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 30, 2012

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

 

 

 

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Item 2.02

Results of Information and Financial Condition.

On April 30, 2012, Northeast Bancorp, a Maine corporation (the “Company”), issued a press release announcing its earnings for the third quarter ended March 31, 2012 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.

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Press Release of the Company, dated April 30, 2012

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SIGNATURE

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

 

Date: April 30, 2012

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release of the Company, dated April 30, 2012

Exhibit 99.1

 

FOR IMMEDIATE RELEASE   For More Information:
Claire S. Bean, Chief Financial Officer & C.O.O. Northeast Bank, 500 Canal Street, Lewiston, ME 04240 207.786.3245 ext. 6202 www.northeastbank.com

Northeast Bancorp Reports Third Quarter Results, Declares Dividend

Lewiston, ME (April 30, 2012) – 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 $168 thousand, or $0.02 per diluted common share, for the quarter ended March 31, 2012. For the nine months ended March 31, 2012, the Company earned net income of $1.1 million, or $0.23 per diluted common share.

The Board of Directors has declared a cash dividend of $0.09 per share, payable on May 29, 2012 to shareholders of record as of May 14, 2012.

Results for the three and nine months ended March 31, 2012 include net income from discontinued operations of $14 thousand and $1.1 million, respectively. As announced in the first quarter of fiscal year 2012, the assets of Northeast’s insurance agency division were acquired by local agencies in two separate transactions. The sale yielded a pre-tax gain of $1.6 million and increased the Company’s tangible capital by $8.4 million. At March 31, 2012, the Company’s tangible book value per share was $15.94, compared to $13.58 at June 30, 2011.

“During the third quarter, we made continued progress on the implementation of our business strategy,” said Richard Wayne, President and Chief Executive Officer of Northeast. “We launched the pilot of our affinity deposit program, ableBanking, which is now taking deposits, and grew our purchased loan portfolio. Since our merger with FHB Formation at the end of 2010, we have made substantial investments in building our purchased loan capacity, and in enhancing the operational capacity of the Bank overall. We have also invested in new people and technology to support the growth of our affinity deposit program, ableBanking. We expect that these investments will serve us well as we seek to grow our new business initiatives to scale over the next several years.”

During the nine month period ended March 31, 2012, the Company purchased loans totaling $59.8 million, and has since purchased an additional $14.6 million in the month ended April 30, 2012. The total return realized on this portfolio, including transactional income, was 13.9% for the quarter and 15.2% for the nine months ended March 31, 2012. “We are very pleased with the progress of our loan purchasing business,” Wayne noted. “While transactional income, which includes accelerated accretion recognized on loan payoffs and gains on sales of purchased loans, may vary significantly from quarter to quarter, we are encouraged by the results in the 10 months since we launched this new business line.”

Quarterly results included the following items of significance:

 

1.

The Company’s net interest margin (“NIM”) was 3.44% for the quarter ended March 31, 2012. The Company’s NIM has benefited from growth in the Company’s purchased loan portfolio, which increased to $56.9 million at March 31, 2012 from $637 thousand at June 30, 2011. The yield on the purchased loan portfolio was 12.2% and 14.2% for the three and nine months ended March 31, 2012, respectively, compared to yields of 5.8% and 6.0% on the originated loan portfolio, respectively, for the same periods. The following summarizes interest income and related yields recognized on the Company’s purchased and originated loans.

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		Interest Income and Yield on Loans
		Three Months Ended March 31, 2012												Nine Months Ended March 31, 2012
		Average Balance				Interest Income				Yield				Average Balance				Interest Income				Yield
										(Dollars in thousands)
Loans - originated		$	297,100			$	4,298				5.82	%		$	305,701			$	13,751				5.99	%
Loans - purchased			51,677				1,572				12.23	%			29,315				3,130				14.21	%
Total		$	348,777			$	5,870				6.77	%		$	335,016			$	16,881				6.71	%

The yield on purchased loans was increased by unscheduled loan payoffs during the three and nine month periods ended March 31, 2012, which resulted in immediate recognition of the prepaid loans’ discount in interest income. The Company also realized $219 thousand related to sales of purchased loans during the quarter ended March 31, 2012. The following table details the “total return” on purchased loans, based on regularly scheduled interest and accretion, accelerated accretion, and other income recognized upon unscheduled loan payoffs or sales.

 

		Total Return on Purchased Loans
		Three Months Ended March 31, 2012								Nine Months Ended March 31, 2012
		Income				Return (1)				Income				Return (1)
						(Dollars in thousands)
Regularly scheduled interest and accretion		$	1,298				10.10	%		$	2,374				10.78	%
Transactional income:
Gains on loan sales			219				1.70	%			219				0.99	%
Accelerated accretion and fees recognized on loan payoffs			274				2.13	%			756				3.43	%
Total		$	1,791				13.94	%		$	3,349				15.20	%

 

(1)	The total return on purchased loan represents interest and noninterest income recorded during the period divided by the average purchased loan balance, on an annualized basis.

 

2.

A net gain on sale of available-for-sale investment securities of $731 thousand.

 

3.

Increased noninterest expenses, including staffing and infrastructure costs associated with the Company’s investment in its new loan purchasing and deposit initiatives, to provide for future growth. The quarter also included certain non-recurring expenses, including compensation costs aggregating $201 thousand, largely the result of terminating the Company’s self-insured employee benefits program and replacing it with a third-party insurance program. The Company also incurred $207 thousand in nonrecurring professional fees, principally consulting costs associated with new information technology initiatives and nonrecurring legal expense.

Total assets declined by $1.4 million or 0.2% to $595.0 million at March 31, 2012, compared to total assets of $596.4 million at June 30, 2011. The principal components of the change in the balance sheet during the nine months ended March 31, 2012 were as follows:

 

1.

A $31.3 million, or 13.4%, decrease in cash and investments, principally as a result of growth in loans during the period. At quarter end, the Company continues to maintain a level of balance sheet liquidity that is intended, in part, for future purchases of commercial loans.

 

2.

Loan growth of $35.9 million, or 11.6%, principally due to growth of $56.3 million in loans purchased by the Company’s Loan Acquisition and Servicing Group, offset in part by amortization and payoffs from the originated loan portfolio of $20.4 million;

---

3.

A $4.6 million, or 3.7%, reduction in borrowed funds, resulting primarily from the $2.1 million repayment of insurance agency debt in connection with the sale of the Company’s insurance agency division assets;

 

4.

A $2.6 million, or 0.7%, increase in deposits. The Bank’s new affinity deposit program, ableBanking, recently launched its pilot program, and at quarter end had raised $1.1 million of new deposits.

 

5.

An $8.4 million, or 63.8%, decrease in intangible assets, resulting primarily from the sale of insurance agency division assets.

During the nine months ended March 31, 2012, nonperforming assets decreased by 22.8% to $6.1 million or 1.0% of total assets, from $7.9 million, or 1.3%, of total assets at June 30, 2011, and loans past due 30 days or more as a percentage of total loans decreased to 2.1% at March 31, 2012 from 2.4% at June 30, 2011.

At March 31, 2012, the Company’s Tier 1 leverage ratio was 11.9%, an increase from 10.4% at June 30, 2011 and the total risk-based capital ratio was 19.5%, an increase from 19.0% at June 30, 2011.

About Northeast Bancorp

Northeast Bancorp (NASDAQ: NBN) is the holding company for Northeast Bank, a full service bank headquartered in Lewiston, Maine. Northeast Bank derives its income from a combination of traditional banking services as well as from its Loan Acquisition and Servicing Group, which purchases performing commercial loans for the Bank’s portfolio. ableBanking, a division of Northeast Bank, which launched its pilot in the first quarter of calendar 2012, offers savings products to consumers online, through affinity partnerships with non-profit organizations. Northeast Bank operates ten full-service branches, four investment centers and three loan production offices that serve individuals and businesses located in western and south-central Maine and southern New Hampshire. Information regarding Northeast Bank can be found on its website at www.northeastbank.com.

On December 29, 2010, FHB Formation LLC (“FHB”) merged with and into Northeast, with Northeast as the surviving company. The Company applied the acquisition method of accounting, as described in Accounting Standards Codification 805, Business Combinations, to this transaction, which represents an acquisition by FHB of Northeast, with Northeast as the surviving company. As a result, the Company’s financial statements from the periods prior to the transaction date are not directly comparable to the financial statements for periods subsequent to the transaction date. To make this distinction, the Company has labeled balances and results of operations prior to the transaction date as “Predecessor Company” and balances and results of operations for periods subsequent to the transaction date as “Successor Company.” The lack of comparability arises from the assets and liabilities having new accounting bases as a result of recording them at their fair values as of the transaction date rather than at historical cost basis. To denote this lack of comparability, the Company has placed a heavy black line between the Successor Company and Predecessor Company columns in its consolidated financial statements and, where applicable, in this discussion.

Non-GAAP Financial Measure

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. 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.

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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 a continuing deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; increasing government regulation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; changes in the rules of participation for the Troubled Asset Relief Program Capital Purchase Program promulgated by the U.S. Department of the Treasury under the Emergency Economic Stabilization Act of 2008, which may be changed unilaterally and restrictively by legislative or regulatory actions; establishment of a consumer financial protection bureau with broad authority to implement new consumer protection regulations; the risk that we may not be successful in the implementation of our 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 we do 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.

IMPORTANT NOTE: Securities and Advisory Services offered through Commonwealth Financial Network, Member FINRA, SIPC, and a Registered Investment Adviser. Securities are not FDIC insured, not bank obligations or otherwise bank guaranteed and may lose value. Northeast Financial is located at 202 Rte. 1, Suite 206, Falmouth, ME 04105.

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NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

 

		March 31, 2012				June 30, 2011
Assets
Cash and due from banks		$	2,609			$	3,227
Short-term investments			62,271				80,704
Total cash and cash equivalents			64,880				83,931
Available-for-sale securities, at fair value			136,730				148,962
Loans held for sale			6,354				5,176
Loans
Commercial real estate			164,060				117,761
Residential real estate			140,226				145,477
Construction			1,497				2,015
Commercial business			21,635				22,225
Consumer			18,359				22,435
Total loans			345,777				309,913
Less: Allowance for loan losses			748				437
Loans, net			345,029				309,476
Premises and equipment, net			8,918				8,271
Repossessed collateral, net			915				690
Accrued interest receivable			1,659				1,244
Federal Home Loan Bank stock, at cost			4,602				4,889
Federal Reserve Bank stock, at cost			871				871
Intangible assets, net			4,749				13,133
Bank owned life insurance			14,171				13,794
Other assets			6,074				5,956
Total assets		$	594,952			$	596,393
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Demand		$	41,613			$	48,215
Savings and interest checking			88,860				89,804
Money market			45,589				48,695
Time deposits			227,673				214,404
Total deposits			403,735				401,118
Federal Home Loan Bank advances			43,567				43,922
Structured repurchase agreements			66,636				68,008
Short-term borrowings			1,836				2,515
Junior subordinated debentures issued to affiliated trusts			8,066				7,957
Capital lease obligation			1,953				2,075
Other borrowings			—				2,229
Other liabilities			4,289				3,615
Total liabilities			530,082				531,439
Commitments and contingencies
Stockholders’ equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; 4,227 shares issued and outstanding at March 31, 2012 and June 30, 2011; liquidation preference of $1,000 per share			4				4
Voting common stock, $1.00 par value, 13,500,000 shares authorized; 3,312,173 issued and outstanding at March 31, 2012 and June 30, 2011			3,312				3,312
Non-voting common stock, $1.00 par value, 1,500,000 shares authorized 195,351 issued and outstanding at March 31, 2012 and June 30, 2011			195				195
Warrants to purchase common stock			406				406
Additional paid-in capital			50,129				49,700
Unearned restricted stock			(136	)			(163	)
Retained earnings			11,601				11,726
Accumulated other comprehensive loss			(641	)			(226	)
Total stockholders’ equity			64,870				64,954
Total liabilities and stockholders’ equity		$	594,952			$	596,393

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NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

 

		Successor Company (1)																		Predecessor Company (2)
		Three Months Ended March 31, 2012				Nine Months Ended March 31, 2012				Three Months Ended March 31, 2011				93 Days Ended March 31, 2011						181 Days Ended December 28, 2010
Interest and dividend income:
Interest on loans		$	5,870			$	16,881			$	5,649			$	5,845					$	11,210
Interest and dividends on available-for-sale securities			422				1,602				910				954						3,111
Dividends on regulatory stock			15				48				12				13						18
Other interest and dividend income			45				128				33				34						39
Total interest and dividend income			6,352				18,659				6,604				6,846						14,378
Interest expense:
Deposits			875				2,548				774				816						2,796
Federal Home Loan Bank advances			256				772				284				299						918
Structured repurchase agreements			247				744				249				272						1,392
Short-term borrowings			7				15				60				67						376
Junior subordinated debentures issued to affiliated trusts			188				556				174				180						340
Obligation under capital lease agreements			25				76				26				28						55
Total interest expense			1,598				4,711				1,567				1,662						5,877
Net interest and dividend income before provision for loan losses			4,754				13,948				5,037				5,184						8,501
Provision for loan losses			100				634				49				49						912
Net interest and dividend income after provision for loan losses			4,654				13,314				4,988				5,135						7,589
Noninterest income:
Fees for other services to customers			326				1,036				310				323						698
Net securities gains			731				1,111				47				47						17
Gain on sales of loans held for sale			634				2,060				490				539						1,867
Gain (loss) on sales of portfolio loans			219				422				(195	)			(195	)					—
Investment commissions			720				2,111				709				734						1,174
Bank-owned life insurance income			124				377				126				131						250
Bargain purchase gain			—				—				296				15,216						—
Other noninterest income			13				120				144				152						225
Total noninterest income			2,767				7,237				1,927				16,947						4,231
Noninterest expense:
Salaries and employee benefits			4,093				11,539				3,958				4,097						4,949
Occupancy and equipment expense			970				2,735				773				795						1,352
Professional fees			539				1,231				374				383						509
Data processing fees			260				823				274				283						521
Marketing expense			142				487				216				220						230
FDIC insurance premiums			125				364				170				175						346
Intangible asset amortization			262				935				306				306						—
Merger expense			—				—				132				3,182						94
Other noninterest expense			861				2,668				893				997						1,454
Total noninterest expense			7,252				20,782				7,096				10,438						9,455
Income (loss) from continuing operations before income tax expense (benefit)			169				(231	)			(181	)			11,644						2,365
Income tax expense (benefit)			15				(209	)			(217	)			(233	)					698
Net income (loss) from continuing operations		$	154			$	(22	)		$	36			$	11,877					$	1,667
Discontinued operations:
Income from discontinued operations		$	—			$	186			$	184			$	176					$	94
Gain on sale of discontinued operations			22				1,551				—				—						105
Income tax expense			8				600				64				62						70
Net income from discontinued operations			14				1,137				120				114						129
Net income		$	168			$	1,115			$	156			$	11,991					$	1,796
Net income available to common stockholders		$	70			$	821			$	58			$	11,891					$	1,677
Weighted-average shares outstanding:
Basic			3,494,498				3,494,498				3,492,498				3,492,498						2,330,197
Diluted			3,512,273				3,494,498				3,559,873				3,560,278						2,354,385
Earnings per common share:
Basic:
Income (loss) from continuing operations		$	0.02			$	(0.09	)		$	(0.01	)		$	3.36					$	0.66
Income from discontinued operations			0.00				0.32				0.03				0.03						0.06
Net income		$	0.02			$	0.23			$	0.02			$	3.39					$	0.72
Diluted:
Income (loss) from continuing operations		$	0.02			$	(0.09	)		$	(0.01	)		$	3.30					$	0.66
Income from discontinued operations			0.00				0.32				0.03				0.03						0.05
Net income		$	0.02			$	0.23			$	0.02			$	3.33					$	0.71

 

(1)	“Successor Company” means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.

(2)	“Predecessor Company” means Northeast Bancorp and its subsidiary prior to the closing of the merger with FHB Formation LLC on December 29, 2010.

 

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NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

		Successor Company (1)
		Three Months Ended March 31, 2012												Nine Months Ended March 31, 2012
		Average Balance				Interest Income/ Expense				Average Yield/ Rate				Average Balance				Interest Income/ Expense				Average Yield/ Rate
Assets:
Interest-earning assets:
Investment securities (3)		$	132,681			$	422				1.28	%		$	139,834			$	1,602				1.52	%
Loans (4) (5)			348,777				5,870				6.77	%			335,016				16,881				6.71	%
Regulatory stock			5,697				15				1.06	%			5,740				48				1.11	%
Short-term investments (6)			67,887				45				0.27	%			71,243				128				0.24	%
Total interest-earning assets			555,042				6,352				4.60	%			551,833				18,659				4.50	%
Cash and due from banks			2,881												2,927
Other non-interest earning assets			35,651												37,143
Total assets		$	593,574											$	591,903
Liabilities & Stockholders’ Equity:
Interest-bearing liabilities:
NOW accounts		$	54,242			$	48				0.36	%		$	55,080			$	170				0.41	%
Money market accounts			43,602				38				0.35	%			44,613				130				0.39	%
Savings accounts			32,923				12				0.15	%			32,907				56				0.23	%
Time deposits			227,182				777				1.38	%			221,127				2,192				1.32	%
Total interest-bearing deposits			357,949				875				0.98	%			353,727				2,548				0.96	%
Short-term borrowings (7)			1,321				7				2.13	%			1,030				15				1.94	%
Borrowed funds			112,468				528				1.89	%			113,109				1,592				1.87	%
Junior subordinated debentures			8,047				188				9.40	%			8,009				556				9.24	%
Total interest-bearing liabilities			479,785				1,598				1.34	%			475,875				4,711				1.32	%
Interest-bearing liabilities of discontinued operations (8)			—												380
Non-interest bearing liabilities:
Demand deposits and escrow accounts			44,249												45,771
Other liabilities			3,972												4,267
Total liabilities			528,006												526,293
Stockholders’ equity			65,568												65,610
Total liabilities and stockholders’ equity		$	593,574											$	591,903
Net interest income						$	4,754											$	13,948
Interest rate spread											3.26	%											3.18	%
Net interest margin (9)											3.44	%											3.36	%

 

(1)	“Successor Company” means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.

(2)	“Predecessor Company” means Northeast Bancorp and its subsidiary prior to the closing of the merger with FHB Formation LLC on December 29, 2010.

(3)	Interest income and yield are stated on a fully tax-equivalent basis using a 30.84 % tax rate.

(4)	Includes Loans held for sale.

(5)	Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.

(6)	Short term investments include FHLB overnight deposits and other interest-bearing deposits.

(7)	Short term borrowings include securities sold under repurchase agreements and sweep accounts.

(8)	The average balance of borrowings associated with discontinued operations has been excluded from interest expense, interest rate spread, and net interest margin.

(9)	Net interest margin is calculated as net interest income divided by total interest-earning assets.

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NORTHEASTBANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

		Successor Company (1)														Predecessor Company (2)
		Three Months Ended March 31, 2011														181 Days Ended December 28, 2010
		Average Balance				Interest Income/ Expense				Average Yield/ Rate						Average Balance				Interest Income/ Expense				Average Yield/ Rate
Assets:
Interest-earning assets:
Investment securities (3)		$	143,482			$	910				2.67	%				$	161,894			$	3,182				3.96	%
Loans (4) (5)			357,376				5,649				6.41	%					385,286				11,210				5.87	%
Regulatory stock			5,486				12				0.89	%					5,486				18				0.66	%
Short-term investments (6)			58,683				33				0.23	%					39,212				39				0.20	%
Total interest-earning assets			565,027				6,604				4.76	%					591,878				14,449				4.92	%
Cash and due from banks			3,423														3,340
Other non-interest earning assets			44,046														34,724
Total assets		$	612,496													$	629,942
Liabilities & Stockholders’ Equity:
Interest-bearing liabilities:
NOW accounts		$	55,994			$	79				0.57	%				$	53,780			$	183				0.69	%
Money market accounts			54,041				70				0.53	%					55,955				213				0.77	%
Savings accounts			35,638				34				0.39	%					38,303				99				0.52	%
Time deposits			198,172				591				1.21	%					196,318				2,301				2.36	%
Total interest-bearing deposits			343,845				774				0.91	%					344,356				2,796				1.64	%
Short-term borrowings (7)			34,822				60				0.70	%					53,873				376				1.41	%
Borrowed funds			117,152				559				1.94	%					117,688				2,365				4.05	%
Junior subordinated debentures			7,902				174				8.93	%					16,496				340				4.16	%
Total interest-bearing liabilities			503,721				1,567				1.26	%					532,413				5,877				2.23	%
Interest-bearing liabilities of discontinued operations (8)			2,134														2,462
Non-interest bearing liabilities:
Demand deposits and escrow accounts			37,379														37,941
Other liabilities			4,444														5,576
Total liabilities			547,678														578,392
Stockholders’ equity			64,818														51,550
Total liabilities and stockholders’ equity		$	612,496													$	629,942
Net interest income						$	5,037													$	8,572
Interest rate spread											3.50	%													2.69	%
Net interest margin (9)											3.62	%													2.92	%

 

(1)	“Successor Company” means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.

(2)	“Predecessor Company” means Northeast Bancorp and its subsidiary prior to the closing of the merger with FHB Formation LLC on December 29, 2 010.

(3)	Interest income and yield are stated on a fully tax-equivalent basis using a 30.84% tax rate.

(4)	Includes Loans held for sale.

(5)	Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.

(6)	Short term investments include FHLB overnight deposits and other interest-bearing deposits.

(7)	Short term borrowings include securities sold under repurchase agreements and sweep accounts.

(8)	The average balance of borrowings associated with discontinued operations has been excluded from interest expense, interest rate spread , and net interest margin.

(9)	Net interest margin is calculated as net interest income divided by total interest-earning assets.

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NORTHEAST BANCORP AND SUBSIDIARY

SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA

(Unaudited)

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

 

		Successor Company (1)
		Three Months Ended March 31,  2012				Nine Months Ended March 31, 2012
Net interest income		$	4,754			$	13,948
Net income		$	168			$	1,115
Weighted average common shares outstanding:
Basic			3,494,498				3,494,498
Diluted			3,512,273				3,494,498
Earnings per common share:
Basic		$	0.02			$	0.23
Diluted		$	0.02			$	0.23
Dividends per common share		$	0.09			$	0.27
Return on average assets			0.11	%			0.25	%
Return on average equity			1.03	%			2.26	%
Net interest rate spread (2)			3.26	%			3.18	%
Net interest margin (3)			3.44	%			3.36	%
Efficiency ratio (4)			96.42	%			98.10	%
Noninterest expense to average total assets			4.91	%			4.67	%
Average interest-earning assets to average interest-bearing liabilities			115.69	%			115.96	%

 

		Successor Company (1)
		March 31, 2012				December 31, 2011				September 30, 2011				June 30, 2011
Nonperforming loans:
Originated portfolio:
Residential real estate		$	3,067			$	3,264			$	2,733			$	2,195
Commercial real estate			442				1,998				2,797				3,601
Construction			0				0				121				121
Home equity			255				182				205				205
Commercial business			1,108				1,119				1,224				559
Consumer			309				329				356				527
			5,181				6,892				7,436				7,208
Purchased portfolio:
Residential real estate			0				0				0				0
Commercial real estate			0				0				0				0
Commercial business			0				0				0				0
			0				0				0				0
Total nonperforming loans			5,181				6,892				7,436				7,208
Repossessed collateral			915				837				463				690
Total nonperforming assets		$	6,096			$	7,729			$	7,899			$	7,898
Past due loans to total loans			2.06	%			2.29	%			2.20	%			2.41	%
Ratio of nonperforming loans to total loans			1.50	%			1.99	%			2.35	%			2.33	%
Ratio of nonperforming assets to total assets			1.02	%			1.30	%			1.35	%			1.32	%
Allowance for loan losses to total loans			0.22	%			0.21	%			0.22	%			0.14	%
Allowance for loan losses to nonperforming loans			14.44	%			10.69	%			9.55	%			6.06	%
Commercial real estate loans to risk-based capital (5)			238.25	%			236.88	%			194.08	%			200.53	%
Net loans to core deposits (6)			88.65	%			91.34	%			84.75	%			84.40	%
Purchased loans to total loans			16.16	%			14.83	%			3.90	%			0.21	%
Equity to total assets			10.90	%			11.08	%			11.27	%			10.89	%
Tier 1 leverage capital ratio			11.85	%			11.86	%			11.85	%			10.35	%
Total risk-based capital ratio			19.49	%			19.28	%			21.02	%			18.99	%
Total stockholders’ equity		$	64,870			$	65,900			$	66,188			$	64,954
Less: Preferred stock			(4,227	)			(4,227	)			(4,227	)			(4,227	)
Common stockholders’ equity			60,643				61,673				61,961				60,727
Less: Intangible assets			(4,749	)			(5,012	)			(5,348	)			(13,133	)
Tangible common stockholders’ equity		$	55,894			$	56,661			$	56,613			$	47,594
Book value per common share		$	17.29			$	17.58			$	17.66			$	17.33
Tangible book value per share (7)		$	15.94			$	16.15			$	16.14			$	13.58

 

(1)	“Successor Company” means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.

(2)	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.

(3)	The net interest margin represents net interest income as a percent of average interest-earning assets for the period.

(4)	The efficiency ratio represents non-interest expense divided by the sum of net interest income (before the loan loss provision) plus non-interest income.

(5)	For purposes of calculating this ratio, commercial real estate includes all those loans defined as such by regulatory guidance, including all land development and construction loans.

(6)	Core deposits includes all non-maturity deposits and maturity deposits less than $250 thousand. Net loans includes loans held-for-sale.

(7)	Tangible book value per share represents total stockholders’ equity less the sum of preferred stock and intangible assets divided by common shares outstanding.