Northeast Bancorp
NORTHEAST BANCORP /ME/ (Form: 8-K, Received: 01/29/2018 16:40:13)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):

January 29 ,   201 8

   

Commission File No. 1-14588

 

NORTHEAST BANCORP

(Exact name of registrant as specified in its charter)

 

Maine

01-0425066

(State or other jurisdiction of incorporation)

(IRS Employer Identification Number)

   

500 Canal Street
Lewiston, Maine

04240

(Address of principal executive offices)

(Zip Code)

 

Registrant ’s telephone number, including area code: (207) 786-3245

 

Former name or former address, if changed since last Report: N/A

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 | | Written communications pursuant to Rule 425 under the Securities Act

 

 | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

 | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

 | | Pre-commencement to communications pursuant to Rule 13e-4(c) under the Exchange Act

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

Item 2.02

Results of Operation s and Financial Condition

 

On January 29, 2018, Northeast Bancorp, a Maine corporation (the "Company"), issued a press release announcing its earnings for the second quarter of fiscal 2018 and declaring the payment of a dividend. The full text of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information contained herein, including the exhibit attached hereto, is furnished pursuant to Item 2.02 of this Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, the information in this report (including the exhibits hereto) are not to be incorporated by reference into any of the Company's filings with the Securities and Exchange Commission, whether filed prior to or after the furnishing of these certificates, regardless of any general or specific incorporation language in such filing.

 

 

Item 9.01

Financial Statements and Exhibits

(c)

Exhibits

 

 

Exhibit No .

Description

   

99.1

Press Release dated January 29, 2018

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.

 

 

 

 

 

NORTHEAST BANCORP

 

 

 

 

 

 

By:

/s/ Jean-Pierre Lapointe

 

Name:

Jean-Pierre Lapointe

 

Title:

Chief Financial Officer and Treasurer

 

Date: January 29, 2018

 

 

 

EXHIBIT INDEX

 

ExhibitNo .

Description

 

99.1

Press Release dated January 29, 2018

Exhibit 99.1

 

FOR IMMEDIATE RELEASE  

 

 

For More Information:

 

Jean-Pierre Lapointe, Chief Financial Officer

Northeast Bank, 500 Canal Street, Lewiston, ME 04240

207.786.3245 ext. 3220

www.northeastbank.com

 

 

Northeast Bancorp Reports Second Quarter Results and Declares Dividend

 

Lewiston, ME ( January 29, 2018) ‒ 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 $3.3 million, or $0.36 per diluted common share, for the quarter ended December 31, 2017, compared to net income of $3.1 million, or $0.35 per diluted common share, for the quarter ended December 31, 2016. Net income for the six months ended December 31, 2017 was $7.9 million, or $0.86 per diluted common share, compared to $4.9 million, or $0.54 per diluted common share, for the six months ended December 31, 2016.

 

On January 26, 2018, the Board of Directors declared a cash dividend of $0.01 per share, payable on February 27, 2018 to shareholders of record as of February 13, 2018.

 

I am pleased to report another strong quarter,” said Richard Wayne, President and Chief Executive Officer. “Our Loan Acquisition and Servicing Group produced $79.1 million of loans, including originations of $44.3 million and purchases with a recorded investment of $34.8 million, for net growth in the LASG portfolio of $20.3 million, or 3.6%, over the linked quarter. With transactional income of $1.9 million, we achieved a total return on our purchased loan portfolio of 11.0% and a net interest margin of 4.9% for the quarter.”

 

As of December 31, 2017, total assets were $1.0 billion, a decrease of $42.4 million, or 3.9%, from total assets of $1.1 billion as of June 30, 2017. The principal components of the change in the balance sheet follow:

 

 

1.

The following table highlights the changes in the loan portfolio for the three and six months ended December 31, 2017:

 

   

Loan Portfolio Changes

 
   

Three Months Ended December 31, 2017

 
   

December 31, 2017 Balance

   

September 30, 2017 Balance

   

 

Change ($)

   

 

Change (%)

 
   

(Dollars in thousands)

 

LASG Purchased

  $ 244,177     $ 230,014     $ 14,163       6.16 %

LASG Originated

    346,874       340,756       6,118       1.80 %

SBA

    49,109       47,870       1,239       2.59 %

Community Banking

    134,030       140,944       (6,914 )     -4.91 %

Total

  $ 774,190     $ 759,584     $ 14,606       1.92 %

 

   

Six Months Ended December 31, 2017

 
   

December 31, 2017 Balance

   

June 30, 20 17

Balance

   

 

Change ($)

   

 

Change (%)

 
   

(Dollars in thousands)

 

LASG Purchased

  $ 244,177     $ 246,388     $ (2,211 )     -0.90 %

LASG Originated

    346,874       330,515       16,359       4.95 %

SBA

    49,109       52,965       (3,856 )     -7.28 %

Community Banking

    134,030       149,327       (15,297 )     -10.24 %

Total

  $ 774,190     $ 779,195     $ (5,005 )     -0.64 %

 

 

 

 

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended December 31, 2017 totaled $79.1 million, which consisted of $34.8 million of purchased loans, at an average price of 91.1% of unpaid principal balance, and $44.3 million of originated loans. The Bank's Small Business Administration and United States Department of Agriculture ("SBA") Division closed and funded $4.5 million of new loans during the quarter ended December 31, 2017. In addition, the Company sold $3.4 million of the guaranteed portion of SBA loans in the secondary market, of which $1.6 million were originated in the current quarter and $1.8 million were originated in prior quarters. Residential loan production sold in the secondary market totaled $17.6 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, 2017

 
       

(Dollars in millions)

 

Total Loans

 

Purchased loans may not exceed 40% of total loans

  $ 113.4  

Regulatory Capital

 

Non-owner occupied c ommercial real estate loans may not exceed 300% of total capital

  $ 177.4  

 

An overview of the Bank’s LASG portfolio follows :

 

 

   

LASG Portfoli o

 
   

Three Months Ended December 31,

 
   

201 7

   

201 6

 
   

Purchased

   

Originate d

   

Secured Loans to

Broker-Dealer s

   

Total LAS G

   

Purchased

   

Originate d

   

Secured Loans to Broker-Dealer s

   

Total LAS G

 
   

(Dollars in thousands )

 

Loans purchased or originated during the period :

                                                               

Unpaid principal balanc e

  $ 38,205     $ 44,285     $ -     $ 82,490     $ 51,112     $ 45,647     $ -     $ 96,759  

Net investment basi s

    34,802       44,285       -       79,087       46,033       45,647       -       91,680  
                                                                 

Loan returns during the period :

                                                               

Yiel d

    11.00 %     6.49 %     0.00 %     8.31 %     13.01 %     5.89 %     0.99 %     8.76 %

Total Return (2 )

    11.00 %     6.49 %     0.00 %     8.31 %     13.01 %     5.89 %     0.99 %     8.76 %

 

   

Six Months Ended December 31,

 
   

201 7

   

201 6

 
   

Purchased

   

Originate d

   

Secured Loans to

Broker-Dealer s

   

Total LAS G

   

Purchased (1 )

   

Originate d

   

Secured Loans to Broker-Dealer s

   

Total LAS G

 
   

(Dollars in thousands )

 

Loans purchased or originated during the period :

                                                               

Unpaid principal balanc e

  $ 42,523     $ 85,064     $ -     $ 127,587     $ 67,903     $ 88,025     $ -     $ 155,928  

Net investment basi s

    38,453       85,064       -       123,517       59,886       88,025       -       147,911  

Loan returns during the period :

                                                               

Yiel d

    11.65 %     6.42 %     0.00 %     8.58 %     11.71 %     5.88 %     0.74 %     8.19 %

Total Return (2 )

    11.65 %     6.42 %     0.00 %     8.58 %     11.73 %     5.88 %     0.74 %     8.19 %
                                                                 
                                                                 

Total loans as of period end :

                                                               

Unpaid principal balanc e

  $ 276,440     $ 346,874     $ -     $ 623,314     $ 288,455     $ 231,278     $ 48,000     $ 567,733  

Net investment basis

    244,177       346,874       -       591,051       255,048       231,278       48,000       534,326  

 

(1) P eriod end purchased loan balances include loans held for sale of $975 thousand at December 31, 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.

 

 

 

 

 

2.

Deposits de creased by $41.2 million, or 4.6%, from June 30, 2017, attributable primarily to a decrease in money market accounts of $22.3 million, or 6.0%, and a decrease in time deposits of $19.4 million, or 5.8%.

 

 

3.

S hareholders’ equity increased by $7.2 million, or 5.9%, from June 30, 2017, primarily due to earnings of $7.9 million, partially offset by stock option exercises which decreased additional paid-in-capital by $1.1 million and dividends paid on common stock of $177 thousand. Additionally, there was stock-based compensation of $485 thousand.

 

Net income increased by $204 thousand to $3.3 million for the quarter ended December 31, 2017, compared to net income of $3.1 million for the quarter ended December 31, 2016.

 

 

1.

Net interest and dividend income before provision f or loan losses increased by $624 thousand for the quarter ended December 31, 2017, compared to the quarter ended December 31, 2016. The increase is primarily due to higher average balances in the total loan portfolio. This increase was partially offset by higher funding costs and higher average deposit balances.

 

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

 

   

Interest Income and Yield on Loans

 
   

Three Months Ended December 31 ,

 
   

2017

   

2016

 
   

Average

   

Interest

           

Average

   

Interest

         
   

Balance (1)

   

Income

   

Yield

   

Balance (1)

   

Income

   

Yield

 
   

(Dollars in thousands)

 

Community Banking

  $ 141,486     $ 1,753       4.92 %   $ 203,963     $ 2,350       4.57 %

SBA

    49,457       814       6.53 %     41,038       574       5.55 %

LASG:

                                               

Originated

    340,240       5,565       6.49 %     216,353       3,210       5.89 %

Purchased

    229,732       6,369       11.00 %     233,502       7,659       13.01 %

Secured Loans to Broker-Dealers

    -       -       0.00 %     48,000       120       0.99 %

Total LASG

    569,972       11,934       8.31 %     497,855       10,989       8.76 %

Total

  $ 760,915     $ 14,501       7.56 %   $ 742,856     $ 13,913       7.43 %

 

   

Six Months Ended December 31,

 
   

2017

   

2016

 
   

Average

   

Interest

           

Average

   

Interest

         
   

Balance (1)

   

Income

   

Yield

   

Balance (1)

   

Income

   

Yield

 
   

(Dollars in thousands)

 

Community Banking

  $ 145,832     $ 3,496       4.76 %   $ 204,864     $ 4,754       4.60 %

SBA

    51,499       1,756       6.76 %     36,093       1,093       6.01 %

LASG:

                                               

Originated

    334,507       10,831       6.42 %     200,731       5,949       5.88 %

Purchased

    234,928       13,800       11.65 %     232,751       13,740       11.71 %

Secured Loans to Broker-Dealers

    -       -       0.00 %     48,000       180       0.74 %

Total LASG

    569,435       24,631       8.58 %     481,482       19,869       8.19 %

Total

  $ 766,766     $ 29,883       7.73 %   $ 722,439     $ 25,716       7.06 %

 

(1)    Includes loans held for sale.

 

 

 

 

The components of total transactional income on purchased loans are set forth in the table below entitled “Total Return on Purchased Loans.” When compared to the three months ended December 31, 2016, transactional income decreased by $1.0 million. The total return on purchased loans for the three months ended December 31, 2017 was 11.0%. The decrease over the prior comparable period was primarily due to lower accelerated accretion in the three months ended December 31, 2017. When compared to the six months ended December 31, 2016, transactional income increased by $432 thousand. This increase over the prior comparable period was primarily due to higher loan fees in the six months ended December 31, 2017. The following table details the total return on purchased loans:

 

   

Total Return on Purchased Loans

 
   

Three Months Ended December 31,

 
   

2017

   

2016

 
   

Income

   

Return (1)

   

Income

   

Return (1)

 
   

(Dollars in thousands)

 

Regularly scheduled interest and accretion

  $ 4,466       7.71 %   $ 4,716       8.01 %

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

    1,903       3.29 %     2,943       5.00 %

Total transactional income

    1,903       3.29 %     2,943       5.00 %

Total

  $ 6,369       11.00 %   $ 7,659       13.01 %

 

   

Total Return on Purchased Loans

 
   

Six Months Ended December 31,

 
   

2017

   

2016

 
   

Income

   

Return (1)

   

Income

   

Return (1)

 
   

(Dollars in thousands)

 

Regularly scheduled interest and accretion

  $ 9,079       7.67 %   $ 9,470       8.07 %

Transactional income:

                               

Gain on loan sales

    -       0.00 %     -       0.00 %

Gain on sale of real estate owned

    -       0.00 %     19       0.02 %

Other noninterest income

    -       0.00 %     -       0.00 %

Accelerated accretion and loan fees

    4,721       3.98 %     4,270       3.64 %

Total transactional income

    4,721       3.98 %     4,289       3.66 %

Total

  $ 13,800       11.65 %   $ 13,759       11.73 %

 

 

(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.

Noni nterest income decreased by $1.5 million for the quarter ended December 31, 2017, compared to the quarter ended December 31, 2016, principally due to the following:

 

A de crease in gain on sale of SBA loans of $1.4 million, due to a lower amount of SBA loans sold in the quarter; and

 

A decrease in gain on sale of residential loans held for sale of $82 thousand, due to lower volume of residential loans sold in the quarter.

 

 

3.

Noninterest expense decreased by $393 thousand for the quarter ended December 31, 2017, compared to the quarter ended December 31, 2016, primarily due to the following:

 

A decrease in other noninterest expense of $395 thousand, primarily due to a $330 thousand decrease in expense related to the quarterly valuation of SBA servicing rights; and

 

A decrease in loan expen se of $179 thousand, largely driven by lower expense related to loan acquisition and refinance activity.

 

The de creases in noninterest expense were partially offset by an increase in data processing fees of $214 thousand, primarily due to the increased cost associated with outsourcing of data processing.

 

 

 

 

 

4.

Inco me tax expense decreased by $458 thousand for the quarter ended December 31, 2017, compared to the quarter ended December 31, 2016, primarily due to the following:

 

A decrease in the federal corporate income tax rate as a result of the Tax Cuts and Jobs Act signed into law on December 22, 2017, which resulted in a $762 thousand decrease in federal income tax expense. Of this total, $328 thousand was related to the decrease in the federal corporate income tax rate for the three months ended December 31, 2017 and $434 thousand was related to income tax expense previously recorded in the three months ended September 30, 2017, to arrive at the required blended federal corporate income tax rate of 28.0% for fiscal year 2018; and

 

A decrease in income tax expense as a result of a $279 thousand income tax benefit arising from the treatment of stock options exercised or vested restricted stock awards under ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , whereby the tax effects of exercised options or vested awards are treated as a discrete item in the reporting period in which they occur.

 

The decreases in income tax expense were partially offset by the impact of revaluing the deferred tax asset as a result of the change in the federal corporate income tax rate as well as the recording of current year changes in the deferred tax asset, which resulted in an increase in income tax expense of $498 thousand.

 

As of December 31, 2017, nonperforming assets totaled $19.0 million, or 1.84% of total assets, as compared to $18.7 million, or 1.78% of total assets, as of September 30, 2017, and $14.8 million, or 1.37% of total assets, as of June 30, 2017.

 

A s of December 31, 2017, past due loans totaled $30.0 million, or 3.87% of total loans, as compared to $12.1 million, or 1.60% of total loans as of September 30, 2017, and $13.4 million, or 1.72% of total loans as of June 30, 2017. The increase was primarily attributable to $5.3 million of loans purchased in December that were delinquent at purchase, as well as $8.8 million of loans that were 30 days past due as of December 31, 2017 and are now current.

 

As of December 31, 2017, the Company’s Tier 1 Leverage Ratio was 13.4%, compared to 12.8% at June 30, 2017, and the Total Capital Ratio was 20.3%, compared to 19.5% at June 30, 2017. The increase in both the Tier 1 Leverage Ratio and the Total Capital Ratio resulted primarily from the increase in earnings and the net decrease in the loan portfolio.

 

 

 

 

Investor Call Information

Richard Wayne, Chief Executive Officer of Northeast Bancorp, and Jean-Pierre Lapointe, 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 30th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 3783438. 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 personal and business banking services to the Maine and New Hampshire markets via ten branches and two loan production offices. Our Loan Acquisition and Servicing Group (“LASG”) purchases and originates commercial loans on a nationwide basis and our SBA Division supports the needs of growing businesses nationally. ableBanking, a division of Northeast Bank, offers online savings products to consumers nationwide. Information regarding Northeast Bank can be found at www.northeastbank.com .

 

 

Non-GAAP Financial Measure s

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; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; 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)

 

   

Dec ember 31, 2017

   

June 30, 2017

 

Assets

               

Cash and due from banks

  $ 2,515     $ 3,582  

Short-term investments

    125,708       159,701  

Total cash and cash equivalents

    128,223       163,283  
                 
                 

Available-for-sale securities, at fair value

    92,339       96,693  
                 

Residential real estate loans held for sale

    5,515       4,508  

SBA loans held for sale

    818       191  

Total loans held for sale

    6,333       4,699  
                 
                 

Loans

               

Commercial real estate

    493,954       498,004  

Commercial and industrial

    178,840       175,654  

Residential real estate

    97,593       101,168  

Consumer

    3,803       4,369  

Total loans

    774,190       779,195  

Less: Allowance for loan losses

    4,355       3,665  

Loans, net

    769,835       775,530  
                 
                 

Premises and equipment, net

    7,061       6,937  

Real estate owned and other repossessed collateral, net

    910       826  

Federal Home Loan Bank stock, at cost

    1,758       1,938  

Intangible assets, net

    1,082       1,300  

Loan s ervicing rights, net

    3,005       2,846  

Bank- owned life insurance

    16,402       16,179  

Other assets

    7,498       6,643  

Total assets

  $ 1,034,446     $ 1,076,874  
                 

Liabilities and Shareholders' Equity

               

Deposits

               

Demand

  $ 71,054     $ 69,827  

Savings and interest checking

    107,750       108,417  

Money market

    352,237       374,569  

Time

    317,613       337,037  

Total deposits

    848,654       889,850  
                 

Federal Home Loan Bank advances

    15,000       20,011  

Subordinated debt

    23,790       23,620  

Capital lease obligation

    741       873  

Other liabilities

    16,258       19,723  

Total liabilities

    904,443       954,077  
                 

Commitments and contingencies

    -       -  
                 

Shareholders' equity

               

Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at December 31, 2017 and June 30, 2017

    -       -  

Voting common stock, $1.00 par value, 25,000,000 shares authorized; 8 ,017,334 and 7,840,460 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively

    8,017       7,841  

Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 921,939 and 991,194 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively

    922       991  

Additional paid-in capital

    76,805       77,455  

Retained earnings

    45,855       38,142  

Accumulated other comprehensive loss

    (1,596 )     (1,632 )

Total shareholders' equity

    130,003       122,797  

Total liabilities and shareholders' equity

  $ 1,034,446     $ 1,076,874  

 

 

 

 

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,

 
   

2017

   

2016

   

2017

   

2016

 

Interest and dividend income:

                               

Interest and fees on loans

  $ 14,501     $ 13,913     $ 29,883     $ 25,716  

Interest on available-for-sale securities

    267       247       533       486  

Other interest and dividend income

    492       172       1,022       387  

Total interest and dividend income

    15,260       14,332       31,438       26,589  
                                 

Interest expense:

                               

Deposits

    2,129       1,798       4,305       3,553  

Federal Home Loan Bank advances

    148       220       319       475  

Subordinated debt

    517       468       1,025       927  

Obligation under capital lease agreements

    9       13       21       27  

Total interest expense

    2,803       2,499       5,670       4,982  

Net interest and dividend income before provision for loan losses

    12,457       11,833       25,768       21,607  

Provision for loan losses

    437       628       792       820  

Net interest and dividend income after provision for loan losses

    12,020       11,205       24,976       20,787  
                                 

Noninterest income:

                               

Fees for other services to customers

    475       481       1,002       889  

Gain on sales of residential loans held for sale

    255       337       545       878  

Gain on sales of SBA loans

    341       1,734       1,361       2,476  

Gain on sales of other loans

    21       -       21       -  

Gain (loss ) on real estate owned, other repossessed collateral and premises and equipment, net

    11       3       11       (11 )

Bank-owned life insurance income

    111       114       223       228  

Other noninterest income

    14       21       23       38  

Total noninterest income

    1,228       2,690       3,186       4,498  
                                 

Noninterest expense:

                               

Salaries and employee benefits

    5,173       5,161       10,427       10,475  

Occupancy and equipment expense

    1,150       1,252       2,260       2,481  

Professional fees

    425       399       867       895  

Data processing fees

    624       410       1,227       832  

Marketing expense

    70       97       157       184  

Loan acquisition and collection expense

    368       547       733       774  

FDIC insurance premiums

    80       22       160       146  

Intangible asset amortization

    109       109       218       218  

Other noninterest expense

    564       959       1,228       1,577  

Total noninterest expense

    8,563       8,956       17,277       17,582  

Income before income tax expense

    4,685       4,939       10,885       7,703  

Income tax expense

    1,381       1,839       2,995       2,852  

Net income

  $ 3,304     $ 3,100     $ 7,890     $ 4,851  
                                 

Weighted-average shares outstanding:

                               

Basic

    8,924,495       8,831,235       8,883,003       8,968,690  

Diluted

    9,168,084       8,864,618       9,129,010       8,999,062  
                                 

Earnings per common share:

                               

Basic

  $ 0.37     $ 0.35     $ 0.89     $ 0.54  

Diluted

    0.36       0.35       0.86       0.54  
                                 

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,

 
   

201 7

   

201 6

 
           

Interest

   

Average

           

Interest

   

Average

 
   

Average

   

Income/

   

Yield/

   

Average

   

Income/

   

Yield/

 
   

Balance

   

Expense

   

Rate

   

Balance

   

Expense

   

Rate

 

Assets:

                                               

Interest-earning assets:

                                               

Investment securities

  $ 93,945     $ 267       1.13%     $ 92,750     $ 247       1.06%  

Loans (1) (2) (3)

    760,915       14,501       7.56%       742,856       13,931       7.44%  

Federal Home Loan Bank stock

    1,860       21       4.48%       2,398       23       3.81%  

Short-term investments (4)

    145,305       471       1.29%       114,276       149       0.52%  

Total interest-earning assets

    1,002,025       15,260       6.04%       952,280       14,350       5.98%  

Cash and due from banks

    2,731                       2,764                  

Other non-interest earning assets

    33,164                       35,213                  

Total assets

  $ 1,037,920                     $ 990,257                  
                                                 

Liabilities & Share holders' Equity:

                                               

Interest-bearing liabilities:

                                               

NOW accounts

  $ 70,287     $ 52       0.29%     $ 71,795     $ 52       0.29%  

Money market accounts

    367,265       1,030       1.11%       312,911       753       0.95%  

Savings accounts

    36,872       12       0.13%       35,206       12       0.14%  

Time deposits

    303,246       1,035       1.35%       317,318       981       1.23%  

Total interest-bearing deposits

    777,670       2,129       1.09%       737,230       1,798       0.97%  

Federal Home Loan Bank advances

    17,719       148       3.31%       27,099       220       3.22%  

Subordinated debt

    23,745       517       8.64%       23,430       468       7.92%  

Capital lease obligations

    764       9       4.67%       1,024       13       5.04%  

Total interest-bearing liabilities

    819,898       2,803       1.36%       788,783       2,499       1.26%  
                                                 

Non-interest bearing liabilities:

                                               

Demand deposits and escrow accounts

    83,855                       80,538                  

Other liabilities

    5,676                       8,299                  

Total liabilities

    909,429                       877,620                  

Share holders' equity

    128,491                       112,637                  

Total liabilities and share holders' equity

  $ 1,037,920                     $ 990,257                  
                                                 

Net interest income (5)

          $ 12,457                     $ 11,851          
                                                 

Interest rate spread

                    4.68%                       4.72%  

Net interest margin (6 )

                    4.93%                       4.94%  

 

(1)

Interest income and yield are stated on a fully tax-equivalent basis using the statutory 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.
(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,

 
   

201 7

   

201 6

 
           

Interest

   

Average

           

Interest

   

Average

 
   

Average

   

Income/

   

Yield/

   

Average

   

Income/

   

Yield/

 
   

Balance

   

Expense

   

Rate

   

Balance

   

Expense

   

Rate

 

Assets:

                                               

Interest-earning assets:

                                               

Investment securities

  $ 94,886     $ 533       1.11%     $ 93,825     $ 486       1.03%  

Loans (1) (2) (3)

    766,766       29,893       7.73%       722,439       25,752       7.07%  

Federal Home Loan Bank stock

    1,899       41       4.28%       2,403       46       3.80%  

Short-term investments (4)

    152,830       981       1.27%       134,334       341       0.50%  

Total interest-earning assets

    1,016,381       31,448       6.14%       953,001       26,625       5.54%  

Cash and due from banks

    2,933                       2,852                  

Other non-interest earning assets

    32,025                       33,012                  

Total assets

  $ 1,051,339                     $ 988,865                  
                                                 

Liabilities & Share holders' Equity:

                                               

Interest-bearing liabilities:

                                               

NOW accounts

  $ 69,931     $ 102       0.29%     $ 71,323     $ 103       0.29%  

Money market accounts

    377,449       2,127       1.12%       302,323       1,435       0.94%  

Savings accounts

    36,953       25       0.13%       35,488       25       0.14%  

Time deposits

    307,865       2,051       1.32%       326,794       1,990       1.21%  

Total interest-bearing deposits

    792,198       4,305       1.08%       735,928       3,553       0.96%  

Federal Home Loan Bank advances

    18,863       319       3.35%       28,580       475       3.30%  

Subordinated debt

    23,703       1,025       8.58%       23,395       927       7.86%  

Capital lease obligations

    797       21       5.23%       1,056       27       5.07%  

Total interest-bearing liabilities

    835,561       5,670       1.35%       788,959       4,982       1.25%  
                                                 

Non-interest bearing liabilities:

                                               

Demand deposits and escrow accounts

    82,210                       78,104                  

Other liabilities

    7,071                       8,255                  

Total liabilities

    924,842                       875,318                  

Share holders' equity

    126,497                       113,547                  

Total liabilities and share holders' equity

  $ 1,051,339                     $ 988,865                  
                                                 

Net interest income (5)

          $ 25,778                     $ 21,643          
                                                 

Interest rate spread

                    4.79%                       4.29%  

Net interest margin (6 )

                    5.03%                       4.51%  

 

(1)

Interest income and yield are stated on a fully tax-equivalent basis using the statutory 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 $10 thousand and $36 thousand for the six months ended December 31, 2017 and December 31, 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:

 
   

December 31 , 2017

   

September 30, 2017

   

June 30, 2017

   

March 31, 2017

   

December 31, 2016

 
                                         

Net interest income

  $ 12,457     $ 13,311     $ 13,757     $ 12,459     $ 11,833  

Provision for loan losses

    437       354       389       384       628  

Noninterest income

    1,228       1,958       2,890       2,308       2,690  

Noninterest expense

    8,563       8,714       9,364       8,842       8,956  

Net income

    3,304       4,586       4,027       3,461       3,100  
                                         

Weighted-average common shares outstanding:

                                       

Basic

    8,924,495       8,841,511       8,823,679       8,830,442       8,831,235  

Diluted

    9,168,084       9,089,936       8,979,471       8,893,534       8,864,618  

Earnings per common share:

                                       

Basic

  $ 0.37     $ 0.52     $ 0.46     $ 0.39     $ 0.35  

Diluted

    0.36       0.50       0.45       0.39       0.35  

Dividends per common share

    0.01       0.01       0.01       0.01       0.01  
                                         

Return on average assets

    1.26 %     1.71 %     1.57 %     1.37 %     1.24 %

Return on average equity

    10.20 %     14.61 %     13.34 %     12.03 %     10.92 %

Net interest rate spread (1)

    4.68 %     4.89 %     5.32 %     4.90 %     4.72 %

Net interest margin (2)

    4.93 %     5.13 %     5.55 %     5.11 %     4.94 %

Efficiency ratio (non-GAAP) (3)

    62.57 %     57.07 %     56.25 %     59.88 %     61.67 %

Noninterest expense to average total assets

    3.27 %     3.25 %     3.64 %     3.50 %     3.59 %

Average interest-earning assets to average interest-bearing liabilities

    122.21 %     121.09 %     121.13 %     120.84 %     120.73 %

 

   

As of:

 
   

December 31 , 2017

   

September 30, 2017

   

June 30, 2017

   

March 31, 2017

   

December 31, 2016

 

Nonperforming loans:

                                       

Originated portfolio:

                                       

Residential real estate

  $ 3,783     $ 3,667     $ 3,337     $ 3,265     $ 2,827  

Commercial real estate

    2,537       2,409       413       420       396  

Home equity

    107       58       58       48       48  

Commercial and industrial

    2,555       2,629       2,600       2,636       2,659  

Consumer

    147       131       103       65       48  

Total originated portfolio

    9,129       8,894       6,511       6,434       5,978  

Total purchased portfolio

    8,962       7,758       7,452       8,388       4,219  

Total nonperforming loans

    18,091       16,652       13,963       14,822       10,197  

Real estate owned and other repossessed collateral, net

    910       2,040       826       3,761       3,145  

Total nonperforming assets

  $ 19,001     $ 18,692     $ 14,789     $ 18,583     $ 13,342  
                                         

Past due loans to total loans

    3.87 %     1.60 %     1.72 %     3.25 %     2.85 %

Nonperforming loans to total loans

    2.34 %     2.19 %     1.79 %     2.00 %     1.33 %

Nonperforming assets to total assets

    1.84 %     1.78 %     1.37 %     1.81 %     1.32 %

Allowance for loan losses to total loans

    0.56 %     0.53 %     0.47 %     0.46 %     0.41 %

Allowance for loan losses to nonperforming loans

    24.07 %     24.23 %     26.25 %     22.77 %     30.47 %
                                         

Commercial real estate loans to risk-based capital (4)

    187.92 %     166.15 %     181.23 %     181.83 %     197.11 %

Net loans to core deposits (5)

    91.46 %     88.68 %     87.68 %     87.46 %     92.04 %

Purchased loans to total loans, including held for sale

    31.28 %     30.11 %     31.43 %     31.87 %     32.91 %

Equity to total assets

    12.57 %     12.07 %     11.40 %     11.55 %     11.35 %

Common equity tier 1 capital ratio

    16.74 %     16.50 %     16.00 %     15.80 %     14.94 %

Total capital ratio

    20.30 %     20.04 %     19.48 %     19.30 %     18.31 %

Tier 1 leverage capital ratio

    13.41 %     12.77 %     12.81 %     12.46 %     12.60 %
                                         

Total shareholders' equity

  $ 130,003     $ 126,712     $ 122,797     $ 118,675     $ 114,942  

Less: Preferred stock

    -       -       -       -       -  

Common shareholders' equity

    130,003       126,712       122,797       118,675       114,942  

Less: Intangible assets (6)

    (4,087 )     (4,146 )     (4,146 )     (3,898 )     (3,856 )

Tangible common shareholders' equity (non-GAAP)

  $ 125,916     $ 122,566     $ 118,651     $ 114,777     $ 111,086  
                                         

Common shares outstanding

    8,939,273       8,890,353       8,831,654       8,815,279       8,831,235  

Book value per common share

  $ 14.54     $ 14.25     $ 13.90     $ 13.46     $ 13.02  

Tangible book value per share (non-GAAP) (7)

    14.09       13.79       13.43       13.02       12.58  

 

 

 

 

(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 noninterest expense divided by the sum of net interest income (before the loan loss provision) plus noninterest 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 loan 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.