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):	April 25, 2018
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 Operations and Financial Condition

 

On April 25, 2018, Northeast Bancorp, a Maine corporation (the "Company"), issued a press release announcing its earnings for the third 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 April 25, 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: April 25, 2018

 

 

EXHIBIT INDEX

 

Exhibit No.	Description
99.1	Press Release dated April 25, 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 Third Quarter Results and Declares Dividend

 

Lewiston, ME (April 25, 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 $3.9 million, or $0.43 per diluted common share, for the quarter ended March 31, 2018, compared to net income of $3.5 million, or $0.39 per diluted common share, for the quarter ended March 31, 2017. Net income for the nine months ended March 31, 2018 was $11.8 million, or $1.29 per diluted common share, compared to $8.3 million, or $0.93 per diluted common share, for the nine months ended March 31, 2017.

 

On April 25, 2018, the Board of Directors declared a cash dividend of $0.01 per share, payable on May 25, 2018 to shareholders of record as of May 11, 2018.

 

“Our strong growth in fiscal year 2018 continued in the third quarter,” said Richard Wayne, President and Chief Executive Officer. “We achieved earnings of 43 cents per diluted share through solid loan volume, purchased loan transactional income, gains from sale of SBA and residential loans, disciplined expense management, and a reduction to 28.0% in our federal income tax rate. Our Loan Acquisition and Servicing Group produced $105.9 million of loans, including originations of $72.9 million and purchases with a recorded investment of $33.0 million, for net growth in the LASG portfolio of $45.6 million, or 7.7%, during the quarter. This quarterly activity helped drive our return on equity to 12.2%, our return on assets to 1.4%, and our efficiency ratio to 59.8%.”

 

As of March 31, 2018, total assets were $1.2 billion, an increase of $89.3 million, or 8.3%, 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 nine months ended March 31, 2018:

 

		Loan Portfolio Changes
		Three Months Ended March 31, 2018
		March 31, 2018 Balance				December 31, 2017 Balance				Change ($)				Change (%)
		(Dollars in thousands)
LASG Purchased		$	254,700			$	244,177			$	10,523				4.31	%
LASG Originated			381,990				346,874				35,116				10.12	%
SBA			50,583				49,109				1,474				3.00	%
Community Banking			129,156				134,030				(4,874	)			(3.64	%)
Total		$	816,429			$	774,190			$	42,239				5.46	%

 

		Nine Months Ended March 31, 2018
		March 31, 2018 Balance				June 30, 2017 Balance				Change ($)				Change (%)
		(Dollars in thousands)
LASG Purchased		$	254,700			$	246,388			$	8,312				3.37	%
LASG Originated			381,990				330,515				51,745				15.57	%
SBA			50,583				52,965				(2,382	)			(4.50	%)
Community Banking			129,156				149,327				(20,171	)			(13.51	%)
Total		$	816,429			$	779,195			$	37,234				4.78	%

 

 

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended March 31, 2018 totaled $105.9 million, which consisted of $33.0 million of purchased loans, at an average price of 85.8% of unpaid principal balance, and $72.9 million of originated loans. The Bank's Small Business Administration ("SBA") Division closed $8.9 million and funded $8.8 million of new loans during the quarter ended March 31, 2018. In addition, the Company sold $5.8 million of the guaranteed portion of SBA loans in the secondary market, of which $4.1 million were originated in the current quarter and $1.7 million were originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $16.4 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 March 31, 2018
				(Dollars in millions)
Total Loans		Purchased loans may not exceed 40% of total loans		$	122.8
Regulatory Capital		Non-owner occupied commercial real estate loans may not exceed 300% of total capital		$	185.6

 

An overview of the Bank’s LASG portfolio follows:

 

		LASG Portfolio
		Three Months Ended March 31,
		2018																2017
		Purchased (1)				Originated				Secured Loans to Broker-Dealers				Total LASG				Purchased (1)				Originated				Secured Loans to Broker-Dealers				Total LASG
		(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance		$	38,493			$	72,894			$	-			$	111,387			$	8,609			$	81,806			$	-			$	90,415
Net investment basis			33,021				72,894				-				105,915				7,861				81,806				-				89,667
Loan returns during the period:
Yield			11.29%				6.83%				-				8.65%				11.89	%			6.44%				1.13	%			8.68%
Total Return (2)			12.16%				6.83%				-				9.00%				11.95	%			6.44%				1.13	%			8.71%

 

 

		Nine Months Ended March 31,
		2018																2017
		Purchased (1)				Originated				Secured Loans to Broker-Dealers				Total LASG				Purchased (1)				Originated				Secured Loans to Broker-Dealers				Total LASG
		(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance		$	81,016			$	157,958			$	-			$	238,974			$	76,511			$	169,831			$	-			$	246,342
Net investment basis			71,474				157,958				-				229,432				67,747				169,831				-				237,578
Loan returns during the period:
Yield			11.53%				6.56%				-				8.60%				11.77	%			6.10%				0.82	%			8.36%
Total Return (2)			11.82%				6.56%				-				8.72%				11.80	%			6.10%				0.82	%			8.37%
Total loans as of period end:
Unpaid principal balance		$	289,852			$	381,990			$	-			$	671,842			$	268,651			$	299,340			$	-			$	567,991
Net investment basis			254,700				381,990				-				636,690				237,569				299,340				-				536,909

 

(1) Period end purchased loan balances include loans held for sale of $0 and $973 thousand at March 31, 2018 and March 31, 2017, respectively.

(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 purchased loans held for sale, on an annualized basis. The total return does not include the effect of purchased loan charge-offs or recoveries during the period. Total return is considered a non-GAAP financial measure.

 

 

2.

Deposits increased by $86.4 million, or 9.7%, from June 30, 2017, attributable primarily to an increase in money market accounts of $115.7 million, or 30.9%, offset by a decrease in time deposits of $25.7 million, or 7.6%.

 

3.

Shareholders’ equity increased by $11.0 million, or 9.0%, from June 30, 2017, primarily due to earnings of $11.8 million. Earnings were partially offset by stock option exercises which decreased additional paid-in-capital by $1.1 million. Additionally, there was stock based compensation of $635 thousand, an increase in accumulated other comprehensive loss of $128 thousand, and dividends paid on common stock of $266 thousand.

 

Net income increased by $471 thousand to $3.9 million for the quarter ended March 31, 2018, compared to net income of $3.5 million for the quarter ended March 31, 2017.

 

	1.	Net interest and dividend income before provision for loan losses increased by $675 thousand for the quarter ended March 31, 2018, compared to the quarter ended March 31, 2017. The increase is primarily due to higher average balances in the loan portfolio. These increases were partially offset by higher funding costs and higher average deposit balances.
		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,
		2018												2017
		Average				Interest								Average				Interest
		Balance (1)				Income				Yield				Balance (1)				Income				Yield
		(Dollars in thousands)
Community Banking		$	136,824			$	1,743				5.17	%		$	188,748			$	2,402				5.16	%
SBA			53,069				1,017				7.77	%			44,538				678				6.17	%
LASG:
Originated			351,271				5,916				6.83	%			256,778				4,075				6.44	%
Purchased			241,793				6,732				11.29	%			245,135				7,184				11.89	%
Secured Loans to Broker-Dealers			-				-				-				27,933				78				1.13	%
Total LASG			593,064				12,648				8.65	%			529,846				11,337				8.68	%
Total		$	782,957			$	15,408				7.98	%		$	763,132			$	14,417				7.66	%

 

 

 

		Nine Months Ended March 31,
		2018												2017
		Average				Interest								Average				Interest
		Balance (1)				Income				Yield				Balance (1)				Income				Yield
		(Dollars in thousands)
Community Banking		$	142,873			$	5,242				4.89	%		$	199,566			$	7,150				4.77	%
SBA			52,014				2,772				7.10	%			36,867				1,771				6.07	%
LASG:
Originated			340,014				16,746				6.56	%			219,140				10,030				6.10	%
Purchased			237,183				20,532				11.53	%			236,822				20,925				11.77	%
Secured Loans to Broker-Dealers			-				-				-				41,409				256				0.82	%
Total LASG			577,197				37,278				8.60	%			497,371				31,211				8.36	%
Total		$	772,084			$	45,292				7.81	%		$	735,804			$	40,132				7.27	%

 

(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 March 31, 2017, transactional income increased by $312 thousand. The total return on purchased loans for the three months ended March 31, 2018 was 12.16%. The increase over the prior comparable period was primarily due to the gain on loan sales in the three months ended March 31, 2018. When compared to the nine months ended March 31, 2017, transactional income increased by $742 thousand. The total return on purchased loans for the nine months ended March 31, 2018 was 11.82%. This increase over the prior comparable period was primarily due to the gain on loan sales and higher accelerated accretion in the nine months ended March 31, 2018. The following table details the total return on purchased loans:

 

		Total Return on Purchased Loans
		Three Months Ended March 31,
		2018								2017
		Income				Return (1)				Income				Return (1)
		(Dollars in thousands)
Regularly scheduled interest and accretion		$	4,630				7.77	%		$	4,914				8.13	%
Transactional income:
Gain on loan sales			516				0.87	%			-				-
Gain on sale of real estate owned			-				-				36				0.06	%
Other noninterest income			-				-				-				-
Accelerated accretion and loan fees			2,102				3.52	%			2,270				3.76	%
Total transactional income			2,618				4.39	%			2,306				3.82	%
Total		$	7,248				12.16	%		$	7,220				11.95	%

 

 

		Nine Months Ended March 31,
		2018								2017
		Income				Return (1)				Income				Return (1)
		(Dollars in thousands)
Regularly scheduled interest and accretion		$	13,709				7.70	%		$	14,383				8.09	%
Transactional income:
Gain on loan sales			516				0.29	%			-				-
Gain on sale of real estate owned			-				-				55				0.03	%
Other noninterest income			-				-				-				-
Accelerated accretion and loan fees			6,823				3.83	%			6,542				3.68	%
Total transactional income			7,339				4.12	%			6,597				3.71	%
Total		$	21,048				11.82	%		$	20,980				11.80	%

 

 

(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 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 $426 thousand for the quarter ended March 31, 2018, compared to the quarter ended March 31, 2017, principally due to the following:

●

A decrease in gain on sale of SBA loans of $391 thousand, due to a lower volume of SBA loans sold in the quarter; and

●

A decrease in gain on sale of residential loans of $54 thousand, due to lower volume of residential loans sold in the quarter.

 

3.

Noninterest expense increased by $133 thousand for the quarter ended March 31, 2018, compared to the quarter ended March 31, 2017, primarily due to the following:

●

An increase of $312 thousand in other noninterest expense, primarily due to $140 thousand of expense related to the quarterly valuation of SBA servicing rights recorded in the three months ended March 31, 2018, and a $167 thousand recovery from a legacy mortgage insurance premium plan that was recorded in the three months ended March 31, 2017, with no such recovery recorded during the three months ended March 31, 2018;

●

An increase of $164 thousand in data processing fees, primarily due to the increased cost associated with the outsourcing of data processing; and

●

An increase of $126 thousand in salaries and employee benefits, primarily due to an increase in incentive compensation and a decrease in deferred salaries driven by loan originations, offset by a decrease in salaries due to a decrease in headcount.

●

The increases in noninterest expense were partially offset by a decrease in loan expense of $464 thousand, largely driven by lower expense related to loan acquisition, collection, and refinance activity.

 

 

4.

Income tax expense decreased by $335 thousand for the quarter ended March 31, 2018, compared to the quarter ended March 31, 2017, $397 thousand of which was due to 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, offset by an increase related to a higher pre-tax net income amount.

 

As of March 31, 2018, nonperforming assets totaled $14.6 million, or 1.25% of total assets, as compared to $19.0 million, or 1.84% of total assets, as of December 31, 2017, and $14.8 million, or 1.37% of total assets, as of June 30, 2017.

 

As of March 31, 2018, past due loans totaled $11.2 million, or 1.37% of total loans, as compared to $30.0 million, or 3.87% of total loans as of December 31, 2017, and $13.4 million, or 1.72% of total loans as of June 30, 2017.

 

As of March 31, 2018, the Company’s Tier 1 Leverage Ratio was 12.9%, compared to 12.8% at June 30, 2017, and the Total Capital Ratio was 19.9%, compared to 19.5% at June 30, 2017.

 

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 third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Thursday, April 26th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 8745479. 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 one loan production office. Our Loan Acquisition and Servicing Group 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 Measures

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures, including tangible common shareholders’ equity, tangible book value per share, total return, and efficiency ratio. Northeast’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

 

 

Forward-Looking Statements 

Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Northeast believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates and real estate values; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; 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.

 

 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share and per share data)

 

		March 31, 2018				June 30, 2017
Assets
Cash and due from banks		$	3,621			$	3,582
Short-term investments			218,446				159,701
Total cash and cash equivalents			222,067				163,283
Available-for-sale securities, at fair value			89,741				96,693
Residential real estate loans held for sale			2,686				4,508
SBA loans held for sale			1,853				191
Total loans held for sale			4,539				4,699
Loans
Commercial real estate			530,565				498,004
Commercial and industrial			185,049				175,654
Residential real estate			97,297				101,168
Consumer			3,518				4,369
Total loans			816,429				779,195
Less: Allowance for loan losses			4,691				3,665
Loans, net			811,738				775,530
Premises and equipment, net			6,762				6,937
Real estate owned and other repossessed collateral, net			947				826
Federal Home Loan Bank stock, at cost			1,758				1,938
Intangible assets, net			975				1,300
Loan servicing rights, net			2,998				2,846
Bank-owned life insurance			16,510				16,179
Other assets			8,108				6,643
Total assets		$	1,166,143			$	1,076,874
Liabilities and Shareholders' Equity
Deposits
Demand		$	66,054			$	69,827
Savings and interest checking			108,667				108,417
Money market			490,236				374,569
Time			311,323				337,037
Total deposits			976,280				889,850
Federal Home Loan Bank advances			15,000				20,011
Subordinated debt			23,873				23,620
Capital lease obligation			675				873
Other liabilities			16,528				19,723
Total liabilities			1,032,356				954,077
Commitments and contingencies			-				-
Shareholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at March 31, 2018 and June 30, 2017			-				-
Voting common stock, $1.00 par value, 25,000,000 shares authorized; 8,016,669 and 7,840,460 shares issued and outstanding at March 31, 2018 and June 30, 2017, respectively			8,017				7,841
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 908,730 and 991,194 shares issued and outstanding at March 31, 2018 and June 30, 2017, respectively			908				991
Additional paid-in capital			76,926				77,455
Retained earnings			49,981				38,142
Accumulated other comprehensive loss			(2,045	)			(1,632	)
Total shareholders' equity			133,787				122,797
Total liabilities and shareholders' equity		$	1,166,143			$	1,076,874

 

 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except share and per share data)

 

		Three Months Ended March 31,								Nine Months Ended March 31,
		2018				2017				2018				2017
Interest and dividend income:
Interest and fees on loans		$	15,408			$	14,417			$	45,292			$	40,132
Interest on available-for-sale securities			280				261				813				748
Other interest and dividend income			795				282				1,818				669
Total interest and dividend income			16,483				14,960				47,923				41,549
Interest expense:
Deposits			2,696				1,855				7,001				5,407
Federal Home Loan Bank advances			118				159				438				634
Subordinated debt			525				475				1,550				1,401
Obligation under capital lease agreements			10				12				31				39
Total interest expense			3,349				2,501				9,020				7,481
Net interest and dividend income before provision for loan losses			13,134				12,459				38,903				34,068
Provision for loan losses			364				384				1,156				1,205
Net interest and dividend income after provision for loan losses			12,770				12,075				37,747				32,863
Noninterest income:
Fees for other services to customers			435				516				1,437				1,405
Gain on sales of residential loans held for sale			227				281				772				1,160
Gain on sales of SBA loans			560				951				1,921				3,411
Gain on sales of other loans			516				365				537				365
Gain on real estate owned, other repossessed collateral and premises and equipment, net			4				20				15				9
Bank-owned life insurance income			108				113				331				341
Other noninterest income			32				62				55				115
Total noninterest income			1,882				2,308				5,068				6,806
Noninterest expense:
Salaries and employee benefits			5,329				5,203				15,756				15,678
Occupancy and equipment expense			1,159				1,299				3,418				3,781
Professional fees			423				370				1,291				1,265
Data processing fees			619				455				1,846				1,286
Marketing expense			172				89				329				272
Loan acquisition and collection expense			264				728				998				1,502
FDIC insurance premiums			77				78				236				224
Intangible asset amortization			107				107				325				324
Other noninterest expense			825				513				2,053				2,093
Total noninterest expense			8,975				8,842				26,252				26,425
Income before income tax expense			5,677				5,541				16,563				13,244
Income tax expense			1,745				2,080				4,741				4,932
Net income		$	3,932			$	3,461			$	11,822			$	8,312
Weighted-average shares outstanding:
Basic			8,927,544				8,830,442				8,897,633				8,923,280
Diluted			9,143,177				8,893,534				9,133,515				8,963,483
Earnings per common share:
Basic		$	0.44			$	0.39			$	1.33			$	0.93
Diluted			0.43				0.39				1.29				0.93
Cash dividends declared per common share		$	0.01			$	0.01			$	0.03			$	0.03

 

 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

		Three Months Ended March 31,
		2018												2017
						Interest				Average								Interest				Average
		Average				Income/				Yield/				Average				Income/				Yield/
		Balance				Expense				Rate				Balance				Expense				Rate
Assets:
Interest-earning assets:
Investment securities		$	91,630			$	280				1.24	%		$	96,868			$	261				1.09	%
Loans (1) (2) (3)			782,957				15,408				7.98	%			763,132				14,435				7.67	%
Federal Home Loan Bank stock			1,758				23				5.31	%			1,938				24				5.02	%
Short-term investments (4)			202,283				772				1.55	%			128,082				258				0.82	%
Total interest-earning assets			1,078,628				16,483				6.20	%			990,020				14,978				6.14	%
Cash and due from banks			3,079												2,875
Other non-interest earning assets			32,332												31,606
Total assets		$	1,114,039											$	1,024,501
Liabilities & Shareholders' Equity:
Interest-bearing liabilities:
NOW accounts		$	68,716			$	49				0.29	%		$	69,773			$	49				0.28	%
Money market accounts			428,946				1,437				1.36	%			338,662				807				0.97	%
Savings accounts			38,369				17				0.18	%			36,940				13				0.14	%
Time deposits			321,271				1,193				1.51	%			329,442				986				1.21	%
Total interest-bearing deposits			857,302				2,696				1.28	%			774,817				1,855				0.97	%
Federal Home Loan Bank advances			15,000				118				3.19	%			20,021				159				3.22	%
Subordinated debt			23,831				525				8.93	%			23,506				475				8.20	%
Capital lease obligations			697				10				5.82	%			961				12				5.06	%
Total interest-bearing liabilities			896,830				3,349				1.51	%			819,305				2,501				1.24	%
Non-interest bearing liabilities:
Demand deposits and escrow accounts			78,209												81,901
Other liabilities			7,714												6,659
Total liabilities			982,753												907,865
Shareholders' equity			131,286												116,636
Total liabilities and shareholders' equity		$	1,114,039											$	1,024,501
Net interest income (5)						$	13,134											$	12,477
Interest rate spread											4.69	%											4.90	%
Net interest margin (6)											4.94	%											5.11	%

 

(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 $0 and $18 thousand for the three months ended March 31, 2018 and March 31, 2017, respectively.
(6)	Net interest margin is calculated as net interest income divided by total interest-earning assets.

 

 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

		Nine Months Ended March 31,
		2018												2017
						Interest				Average								Interest				Average
		Average				Income/				Yield/				Average				Income/				Yield/
		Balance				Expense				Rate				Balance				Expense				Rate
Assets:
Interest-earning assets:
Investment securities		$	93,816			$	813				1.15	%		$	94,824			$	748				1.05	%
Loans (1) (2) (3)			772,084				45,302				7.82	%			735,804				40,185				7.28	%
Federal Home Loan Bank stock			1,852				65				4.68	%			2,250				70				4.14	%
Short-term investments (4)			169,073				1,753				1.38	%			132,280				599				0.60	%
Total interest-earning assets			1,036,825				47,933				6.16	%			965,158				41,602				5.74	%
Cash and due from banks			2,981												2,860
Other non-interest earning assets			31,924												32,554
Total assets		$	1,071,730											$	1,000,572
Liabilities & Shareholders' Equity:
Interest-bearing liabilities:
NOW accounts		$	69,532			$	152				0.29	%		$	70,814			$	152				0.29	%
Money market accounts			394,364				3,564				1.20	%			314,259				2,242				0.95	%
Savings accounts			37,418				42				0.15	%			35,964				37				0.14	%
Time deposits			312,268				3,243				1.38	%			327,664				2,976				1.21	%
Total interest-bearing deposits			813,582				7,001				1.15	%			748,701				5,407				0.96	%
Federal Home Loan Bank advances			17,594				438				3.32	%			25,768				634				3.28	%
Subordinated debt			23,745				1,550				8.70	%			23,431				1,401				7.97	%
Capital lease obligations			764				31				5.41	%			1,024				39				5.07	%
Total interest-bearing liabilities			855,685				9,020				1.40	%			798,924				7,481				1.25	%
Non-interest bearing liabilities:
Demand deposits and escrow accounts			80,896												79,352
Other liabilities			7,080												7,738
Total liabilities			943,661												886,014
Shareholders' equity			128,069												114,558
Total liabilities and shareholders' equity		$	1,071,730											$	1,000,572
Net interest income (5)						$	38,913											$	34,121
Interest rate spread											4.76	%											4.49	%
Net interest margin (6)											5.00	%											4.71	%

 

(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 $53 thousand for the nine months ended March 31, 2018 and March 31, 2017, 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:
		March 31, 2018				December 31, 2017				September 30, 2017				June 30, 2017				March 31, 2017
Net interest income		$	13,134			$	12,457			$	13,311			$	13,757			$	12,459
Provision for loan losses			364				437				354				389				384
Noninterest income			1,882				1,228				1,958				2,890				2,308
Noninterest expense			8,975				8,563				8,714				9,364				8,842
Net income			3,932				3,304				4,586				4,027				3,461
Weighted-average common shares outstanding:
Basic			8,927,544				8,924,495				8,841,511				8,823,679				8,830,442
Diluted			9,143,177				9,168,084				9,089,936				8,979,471				8,893,534
Earnings per common share:
Basic		$	0.44			$	0.37			$	0.52			$	0.46			$	0.39
Diluted			0.43				0.36				0.50				0.45				0.39
Dividends per common share			0.01				0.01				0.01				0.01				0.01
Return on average assets			1.43	%			1.26	%			1.71	%			1.57	%			1.37	%
Return on average equity			12.15	%			10.20	%			14.61	%			13.34	%			12.03	%
Net interest rate spread (1)			4.69	%			4.68	%			4.89	%			5.32	%			4.90	%
Net interest margin (2)			4.94	%			4.93	%			5.13	%			5.55	%			5.11	%
Efficiency ratio (non-GAAP) (3)			59.77	%			62.57	%			57.07	%			56.25	%			59.88	%
Noninterest expense to average total assets			3.27	%			3.27	%			3.25	%			3.64	%			3.50	%
Average interest-earning assets to average interest-bearing liabilities			120.27	%			122.21	%			121.09	%			121.13	%			120.84	%

 

		As of:
		March 31, 2018				December 31, 2017				September 30, 2017				June 30, 2017				March 31, 2017
Nonperforming loans:
Originated portfolio:
Residential real estate		$	3,116			$	3,783			$	3,667			$	3,337			$	3,265
Commercial real estate			1,408				2,537				2,409				413				420
Home equity			255				107				58				58				48
Commercial and industrial			636				2,555				2,629				2,600				2,636
Consumer			136				147				131				103				65
Total originated portfolio			5,551				9,129				8,894				6,511				6,434
Total purchased portfolio			8,063				8,962				7,758				7,452				8,388
Total nonperforming loans			13,614				18,091				16,652				13,963				14,822
Real estate owned and other repossessed collateral, net			947				910				2,040				826				3,761
Total nonperforming assets		$	14,561			$	19,001			$	18,692			$	14,789			$	18,583
Past due loans to total loans			1.37	%			3.87	%			1.60	%			1.72	%			3.25	%
Nonperforming loans to total loans			1.67	%			2.34	%			2.19	%			1.79	%			2.00	%
Nonperforming assets to total assets			1.25	%			1.84	%			1.78	%			1.37	%			1.81	%
Allowance for loan losses to total loans			0.57	%			0.56	%			0.53	%			0.47	%			0.46	%
Allowance for loan losses to nonperforming loans			34.46	%			24.07	%			24.23	%			26.25	%			22.77	%
Commercial real estate loans to risk-based capital (4)			186.07	%			187.92	%			166.15	%			181.23	%			181.83	%
Net loans to core deposits (5)			83.65	%			91.46	%			88.68	%			87.68	%			87.46	%
Purchased loans to total loans, including held for sale			31.02	%			31.28	%			30.11	%			31.43	%			31.87	%
Equity to total assets			11.47	%			12.57	%			12.07	%			11.40	%			11.55	%
Common equity tier 1 capital ratio			16.48	%			16.74	%			16.50	%			16.00	%			15.80	%
Total capital ratio			19.92	%			20.30	%			20.04	%			19.48	%			19.30	%
Tier 1 leverage capital ratio			12.88	%			13.41	%			12.77	%			12.81	%			12.46	%
Total shareholders' equity		$	133,787			$	130,003			$	126,712			$	122,797			$	118,675
Less: Preferred stock			-				-				-				-				-
Common shareholders' equity			133,787				130,003				126,712				122,797				118,675
Less: Intangible assets (6)			(3,973	)			(4,087	)			(4,146	)			(4,146	)			(3,898	)
Tangible common shareholders' equity (non-GAAP)		$	129,814			$	125,916			$	122,566			$	118,651			$	114,777
Common shares outstanding			8,925,399				8,939,273				8,890,353				8,831,654				8,815,279
Book value per common share		$	14.99			$	14.54			$	14.25			$	13.90			$	13.46
Tangible book value per share (non-GAAP) (7)			14.54				14.09				13.79				13.43				13.02

 

(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.