Northeast Bancorp
Apr 30, 2015

Northeast Bancorp Reports Third Quarter Results, Announces Increase in Stock Repurchase Program and Declares Dividend

LEWISTON, Maine, April 30, 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 $1.8 million, or $0.18 per diluted common share, for the quarter ended March 31, 2015, compared to net income of $437 thousand, or $0.04 per diluted common share, for the quarter ended March 31, 2014. Net income for the nine months ended March 31, 2015 was $5.0 million, compared to $2.2 million for the nine months ended March 31, 2014.

The Board of Directors has voted to amend the existing stock repurchase program to authorize the Company to purchase an additional 500,000 shares of its common stock, representing 5.1% of the Company's outstanding common shares or approximately $4.7 million based on the Company's closing price on April 29, 2015. Under the existing program, implemented in April 2014, the Company has purchased 783,336 shares through April 29, 2015 and 86,664 shares remain available for repurchase under the program on that date, prior to the 500,000 share increase in the repurchase plan. The amended stock repurchase program will expire on April 30, 2017.

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

"We continue to make progress in the execution of our business plan," said Richard Wayne, President and Chief Executive Officer. "We've begun to see results from our new SBA Lending Division, with SBA loan originations totaling $9.4 million for the quarter. It was also a strong quarter for transactional income, which totaled $2.7 million and contributed to our 4.8% net interest margin for the period. As always, we remain focused on the further leveraging of our operating infrastructure and the effective deployment of our capital."

"With regard to capital, we continue to believe that our shares are undervalued, based on current market prices," said Mr. Wayne. "Our goal in implementing the amendment to the existing stock repurchase program is to continue to enhance shareholder value."

At March 31, 2015, total assets were $832.9 million, an increase of $71.0 million, or 9.3%, 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 $62.8 million, or 12.2%, compared to June 30, 2014, the result of net growth of $67.1 million in commercial loans purchased or originated by the Bank's Loan Acquisition and Servicing Group ("LASG"), offset by a $4.3 million decrease in the Bank's Community Banking Division loan portfolio. 

New loans generated by the LASG totaled $35.8 million and $156.1 million for the three and nine-month periods, respectively, ending March 31, 2015. The quarterly growth in LASG loans consisted of $5.1 million of purchased loans, at an average price of 92.3%, and $30.7 million of originated loans. Small Business Administration ("SBA") loans originated during the quarter totaled $9.4 million, of which $3.1 million were sold in the secondary market. Residential and consumer loan production sold in the secondary market totaled $20.0 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 March 31, 2015
    (Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans  $ 62.9
Regulatory Capital Non-owner occupied commercial real estate loans may not exceed 300% of total risk-based capital  $ 155.2

An overview of the Bank's LASG portfolio follows:

  LASG Portfolio
  Three Months Ended March 31
  2015 2014
  Purchased  Originated Secured Loans to
Broker-Dealers
Total LASG Purchased  Originated Secured Loans to
Broker-Dealers
Total LASG
  (Dollars in thousands)
Loans purchased or originated during the period:              
Unpaid principal balance  $ 5,484  $ 18,760  $ 12,000  $ 36,244  $ 19,050  $ 11,158  $ --   $ 30,208
Net investment basis 5,063 18,697 12,000 35,760 16,300 11,158  --  27,458
                 
Loan returns during the period:                
Yield 12.87% 5.67% 0.46% 9.37% 9.51% 6.95% 0.61% 8.11%
Total Return (1) 13.60% 5.67% 0.46% 9.81% 10.39% 7.10% 0.61% 8.71%
                 
   
  Nine Months Ended March 31
  2015 2014
  Purchased  Originated Secured Loans to
Broker-Dealers
Total LASG Purchased  Originated Secured Loans to
Broker-Dealers
Total LASG
  (Dollars in thousands)
Loans purchased or originated during the period:              
Unpaid principal balance  $ 67,909  $ 50,315  $ 48,000  $ 166,224  $ 53,044  $ 54,722 $ --   $ 107,766
Net investment basis 57,896 50,236 48,000 156,132 46,267 54,722  --  100,989
                 
Loan returns during the period:                
Yield 12.97% 6.91% 0.47% 10.12% 11.17% 7.42% 0.61% 9.55%
Total Return (1) 13.36% 7.40% 0.47% 10.48% 11.60% 7.50% 0.61% 9.87%
                 
Total loans as of period end:                
Unpaid principal balance  $ 234,672  $ 92,542  $ 60,000  $ 387,214  $ 221,597  $ 64,700  $ 24,000  $ 310,297
Net investment basis   $ 195,683  $ 92,414  $ 60,000  $ 348,097  $ 184,959  $ 64,724  $ 24,000  $ 273,683
                 
(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 $23.5 million, or 3.7%, for the quarter, attributable primarily to growth in non-maturity accounts, which increased by $20.1 million, or 6.9%, for the three months ended March 31, 2015, as well as an increase of $3.3 million in time deposits. For the nine-month period, deposits increased by $80.8 million, or 14.1%. 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 increased by $421 thousand from June 30, 2014, due principally to earnings of $5.0 million, as well as $504 thousand of scheduled amortization of stock-based compensation, offset by $4.4 million in share repurchases (representing 479,936 shares), a decrease in accumulated other comprehensive income of $365 thousand and $302 thousand in dividends paid on common stock. During the quarter, there were 31,250 shares repurchased for $291 thousand.

Net income from continuing operations increased by $1.3 million to $1.8 million for the quarter ended March 31, 2015, compared to $437 thousand for the quarter ended March 31, 2014

1. Net interest and dividend income before provision for loan losses increased by $2.0 million, or 28.2%, for the quarter ended March 31, 2015 compared to the quarter ended March 31, 2014, 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 March 31, 2015 increased by $64.6 million, and average loans increased by $58.9 million, when compared to the three months ended March 31, 2014. For the nine months ended March 31, 2015, average total interest-earning assets increased by $66.9 million and average loans increased by $60.5 million compared to the nine months ended March 31, 2014 .

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 nine month periods ended March 31, 2014, transactional interest income increased by $2.0 million and $3.9 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 March 31,
  2015 2014
  Average  Interest   Average  Interest  
  Balance Income Yield Balance Income Yield
  (Dollars in thousands)
Community Banking Division  $ 232,369  $ 2,823 4.93%  $ 249,962  $ 3,183 5.16%
LASG:            
Originated 80,567 1,127 5.67% 59,526 1,020 6.95%
Purchased 208,487 6,614 12.87% 177,559 4,164 9.51%
Secured Loans to Broker-Dealers 48,551 55 0.46% 24,000 36 0.61%
Total LASG 337,605 7,796 9.37% 261,085 5,220 8.11%
Total  $ 569,974  $ 10,619 7.56%  $ 511,047  $ 8,403 6.67%
             
  Nine Months Ended March 31,
  2015 2014
  Average  Interest   Average  Interest  
  Balance Income Yield Balance Income Yield
  (Dollars in thousands)
Community Banking Division  $ 236,584  $ 8,782 4.94%  $ 246,539  $ 9,809 5.30%
LASG:            
Originated 66,314 3,441 6.91% 45,379 2,527 7.42%
Purchased 206,747 20,125 12.97% 175,383 14,711 11.17%
Secured Loans to Broker-Dealers 39,054 139 0.47% 20,890 95 0.61%
Total LASG 312,115 23,705 10.12% 241,652 17,333 9.55%
Total  $ 548,699  $ 32,487 7.89%  $ 488,191  $ 27,142 7.41%

The yield on purchased loans for the three and nine months ended March 31, 2015 increased primarily due to unscheduled loan payoffs, which resulted in immediate recognition in interest income of the discount associated with the prepaid loans. The following table details the "total return" on purchased loans, which includes transactional income of $2.7 million for the quarter ended March 31, 2015, an increase of $2.0 million from the quarter ended March 31, 2014. Additionally, total transactional income for the nine months ended March 31, 2015 increased by $3.8 million, compared to the nine months ended March 31, 2014. The following table summarizes the total return recognized on the purchased loan portfolio.

  Total Return on Purchased Loans
  Three Months Ended March 31,
  2015 2014
  Income Return (1) Income Return (1)
  (Dollars in thousands)
Regularly scheduled interest and accretion  $ 4,322 8.41%  $ 3,880 8.83%
Transactional income:        
Gains on loan sales  --  0.00% 349 0.79%
Gain on sale of real estate owned 379 0.74% 56 0.13%
Other noninterest income  --  0.00%  --  0.00%
Accelerated accretion and loan fees  2,292 4.46% 284 0.65%
Total transactional income 2,671 5.20% 689 1.57%
Total   $ 6,993 13.60%  $ 4,569 10.39%
         
         
  Nine Months Ended March 31,
  2015 2014
  Income Return (1) Income Return (1)
  (Dollars in thousands)
Regularly scheduled interest and accretion  $ 13,195 8.50%  $ 11,632 8.80%
Transactional income:        
Gains on loan sales 190 0.12% 576 0.44%
Gain on sale of real estate owned 419 0.27% 56 0.04%
Other noninterest income  --  0.00%  --  0.00%
Accelerated accretion and loan fees  6,930 4.47% 3,079 2.33%
Total transactional income 7,539 4.86% 3,711 2.81%
Total   $ 20,734 13.36%  $ 15,343 11.60%
         
(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 $246 thousand for the quarter ended March 31, 2015, compared to the quarter ended March 31, 2014, principally due to the following:

  • An increase of $192 thousand in gains recognized on Real Estate Owned/Other Assets Acquired ("REO/OAA");
  • An increase of $90 thousand in gains realized on sale of loans held for sale in the secondary market, due principally to an increase in purchase-related mortgage loan activity in the current period;
  • An increase of $52 thousand in gains realized on sale of portfolio loans. The recent quarter includes gains realized on sale of SBA loans of $425 thousand, compared to zero in the quarter ended March 31, 2014; and
  • A decrease of $82 thousand in fees and other services to customers, primarily due to a decrease in servicing rights related to loans paid off or sold.

3. Noninterest expense increased by $369 thousand for the quarter ended March 31, 2015, compared to the quarter ended March 31, 2014, principally due to the following:

  • An increase of $557 thousand in salaries and employee benefits, principally due to increased employee head count; and
  • A decrease of $172 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 $104 thousand.

4. The Company's effective tax rate for the quarter ended March 31, 2015 was 36.17%, compared to 39.64% for the quarter ended March 31, 2014. The decrease in the quarter was primarily due to fluctuations in projected pre-tax income and permanent book to tax differences for the prior fiscal year.

At March 31, 2015, nonperforming assets totaled $14.1 million, or 1.7% 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 nine months ended March 31, 2015 was mainly due to the addition of one purchased loan relationship.

At March 31, 2015, the Company's Tier 1 Leverage Ratio was 15.0%, a decrease from 15.9% at June 30, 2014, and the Total Capital Ratio was 21.2%, a decrease from 23.7% at June 30, 2014. The decreases resulted primarily from balance sheet growth, risk weighting adjustment due to the effect of the adoption of Basel III, and the effect of purchases under the Company's share repurchase program in the nine months ended March 31, 2015.

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 third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Friday, May 1, 2015. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 34175780. 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.

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; increasing government regulation; the risk that the Company may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Company's financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company's Annual Report on Form 10-K and updated by the Company's Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. These statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.

NBN-F

     
     
NORTHEAST BANCORP AND SUBSIDIARY    
CONSOLIDATED BALANCE SHEETS    
(Unaudited)    
(Dollars in thousands, except share and per share data)    
  March 31, 2015 June 30, 2014
Assets    
Cash and due from banks  $ 2,496  $ 3,372
Short-term investments 102,577 78,887
 Total cash and cash equivalents 105,073 82,259
     
Available-for-sale securities, at fair value 105,523 113,881
Loans held for sale 4,439 11,945
     
Loans     
 Commercial real estate 327,767 316,098
 Residential real estate 136,778 148,634
 Commercial and industrial 106,271 41,800
 Consumer 8,377 9,884
 Total loans 579,193 516,416
 Less: Allowance for loan losses 1,741 1,367
 Loans, net 577,452 515,049
     
Premises and equipment, net 8,095 9,135
Real estate owned and other possessed collateral, net 3,694 1,991
Regulatory stock, at cost 4,102 4,102
Intangible assets, net 2,338 2,798
Bank owned life insurance 15,165 14,836
Other assets 7,047 5,935
 Total assets  $ 832,928  $ 761,931
     
Liabilities and Stockholders' Equity    
 Deposits    
 Demand  $ 50,870  $ 50,140
 Savings and interest checking 98,050 98,340
 Money market 163,004 83,901
 Time  343,253 341,948
 Total deposits 655,177 574,329
     
 Federal Home Loan Bank advances 30,216 42,824
 Wholesale repurchase agreements 10,077 10,199
 Short-term borrowings 2,861 2,984
 Junior subordinated debentures issued to affiliated trusts 8,578 8,440
 Capital lease obligation 1,416 1,558
 Other liabilities 12,116 9,531
 Total liabilities 720,441 649,865
     
Commitments and contingencies  --   -- 
     
Stockholders' equity    
 Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at March 31, 2015 and June 30, 2014  --   -- 
 Voting common stock, $1.00 par value, 25,000,000 shares authorized; 8,908,121 and 9,260,331 shares issued and outstanding at March 31, 2015 and June 30, 2014, respectively 8,908 9,260
 Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 911,488 and 880,963 shares issued and outstanding at March 31, 2015 and June 30, 2014, respectively 911 881
 Additional paid-in capital  87,348 90,914
 Retained earnings 16,968 12,294
 Accumulated other comprehensive income (loss) (1,648) (1,283)
 Total stockholders' equity 112,487 112,066
 Total liabilities and stockholders' equity  $ 832,928  $ 761,931
         
         
NORTHEAST BANCORP AND SUBSIDIARY        
CONSOLIDATED STATEMENTS OF INCOME        
(Unaudited)        
(Dollars in thousands, except share and per share data)        
  Three Months Ended March 31, Nine Months Ended March 31,
  2015 2014 2015 2014
Interest and dividend income:        
 Interest and fees on loans  $ 10,619  $ 8,403  $ 32,487  $ 27,142
 Interest on available-for-sale securities 222 253 697 797
 Other interest and dividend income  72 61 218 208
 Total interest and dividend income 10,913 8,717 33,402 28,147
         
Interest expense:        
 Deposits 1,271 1,022 3,681 3,048
 Federal Home Loan Bank advances 257 324 845 975
 Wholesale repurchase agreements 71 93 216 285
 Short-term borrowings 5 6 21 17
 Junior subordinated debentures issued to affiliated trusts 171 140 566 525
 Obligation under capital lease agreements 18 20 56 63
 Total interest expense 1,793 1,605 5,385 4,913
         
Net interest and dividend income before provision for loan losses 9,120 7,112 28,017 23,234
Provision for loan losses 44 180 477 407
Net interest and dividend income after provision for loan losses 9,076 6,932 27,540 22,827
         
Noninterest income:        
 Fees for other services to customers 303 385 1,089 1,246
 Gain on sales of loans held for sale 355 265 1,384 1,145
 Gain on sales of portfolio loans 425 373 950 603
 Gain recognized on real estate owned and other repossessed collateral, net 357 165 303 50
 Bank-owned life insurance income 110 108 329 342
 Other noninterest income 4 12 23 46
 Total noninterest income 1,554 1,308 4,078 3,432
         
Noninterest expense:        
 Salaries and employee benefits 4,316 3,759 13,586 12,624
 Occupancy and equipment expense 1,278 1,450 3,662 4,075
 Professional fees 386 366 1,153 1,115
 Data processing fees 361 257 1,029 770
 Marketing expense 54 86 203 225
 Loan acquisition and collection expense 409 440 1,096 1,203
 FDIC insurance premiums 137 127 371 354
 Intangible asset amortization 128 162 460 582
 Legal settlement recovery  --   --   --  (250)
 Other noninterest expense 816 869 2,272 2,284
 Total noninterest expense 7,885 7,516 23,832 22,982
         
Income from continuing operations before income tax expense 2,745 724 7,786 3,277
Income tax expense 993 287 2,810 1,119
Net income from continuing operations 1,752 437 4,976 2,158
         
Income from discontinued operations before tax (benefit) expense   --   --   --  (12)
Income tax (benefit) expense   --   --   --  (4)
Net (loss) income from discontinued operations  --   --   --  (8)
Net income   $ 1,752  $ 437  $ 4,976  $ 2,150
         
Weighted-average shares outstanding:        
 Basic 9,833,033 10,432,494 10,049,983 10,435,300
 Diluted 9,833,033 10,432,494 10,049,983 10,435,300
Earnings per common share:        
 Basic:        
Income from continuing operations  $ 0.18  $ 0.04  $ 0.50  $ 0.21
Income from discontinued operations 0.00 0.00 0.00 0.00
Net Income  $ 0.18  $ 0.04  $ 0.50  $ 0.21
 Diluted:        
Income from continuing operations  $ 0.18  $ 0.04  $ 0.50  $ 0.21
Income from discontinued operations 0.00 0.00 0.00 0.00
Net Income  $ 0.18  $ 0.04  $ 0.50  $ 0.21
Cash dividends declared per common share  $ 0.01  $ 0.09  $ 0.03  $ 0.27
             
             
NORTHEAST BANCORP AND SUBSIDIARY          
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS      
(Unaudited)            
(Dollars in thousands)            
  Three Months Ended March 31,
  2015 2014
    Interest Average   Interest Average
  Average  Income/ Yield/ Average  Income/ Yield/
  Balance Expense Rate Balance Expense Rate
Assets:            
Interest-earning assets:            
Investment securities (1)  $ 107,010  $ 222 0.84%  $ 114,925  $ 253 0.89%
Loans (2) (3) 569,974 10,619 7.56% 511,047 8,403 6.67%
Regulatory stock 4,102 18 1.78% 5,721 16 1.13%
Short-term investments (4) 90,722 54 0.24% 75,506 45 0.24%
Total interest-earning assets 771,808 10,913 5.73% 707,199 8,717 5.00%
Cash and due from banks 2,919     2,833    
Other non-interest earning assets 33,069     37,366    
Total assets  $ 807,796      $ 747,398    
             
Liabilities & Stockholders' Equity:            
Interest-bearing liabilities:            
NOW accounts  $ 62,317  $ 39 0.25%  $ 61,028  $ 40 0.27%
Money market accounts 153,487 300 0.79% 87,352 112 0.52%
Savings accounts 34,140 11 0.13% 35,052 12 0.14%
Time deposits 328,633 921 1.14% 325,505 858 1.07%
 Total interest-bearing deposits 578,577 1,271 0.89% 508,917 1,022 0.81%
Short-term borrowings  2,356 5 0.86% 2,192 6 1.11%
Borrowed funds 43,718 346 3.21% 59,399 437 2.98%
Junior subordinated debentures 8,553 171 8.11% 8,374 140 6.78%
Total interest-bearing liabilities 633,204 1,793 1.15% 578,882 1,605 1.12%
             
Non-interest bearing liabilities:            
Demand deposits and escrow accounts 54,647     48,361    
Other liabilities 8,516     5,920    
Total liabilities 696,367     633,163    
Stockholders' equity 111,429     114,325    
Total liabilities and stockholders' equity  $ 807,796      $ 747,398    
             
 Net interest income    $ 9,120      $ 7,112  
             
Interest rate spread     4.58%     3.88%
Net interest margin (5)     4.79%     4.08%
             
(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)
  Nine Months Ended March 31,
  2015 2014
    Interest Average   Interest Average
  Average  Income/ Yield/ Average  Income/ Yield/
  Balance Expense Rate Balance Expense Rate
Assets:            
Interest-earning assets:            
Investment securities (1)  $ 109,605  $ 697 0.85%  $ 117,053  $ 797 0.91%
Loans (2) (3) 548,699 32,487 7.89% 488,191 27,142 7.41%
Regulatory stock 4,102 49 1.59% 5,721 68 1.58%
Short-term investments (4) 92,784 169 0.24% 77,334 140 0.24%
Total interest-earning assets 755,190 33,402 5.89% 688,299 28,147 5.45%
Cash and due from banks 2,755     2,975    
Other non-interest earning assets 33,241     35,855    
Total assets  $ 791,186      $ 727,129    
             
Liabilities & Stockholders' Equity:            
Interest-bearing liabilities:            
NOW accounts  $ 62,731  $ 121 0.26%  $ 59,703  $ 120 0.27%
Money market accounts 122,165 665 0.73% 86,421 338 0.52%
Savings accounts 34,049 34 0.13% 34,160 35 0.14%
Time deposits 339,116 2,861 1.12% 306,423 2,555 1.11%
 Total interest-bearing deposits 558,061 3,681 0.88% 486,707 3,048 0.83%
Short-term borrowings  2,852 21 0.98% 2,290 17 0.99%
Borrowed funds 47,455 1,117 3.14% 59,778 1,323 2.95%
Junior subordinated debentures 8,507 566 8.86% 8,331 525 8.39%
Total interest-bearing liabilities 616,875 5,385 1.16% 557,106 4,913 1.17%
             
Non-interest bearing liabilities:            
Demand deposits and escrow accounts 54,339     50,662    
Other liabilities 7,644     5,718    
Total liabilities 678,858     613,486    
Stockholders' equity 112,328     113,643    
Total liabilities and stockholders' equity  $ 791,186      $ 727,129    
             
 Net interest income    $ 28,017      $ 23,234  
             
Interest rate spread     4.73%     4.28%
Net interest margin (5)     4.94%     4.50%
             
(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:
  March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014
Net interest income $ 9,120 $ 9,426 $ 9,471 $ 8,484 $ 7,112
Provision for loan losses 44 113 320 124 180
Noninterest income 1,554 1,370 1,154 1,437 1,308
Noninterest expense 7,885 8,210 7,737 8,795 7,516
Net income from continuing operations 1,752 1,580 1,644 542 437
Net income  1,752 1,580 1,644 542 437
           
Weighted average common shares outstanding:          
 Basic 9,833,033 10,132,349 10,180,038 10,314,197 10,432,494
 Diluted 9,833,033 10,132,349 10,180,038 10,314,197 10,432,494
Earnings per common share:          
 Basic $ 0.18 $ 0.16 $ 0.16 $ 0.05 $ 0.04
 Diluted 0.18 0.16 0.16 0.05 0.04
Dividends per common share 0.01 0.01 0.01 0.01 0.09
           
Return on average assets 0.88% 0.78% 0.85% 0.29% 0.24%
Return on average equity 6.38% 5.54% 5.80% 1.98% 1.55%
Net interest rate spread (1)  4.59% 4.65% 4.95% 4.53% 3.87%
Net interest margin (2) 4.79% 4.87% 5.18% 4.75% 4.08%
Efficiency ratio (3) 73.87% 76.05% 72.82% 88.65% 89.26%
Noninterest expense to average total assets 3.96% 4.05% 4.02% 4.69% 4.08%
Average interest-earning assets to average interest-bearing liabilities 121.89% 122.32% 123.09% 121.92% 122.17%
           
  As of:
  March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014
Nonperforming loans:          
Originated portfolio:          
Residential real estate $ 3,163 $ 2,706 $ 2,105 $ 1,743 $ 1,678
Commercial real estate 1,201 1,166 721 1,162 798
Home equity 11 11 28 160 214
Commercial business  --   --   --  5  -- 
Consumer  225 237 145 139 152
Total originated portfolio 4,600 4,120 2,999 3,209 2,842
Total purchased portfolio 5,850 8,129 4,287 4,116 4,582
Total nonperforming loans 10,450 12,249 7,286 7,325 7,424
Real estate owned and other possessed collateral, net 3,694 2,058 2,115 1,991 2,000
Total nonperforming assets $ 14,144 $ 14,307 $ 9,401 $ 9,316 $ 9,424
           
Past due loans to total loans 2.57% 2.64% 1.40% 1.14% 1.44%
Nonperforming loans to total loans 1.80% 2.13% 1.34% 1.42% 1.44%
Nonperforming assets to total assets 1.70% 1.77% 1.20% 1.22% 1.26%
Allowance for loan losses to total loans 0.30% 0.29% 0.28% 0.26% 0.26%
Allowance for loan losses to nonperforming loans 16.66% 13.58% 21.12% 18.66% 18.12%
           
Commercial real estate loans to risk-based capital (4) 173.17% 190.05% 167.57% 176.98% 175.10%
Net loans to core deposits (5) 89.04% 91.79% 92.80% 92.13% 93.18%
Purchased loans to total loans, including held for sale 33.53% 37.97% 37.38% 38.51% 35.29%
Equity to total assets 13.51% 13.69% 14.48% 14.71% 15.18%
Common equity tier 1 capital ratio 20.90% -- -- -- --
Total capital ratio (7) 21.21% 21.44% 22.97% 23.69% 24.21%
Tier 1 leverage capital ratio 14.96% 14.81% 15.89% 15.90% 16.28%
           
Total stockholders' equity  $ 112,487 $ 110,923 $ 113,242 $ 112,066 $ 114,008
Less: Preferred stock  --   --   --   --   -- 
Common stockholders' equity 112,487 110,923 113,242 112,066 114,008
Less: Intangible assets (2,338) (2,466) (2,632) (2,798) (2,962)
Tangible common stockholders' equity (non-GAAP) $ 110,149 $ 108,457 $ 110,610 $ 109,268 $ 111,046
           
Common shares outstanding 9,819,609 9,846,387 10,248,034 10,141,294 10,432,494
Book value per common share  $ 11.46 $ 11.27 $ 11.05 $ 11.05 $ 10.93
Tangible book value per share (non-GAAP) (6) 11.22 11.01 10.79 10.77 10.64
           
  Reconciliation of Net Income (GAAP) to Net Operating Earnings (non-GAAP) 
  Three Months Ended:
  March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014
Net income (GAAP) $ 1,752 $ 1,580 $ 1,644 $ 542 $ 437
Items excluded from operating earnings, net of tax:          
Discontinued operations  --   --   --   --   -- 
Severance expense 8 36 52 407 35
Income from life insurance death benefits  --   --   --  148 84
Legal settlement expense and related professional fees  --   --   --   --   -- 
Total after-tax items 8 36 52 555 119
Net operating earnings (non-GAAP) $ 1,760 $ 1,616 $ 1,696 $ 1,097 $ 556
Net operating earnings per share - basic (non-GAAP) $ 0.18 $ 0.16 $ 0.17 $ 0.11 $ 0.05
           
(1) The net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.
(2) The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
(3) The efficiency ratio represents non-interest expense divided by the sum of net interest income (before the loan loss provision) plus non-interest income.
(4) For purposes of calculating this ratio, commercial real estate includes all those loans defined as such by regulatory guidance, including all land development and construction loans. 
(5) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held-for-sale.
(6) Tangible book value per share represents total stockholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
(7) The Company's adoption of Basel III went into effect as of March 31, 2015. The previous period ratios are the "Total Risk-Based Capital Ratio."
CONTACT: 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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