SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 Q
_X_ Quarterly report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarter ended March 31, 2000
______________
or
___ Transition report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to ______________
Commission File Number 1-14588
_______
Northeast Bancorp
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Maine 01-0425066
____________________________________ ________________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
232 Center Street, Auburn, Maine 04210
____________________________________ ________________________________________
(Address of Principal executive (Zip Code)
offices)
(207) 777-6411
_______________________________________________________________________________
Registrant's telephone number, including area code
Not Applicable
_______________________________________________________________________________
Former name, former address and former fiscal year,if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subjected to
such filing requirements for the past 90 days. Yes_X_ No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Shares outstanding as of April
30, 2000, 2,685,234 of common stock, $1.00 par value per share.
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
March 31, 2000 and June 30, 1999
Consolidated Statements of Income
Three Months ended March 31, 2000 and 1999
Consolidated Statements of Income
Nine Months ended March 31, 2000 and 1999
Consolidated Statements of Changes in
Shareholders' Equity
Nine Months ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows
Nine Months ended March 31, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation
Item 3. Quantitative and Qualitative disclosure about
Market Risk
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
March 31, June 30,
2000 1999
_______________ _______________
Assets
Cash and due from bank $ 6,918,581 $ 4,963,985
Interest bearing deposits 503,256 345,585
Federal Home Loan Bank overnight deposits 3,659,000 6,784,000
Available for sale securities 23,816,706 18,054,317
Federal Home Loan Bank stock 6,346,400 5,680,500
Loans held for sale 147,636 311,600
Loans 368,395,545 318,986,247
Less allowance for loan losses 3,287,000 2,924,000
_______________ _______________
Net loans 365,108,545 316,062,247
Bank premises and equipment, net 4,638,081 5,037,026
Assets acquired through foreclosure 190,535 193,850
Goodwill (net of accumulated amortization
of $1,868,282 at 3/31/00 and $1,662,588
at 6/30/99) 1,256,652 1,462,346
Other assets 6,553,393 5,487,449
_______________ _______________
Total Assets $ 419,138,785 $ 364,382,905
=============== ===============
Liabilities and Shareholders' Equity
Liabilities
Deposits $ 240,934,864 $ 219,364,035
Securities Sold Under Repurchase Agreements 14,361,356 11,867,839
Advances from Federal Home Loan Bank 126,408,650 103,881,716
Notes payable 0 687,500
Other Liabilities 2,666,495 1,898,700
_______________ _______________
Total Liabilities 384,371,365 337,699,790
Guaranteed Preferred Beneficial
Interests in the Company's
Junior Subordinated Debentures 7,172,998 0
Shareholders' Equity
Common stock, $1.00 par value,
15,000,000 shares authorized.
2,786,095 and 2,768,624 shares
issued at 03/31/00 and 06/30/99,
respectively. 2,690,450 and
2,768,624 shares outstanding at
03/31/00 and 6/30/99, respectively 2,786,095 2,768,624
Additional paid in capital 10,265,729 10,208,299
Retained earnings 16,196,310 14,145,720
_______________ _______________
Accumulated other comprehensive income (loss) (851,393) (439,528)
_______________ _______________
28,396,741 26,683,115
Treasury Stock at cost, 95,645 and 0
shares at 03/31/00 and 6/30/99,
respectively. (802,319) 0
_______________ _______________
Total Shareholders' Equity 27,594,422 26,683,115
_______________ _______________
Total Liabilities and Shareholders' Equity $ 419,138,785 $ 364,382,905
=============== ===============
1
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31,
2000 1999
_______________ _______________
Interest and Dividend Income
Interest on FHLB overnight deposits $ 50,778 $ 89,478
Interest on loans & Loans held for sale 7,671,932 6,140,300
Interest on available for sale securities 429,945 283,269
Dividends on Federal Home Loan Bank stock 109,795 89,643
Other Interest Income 6,951 6,588
_______________ _______________
Total Interest Income 8,269,401 6,609,278
Interest Expense
Deposits 2,639,007 2,143,909
Repurchase agreements 136,368 95,483
Trust preferred securities 176,336 -
Other borrowings 1,820,771 1,340,474
_______________ _______________
Total Interest Expense 4,772,482 3,579,866
_______________ _______________
Net Interest Income 3,496,919 3,029,412
Provision for loan losses 195,147 120,007
_______________ _______________
Net interest income after
Provision for Loan Losses 3,301,772 2,909,405
Other Income
Service charges 297,190 253,507
Net securities gains 30,807 11,035
Net gain on trading securities 3,813 0
Other 314,609 468,666
_______________ _______________
Total Other Income 646,419 733,208
Other Expenses
Salaries and employee benefits 1,366,785 1,121,727
Net occupancy expense 248,954 290,583
Equipment expense 239,983 213,462
Goodwill amortization 68,565 74,094
Other 667,180 788,973
_______________ _______________
Total Other Expenses 2,591,467 2,488,839
_______________ _______________
Income Before Income Taxes 1,356,724 1,153,774
Income tax expense 479,459 410,268
_______________ _______________
Net Income $ 877,265 $ 743,506
=============== ===============
Earnings Per Common Share
Basic $ 0.32 $ 0.27
Diluted $ 0.32 $ 0.27
2
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Nine Months Ended
March 31,
2000 1999
_______________ _______________
Interest and Dividend Income
Interest on FHLB overnight deposits $ 173,442 $ 279,571
Interest on loans & Loans held for sale 22,127,054 18,629,287
Interest on available for sale securities 1,070,335 654,708
Dividends on Federal Home Loan Bank stock 305,205 271,481
Other Interest Income 16,304 17,103
_______________ _______________
Total Interest Income 23,692,340 19,852,150
Interest Expense
Deposits 7,525,073 6,431,561
Repurchase agreements 431,366 234,758
Trust preferred securities 250,267 -
Other borrowings 4,995,798 4,157,492
_______________ _______________
Total Interest Expense 13,202,504 10,823,811
Net Interest Income 10,489,836 9,028,339
Provision for loan losses 686,260 489,428
_______________ _______________
Net interest income after Provision for
Loan Losses 9,803,576 8,538,911
Other Income
Service charges 887,423 776,427
Net securities gains 56,668 69,525
Net gain on trading securities 3,813 10,732
Other 939,547 1,224,521
_______________ _______________
Total Other Income 1,887,451 2,081,205
Other Expenses
Salaries and employee benefits 3,957,682 3,509,956
Net occupancy expense 697,896 729,749
Equipment expense 700,571 606,425
Goodwill amortization 205,694 222,280
Other 2,234,878 2,308,172
_______________ _______________
Total Other Expenses 7,796,721 7,376,582
_______________ _______________
Income Before Income Taxes 3,894,306 3,243,534
Income tax expense 1,378,576 1,163,423
_______________ _______________
Net Income $ 2,515,730 $ 2,080,111
=============== ===============
Earnings Per Common Share
Basic $ 0.91 $ 0.76
Diluted $ 0.91 $ 0.74
3
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
Nine Months Ended March 31, 2000 and 1999
Accumulated
Other
Common Additional Comprehensive
Preferred Stock at Paid in Retained Income Treasury
Stock $1.00 Par Capital Earnings (Loss) Stock Total
_____________ ___________ ____________ _____________ _____________ ____________ _____________
Balance at June 30, 1998 $ 999,988 $2,614,285 $ 9,258,107 $ 12,331,595 $ (64,448) $ - $ 25,139,527
Net income for nine months
ended March 31, 1999 - - - 2,080,111 - - 2,080,111
Other comprehensive income,
net of tax:
Adjustment of valuation
reserve for securities
available for sale - - - - (142,244) - (142,244)
_____________
Total comprehensive income - - - - - - 1,937,867
Dividends on common stock
at $0.21 per share - - - (423,940) - - (423,940)
Dividends on preferred
stock - - - (25,667) - - (25,667)
Preferred stock converted
to common stock (999,988) 136,362 863,626 - - - -
Common stock issued in
connection with employee
benefit and stock option
plans - 15,336 68,173 - - - 83,509
_____________ ___________ ____________ _____________ _____________ ____________ _____________
Balance at March 31,1999 $ - $2,765,983 $10,189,906 $ 13,962,099 $ (206,692) $ - $ 26,711,296
============= =========== ============ ============= ============= ============ =============
Balance at June 30, 1999 $ - $2,768,624 $10,208,299 $ 14,145,720 $ (439,528) $ - $ 26,683,115
Net income for nine months
ended March 31, 2000 - - - 2,515,730 - - 2,515,730
Other comprehensive income,
net of tax:
Adjustment of valuation
reserve for securities
available for sale - - - - (411,865) - (411,865)
_____________
Total comprehensive income - - - - - - 2,103,865
Dividends on common stock
at $0.25 per share - - - (465,140) - - (465,140)
Common stock issued in
connection with employee
benefit and stock option
plans - 17,471 57,430 - - 5,446 80,347
Treasury stock purchased - - - - - (807,765) (807,765)
_____________ ___________ ____________ _____________ _____________ ____________ _____________
Balance at March 31, 2000 $ - $2,786,095 $10,265,729 $ 16,196,310 $ (851,393) $ (802,319) $ 27,594,422
============= =========== ============ ============= ============= ============ =============
4
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flow
(Unaudited)
Nine Months Ended
March 31,
2000 1999
_______________ _______________
Cash provided by operating activities $ 3,068,421 $ 950,817
Cash flows from investing activities:
FHLB stock Purchased (665,900) -
Available for sale securities purchased (8,803,080) (15,307,160)
Available for sale securities matured 2,243,738 3,169,943
Available for sale securities sold 235,041 6,618,573
New loans, net of repayments & charge offs (48,757,131) (24,476,252)
Net capital expenditures (230,722) (982,014)
Assets acquired through foreclosure sold 483,024 422,742
Real estate held for investment sold 14,967 50,000
_______________ _______________
Net cash used in investing activities (55,480,063) (30,504,168)
Cash flows from financing activities:
Net change in deposits 21,570,829 28,686,185
Net change in repurchase agreements 2,493,517 4,286,107
Dividends paid (465,140) (449,607)
Proceeds from stock issuance 80,347 83,509
Treasury Stock purchased (802,319) -
Net increase (decrease) in advances from
Federal Home Loan Bank of Boston 22,526,934 (2,328,463)
Proceeds from issuance of guaranteed
preferred beneficial interests in the
Company's junior subordinated debentures 7,172,998 -
Payments for debt issue cost (490,757) -
Net change in notes payable (687,500) (229,167)
_______________ _______________
Net cash provided by financing activities 51,398,909 30,048,564
_______________ _______________
Net (decrease) increase in cash and cash
equivalents (1,012,733) 495,213
Cash and cash equivalents, beginning of
period 12,093,570 12,151,966
_______________ _______________
Cash and cash equivalents, end of period $ 11,080,837 $ 12,647,179
=============== ===============
Cash and cash equivalents include
cash on hand, amounts due from
banks and interest bearing deposits.
Supplemental schedule of noncash activities:
Net change in valuation for unrealized
market value adjustments on available for
sale securities (411,865) (142,244)
Net transfer from Loans to Other Real Estate
Owned 127,276 97,332
Supplemental disclosure of cash paid during
the period for:
Income taxes paid, net of refunds 1,311,000 1,105,000
Interest paid 12,866,053 10,801,119
5
NORTHEAST BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2000
1. Basis of Presentation
_____________________
The accompanying unaudited condensed and consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine-month period ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the fiscal year ending
June 30, 2000. For further information, refer to the audited consolidated
financial statements and footnotes thereto for the fiscal year ended June
30, 1999 included in the Company's Annual Report on Form 10-K.
2. Guaranteed Preferred Beneficial Interests in the Company's Junior
Subordinated Debentures
_________________________________________________________________
NBN Capital Trust ("NBNCT") a Delaware statutory trust, was created on
October 4, 1999. The NBNCT exists for the exclusive purpose of (i) issuing
and selling Common Securities and Preferred Securities of NBNCT (together
the "Trust Securities"), (ii) using the proceeds of the sale of Trust
Securities to acquire 9.60% Junior Subordinated Deferrable Interest
Debentures ("Junior Subordinated Debentures") issued by the Company, and
(iii) engaging only in those other activities necessary, convenient, or
incidental thereto (such as registering the transfer of the Trust
Securities). Accordingly the Junior Subordinated Debentures will be the
sole assets of the NBNCT. The preferred securities accrue and pay
distributions quarterly at an annual rate of 9.60% of the stated
liquidation amount of $7.00 per preferred security. The Company has fully
and unconditionally guaranteed all of the obligations of NBNCT. The
guaranty covers the quarterly distributions and payments on liquidation or
redemption of the preferred securities, but only to the extent of funds
held by NBNCT. The preferred securities are mandatory redeemable upon the
maturity of the Junior Subordinated Debentures on December 31, 2029 or upon
earlier redemption as provided in the Indenture. The Company has the right
to redeem the Junior Subordinated Debentures, in whole or in part on or
after December 31, 2004 at a redemption price specified in the Indenture
plus any accrued but unpaid interest to the redemption date. The Company
owns all of the Common Securities of NBNCT, the only voting security, and
as a result it is a subsidiary of the Company.
6
3. Securities
__________
Securities available for sale at cost and approximate market values are
summarized below.
March 31, 2000 June 30,1999
_________________________ _________________________
Market Market
Cost Value Cost Value
____________ ____________ ____________ ____________
Debt securities issued by
the U.S.Treasury and
other U.S. Government
corporations and agencies $ 594,270 $ 592,036 $ 596,626 $ 598,445
Corporate bonds 201,135 194,641 201,916 199,527
Mortgage-backed securities 22,898,432 21,904,388 16,653,302 16,027,028
Equity securities 1,412,858 1,125,641 1,268,424 1,229,317
____________ ____________ ____________ ____________
$25,106,695 $23,816,706 $18,720,268 $18,054,317
============ ============ ============ ============
March 31, 2000 June 30, 1999
_________________________ _________________________
Market Market
Cost Value Cost Value
____________ ____________ ____________ ____________
Due in one year or less $ 494,270 $ 494,270 $ 496,626 $ 497,820
Due after one year
through five years 201,135 194,641 301,916 300,152
Due after five years
through ten years 100,000 97,766 0 0
Mortgage-backed securities
(including securities
with interest rates
rangine from 5.15% to
9.0% maturing September
2003 to November 2029) 22,898,432 21,904,388 16,653,302 16,027,028
Equity securities 1,412,858 1,125,641 1,268,424 1,229,317
____________ ____________ ____________ ____________
$25,106,695 $23,816,706 $18,720,268 $18,054,317
============ ============ ============ ============
4. Allowances for Loan Losses
__________________________
The following is an analysis of transactions in the allowance for loan Losses:
Nine Months Ended
March 31,
2000 1999
____________ ____________
Balance at beginning of year $ 2,924,000 $ 2,978,000
Add provision charged to operations 686,260 489,428
Recoveries on loans previously charged off 201,811 136,296
____________ ____________
3,812,071 3,603,724
Less loans charged off 525,071 674,724
____________ ____________
Balance at end of period $ 3,287,000 $ 2,929,000
============ ============
7
5. Advances from Federal Home Loan Bank
____________________________________
A summary of borrowings from the Federal Home Loan Bank is as follows:
March 31, 2000
_____________________________________________
Principal Interest Maturity
Amounts Rates Dates
______________ _______________ ____________
$ 96,500,000 4.85% - 6.58% 2001
2,657,008 5.38% - 6.49% 2002
7,166,179 5.97% - 6.64% 2003
5,383,250 5.69% - 6.67% 2004
1,702,213 5.55% 2005
4,000,000 5.44% - 6.65% 2006
8,000,000 5.59% - 5.68% 2008
1,000,000 5.40 2009
______________
$ 126,408,650
==============
June 30, 1999
_____________________________________________
Principal Interest Maturity
Amounts Rates Dates
______________ _______________ ____________
$ 42,000,000 4.64% - 6.27% 2000
3,148,288 4.98% - 6.40% 2001
2,815,780 5.38% - 6.49% 2002
9,515,546 5.69% - 6.64% 2003
3,402,102 5.55% - 6.67% 2004
9,000,000 5.25% - 6.65% 2005
34,000,000 4.89% - 5.68% 2008
______________
$ 103,881,716
==============
6. Loans
_____
The following is a summary of the composition of loans at:
March 31, 2000 June 30, 1999
________________ ________________
Residential Mortgage $ 189,379,763 $ 182,244,336
Commercial Real Estate 59,773,566 55,437,983
Construction 6,643,506 1,685,649
Commercial 39,266,556 34,647,058
Consumer & Other 70,883,389 43,642,768
________________ ________________
Total 365,946,780 317,657,794
Less Net Deferred Costs (2,448,765) (1,328,453)
________________ ________________
Net Loans $ 368,395,545 $ 318,986,247
================ ================
8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
_______________________________________________________________
Description of Operations
_________________________
Northeast Bancorp (the "Company"), is a unitary savings and loan holding
company registered with the Office of Thrift Supervision ("OTS") its
primary regulator. The Company's principal asset is its wholly-owned
banking subsidiary, Northeast Bank, FSB (the "Bank"), which has branches
located in Auburn, Augusta, Bethel, Harrison, South Paris, Buckfield,
Mechanic Falls, Brunswick, Richmond, Lewiston, and Lisbon Falls, Maine. The
Bank also maintains a facility on Fundy Road in Falmouth, Maine, from which
loan applications are accepted and investment, insurance and financial
planning products services are offered. Although the Bank's deposits are
primarily insured through the Bank Insurance Fund ("BIF"), deposits at the
Brunswick branch, which represent approximately 22% of the Bank's total
deposits at March 31, 2000 are SAIF-insured.
Northeast Bancorp through its subsidiary, Northeast Bank and the Bank's
subsidiary Northeast Financial Services, Inc., provide a broad range of
financial services to individuals and companies in western, midcoast and
south-central Maine. Substantially all income and services are derived from
banking products and services in Maine.
This Management's Discussion and Analysis of Financial Condition and
Results of Operations presents a review of the material changes in the
financial condition of the Company from June 30, 1999 to March 31, 2000,
and the results of operations for the three and nine months ended March 31,
2000 and 1999. This discussion and analysis is intended to assist in
understanding the financial condition and results of operations of the
Company. Accordingly, this section should be read in conjunction with the
consolidated financial statements and the related notes and other
statistical information contained herein.
Certain statements contained herein are not based on historical facts and
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, such as statements relating to
financial condition and future prospects, loan loss reserve adequacy,
simulation of changes in interest rates, prospective results of operations,
capital spending and financing sources, and revenue sources. These
statements relate to expectations concerning matters that are not
historical facts. Forward-looking statements, which are based on various
assumptions (some of which are beyond the Company's control), may be
identified by reference to a future period or periods, or by the use of
forward-looking terminology such as "believe", "expect", "estimate",
"anticipate", "continue", "plan", "approximately", "intend", or other
similar terms or variations on those terms, or future or conditional verbs
such as "will", "may", "should", "could", and "would". Such forward-looking
statements reflect the current view of management and are based on
information currently available to them, and upon current expectations,
estimates, and projections regarding the Company and its industry,
management's belief with respect there to, and certain assumptions made by
management. These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and other factors.
Accordingly, actual results could differ materially from those set forth in
forward-looking statements due to a variety of factors, including, but not
limited to, those related to the economic environment, particularly in the
market areas in which the Company operates, competitive products and
pricing, fiscal and monetary policies of the U.S. Government, changes in
government regulations affecting financial institutions, including
regulatory fees and capital requirements, changes in prevailing interest
rates, acquisitions and the integration of acquired businesses, credit risk
management, asset/liability management, changes in technology, changes in
the securities markets, and the availability of and the costs associated
with sources of liquidity. For a more complete discussion of such risks,
please refer to the Company's Form 10-K for the year ended June 30, 1999
under the section entitled "Business-Forward-Looking Statements".
9
Financial Condition
___________________
Total consolidated assets were $419,138,785 on March 31, 2000, which
represents an increase of $54,755,880 from June 30, 1999. The increase in
assets is primarily due to loan growth. Loan volume during the nine month
period has been enhanced due to increased generation of consumer loans
through the Bank's participation in indirect automobile loans and mobile
home loans as well as increased volume in residential and commercial loans.
The increase in loans has been funded with increased deposits, repurchase
agreements, and Federal Home Loan Bank ("FHLB") borrowings. In this regard,
total loans and securities increased by $49,409,298 and $5,762,389,
respectively, from June 30, 1999 to March 31, 2000, while cash equivalents
decreased by $1,012,733 during the same period. Total deposits and
repurchase agreements increased by $24,064,346 from June 30, 1999 to March
31, 2000. FHLB borrowings also increased by $22,526,934 during the same
period.
At March 31, 2000, the carrying value of securities available for sale by
the Company was $23,816,706, which is $1,289,989 less than the cost of the
underlying securities. The increase of $5,762,389 in securities available
for sale, from June 30, 1999 to March 31, 2000, was primarily due to the
Company purchasing mortgage-backed securities, taking advantage of the
higher yields on these investments during the current increasing rate
environment. The difference between the carrying value and the cost of the
securities was primarily attributable to the decline in the market value of
mortgage-backed securities due to rising interest rates. The net unrealized
loss on mortgage-backed securities was $994,044 at March 31, 2000.
Substantially all of the mortgage-backed securities are high grade
government backed securities. As in any long term earning asset in which
the earnings rate is fixed, the market value of mortgage-backed securities
will fluctuate based on changes in market interest rates from the time of
purchase. Since these mortgage-backed securities are backed by the U.S.
Government, there is virtually no risk of loss of principal. Management
believes that the yields currently received on this portfolio are
satisfactory and intends to hold these securities for the foreseeable
future. Management attributes the reduction of $287,217 in the market value
of equity securities to the decline on the market value of the Company's
investments in preferred equity securities. Management reviews the
portfolio of investments on an ongoing basis to determine if there has been
an other-than-temporary decline in value. Some of the considerations
management makes in the determination are market valuations of particular
securities and economic analysis of the securities' sustainable market
values based on the underlying companies' profitability.
FHLB stock increased by $665,900 from June 30, 1999 to March 31, 2000, due
to the increase in FHLB borrowings. The FHLB requires institutions to hold
a certain level of FHLB stock based on advances outstanding.
10
Total loans increased by $49,409,298 for the nine months ended March 31,
2000. From June 30, 1999 to March 31, 2000, the loan portfolio increased
by $16,721,170 in real estate mortgage loans, $28,062,454 in consumer and
other loans, and by $4,625,674 in commercial loans. The increase in
consumer loans was primarily due to the increased volume in indirect
automobile loans and mobile home loans. The loan portfolio contains
elements of credit and interest rate risk. The Bank primarily lends within
its local market areas, which management believes helps them to better
evaluate credit risk. The Bank's local market, as well as the secondary
market, continues to be very competitive for loan origination volume. The
local competitive environment and customer responses to favorable secondary
market rates have affected the Bank's ability to increase the loan
portfolio. The Bank has supplemented its loan portfolio by purchasing
mortgage loans locally and from other states. In December 1999, the Bank
purchased approximately $3,200,000 of 1-4 family mortgages. The purchase
consisted of 1-4 family adjustable rate mortgages secured by property
located in the State of Tennessee. As the Bank expands its purchase of
loans in other states, management researches the strength of the economy in
the respective state and underwrites every loan before purchase. These
steps are taken to better evaluate and minimize the credit risk of out-of-
state purchases. Also, in an effort to increase loan volume, the Bank's
offering rates for its loan products have been reduced to compete in the
various markets. The Bank has experienced margin compression due to
decreased loan rates as well as increased rates on its cost of funds. The
Bank anticipates that the margin compression will continue for the
foreseeable future until loan volume increases in the current rising
interest rate environment.
At March 31, 2000, residential real estate mortgages consisting of owner-
occupied residential loans made up 53% of the total loan portfolio, of
which 37% of the residential loans are variable rate products. At March 31,
1999, residential real estate mortgages made up 61% of the total loan
portfolio, of which 42% were variable rate products. Although the Bank has
purchased fixed rate loans, it is management's intent, where market
opportunities arise, to increase the volume in variable rate residential
loans to reduce the interest rate risk in this area.
At March 31, 2000, 17% of the Bank's total loan portfolio balance is
commercial real estate mortgages. Commercial real estate loans have minimal
interest rate risk as 87% of the portfolio consists of variable rate
products. At March 31, 1999, commercial real estate mortgages made up 18%
of the total loan portfolio, of which 84% were variable rate products. The
Bank tries to mitigate credit risk by lending in its local market area as
well as maintaining a well-collateralized position in real estate.
Commercial loans made up 11% of the total loan portfolio, of which 44% are
variable rate instruments at March 31, 2000. At March 31, 1999 commercial
loans made up 10% of the total loan portfolio, of which 46% were variable
rate instruments. The repayment ability of commercial loans is highly
dependent on the cash flow of the customer's business. The Bank mitigates
losses by strictly adhering to the Company's underwriting and credit
policies.
Consumer and other loans made up 19% of the loan portfolio as of March 31,
2000, which compares to 11% at March 31, 1999. Since these loans are
primarily fixed rate products, they have interest rate risk when market
rates increase. The increase in consumer loans was primarily due to
increased volume in indirect automobile loans and mobile home loans, which
together comprise approximately 88% of the total consumer loans. The
consumer loan department underwrites all the indirect automobile loans and
mobile home loans to mitigate credit risk. The Bank primarily pays a
nominal one time origination fee on the loans. The fees are deferred and
amortized over the life of the loans as a yield adjustment. Management
attempts to mitigate credit and interest rate risk by keeping the products
offered short-term, receiving a rate of return commensurate with the risk,
and lending to individuals in the Bank's known market areas.
11
The Bank's allowance for loan losses was $3,287,000 as of March 31, 2000 as
compared to $2,924,000 as of June 30, 1999, representing 0.89% and 0.92% of
total loans, respectively. The Bank had non-performing loans totaling
$1,785,000 and $1,144,000 at March 31, 2000 and June 30, 1999,
respectively, which was 0.48% and 0.36% of total loans, respectively. The
increase in the 1-4 family residential and commercial non-performing loan
balances was due to the increase of three loans in each category. The
Bank's allowance for loan losses was equal to 184% and 256% of the total
non-performing loans at March 31, 2000 and June 30, 1999, respectively. At
March 31, 2000, the Bank had approximately $1,153,000 of loans classified
substandard, exclusive of the non-performing loans stated above, that could
potentially become non-performing due to delinquencies or marginal cash
flows. These substandard loans increased by $412,000 when compared to the
$741,000 at June 30, 1999. The increase was attributed to management
downgrading certain loans during its internal review process.
The following table represents the Bank's non-performing loans as of March 31,
2000 and June 30, 1999, respectively:
March 31, June 30,
Description 2000 1999
_________________________ _______________ _______________
1-4 Family Mortgages $ 560,000 $ 293,000
Commercial Mortgages 674,000 654,000
Commercial Loans 325,000 0
Consumer Installment 226,000 197,000
_______________ _______________
Total non-performing $ 1,785,000 $ 1,144,000
=============== ===============
The following table reflects the quarterly trend of total delinquencies 30
days or more past due, including non-performing loans, for the Bank as a
percentage of total loans:
03-31-00 12-31-99 09-30-99 06-30-99
__________ __________ __________ __________
1.08% 1.15% 0.72% 0.76%
At March 31, 2000, loans classified as non-performing of $1,785,000
included approximately $102,000 of loan balances that are current and
paying as agreed, but which the Bank maintains as non-performing until the
borrower has demonstrated a sustainable period of performance.
12
The level of the allowance for loan losses as a percentage of total loans
has decreased due to the increase of loan volume as well as the level of
allowance for loan losses as a percentage of non-performing loans decreased
due to the increase in non-performing loans at March 31, 2000, when
compared to June 30, 1999. The Company has experienced good growth in the
commercial and consumer loan portfolio during the March 31, 2000 quarter,
however these type of loans have additional credit risk as compared to real
estate mortgage loans. Although these types of loans have increased, the
decrease in the allowance for loan losses as a percentage of total loans
was supported by management's ongoing analysis of the adequacy of the
allowance for loan losses. The increase in the delinquency percentage from
September 30, 1999 to December 31, 1999 was due to an increase in the 30
day delinquent category of 1-4 family and commercial mortgages as well as
consumer loans. Total delinquencies decreased slightly from December 31,
1999 to March 31, 2000. Although delinquencies and non-performing loans
increased during the current fiscal year, management does not consider this
to be a potential trend at this point in time. Classified loans are also
considered in management's analysis of the adequacy of the allowance for
loan losses. Based on reviewing the credit risk and collateral of
classified loans, management has considered the risks of the classified
portfolio and believes the allowance for loan losses is adequate.
On a regular and ongoing basis, management evaluates the adequacy of the
allowance for loan losses. The process to evaluate the allowance involves
a high degree of management judgement. The methods employed to evaluate
the allowance for loan losses are quantitative in nature and consider such
factors as the loan mix, the level of non-performing loans, delinquency
trends, past charge-off history, loan reviews and classifications,
collateral, and the current economic climate.
Management believes that the allowance for loan losses is adequate
considering the level of risk in the loan portfolio. While management uses
its best judgement in recognizing loan losses in light of available
information, there can be no assurance that the Company will not have to
increase its provision for loan losses in the future as a result of
changing economic conditions, adverse markets for real estate or other
factors. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Bank's allowance for
loan losses. Such agencies may require the Bank to recognize additions to
the allowance for loan losses based on their judgements about information
available to them at the time of their examination. The Bank's most recent
examination by the OTS was on November 30, 1998. At the time of the exam
the regulators proposed no additions to the allowance for loan losses.
At March 31, 2000, the Bank's premises and equipment decreased by $398,945
when compared to June 30, 1999. The reduction in assets was due to normal
depreciation.
The Bank served its Augusta, Maine location with two branch offices. As of
March 31, 2000, the Bank consolidated its loan and deposit customers to the
Western Avenue branch and closed the Bangor Street location. The merging of
these two branches allows the Bank to continue to serve the Augusta, Maine
community with greater efficiency with little or no disruption. The Bangor
street branch was under a lease agreement, which had expired. The
relocation expenses were not material and the employees were absorbed into
other available positions within the Bank or decreased through attrition.
The closure of the branch did not have a material impact on the financial
condition or operations of the Company.
Other assets increased by $1,065,944 from June 30, 1999 to March 31, 2000.
The increase was due to the increase in capitalized loan servicing rights
and the purchase of non-marketable investments as well as the deferred
issuance costs associated with the Company's trust preferred security
offering.
13
Other liabilities increased by $767,795 compared to June 30, 1999, due
primarily to increases in accrued expenses and escrow accounts.
Capital Resources and Liquidity
_______________________________
The Bank continues to attract new local deposit relationships. The Bank
utilizes, as alternative sources of funds, brokered certificate of deposits
("C.D.s") when national deposit interest rates are less than the interest
rates on local market deposits. Brokered C.D.s are also used to supplement
the growth in earning assets. Brokered C.D.s carry the same risk as local
deposit C.D.s, in that both are interest rate sensitive with respect to the
Bank's ability to retain the funds. The Bank also utilizes FHLB advances,
as alternative sources of funds, when the interest rates of the advances
are less than market deposit interest rates. FHLB advances are also used to
fund short-term liquidity demands.
Total deposits were $240,934,864 and securities sold under repurchase
agreements were $14,361,356 as of March 31, 2000. These amounts represent
an increase of $21,570,829 and $2,493,517, respectively, compared to June
30, 1999. The increase in deposits was primarily due to the increase in
time deposits. The increase in time deposits was attributable to various
special offerings as well as normal growth from the branch market areas.
The Bank has devoted additional staffing to increase its balances in
repurchase agreements. Repurchase agreements enhance the Bank's ability to
attain additional municipal and commercial relationships, improving its
overall liquidity position in a cost effective manner. Brokered deposits
represented $18,878,471 of the total deposits at March 31, 2000, which
increased by $5,420,214 compared to the $13,458,257 balance as of June 30,
1999. Cross selling strategies are employed by the Bank to enhance deposit
growth. Even though deposit interest rates have remained competitive, the
rates of return are potentially higher with other financial instruments
such as mutual funds and annuities. Like other companies in the banking
industry, the Bank will be challenged to maintain and/or increase its core
deposits.
Total advances from the FHLB were $126,408,650 as of March 31, 2000; an
increase of $22,526,934 compared to June 30, 1999. The cash received from
the increase in FHLB advances and deposits were utilized to fund the Bank's
loan growth. The Bank has unused borrowing capacity from the FHLB through
its advances program. The Bank's current advance availability, subject to
the satisfaction of certain conditions, is approximately $11,700,000 over
and above the March 31, 2000 advances. Mortgages, free of liens, pledges
and encumbrances are required to be pledged to secure FHLB advances. The
Bank's ability to access principal sources of funds is immediate and with
the borrowing capacity at the Federal Home Loan Bank, the normal growth in
bank deposits and repurchase agreements and the immediate availability of
the Bank's cash equivalents as well as securities available for sale,
management believes that the Company's available liquidity resources are
sufficient to support the Company's needs.
Total equity of the Company was $27,594,422 as of March 31, 2000 as
compared to $26,683,115 at June 30, 1999. Book value per common share was
$10.26 as of March 31, 2000 as compared to $9.64 at June 30, 1999. The
total equity to total assets ratio of the Company was 6.58% as of March 31,
2000 and 7.32% at June 30, 1999.
14
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), contains various provisions intended to capitalize BIF and also
affects a number of regulatory reforms that impact all insured depository
institutions, regardless of the insurance fund in which they participate.
Among other things, FDICIA grants the OTS broader regulatory authority to
take prompt corrective action against insured institutions that do not meet
capital requirements, including placing undercapitalized institutions into
conservatorship or receivership. FDICIA also grants the OTS broader
regulatory authority to take corrective action against insured institutions
that are otherwise operating in an unsafe and unsound manner.
FDICIA defines specific capital categories based on an institution's
capital ratios. Although no capital requirements are imposed on the
Company, the Bank is subject to such requirements established by the OTS.
The OTS has issued regulations requiring a savings institution to maintain
a minimum regulatory tangible capital equal to 1.5% of adjusted total
assets, core capital of 3.0%, leverage capital of 4.0% and a risk-based
capital standard of 8.0%. The prompt corrective action regulations define
specific capital categories based on an institution's capital ratios. The
capital categories, in declining order, are "well capitalized", "adequately
capitalized", "undercapitalized", "significantly undercapitalized", and
"critically undercapitalized". As of March 31, 2000, the Bank met the
definition of a well capitalized institution. There are no conditions or
events since that notification that management believes has changed the
institution's category.
At March 31, 2000, the Bank's regulatory capital, which includes capital
downstreamed of $4,000,000 by the parent as a result of a trust preferred
security offering as described below, was in compliance with regulatory
capital requirements as follows:
To Be " Well
Capitalized" Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
________ ________ ________ ________ ________ _________
(Dollars in Thousands)
As of March 31, 2000:
Tier 1 (Core) capital
(to risk weighted
assets) $ 32,238 10.81% $ 11,924 4.00% $ 17,887 6.00%
Tier 1 (Core) capital
(to total assets) $ 32,238 7.71% $ 16,721 4.00% $ 20,902 5.00%
Total Capital (to risk
weighted assets) $ 34,349 11.52% $ 23,849 8.00% $ 29,811 10.00%
15
Management believes that there are adequate funding sources to meet its
future liquidity needs for the foreseeable future. Primary among these
funding sources are the repayment of principal and interest on loans, the
renewal of time deposits, and the growth in the deposit base. Management
does not believe that the terms and conditions that will be present at the
renewal of these funding sources will significantly impact the Company's
operations, due to its management of the maturities of its assets and
liabilities.
During the quarter ended December 31, 1999, the Company also generated
additional liquidity and funding through the issuance of certain debt
instruments. In this regard, on October 4, 1999, the Company formed NBN
Capital Trust, a Delaware statutory trust and a wholly-owned subsidiary of
the Company (the "Trust"), for the purpose of (i) issuing and selling in
common securities to the Company and its trust preferred securities to the
public, and (ii) using the proceeds therefrom to purchase 9.60% Junior
Subordinated Deferrable Interest Debentures ("Junior Subordinated
Debentures") from the Company. Accordingly, the Junior Subordinated
Debentures are, and will be, the sole asset of the Trust. In the quarter
ended December 31, 1999, the Trust sold $7,172,998 of its trust preferred
securities to the public and $221,851 of its common securities to the
Company. The Trust used the proceeds to purchase $7,394,849 in principal
amount of the Junior Subordinated Debentures issued by the Company. The
Company will pay interest on the Junior Subordinated Debentures at a rate
of 9.60% to the Trust at the end of each quarter, which is equal to the
dividend rate payable to the holders of the Trust's preferred securities.
The cost of the issuance of the preferred securities was approximately
$491,000 and is treated as a deferred asset and will be amortized over the
life of the securities. Following the offer and sale of the Trust's
securities, the Company owned and currently holds all of the outstanding
common securities of the Trust, its only voting securities, and as a result
the Trust is a subsidiary of the Company. The Company used the net
proceeds of the offering, approximately $6,700,000, for the following
purposes: (i) contributed $4,000,000 as additional capital for the Bank,
(ii) allocated $1,000,000 for the Company's stock buy-back program, (iii)
paid off the remaining principal balance of $535,000 on its note payable,
and (iv) retained the remaining $1,200,000 for general corporate
requirements as they may arise from time to time.
The Company downstreamed $4,000,000 of the funds received from the junior
subordinated debentures to the Bank. The funds are allowed under the Office
of Thrift Supervision regulations to be used as capital at the Bank. As
discussed above, these funds have increased the regulatory capital position
at the Bank and are reported in the capital adequacy chart above. The
increase in regulatory capital will allow the Bank to fund loan growth for
the foreseeable future.
In December 1999, the Board of Directors of Northeast Bancorp approved a
plan to repurchase up to $2,000,000 of its common stock. Under the common
stock repurchase plan, Northeast Bancorp may purchase shares of its common
stock from time to time in the open market at prevailing prices.
Repurchased shares will be held in treasury and may be used in connection
with employee benefits and other general corporate purposes. The Company
does not believe that the current market price for its common stock
adequately reflects full value and believes that the purchase of its common
stock from time to time in the market is a good investment and use of its
funds. As of March 31, 2000, the Company has repurchased approximately
$802,000 of its common stock.
Cash provided by operating activities in the consolidated statements of
cash flow increased by $2,117,604 from March 31, 1999 to March 31, 2000 as
a result of the increase in net income and the adjustments to reconcile net
income to net cash provided by operating activities. The reconciling items
that increased operating activities were the market value adjustment of
available for sale securities, the provision and recoveries to the loan
loss allowance and the depreciation expense for premises and equipment.
16
Results of Operations
_____________________
Net income for the quarter ended March 31, 2000 was $877,265 or basic and
diluted earnings per share of $0.32, respectively. This compares to
earnings of $743,506 or basic and diluted earnings per share of $0.27 for
the quarter ended March 31, 1999. Net income for the nine months ended
March 31, 2000 was $2,515,730 versus $2,080,111 for the period ended March
31, 1999. Basic and diluted earnings per share were $0.91, respectively,
for the nine months ended March 31, 2000 versus basic earnings per share of
$0.76 and diluted earnings per share of $0.74 for the period ended March
31, 1999.
The Company's net interest income was $10,489,836 for the nine months ended
March 31, 2000, as compared to $9,028,339 for the nine months ended March
31, 1999, an increase of $1,461,497. Total interest income increased
$3,840,190 during the nine months ended March 31, 2000 compared to the nine
months ended March 31, 1999. Loan interest income increased by $1,531,632
and $3,497,767 for the three and nine months ended March 31, 2000 compared
to March 31, 1999, respectively. The increase in loan interest income was
primarily due to the increased volume in consumer loans during the three
and nine month periods ended March 31, 2000. The increase in interest
income was due primarily from an increase in the volume of loans offset in
part by a decrease in rates. The increase in total interest expense of
$2,378,693 for the nine months ended March 31, 2000 was due primarily from
the increased volume of deposits and borrowings offset in part by the
decrease in rates.
The changes in net interest income are presented in the schedule below.
Northeast Bancorp
Rate/Volume Analysis for the nine months ended
March 31, 2000 versus March 31, 1999
Difference Due to
Volume Rate Total
_______________ _______________ ________________
Investments $ 352,107 $ 97,244 $ 449,351
Loans 3,676,876 (179,109) 3,497,767
FHLB & Other Deposits (118,718) 11,790 (106,928)
_______________ _______________ ________________
Total 3,910,265 (70,075) 3,840,190
Deposits 1,329,959 (236,447) 1,093,512
Repurchase Agreements 200,769 (4,161) 196,608
Borrowings 929,698 158,875 1,088,573
_______________ _______________ ________________
Total 2,460,426 (81,733) 2,378,683
_______________ _______________ ________________
Net Interest Income $ 1,449,839 $ 11,658 $ 1,461,497
=============== =============== ================
17
Rate/Volume amounts spread proportionately between volume and rate.
The Company's business primarily consists of the savings and loan
activities of the Bank. Accordingly, the success of the Company is largely
dependent on its ability to manage interest rate risk. This is the risk
that represents the potential changes in interest rates and those changes
in interest rates may adversely affect net interest income. Generally,
interest rate risk results from differences in repricing intervals or
maturities between interest-earning assets and interest-bearing
liabilities, the components of which comprise the interest rate spread.
When such differences exist, a change in the level of interest rates will
most likely result in an increase or decrease in net interest income. The
Bank has shifted to a slightly liability sensitive position based on its
own internal analysis which categorizes its core deposits as long term
liabilities which are then matched to long term assets. As a result, the
Bank will generally experience a contraction in its net interest margins
during a period of increasing rates. Management is currently addressing the
asset/liability mix to reposition the Bank to a slightly asset sensitive
position.
Approximately 19% of the Bank's loan portfolio is comprised of floating
rate loans based on a prime rate index. Interest income on these existing
loans will increase as the prime rate increases, as well as on
approximately 20% of other loans in the Bank's portfolio that are based on
short-term rate indices such as the one-year treasury bill. An increase in
short-term interest rates will also increase deposit and FHLB advance
rates, increasing the Company's interest expense. Although the Company has
experienced some net interest margin compression, the impact on net
interest income will depend on, among other things, actual rates charged on
the Bank's loan portfolio, deposit and advance rates paid by the Bank and
loan volume.
The provision for loan losses for the nine months ended March 31, 2000
increased by $196,832 when compared to March 31, 1999. Management believes
the increase in the provision for loan losses was prudent to mitigate
potential credit risk, based on the growth in the loan portfolio.
Total non-interest income was $646,419 and $1,887,451 for the three and
nine months ended March 31, 2000 versus $733,208 and $2,081,205 for the
three and nine months ended March 31, 1999. The decrease in total non-
interest income was primarily due to the decrease in other income. Service
fee income was $297,190 and $887,423 for the three and nine months ended
March 31, 2000 versus $253,507 and $776,427 for the three and nine months
ended March 31, 1999. The $43,683 and $110,996 service fee increase for
the three and nine months ended March 31, 2000, respectively, was primarily
due to an increase in loan servicing and deposit fee income. Gains from
available for sale securities were $30,807 and $56,668 for the three and
nine months ended March 31, 2000 versus $11,035 and $69,525 for the three
and nine months ended March 31, 1999. The Company sold a portion of its
available for sale securities during the three months period ended March
31, 2000, taking advantage of the fluctuation in market prices.
Other income was $314,609 and $939,547 for the three and nine months ended
March 31, 2000, which was a decrease of $154,057 and $284,974 when compared
to other income of $468,666 and $1,224,521 for the three and nine months
ended March 31, 1999, respectively. The decrease in other income in the
three and nine months ended March 31,2000, was primarily due to gains from
1-4 family mortgage and indirect auto loan sales that occurred in 1999 but
did not occur at the same level in 2000. The decrease in gains was offset
by increased fee income from trust and investment services.
18
Total non-interest expense for the Company was $2,591,467 and $7,796,721
for the three and nine months ended March 31, 2000, which was an increase
of $102,628 and $420,139, respectively, when compared to total non-interest
expense of $2,488,839 and $7,376,582 for the three and nine months ended
March 31, 1999. The increase in non-interest expense for the three and nine
months ended March 31, 2000 as compared to the three and nine months ended
March 31, 1999 was due, in part, to the following items: (i) compensation
expense increased for the three and nine months ended March 31, 2000 and
was primarily due to the additional staffing for the new branch opened in
Lewiston, Maine, the increased commission paid to brokers in the investment
sales division due to growth in sales revenue and increased costs
associated with the Company's health insurance and benefit plans, (ii)
equipment expense increased for the three and nine month period due to the
expenses associated with opening the new Lewiston branch as well as the
conversion of the mainframe hardware and software and tele-communication
system. The Company relocated its benefit administration department during
March 1999 and incurred a one time lease penalty to terminate its existing
lease contract. Due to this one time expense in March 1999, occupancy
expenses as of March 31, 2000 decreased when compared to March 31, 1999.
Other expenses decreased by $121,793 and $73,294 for three and six months
ended March 31, 2000 compared to the three and nine months ended March 31,
1999. The decrease was primarily due to the costs associated with the
opening of the Lewiston branch in March 1999 and was not incurred again
during the three and nine months ended March 31, 2000. Due to these
additional costs during the prior period, other expenses decreased for the
three and nine months ended March 31, 2000 due to the reduction in
advertising expense, supplies expense and professional fees. Other expenses
also decreased due to reductions in travel and meetings expenses,
shareholder relations expenses and general business insurance.
The Company's income tax expense increased by $69,191 and $215,153 for the
three and nine months ended March 31, 2000, when compared to the three and
nine months ended March 31, 1999. The increase in income tax expense is due
to increased earnings before tax.
Impact of Inflation
___________________
The consolidated financial statements and related notes herein have been
presented in terms of historic dollars without considering changes in the
relative purchasing power of money over time due to inflation. Unlike
industrial companies, substantially all of the assets and virtually all of
the liabilities of the Company are monetary in nature. As a result,
interest rates have a more significant impact on the Company's performance
than the general level of inflation. Over short periods of time, interest
rates may not necessarily move in the same direction or in the same
magnitude as inflation.
Year 2000
_________
The Company addressed the Year 2000 issue and believes it has been
successful. The Company has had no adverse affects to date regarding the
century rollover period. There also have been no adverse implications from
the Company's borrowers or depositors. The Company continued to monitor for
any affects of the Year 2000 issue during the March 31, 2000 quarter and
did not incur any adverse implications. As of March 31, 2000, the Company
had incurred approximately $39,000 of capitalized purchases and $111,800 of
cumulative Year 2000 expenses.
18
Item 3. Quantitative and Qualitative Disclosure about Market Risk
_________________________________________________________
There have been no material changes in the Company's market risk from June
30, 1999. For information regarding the Company's market risk, refer to
the Company's Annual Report on Form 10-K dated as of June 30, 1999.
Part II - Other Information
Item 1. Legal Proceedings
_________________
None.
Item 2. Changes in Securities
_____________________
None.
Item 3. Defaults Upon Senior Securities
_______________________________
None.
Item 4. Submission of Matters to a Vote of Security Holders
___________________________________________________
None.
Item 5. Other Information
_________________
None.
Item 6. Exhibits and Reports on Form 8-K
________________________________
(a) Exhibits
________
11 Statement regarding computation of per share earnings.
27 Financial data Schedule
(b) Reports on Form 8-K
___________________
No reports on Form 8-K have been filed during the quarter ended March
31, 2000.
19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Date: May 10, 2000 NORTHEAST BANCORP
By: James D. Delamater
____________________________
James D. Delamater
President and CEO
By: Richard Wyman
____________________________
Richard Wyman
Chief Financial Officer
NORTHEAST BANCORP
Index to Exhibits
EXHIBIT NUMBER DESCRIPTION
11 Statement regarding computation of per share earnings
27 Financial data schedule
NORTHEAST Bancorp
Exhibit 11. Statement Regarding Computation of Per Share Earnings
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
____________________ ____________________
EQUIVALENT SHARES:
Weighted Average Shares Outstanding 2,728,478 2,764,421
Total Diluted Shares 2,737,571 2,792,552
Net Income $ 877,265 $ 743,506
Less Preferred Stock Dividend - -
____________________ ____________________
Income Available to Common
Stockholders $ 877,265 $ 743,506
==================== ====================
Basic Earnings Per Share $ 0.32 $ 0.27
Diluted Earnings Per Share $ 0.32 $ 0.27
Nine Months Ended Nine Months Ended
March 31, 2000 March 31, 1999
____________________ ____________________
EQUIVALENT SHARES:
Weighted Average Shares Outstanding 2,758,041 2,690,872
Total Diluted Shares 2,774,440 2,794,034
Net Income $ 2,515,730 $ 2,080,111
Less Preferred Stock Dividend - 25,667
____________________ ____________________
Income Available to Common
Stockholders $ 2,515,730 $ 2,054,444
==================== ====================
Basic Earnings Per Share $ 0.91 $ 0.76
Diluted Earnings Per Share $ 0.91 $ 0.74
9 1 9-MOS JUN-30-2000 MAR-31-2000 6,918,581 4,162,256 0 0 23,816,706 0 0 368,395,545 3,287,000 419,138,785 240,934,864 110,861,356 2,666,495 37,081,648 0 0 2,786,095 24,808,327 419,138,785 22,127,054 1,070,335 494,951 23,692,340 7,525,073 13,202,504 10,489,836 686,260 56,668 7,796,721 3,894,306 3,894,306 0 0 2,515,730 0.91 0.91 3.472 1,785,000 0 93,888 1,153,000 2,924,000 525,070 201,810 3,287,000 50,000 0 3,237,000