Investor Relations

Jan 27, 2020

Northeast Bank Reports Second Quarter Results and Declares Dividend

LEWISTON, Maine, Jan. 27, 2020 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $4.9 million, or $0.53 per diluted common share, for the quarter ended December 31, 2019, compared to net income of $5.1 million, or $0.56 per diluted common share, for the quarter ended December 31, 2018. Net income for the six months ended December 31, 2019 was $9.6 million, or $1.05 per diluted common share, compared to $9.7 million, or $1.05 per diluted common share, for the six months ended December 31, 2018.

On January 24, 2020, the Board of Directors declared a cash dividend of $0.01 per share, payable on February 24, 2020, to shareholders of record as of February 10, 2020.

“During the second quarter, we generated a record level of loan originations and purchases, and at quarter end we surpassed $1 billion in total loans,” said Richard Wayne, Chief Executive Officer. “Our Loan Acquisition and Servicing Group produced $163.4 million of loans, including originations of $98.6 million and purchases with an investment of $64.8 million during the quarter. As a result, we earned $0.53 per diluted common share, a return on average equity of 12.1%, a return on average assets of 1.7%, and a net interest margin of 5.6%.”

As of December 31, 2019, total assets were $1.2 billion, an increase of $53.6 million, or 4.6%, from total assets of $1.2 billion as of June 30, 2019. The principal components of the changes 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, 2019:

  Loan Portfolio Changes
  Three Months Ended December 31, 2019
  December 31, 2019
Balance
  September 30, 2019
Balance
   
Change ($)
  Change (%)
  (Dollars in thousands)
LASG Purchased $ 367,625   $ 332,227   $ 35,398     10.65 %
LASG Originated   497,386     457,350   40,036     8.75 %
SBA   54,572     58,270   (3,698 )   (6.35 %)
Community Banking   81,195     86,192   (4,997 )   (5.80 %)
Total $ 1,000,778   $ 934,039   $ 66,739     7.15 %
   
   
   

Six Months Ended December 31, 2019
  December 31, 2019
Balance
  June 30, 2019
Balance
   
Change ($)
   Change (%)
  (Dollars in thousands)
LASG Purchased $ 367,625   $ 326,640   $ 40,985     12.55 %
LASG Originated   497,386     493,413     3,973     0.81 %
SBA   54,572     63,053     (8,481 )   (13.45 %)
Community Banking   81,195     91,954     (10,759 )   (11.70 %)
Total $ 1,000,778   $ 975,060   $ 25,718     2.64 %
                         

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended December 31, 2019 totaled $163.4 million, which consisted of $64.8 million of purchased loans, at an average price of 97.1% of unpaid principal balance, and $98.6 million of originated loans. The Bank sold the guaranteed portion of Small Business Administration ("SBA") loans totaling $4.0 million in the secondary market, of which $419 thousand were originated in the current quarter and $3.5 million were originated or purchased in the prior quarter. Residential loan production sold in the secondary market totaled $10.8 million for the quarter.

An overview of the Bank’s LASG portfolio follows:

  LASG Portfolio
  Three Months Ended December 31,
  2019     2018  
  Purchased   Originated   Total LASG   Purchased   Originated   Total LASG
  (Dollars in thousands)
Loans purchased or originated during the period:                                  
Unpaid principal balance $   66,784     $  98,563     $   165,347     $   52,672     $   64,117     $   116,789  
Net investment basis   64,840         98,563         163,403       49,334         64,117         113,451  
                                   
Loan returns during the period:                                  
Yield   9.76 %     7.67 %     8.57 %     10.30 %     7.61 %     8.75 %
Total Return on Purchased Loans (1)   10.21 %     7.67 %     8.77 %     10.30 %     7.61 %     8.75 %
                                   
                                   
  Six Months Ended December 31,
  2019     2018  
  Purchased   Originated   Total LASG   Purchased   Originated   Total LASG
  (Dollars in thousands)
Loans purchased or originated during the period:                                  
Unpaid principal balance $   97,116     $ 139,100     $   236,216     $   89,748     $ 135,253     $   225,001  
Net investment basis   93,462       139,100         232,562       84,137       135,253         219,390  
                                   
Loan returns during the period:                                  
Yield   9.74 %     7.62 %     8.52 %     9.88 %     7.53 %     8.53 %
Total Return on Purchased Loans (1)   9.98 %     7.62 %     8.61 %     9.88 %     7.53 %     8.53 %
                                   
Total loans as of period end:                                  
Unpaid principal balance $ 401,393     $ 497,386     $   898,779     $ 368,345     $ 435,817     $   804,162  
Net investment basis   367,625       497,386         865,011       330,643       435,817         766,460  

 

(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 purchased loans held for sale, on an annualized basis. The total return on purchased loans does not include the effect of purchased loan charge-offs or recoveries during the period. Total return on purchased loans is considered a non-GAAP financial measure. See reconciliation in below table entitled “Total Return on Purchased Loans.”

2. Deposits decreased by $3.5 million, or 0.4%, from June 30, 2019, attributable primarily to decreases in time deposits of $13.7 million, or 2.7%, demand deposits of $1.9 million, or 2.7%, and money market deposits of $1.8 million, or 0.7%, partially offset by an increase in savings and interest checking accounts of $13.9 million, or 13.8%.

3. Shareholders’ equity increased by $9.8 million, or 6.4%, from June 30, 2019, primarily due to net income of $9.6 million.

Net income decreased by $258 thousand to $4.9 million for the quarter ended December 31, 2019, compared to net income of $5.1 million for the quarter ended December 31, 2018.

1. Net interest and dividend income before provision for loan losses decreased by $98 thousand to $15.5 million for the quarter ended December 31, 2019, compared to $15.6 million for the quarter ended December 31, 2018. The decrease was primarily due to higher deposit and borrowing costs and lower transactional interest income in the purchased portfolio, partially offset by higher average balances in the LASG portfolio, as well as a decrease in interest expense on subordinated debt from the redemption of trust preferred securities in May 2019.

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

  Interest Income and Yield on Loans
  Three Months Ended December 31,
  2019     2018  
  Average   Interest       Average   Interest    
  Balance (1)   Income   Yield   Balance (1)   Income   Yield
  (Dollars in thousands)
Community Banking $ 85,989   $   1,193   5.52 %   $ 108,344   $   1,448   5.30 %
SBA   57,371     1,003   6.96 %     73,467     1,440   7.78 %
LASG:                              
Originated    456,877       8,814   7.67 %      420,816       8,077   7.61 %
Purchased    345,748       8,480   9.76 %      307,094       7,969   10.30 %
Total LASG    802,625       17,294   8.57 %      727,910       16,046   8.75 %
Total $  945,985   $   19,490   8.20 %   $  909,721   $   18,934   8.26 %
   

Six Months Ended December 31,
  2019     2018  
  Average   Interest       Average   Interest    
  Balance (1)   Income   Yield   Balance (1)   Income   Yield
  (Dollars in thousands)
Community Banking $ 88,187   $   2,458   5.54 %   $ 114,342   $   2,970   5.15 %
SBA   60,062     2,472   8.19 %     72,316     2,726   7.48 %
LASG:                              
Originated    463,092       17,742   7.62 %      409,575       15,541   7.53 %
Purchased    337,284       16,521   9.74 %      305,600       15,223   9.88 %
Total LASG    800,376       34,263   8.52 %      715,175       30,764   8.53 %
Total $  948,625   $   39,193   8.22 %   $  901,833   $   36,460   8.02 %
   
 (1)  Includes loans held for sale.  

The components of total income on purchased loans are set forth in the table below entitled “Total Return on Purchased Loans.” Wh­en compared to the quarter ended December 31, 2018, transactional income for the quarter ended December 31, 2019 increased by $241 thousand, while regularly scheduled interest and accretion increased by $665 thousand due to the increase in average balances. The total return on p­­­­­­­­urchased loans for the quarter ended December 31, 2019 was 10.2%, a decrease from 10.3% for the quarter ended December 31, 2018. The following table details the total return on purchased loans:

  Total Return on Purchased Loans
  Three Months Ended December 31,
  2019     2018  
  Income   Return (1)   Income   Return (1)
  (Dollars in thousands)
Regularly scheduled interest and accretion $ 6,525   7.51 %   $ 5,860   7.57 %
Transactional income:                  
Gain on loan sales     -   0.00 %       -   0.00 %
Gain on real estate owned     395   0.45 %       -   0.00 %
Other noninterest income     -   0.00 %       -   0.00 %
Accelerated accretion and loan fees     1,955   2.25 %       2,109   2.73 %
Total transactional income     2,350   2.70 %       2,109   2.73 %
Total $   8,875   10.21 %   $   7,969   10.30 %
   
   
  Six Months Ended December 31,
  2019     2018  
  Income   Return (1)   Income   Return (1)
  (Dollars in thousands)
Regularly scheduled interest and accretion $ 12,580   7.42 %   $ 11,621   7.54 %
Transactional income:                  
Gain on loan sales     -   0.00 %       -   0.00 %
Gain on real estate owned     395   0.24 %       -   0.00 %
Other noninterest income     -   0.00 %       -   0.00 %
Accelerated accretion and loan fees     3,941   2.32 %       3,602   2.34 %
Total transactional income     4,336   2.56 %       3,602   2.34 %
Total $   16,916   9.98 %   $   15,223   9.88 %

 

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

2. Noninterest income decreased by $208 thousand for the quarter ended December 31, 2019, compared to the quarter ended December 31, 2018, principally due to the following:

  • A decrease in gain on sale of SBA loans of $638 thousand, due to lower volume of SBA loans sold in the quarter due to lower originations in recent quarters; and
  • An increase in net unrealized loss on equity securities of $75 thousand; partially offset by,
  • An increase in gain on real estate owned of $338 thousand, due to the gain recorded on the transfer of a loan into real estate owned, partially offset by a write-down on an existing property; and
  • An increase in gain on sale of residential loans held for sale of $108 thousand, due to both a higher volume of loans sold and higher pricing on loans sold.

3. Noninterest expense decreased by $114 thousand for the quarter ended December 31, 2019 compared to the quarter ended December 31, 2018, primarily due to the following:

  • A decrease in professional fees of $211 thousand, due to a decrease in legal expenses related to the corporate reorganization completed in the prior period, as well as lower other professional fees;
  • A decrease in occupancy and equipment expense of $108 thousand, primarily due to a decrease in computer equipment repairs and maintenance expense; and
  • A decrease in loan acquisition and collection expense of $104 thousand, primarily due to collection expense reimbursements received during the quarter; partially offset by,
  • An increase in salaries and employee benefits of $227 thousand, primarily due to increases in regular compensation and incentive compensation, offset by a decrease in stock-based compensation; and
  • An increase in data processing fees of $172 thousand, primarily due to increased IT outsourcing costs. 

4. Income tax expense decreased by $76 thousand to $2.0 million, or an effective tax rate of 28.9%, for the quarter ended December 31, 2019, compared to $2.1 million, or an effective tax rate of 28.7%, for the quarter ended December 31, 2018.             

As of December 31, 2019, nonperforming assets totaled $21.3 million, or 1.76% of total assets, as compared to $16.7 million, or 1.45% of total assets, as of June 30, 2019. The increase was primarily due to one LASG originated loan totaling $2.7 million and three LASG purchased loans totaling $2.1 million that were placed on nonaccrual, offset by the payoff of one nonperforming Community Banking loan totaling $1.1 million during the six months ended December 31, 2019.

As of December 31, 2019, past due loans totaled $28.4 million, or 2.84% of total loans, as compared to past due loans totaling $14.6 million, or 1.50% of total loans as of June 30, 2019. The increase was primarily due to nine LASG purchased loans totaling $9.6 million, three LASG originated loans totaling $2.8 million, and six SBA loans totaling $1.9 million, becoming past due during the six months ended December 31, 2019.

As of December 31, 2019, the Bank’s Tier 1 leverage capital ratio was 14.3%, compared to 12.9% at June 30, 2019, and the Total capital ratio was 18.5% at December 31, 2019, as compared to 18.0% at June 30, 2019. Capital ratios were affected by earnings and lower average assets in the quarter.

Investor Call Information
Richard Wayne, Chief Executive Officer of Northeast Bank, and Jean-Pierre Lapointe, Chief Financial Officer of Northeast Bank, will host a conference call to discuss second quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, January 28th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 9080916. The call will be available via live webcast, which can be viewed by accessing the Bank’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 Bank
Northeast Bank (NASDAQ: NBN) is a full-service bank headquartered in Lewiston, Maine. We offer personal and business banking services to the Maine market via ten branches. Our Loan Acquisition and Servicing Group purchases and originates commercial loans on a nationwide basis. 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 Measures
In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures, including net operating earnings, operating earnings per common share, operating return on average assets, operating return on average equity, operating efficiency ratio, operating noninterest expense to average total assets, tangible common shareholders’ equity, tangible book value per share, total return on purchased loans, and efficiency ratio. The Bank’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 the Bank 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 Bank’s control. The Bank’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 Bank 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 Bank may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Bank’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 Bank’s Annual Report on Form 10-K and updated by our Quarterly Reports on Form 10-Q and other filings submitted to the Federal Deposit Insurance Corporation. These statements speak only as of the date of this release and the Bank 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.

   
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 

NBN-F

 
NORTHEAST BANK
BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
  December 31, 2019   June 30, 2019
Assets          
Cash and due from banks $ 2,699     $ 2,482  
Short-term investments   83,641       54,425  
  Total cash and cash equivalents   86,340       56,907  
           
           
Available-for-sale debt securities, at fair value   72,895       75,774  
Equity securities, at fair value   7,038       6,938  
  Total investment securities   79,933       82,712  
           
Residential real estate loans held for sale   989       3,179  
SBA loans held for sale   1,342       731  
  Total loans held for sale   2,331       3,910  
           
Loans:          
  Commercial real estate   679,959       668,496  
  Commercial and industrial   234,815       232,839  
  Residential real estate   84,142       71,218  
  Consumer   1,862       2,507  
  Total loans   1,000,778       975,060  
  Less: Allowance for loan losses   5,405       5,702  
  Loans, net   995,373       969,358  
           
           
Premises and equipment, net   10,390       5,582  
Real estate owned and other repossessed collateral, net   2,505       1,957  
Federal Home Loan Bank stock, at cost   3,010       1,258  
Intangible assets, net   217       434  
Loan servicing rights, net   2,424       2,851  
Bank-owned life insurance   16,858       17,057  
Other assets   8,035       11,832  
  Total assets $ 1,207,416     $ 1,153,858  
           
Liabilities and Shareholders' Equity          
Deposits:          
  Demand $ 66,917     $ 68,782  
  Savings and interest checking   114,952       101,061  
  Money market   269,057       270,835  
  Time   487,983       501,693  
  Total deposits   938,909       942,371  
           
Federal Home Loan Bank advances   60,000       15,000  
Subordinated debt   14,884       14,829  
Lease liability   5,196       323  
Other liabilities   25,027       27,755  
  Total liabilities   1,044,016       1,000,278  
           
 

Commitments and contingencies
    -         -  
           
Shareholders' equity          
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares        
   issued and outstanding at December 31, 2019 and June 30, 2019     -         -  
Voting common stock, $1.00 par value, 25,000,000 shares authorized;          
9,007,230 and 8,997,326 shares issued and outstanding at        
  December 31, 2019 and June 30, 2019, respectively   9,007       8,997  
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;          
  44,783 shares issued and outstanding at December 31, 2019 and June 30, 2019 45       45  
Additional paid-in capital   78,380       78,095  
Retained earnings   77,039       67,581  
Accumulated other comprehensive loss   (1,071 )     (1,138 )
  Total shareholders' equity   163,400       153,580  
  Total liabilities and shareholders' equity $ 1,207,416     $ 1,153,858  

 

 
NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
  Three Months Ended December 31,   Six Months Ended December 31,  
  2019   2018   2019   2018  
Interest and dividend income:                        
  Interest and fees on loans $ 19,490   $ 18,934   $ 39,193   $ 36,460  
  Interest on available-for-sale securities   442     425     893     784  
  Other interest and dividend income   326     970     665     1,851  
 Total interest and dividend income   20,258     20,329     40,751     39,095  
                         
                         
Interest expense:
  Deposits   4,181     3,982     8,497     7,664  
  Federal Home Loan Bank advances   218     125     343     242  
  Subordinated debt   282     573     563     1,174  
  Obligation under capital lease agreements   32     6     68     14  
 Total interest expense   4,713     4,686     9,471     9,094  
                         
Net interest and dividend income before provision for loan losses   15,545     15,643     31,280     30,001  
Provision for loan losses   243     101     106     633  
Net interest and dividend income after provision for loan losses   15,302     15,542     31,174     29,368  
                         
                         
Noninterest income:
 Fees for other services to customers   414     340     827     832  
 Gain on sales of SBA loans   304     942     556     1,793  
 Gain on sales of residential loans held for sale   212     104     425     279  
  Net unrealized (loss) gain on equity securities   (25   50     15     10  
  Gain (loss) on real estate owned, other repossessed collateral   314     (24 )   312     (64
  and premises and equipment, net
 Bank-owned life insurance income   108     110     350     219  
 Other noninterest income   10     23     28     29  
 Total noninterest income   1,337     1,545     2,513     3,098  
                         
                         
Noninterest expense:
 Salaries and employee benefits   5,926     5,699     12,312     11,208  
 Occupancy and equipment expense   849     957     1,747     2,084  
 Professional fees   445     656     837     1,190  
 Data processing fees   1,002     830     1,986     1,431  
 Marketing expense   55     130     148     253  
  Loan acquisition and collection expense   481     585     1,092     1,024  
 FDIC insurance premiums (credits)   (1   81     (19   162  
 Intangible asset amortization   109     109     217     218  
 Other noninterest expense   923     856     1,824     1,687  
 Total noninterest expense   9,789     9,903     20,144     19,257  
                         
Income before income tax expense   6,850     7,184     13,543     13,209  
Income tax expense   1,983     2,059     3,901     3,550  
Net income $ 4,867   $ 5,125   $ 9,642   $ 9,659  
                         
                         
                         
Weighted-average shares outstanding:
 Basic   9,048,171     9,048,397     9,046,004     9,022,161  
 Diluted   9,223,137     9,201,557     9,217,544     9,192,643  
                         
Earnings per common share:
                         
  Basic $ 0.54   $ 0.57   $ 1.07   $ 1.07  
  Diluted   0.53     0.56     1.05     1.05  
  $ 0.01   $ 0.01   $ 0.02   $ 0.02  
Cash dividends declared per common share

 

 

 
NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
  Three Months Ended December 31,
  2019     2018  
      Interest   Average       Interest   Average
  Average   Income/   Yield/   Average   Income/   Yield/
  Balance   Expense   Rate   Balance   Expense   Rate
Assets:                              
Interest-earning assets:                              
Investment securities $ 81,009   $ 442   2.17 %   $ 85,325   $ 425   1.98 %
Loans (1) (2) (3)   945,985     19,490   8.20 %     909,721     18,934   8.26 %
Federal Home Loan Bank stock   2,079     18   3.44 %     1,652     24   5.76 %
Short-term investments (4)   77,268     308   1.59 %     168,768     946   2.22 %
Total interest-earning assets   1,106,341     20,258   7.28 %     1,165,466     20,329   6.92 %
Cash and due from banks   2,781               2,600          
Other non-interest earning assets   42,725               31,344          
Total assets $ 1,151,847             $ 1,199,410          
                               
Liabilities & Shareholders' Equity:                              
Interest-bearing liabilities:                              
NOW accounts $ 70,737   $ 77   0.43 %   $ 74,027   $ 69   0.37 %
Money market accounts   269,880     1,094   1.61 %     373,409     1,461   1.55 %
Savings accounts   34,317     15   0.17 %     35,004     14   0.16 %
Time deposits   464,424     2,995   2.57 %     443,779     2,438   2.18 %
  Total interest-bearing deposits   839,358     4,181   1.98 %     926,219     3,982   1.71 %
Federal Home Loan Bank advances   36,250     218   2.39 %     15,000     125   3.31 %
Subordinated debt   14,871     282   7.54 %     24,087     573   9.44 %
Capital lease obligations   5,365     32   2.37 %     490     6   4.86 %
Total interest-bearing liabilities   895,844     4,713   2.09 %     965,796     4,686   1.92 %
                               
Non-interest bearing liabilities:                              
Demand deposits and escrow accounts   85,894               81,223          
Other liabilities   9,940               6,513          
Total liabilities   991,678               1,053,532          
Shareholders' equity   160,169               145,878          
Total liabilities and shareholders' equity $ 1,151,847             $ 1,199,410          
                               
  Net interest income       $ 15,545             $ 15,643    
                               
Interest rate spread             5.19 %               5.00 %
Net interest margin (5)             5.59 %               5.33 %
                               
(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) Net interest margin is calculated as net interest income divided by total interest-earning assets.

 

 

 
NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
  Six Months Ended December 31,
  2019     2018  
      Interest   Average       Interest   Average
  Average   Income/   Yield/   Average   Income/   Yield/
  Balance   Expense   Rate   Balance   Expense   Rate
Assets:                              
Interest-earning assets:                              
Investment securities $ 81,545   $ 893   2.18 %   $ 86,599   $ 784   1.80 %
Loans (1) (2) (3)   948,625     39,193   8.22 %     901,833     36,460   8.02 %
Federal Home Loan Bank stock   1,669     37   4.41 %     1,652     49   5.88 %
Short-term investments (4)   68,808     628   1.82 %     170,705     1,802   2.09 %
Total interest-earning assets   1,100,647     40,751   7.36 %     1,160,789     39,095   6.68 %
Cash and due from banks   2,705               2,585          
Other non-interest earning assets   39,127               31,289          
Total assets $ 1,142,479             $ 1,194,663          
                               
Liabilities & Shareholders' Equity:                              
Interest-bearing liabilities:                              
NOW accounts $ 68,071   $ 137   0.40 %   $ 71,866   $ 124   0.34 %
Money market accounts   267,379     2,162   1.61 %     389,757     3,008   1.53 %
Savings accounts   34,397     30   0.17 %     35,590     28   0.16 %
Time deposits   474,270     6,168   2.59 %     424,965     4,504   2.10 %
  Total interest-bearing deposits   844,117     8,497   2.00 %     922,178     7,664   1.65 %
Federal Home Loan Bank advances   25,625     343   2.66 %     15,000     242   3.20 %
Subordinated debt   14,856     563   7.54 %     24,042     1,174   9.69 %
Capital lease obligations   5,527     68   2.45 %     525     14   5.29 %
Total interest-bearing liabilities   890,125     9,471   2.12 %     961,745     9,094   1.88 %
                               
Non-interest bearing liabilities:                              
Demand deposits and escrow accounts   85,491               81,615          
Other liabilities   8,760               8,126          
Total liabilities   984,376               1,051,486          
Shareholders' equity   158,103               143,177          
Total liabilities and shareholders' equity $ 1,142,479             $ 1,194,663          
                               
  Net interest income       $ 31,280             $ 30,001    
                               
Interest rate spread             5.25 %               4.80 %
Net interest margin (5)             5.65 %               5.13 %
                               
(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) Net interest margin is calculated as net interest income divided by total interest-earning assets.

 

 

 
NORTHEAST BANK
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
  Three Months Ended
  December 31, 2019   September 30, 2019   June 30, 2019   March 31, 2019   December 31, 2018
 

Net interest income
$   15,545     $   15,737     $   17,288     $    15,033     $   15,643  
Provision (credit) for loan losses   243       (136 )     262       414       101  
Noninterest income   1,337       1,176       1,151       1,866       1,545  
Noninterest expense   9,789       10,354       18,504       9,752       9,903  
Net income (loss)   4,867       4,776       (603 )     4,828       5,125  
                   
Weighted-average common shares outstanding:                  
 Basic   9,048,171       9,043,761       9,041,926       9,044,230       9,048,397  
 Diluted   9,223,137       9,211,874       9,041,926       9,198,077       9,201,557  
 

Earnings (loss) per common share:
                 
 Basic $   0.54     $    0.53     $    (0.07 )   $   0.53     $   0.57  
 Diluted     0.53         0.52         (0.07 )       0.52         0.56  
                   
Operating earnings per common share (4):                  
 Basic $   0.54     $   0.53     $    0.60     $    0.53     $   0.57  
 Diluted     0.53         0.52         0.59         0.52         0.56  
                   
Dividends declared per common share $    0.01     $    0.01     $    0.01     $    0.01     $    0.01  
                   
Return (loss) on average assets   1.68 %     1.68 %     (0.20 %)     1.63 %     1.70 %
Return (loss) on average equity   12.09 %     12.18 %     (1.58 %)     13.00 %     13.94 %
Net interest rate spread (1)   5.19 %     5.31 %     5.55 %     4.81 %     5.00 %
Net interest margin (2)   5.59 %     5.72 %     5.95 %     5.20 %     5.33 %
Efficiency ratio (non-GAAP) (3)   57.98 %     61.22 %     100.35 %     57.71 %     57.62 %
Noninterest expense to average total assets   3.38 %     3.64 %     6.18 %     3.29 %     3.28 %
Average interest-earning assets to average
  interest-bearing liabilities
  123.50 %     123.81 %     121.71 %     121.65 %     120.67 %
                   
Operating return on average assets (non-GAAP) (4)   1.68 %     1.68 %     1.81 %     1.63 %     1.70 %
Operating return on average equity (non-GAAP) (4)   12.09 %     12.18 %     14.18 %     13.00 %     13.94 %
Operating efficiency ratio (non-GAAP) (3) (4)   57.98 %     61.22 %     55.15 %     57.71 %     57.62 %
Operating noninterest expense to average total assets (non-
  GAAP) (4)
  3.38 %     3.64 %     3.40 %     3.29 %     3.28 %
  As of:
  December 31, 2019   September 30, 2019   June 30, 2019   March 31, 2019   December 31, 2018
Nonperforming loans:                  
Originated portfolio:                  
Residential real estate $   1,586     $   1,515     $    2,772     $   2,317     $   2,595  
Commercial real estate   8,032       4,530       3,892       3,336       2,764  
Commercial and industrial   622       87       1,284       1,495       1,420  
Consumer   59       136       148       236       216  
Total originated portfolio   10,299       6,268       8,096       7,384       6,995  
Total purchased portfolio   8,489       7,834       6,671       5,366       5,351  
Total nonperforming loans   18,788       14,102       14,767       12,750       12,346  
Real estate owned and other repossessed collateral, net   2,505       1,936       1,957       2,014       1,463  
Total nonperforming assets $   21,293     $   16,038     $   16,724     $   14,764     $   13,809  
                   
Past due loans to total loans   2.84 %     1.50 %     1.50 %     2.16 %     1.95 %
Nonperforming loans to total loans   1.88 %     1.51 %     1.51 %     1.33 %     1.32 %
Nonperforming assets to total assets   1.76 %     1.43 %     1.45 %     1.20 %     1.16 %
Allowance for loan losses to total loans   0.54 %     0.57 %     0.58 %     0.59 %     0.57 %
Allowance for loan losses to nonperforming loans   28.77 %     37.44 %     38.61 %     44.38 %     42.99 %
                   
Commercial real estate loans to total capital (5)   292.58 %     262.92 %     282.05 %     251.02 %     242.38 %
Net loans to core deposits (6)   106.52 %     102.59 %     103.33 %     94.19 %     94.84 %
Purchased loans to total loans, including held for sale   36.65 %     35.50 %     33.37 %     33.27 %     35.17 %
Equity to total assets   13.53 %     14.08 %     13.31 %     12.44 %     12.44 %
Common equity tier 1 capital ratio   16.48 %     16.92 %     15.89 %     16.23 %     16.04 %
Total capital ratio   18.52 %     19.07 %     18.01 %     19.33 %     19.15 %
Tier 1 leverage capital ratio   14.26 %     14.06 %     12.86 %     13.58 %     13.20 %
                   
Total shareholders' equity $   163,400     $    158,101     $   153,580     $   153,188     $   148,491  
Less: Preferred stock     -         -         -         -         -  
Common shareholders' equity     163,400         158,101         153,580         153,188         148,491  
Less: Intangible assets (7)     (2,641 )       (2,940 )       (3,285 )       (3,485 )       (3,583 )
Tangible common shareholders' equity (non-GAAP) $   160,759     $   155,161     $   150,295     $   149,703     $   144,908  
                   
Common shares outstanding   9,052,013       9,038,912       9,042,109       9,041,868       9,048,863  
Book value per common share $    18.05     $    17.49     $    16.98     $    16.94     $    16.41  
Tangible book value per share (non-GAAP) (8)     17.76         17.17         16.62         16.56         16.01  
                   
 
(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) Operating earnings per common share, operating return on average assets, operating return on average equity, operating efficiency ratio, and operating noninterest expense to average total assets utilize net operating earnings (non-GAAP). Net operating earnings is calculated as net loss of $603 thousand, less non-recurring reorganization expense, net of tax, of $6.0 million, for net operating earnings of $5.4 million.
(5) 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.
(6) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held for sale.
(7) Includes the core deposit intangible asset and loan servicing rights asset.
(8) Tangible book value per share represents total shareholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.

NEBank_CMYK_transparent_ sm.png

 

Source: Northeast Bank