Investor Relations

Apr 22, 2020

Northeast Bank Reports Third Quarter Results and Declares Dividend

PORTLAND, Maine, April 22, 2020 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $1.9 million, or $0.21 per diluted common share, for the quarter ended March 31, 2020, compared to net income of $4.8 million, or $0.52 per diluted common share, for the quarter ended March 31, 2019. Net income for the nine months ended March 31, 2020 was $11.5 million, or $1.25 per diluted common share, compared to $14.5 million, or $1.58 per diluted common share, for the nine months ended March 31, 2019. Results for the quarter and nine months ended March 31, 2020 were negatively impacted by (a) an increased provision for loan losses of $3.3 million ($0.26 per diluted common share), of which $3.0 million was allocated to the SBA portfolio, and (b) a non-recurring income tax expense of $554 thousand ($0.06 per diluted common share) related to the recapture of tax reserve for loan losses triggered by the repurchase of common stock during the quarter ended March 31, 2020.

On April 22, 2020, the Board of Directors declared a cash dividend of $0.01 per share, payable on May 21, 2020, to shareholders of record as of May 7, 2020.

“Our thoughts are with the individuals, families and communities, healthcare workers and first responders affected by COVID-19. We are pleased to participate in the Paycheck Protection Program, having originated in the initial phase 194 loans totaling $37.2 million,” said Rick Wayne, Chief Executive Officer. Mr. Wayne continued, “The Bank is working with our customers impacted by COVID-19 to provide effective solutions during the crisis. While we did not envision that the market event would be this global pandemic, our longstanding credit discipline has generated a strong loan portfolio with a weighted average loan-to-value of approximately 53%. For more information on the Bank’s asset quality, refer to https://investor.northeastbank.com/investor-relations.”

Discussing results, Mr. Wayne said “Our Loan Acquisition and Servicing Group produced $113.8 million of loans, including record purchases of $65.0 million and originations of $48.8 million during the quarter.” Mr. Wayne continued, “We are pleased to report that the remaining regulatory conditions from the 2010 merger have been waived. The Bank’s Tier 1 leverage capital ratio limit has been reduced from 10% to 9%, and Total capital ratio limit has been reduced from 13.5% to 12%. With this change, we are in conformity with many banks’ capital limits and now have more capacity to prudently grow our balance sheet.”

As of March 31, 2020, total assets were $1.23 billion, an increase of $77.6 million, or 6.7%, from total assets of $1.15 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 nine months ended March 31, 2020:

  Loan Portfolio Changes
  Three Months Ended March 31, 2020
  March 31, 2020 Balance   December 31, 2019 Balance   Change ($)   Change (%)
               
  (Dollars in thousands)
LASG Purchased $ 395,944   $ 367,625   $ 28,319       7.70 %
LASG Originated   512,964     497,386     15,578       3.13 %
SBA   48,306     54,572     (6,266 )     (11.48 %)
Community Banking   76,706     81,195     (4,489 )     (5.53 %)
Total $ 1,033,920   $ 1,000,778   $ 33,142       3.31 %
                           
   
  Nine Months Ended March 31, 2020
  March 31, 2020 Balance   June 30, 2019 Balance   Change ($)   Change (%)
               
  (Dollars in thousands)
LASG Purchased $ 395,944   $ 326,640   $ 69,304       21.22 %
LASG Originated   512,964     493,413     19,551       3.96 %
SBA   48,306     63,053     (14,747 )     (23.39 %)
Community Banking   76,706     91,954     (15,248 )     (16.58 %)
Total $ 1,033,920   $ 975,060   $ 58,860       6.04 %

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended March 31, 2020 totaled $113.8 million, which consisted of $65.0 million of purchased loans, at an average price of 91.8% of unpaid principal balance, and $48.8 million of originated loans. The Bank sold the guaranteed portion of Small Business Administration ("SBA") loans totaling $4.1 million in the secondary market, all of which was originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $6.3 million for the quarter.

An overview of the Bank’s LASG portfolio follows:

  LASG Portfolio
  Three Months Ended March 31,
  2020   2019
  Purchased   Originated   Total LASG   Purchased   Originated   Total LASG
                       
  (Dollars in thousands)
Loans purchased or originated during the period:                                  
Unpaid principal balance $ 70,860     $ 48,772     $ 119,632     $ 4,675     $ 84,546     $ 89,221  
Net investment basis   65,056       48,772       113,828       4,604       84,546       89,150  
                                   
Loan returns during the period:                                  
Yield   10.05 %     7.35 %     8.50 %     9.49 %     7.87 %     8.56 %
Total Return on Purchased Loans (1)   10.05 %     7.35 %     8.50 %     10.22 %     7.87 %     8.87 %
                                   
 
Nine Months Ended March 31,
  2020   2019
  Purchased   Originated   Total LASG   Purchased   Originated   Total LASG
                       
  (Dollars in thousands)
Loans purchased or originated during the period:                                  
Unpaid principal balance $ 167,977     $ 187,872     $ 355,849     $ 94,423     $ 219,348     $ 313,771  
Net investment basis   158,518       187,872       346,390       88,741       219,348       308,089  
                                   
Loan returns during the period:                                  
Yield   9.85 %     7.53 %     8.51 %     9.75 %     7.64 %     8.54 %
Total Return on Purchased Loans (1)   10.00 %     7.53 %     8.57 %     10.00 %     7.64 %     8.65 %
                                   
Total loans as of period end:                                  
Unpaid principal balance $ 432,920     $ 512,964     $ 945,884     $ 354,655     $ 478,020     $ 832,675  
Net investment basis   395,944       512,964       908,908       320,326       478,020       798,346  

(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 increased by $70.1 million, or 7.4%, from June 30, 2019, attributable primarily to increases in time deposits of $39.7 million, or 7.9%, money market accounts of $15.4 million, or 5.7%, and savings and interest checking accounts of $13.4 million, or 13.2%.

3. Shareholders’ equity increased by $5.9 million, or 3.9%, from June 30, 2019, primarily due to net income of $11.5 million, partially offset by the repurchase of 416,700 shares at a weighted average share price of $12.83, which resulted in a $5.3 million reduction in shareholders’ equity.

Net income decreased by $3.0 million to $1.9 million for the quarter ended March 31, 2020, compared to net income of $4.8 million for the quarter ended March 31, 2019.

1. Net interest and dividend income before provision for loan losses increased by $1.3 million to $16.3 million for the quarter ended March 31, 2020, compared to $15.0 million for the quarter ended March 31, 2019. The increase was primarily due to higher average balances in the LASG portfolio, higher transactional interest income in the purchased portfolio, lower deposit interest expense due to lower average balances and rates, and a decrease in interest expense on subordinated debt from the redemption of trust preferred securities in May 2019. This activity was partially offset by lower average balances and yields from short-term investments, the SBA portfolio, and the Community Banking Portfolio.

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,    
  2020   2019    
  Average   Interest       Average   Interest        
  Balance (1)   Income   Yield   Balance (1)   Income   Yield    
                           
  (Dollars in thousands)    
Community Banking $ 79,325   $ 1,036   5.25 %   $ 102,850   $ 1,348   5.32 %    
SBA   53,643     952   7.14 %     69,247     1,366   8.00 %    
LASG:                                  
Originated   497,773     9,092   7.35 %     437,499     8,490   7.87 %    
Purchased   367,486     9,186   10.05 %     324,414     7,592   9.49 %    
Total LASG   865,259     18,278   8.50 %     761,913     16,082   8.56 %    
  Total $ 998,227   $ 20,266   8.17 %   $ 934,010   $ 18,796   8.16 %    
                                       
 

Nine Months Ended March 31,
   
  2020   2019    
  Average   Interest       Average   Interest        
  Balance (1)   Income   Yield   Balance (1)   Income   Yield    
                           
  (Dollars in thousands)    
Community Banking $ 85,254   $ 3,494   5.45 %   $ 110,566   $ 4,319   5.20 %    
SBA   57,939     3,424   7.87 %     71,309     4,091   7.64 %    
LASG:                                  
Originated   474,568     26,834   7.53 %     418,747     24,031   7.64 %    
Purchased   347,278     25,707   9.85 %     311,780     22,815   9.75 %    
Total LASG   821,846     52,541   8.51 %     730,527     46,846   8.54 %    
  Total $ 965,039   $ 59,459   8.20 %   $ 912,402   $ 55,256   8.07 %    

  (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 March 31, 2019, transactional income for the quarter ended March 31, 2020 increased by $509 thousand, while regularly scheduled interest and accretion increased by $503 thousand due to the increase in average balances. The total return on p­­­­­­­­urchased loans for the quarter ended March 31, 2020 was 10.1%, a decrease from 10.2% for the quarter ended March 31, 2019. The following table details the total return on purchased loans:

  Total Return on Purchased Loans
  Three Months Ended March 31,
  2020   2019
  Income   Return (1)   Income   Return (1)
               
  (Dollars in thousands)
Regularly scheduled interest and accretion $ 6,731   7.36 %   $ 6,228   7.79 %
Transactional income:                  
Gain on loan sales   -   0.00 %     582   0.73 %
Gain on real estate owned   -   0.00 %     -   0.00 %
Other noninterest income   -   0.00 %     -   0.00 %
Accelerated accretion and loan fees   2,455   2.69 %     1,364   1.70 %
Total transactional income   2,455   2.69 %     1,946   2.43 %
   Total $ 9,186   10.05 %   $ 8,174   10.22 %
                       
   
  Nine Months Ended March 31,
  2020   2019
  Income   Return (1)   Income   Return (1)
               
  (Dollars in thousands)
Regularly scheduled interest and accretion $ 19,311   7.40 %   $ 17,849   7.63 %
Transactional income:                  
Gain on loan sales   -   0.00 %     582   0.25 %
Gain on real estate owned   395   0.15 %     -   0.00 %
Other noninterest income   -   0.00 %     -   0.00 %
Accelerated accretion and loan fees   6,396   2.45 %     4,966   2.12 %
Total transactional income   6,791   2.60 %     5,548   2.37 %
   Total $ 26,102   10.00 %   $ 23,397   10.00 %
 
(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 periods shown. Total return is considered a non-GAAP financial measure.
 

2. Provision for loan losses increased by $3.1 million for the quarter ended March 31, 2020, compared to the quarter ended March 31, 2019, of which $3.0 million was allocated to the SBA portfolio.

3. Noninterest income decreased by $1.0 million for the quarter ended March 31, 2020, compared to the quarter ended March 31, 2019, primarily due to the following:

  • A decrease in gain on sale of other loans of $582 thousand, due to no loans sold during the current quarter, as compared to three LASG purchased loans sold in the quarter ended March 31, 2019;
  • A decrease in gain on sale of SBA loans of $331 thousand, due to a lower volume of SBA loans sold in the current quarter resulting from lower originations in previous quarters; and,
  • A decrease of $92 thousand in fees for other services to customers due to lower commercial loans servicing fees resulting from a higher volume of SBA loan payoffs.

4. Noninterest expense increased by $329 thousand for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019, primarily due to the following:

  • An increase in other noninterest expense of $203 thousand, due to a $215 thousand impairment charge on the SBA servicing asset, as compared to a $94 thousand recovery in the quarter ended March 31, 2019;
  • An increase in salaries and employee benefits of $178 thousand, primarily due to increases in regular compensation and incentive compensation, partially offset by a decrease in stock-based compensation;
  • An increase in data processing fees of $167 thousand, primarily due to increased IT outsourcing costs; and
  • An increase in loan acquisition and collection expense of $107 thousand, primarily related to increased costs associated with real estate owned properties; partially offset by,
  • A decrease in professional fees of $144 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; and
  • A decrease in Federal Deposit Insurance Corporation (“FDIC”) insurance expense of $77 thousand, primarily due to credits issued from the FDIC in the current quarter.

5. Income tax expense decreased by $169 thousand to $1.7 million, or an effective tax rate of 48.1%, for the quarter ended March 31, 2020, compared to $1.9 million, or an effective tax rate of 28.3%, for the quarter ended March 31, 2019. The decrease was primarily due to lower pre-tax income, which decreased by $3.1 million during the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019. Offsetting this activity was the Bank’s recording of a $554 thousand expense related to the recapture of the tax reserve for loan losses as a result of the repurchase of common stock during the quarter ended March 31, 2020. This is a one-time expense as the Bank has now recaptured all of its tax bad debt reserve, which arose from pre-1988 bad debt deductions taken for tax purposes in excess of net charge-offs, which now must be recaptured.  Because the Bank had only intended to use the reserve to absorb loan losses, no provision had been made for this liability.

As of March 31, 2020, nonperforming assets totaled $27.5 million, or 2.23% 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 four LASG purchased loans totaling $4.9 million, one LASG originated loan totaling $2.7 million, and two SBA loans totaling $2.1 million that were placed on nonaccrual, and a $1.2 million increase in real estate owned, due to three properties transferred in, partially offset by two properties sold during the nine months ended March 31, 2020.

As of March 31, 2020, past due loans totaled $36.4 million, or 3.52% 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 twenty LASG purchased loans totaling $14.4 million, one LASG originated loan totaling $2.7 million, and six SBA loans totaling $3.8 million, becoming past due during the nine months ended March 31, 2020. Of the twenty LASG purchased loans totaling $14.4 million, seven loans totaling $3.8 million were purchased during the quarter ended March 31, 2020.

As of March 31, 2020, the Bank’s Tier 1 leverage capital ratio was 13.0%, compared to 12.9% at June 30, 2019, and the Total capital ratio was 18.0% at March 31, 2020 and June 30, 2019. Effective April 13, 2020, the Bank’s Tier 1 leverage capital ratio limit is 9% and Total capital ratio limit is 12%.

Investor Call Information
Rick Wayne, Chief Executive Officer of Northeast Bank, Jean-Pierre Lapointe, Chief Financial Officer of Northeast Bank, and Pat Dignan, Executive Vice President and Chief Credit Officer of Northeast Bank, will host a conference call to discuss third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Thursday, April 23rd. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 8453418. 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 Portland, 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, the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the length and extent of the economic contraction resulting from the COVID-19 pandemic; continued deterioration in general business and economic conditions on a national basis and in the local markets in which the Bank operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in customer behavior due to changing business and economic conditions or legislative or regulatory initiatives; continued turbulence in the capital and debt markets; changes in interest rates and real estate values; increases in loan defaults and charge-off rates; decreases 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; competitive pressures from other financial institutions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; 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, 27 Pearl Street, Portland, ME 04101
207.786.3245 ext. 3220
www.northeastbank.com

NBN-F

 

 

NORTHEAST BANK
BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
  March 31, 2020   June 30, 2019
Assets          
Cash and due from banks $ 3,856     $ 2,482  
Short-term investments   84,919       54,425  
Total cash and cash equivalents   88,775       56,907  
           
           
Available-for-sale debt securities, at fair value   66,318       75,774  
Equity securities, at fair value   7,163       6,938  
Total investment securities   73,481       82,712  
           
Residential real estate loans held for sale   370       3,179  
SBA loans held for sale   -       731  
Total loans held for sale   370       3,910  
           
           
Loans:          
Commercial real estate   696,403       668,496  
Commercial and industrial   251,688       232,839  
Residential real estate   83,830       71,218  
Consumer   1,999       2,507  
Total loans   1,033,920       975,060  
Less: Allowance for loan losses   8,809       5,702  
Loans, net   1,025,111       969,358  
           
           
Premises and equipment, net   9,810       5,582  
Real estate owned and other repossessed collateral, net   3,110       1,957  
Federal Home Loan Bank stock, at cost   1,306       1,258  
Intangible assets, net   109       434  
Loan servicing rights, net   2,007       2,851  
Bank-owned life insurance   16,965       17,057  
Other assets   10,414       11,832  
Total assets $ 1,231,458     $ 1,153,858  
           
Liabilities and Shareholders' Equity          
Deposits:          
Demand $ 70,443     $ 68,782  
Savings and interest checking   114,441       101,061  
Money market   286,240       270,835  
Time   541,390       501,693  
Total deposits   1,012,514       942,371  
           
Federal Home Loan Bank advances   15,000       15,000  
Subordinated debt   14,912       14,829  
Lease liability   4,846       323  
Other liabilities   24,661       27,755  
Total liabilities   1,071,933       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 March 31, 2020 and June 30, 2019   -       -  
Voting common stock, $1.00 par value, 25,000,000 shares authorized;          
8,588,989 and 8,997,326 shares issued and outstanding at        
March 31, 2020 and June 30, 2019, respectively   8,589       8,997  
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;          
44,783 shares issued and outstanding at March 31, 2020 and June 30, 2019 45     45  
Additional paid-in capital   73,700       78,095  
Retained earnings   78,824       67,581  
Accumulated other comprehensive loss   (1,633 )     (1,138 )
Total shareholders' equity   159,525       153,580  
Total liabilities and shareholders' equity $ 1,231,458     $ 1,153,858  

 

 
 
NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
  Three Months Ended March 31,   Nine Months Ended March 31,  
  2020     2019   2020     2019    
Interest and dividend income:                        
Interest and fees on loans $ 20,266     $ 18,796   $ 59,459     $ 55,256    
Interest on available-for-sale securities   426       444     1,320       1,229    
Other interest and dividend income   395       939     1,061       2,789    
Total interest and dividend income   21,087       20,179     61,840       59,274    
                         
Interest expense:                        
Deposits   4,228       4,447     12,725       12,111    
Federal Home Loan Bank advances   226       116     569       359    
Subordinated debt   282       578     845       1,752    
Obligation under capital lease agreements   30       5     98       19    
Total interest expense   4,766       5,146     14,237       14,241    
                         
Net interest and dividend income before provision for loan losses   16,321       15,033     47,603       45,033    
Provision for loan losses   3,489       414     3,595       1,047    
Net interest and dividend income after provision for loan losses   12,832       14,619     44,008       43,986    
                         
Noninterest income:                        
Fees for other services to customers   316       408     1,142       1,240    
Gain on sales of SBA loans   237       568     793       2,361    
Gain on sales of residential loans held for sale   139       108     565       387    
Gain on sales of other loans   -       582     -       582    
Net unrealized gain on equity securities   87       65     102       75    
Gain (loss) on real estate owned, other repossessed collateral
   and premises and equipment, net
  (64 )     -     247       (64 )  
Bank-owned life insurance income   108       108     457       328    
Other noninterest income   37       27     66       56    
Total noninterest income   860       1,866     3,372       4,965    
                         
Noninterest expense:                        
Salaries and employee benefits   5,960       5,782     18,272       16,991    
Occupancy and equipment expense   919       957     2,667       2,692    
Professional fees   339       483     1,175       1,516    
Data processing fees   994       827     2,980       2,764    
Marketing expense   91       160     239       413    
Loan acquisition and collection expense   716       609     1,807       1,633    
FDIC insurance premiums (credits)   4       81     (15 )     242    
Intangible asset amortization   109       107     326       325    
Other noninterest expense   949       746     2,774       2,433    
Total noninterest expense   10,081       9,752     30,225       29,009    
                         
Income before income tax expense   3,611       6,733     17,155       19,942    
Income tax expense   1,736       1,905     5,637       5,455    
Net income $ 1,875     $ 4,828   $ 11,518     $ 14,487    
                         
                         
Weighted-average shares outstanding:                        
Basic   9,004,819       9,044,230     9,032,254       9,029,409    
Diluted   9,128,651       9,198,077     9,187,891       9,194,346    
                               
Earnings per common share:                        
                         
Basic $ 0.21     $ 0.53   $ 1.28     $ 1.60    
Diluted   0.21       0.52     1.25       1.58    
                               
Cash dividends declared per common share $ 0.01     $ 0.01   $ 0.03     $ 0.03    
 

 

 
NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
  Three Months Ended March 31,
  2020   2019
      Interest   Average       Interest   Average
  Average   Income/   Yield/   Average   Income/   Yield/
  Balance   Expense   Rate   Balance   Expense   Rate
Assets:                              
Interest-earning assets:                              
Investment securities $ 78,369   $ 426   2.19 %   $ 84,318   $ 444   2.14 %
Loans (1) (2) (3)   998,227     20,266   8.17 %     934,010     18,796   8.16 %
Federal Home Loan Bank stock   2,295     29   5.08 %     1,332     26   7.92 %
Short-term investments (4)   114,794     366   1.28 %     152,854     913   2.42 %
Total interest-earning assets   1,193,685     21,087   7.11 %     1,172,514     20,179   6.98 %
Cash and due from banks   3,054               2,647          
Other non-interest earning assets   37,634               28,399          
Total assets $ 1,234,373             $ 1,203,560          
                               
Liabilities & Shareholders' Equity:                              
Interest-bearing liabilities:                              
NOW accounts $ 78,777   $ 104   0.53 %   $ 68,869   $ 59   0.35 %
Money market accounts   279,852     1,105   1.59 %     318,423     1,251   1.59 %
Savings accounts   33,912     13   0.15 %     35,599     14   0.16 %
Time deposits   519,980     3,006   2.33 %     501,378     3,123   2.53 %
Total interest-bearing deposits   912,521     4,228   1.86 %     924,269     4,447   1.95 %
Federal Home Loan Bank advances   39,011     226   2.33 %     15,000     116   3.14 %
Subordinated debt   14,897     282   7.61 %     24,170     578   9.70 %
Lease obligations   4,997     30   2.41 %     419     5   4.84 %
Total interest-bearing liabilities   971,426     4,766   1.97 %     963,858     5,146   2.17 %
                               
Non-interest bearing liabilities:                              
Demand deposits and escrow accounts   89,248               79,599          
Other liabilities   8,671               9,489          
Total liabilities   1,069,345               1,052,946          
Shareholders' equity   165,028               150,614          
Total liabilities and shareholders' equity $ 1,234,373             $ 1,203,560          
                               
Net interest income       $ 16,321             $ 15,033    
                               
Interest rate spread             5.14 %               4.81 %
Net interest margin (5)             5.50 %               5.20 %
                               
(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)
  Nine Months Ended March 31,
  2020   2019
      Interest   Average       Interest   Average
  Average   Income/   Yield/   Average   Income/   Yield/
  Balance   Expense   Rate   Balance   Expense   Rate
Assets:                              
Interest-earning assets:                              
Investment securities $ 80,494   $   1,320   2.18 %   $ 85,850   $   1,229   1.91 %
Loans (1) (2) (3)     965,039       59,459   8.20 %       912,402       55,256   8.07 %
Federal Home Loan Bank stock     1,876       66   4.68 %       1,547       74   6.37 %
Short-term investments (4)     84,025       995   1.58 %       164,841       2,715   2.19 %
Total interest-earning assets     1,131,434      61,840   7.27 %       1,164,640       59,274   6.78 %
Cash and due from banks     2,820                 2,606          
Other non-interest earning assets     38,663                 30,339          
Total assets $   1,172,887             $   1,197,585          
                               
Liabilities & Shareholders' Equity:                              
Interest-bearing liabilities:                              
NOW accounts $ 71,614   $ 241   0.45 %   $ 70,882   $ 183   0.34 %
Money market accounts     271,506       3,268   1.60 %       366,326       4,259   1.55 %
Savings accounts     34,236       43   0.17 %       35,592       42   0.16 %
Time deposits     489,396       9,173   2.49 %       450,064       7,627   2.26 %
  Total interest-bearing deposits     866,752       12,725   1.95 %       922,864       12,111   1.75 %
Federal Home Loan Bank advances     30,055       569   2.52 %       15,000       359   3.19 %
Subordinated debt     14,869       845   7.56 %       24,084       1,752   9.69 %
Lease obligations     5,352       98   2.44 %       490       19   5.17 %
Total interest-bearing liabilities     917,028       14,237   2.07 %       962,438       14,241   1.97 %
                               
Non-interest bearing liabilities:                              
Demand deposits and escrow accounts   86,735               80,953          
Other liabilities     8,730                 8,575          
Total liabilities     1,012,493                 1,051,966          
Shareholders' equity     160,394                 145,619          
Total liabilities and shareholders' equity $   1,172,887             $   1,197,585          
                               
  Net interest income       $   47,603             $   45,033    
                               
Interest rate spread             5.20 %               4.81 %
Net interest margin (5)             5.60 %               5.15 %
                               
(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
  March 31, 2020   December 31, 2019   September 30, 2019   June 30, 2019   March 31, 2019
Net interest income $ 16,321     $ 15,545     $ 15,737     $ 17,288     $ 15,033  
Provision (credit) for loan losses   3,489       243       (136 )     262       414  
Noninterest income   860       1,337       1,176       1,151       1,866  
Noninterest expense   10,081       9,789       10,354       18,504       9,752  
Net income (loss)   1,875       4,867       4,776       (603 )     4,828  
                   
Weighted-average common shares outstanding:                  
Basic   9,004,819       9,048,171       9,043,761       9,041,926       9,044,230  
Diluted   9,128,651       9,223,137       9,211,874       9,041,926       9,198,077  

Earnings (loss) per common share:
                 
Basic $ 0.21     $ 0.54     $ 0.53     $ (0.07 )   $ 0.53  
Diluted   0.21       0.53       0.52       (0.07 )     0.52  
                   
Operating earnings per common share (4):                  
Basic $ 0.21     $ 0.54     $ 0.53     $ 0.60     $ 0.53  
Diluted   0.21       0.53       0.52       0.59       0.52  
                   
Dividends declared per common share $ 0.01     $ 0.01     $ 0.01     $ 0.01     $ 0.01  
                   
Return (loss) on average assets   0.61 %     1.68 %     1.68 %     (0.20 %)     1.63 %
Return (loss) on average equity   4.57 %     12.09 %     12.18 %     (1.58 %)     13.00 %
Net interest rate spread (1)   5.14 %     5.19 %     5.31 %     5.55 %     4.81 %
Net interest margin (2)   5.50 %     5.59 %     5.72 %     5.95 %     5.20 %
Efficiency ratio (non-GAAP) (3)   58.68 %     57.98 %     61.22 %     100.35 %     57.71 %
Noninterest expense to average total assets   3.28 %     3.38 %     3.64 %     6.18 %     3.29 %
Average interest-earning assets to average
  interest-bearing liabilities
  122.88 %     123.50 %     123.81 %     121.71 %     121.65 %
                   
Operating return on average assets (non-GAAP) (4)   0.61 %     1.68 %     1.68 %     1.81 %     1.63 %
Operating return on average equity (non-GAAP) (4)   4.57 %     12.09 %     12.18 %     14.18 %     13.00 %
Operating efficiency ratio (non-GAAP) (3) (4)   58.68 %     57.98 %     61.22 %     55.15 %     57.71 %
Operating noninterest expense to average total assets (non-
  GAAP) (4)
  3.28 %     3.38 %     3.64 %     3.40 %     3.29 %
 
  As of:
  March 31, 2020   December 31, 2019   September 30, 2019   June 30, 2019   March 31, 2019
Nonperforming loans:                  
Originated portfolio:                  
Residential real estate $ 1,187     $ 1,586     $ 1,515     $ 2,772     $ 2,317  
Commercial real estate   7,439       8,032       4,530       3,892       3,336  
Commercial and industrial   2,226       622       87       1,284       1,495  
Consumer   40       59       136       148       236  
Total originated portfolio   10,892       10,299       6,268       8,096       7,384  
Total purchased portfolio   13,485       8,489       7,834       6,671       5,366  
Total nonperforming loans   24,377       18,788       14,102       14,767       12,750  
Real estate owned and other repossessed collateral, net   3,110       2,505       1,936       1,957       2,014  
Total nonperforming assets $ 27,487     $ 21,293     $ 16,038     $ 16,724     $ 14,764  
                   
Past due loans to total loans   3.52 %     2.84 %     1.50 %     1.50 %     2.16 %
Nonperforming loans to total loans   2.36 %     1.88 %     1.51 %     1.51 %     1.33 %
Nonperforming assets to total assets   2.23 %     1.76 %     1.43 %     1.45 %     1.20 %
Allowance for loan losses to total loans   0.85 %     0.54 %     0.57 %     0.58 %     0.59 %
Allowance for loan losses to nonperforming loans   36.14 %     28.77 %     37.44 %     38.61 %     44.38 %
                   
Commercial real estate loans to total capital (5)   304.40 %     292.58 %     262.92 %     282.05 %     251.02 %
Net loans to core deposits (6)   102.04 %     106.52 %     102.59 %     103.33 %     94.19 %
Purchased loans to total loans, including held for sale   38.28 %     36.65 %     35.50 %     33.37 %     33.27 %
Equity to total assets   12.95 %     13.53 %     14.08 %     13.31 %     12.44 %
Common equity tier 1 capital ratio   15.71 %     16.48 %     16.92 %     15.89 %     16.23 %
Total capital ratio   18.03 %     18.52 %     19.07 %     18.01 %     19.33 %
Tier 1 leverage capital ratio   13.04 %     14.26 %     14.06 %     12.86 %     13.58 %
                   
Total shareholders' equity $ 159,525     $ 163,400     $ 158,101     $ 153,580     $ 153,188  
Less: Preferred stock   -       -       -       -       -  
Common shareholders' equity   159,525       163,400       158,101       153,580       153,188  
Less: Intangible assets (7)   (2,116 )     (2,641 )     (2,940 )     (3,285 )     (3,485 )
Tangible common shareholders' equity (non-GAAP) $ 157,409     $ 160,759     $ 155,161     $ 150,295     $ 149,703  
                   
Common shares outstanding   8,633,772       9,052,013       9,038,912       9,042,109       9,041,868  
Book value per common share $ 18.48     $ 18.05     $ 17.49     $ 16.98     $ 16.94  
Tangible book value per share (non-GAAP) (8)   18.23       17.76       17.17       16.62       16.56  
                   
(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 for the quarter ended June 30, 2019.
(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.
 

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Source: Northeast Bank