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): July 29,2013

 

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:

 

o            Written communications pursuant to Rule 425 under the Securities Act

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

o            Pre-commencement to communications pursuant to Rule 13e-4(c) under the Exchange Act

 

 

 



 

Item 2.02                                           Results of Operations and Financial Condition

 

On July 29, 2013, Northeast Bancorp, a Maine corporation (the “Company”), issued a press release announcing its earnings for the fourth quarter of fiscal 2013 and declaring the payment of a dividend. The full text of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information contained herein, including the exhibit attached hereto, is furnished pursuant to Item 2.02 of this Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, the information in this report (including the exhibits hereto) are not to be incorporated by reference into any of the Company’s filings with the Securities and Exchange Commission, whether filed prior to or after the furnishing of these certificates, regardless of any general or specific incorporation language in such filing.

 

Item 9.01                                           Financial Statements and Exhibits

 

(c)                                                                                  Exhibits

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated July 29, 2013

 

2



 

SIGNATURE

 

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

 

 

 

NORTHEAST BANCORP

 

 

 

 

 

 

By:

/s/ Claire S. Bean

 

Name:

Claire S. Bean

 

Title:

Chief Financial Officer

 

Date: July 29, 2013

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated July 29, 2013

 

4


Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

For More Information:

 

Claire S. Bean, CFO & COO

Northeast Bank, 500 Canal Street, Lewiston, ME 04240

207.786.3245 ext. 3202

www.northeastbank.com

GRAPHIC

 

Northeast Bancorp Reports Fourth Quarter Results, Declares Dividend

 

Lewiston, ME (July 29, 2013) 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 $205 thousand for the quarter ended June 30, 2013, compared to $1.0 million for the quarter ended June 30, 2012.  Net income for the year ended June 30, 2013 was $4.4 million, compared to $2.2 million for the year ended June 30, 2012.  Net income for the year ended June 30, 2012 included $1.1 million from discontinued operations.

 

The current quarter included $1.4 million of expenses related to severance and the settlement of a previously disclosed lawsuit, based on a claim arising from events occurring in 2005 and 2006. Excluding these items, which the Company considers to be non-core, net operating earnings were $1.1 million or $0.11 per diluted common share. Reported net income and net operating earnings for the quarters and years ended June 30, 2013 and 2012, respectively, are set forth below:

 

 

 

Reconciliation of Net Income Available to Common Shareholders (GAAP) to Net Operating
Earnings (non-GAAP)(1)

 

 

 

Three Months Ended June 30,

 

Year Ended June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

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

 

Net income available to common shareholders (GAAP)

 

$

205

 

$

950

 

$

4,065

 

$

1,771

 

Items excluded from operating earnings, net of tax:

 

 

 

 

 

 

 

 

 

Net income from discontinued operations

 

 

(10

)

 

(1,147

)

Severance

 

255

 

 

255

 

 

Legal settlement and related professional fees

 

671

 

 

671

 

 

Total after-tax items

 

926

 

(10

)

926

 

(1,147

)

Net operating earnings (non-GAAP)

 

$

1,131

 

$

940

 

$

4,991

 

$

624

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

10,446,643

 

6,605,465

 

10,409,588

 

4,277,777

 

 

 

 

 

 

 

 

 

 

 

Reported basic earnings per share (GAAP)

 

$

0.02

 

$

0.14

 

$

0.39

 

$

0.41

 

Items excluded from operating earnings

 

0.09

 

 

0.09

 

(0.26

)

Net operating earnings per share (non-GAAP)

 

$

0.11

 

$

0.14

 

$

0.48

 

$

0.15

 

 


(1) Management believes operating earnings, which exclude non-core items, provide a more meaningful representation of the Company’s performance.

 

The Board of Directors has declared a cash dividend of $0.09 per share, payable on August 23, 2013 to shareholders of record as of August 9, 2013.

 

“The growing value of our business strategy is reflected in this year’s results, in which we achieved over 22% growth in our loan portfolio, and 15% deposit growth,” said Richard Wayne, Chief Executive Officer.  “Loan originations and acquisitions for the quarter totaled $117 million, of which $67 million was generated by our loan purchasing group, and $48 million through our residential lending division. The success of our lending efforts helped drive our net interest margin to 5.32% for the quarter,” continued Wayne.

 

At June 30, 2013, total assets were $670.6 million, an increase of $1.4 million, or 0.2%, compared to June 30, 2012 and a decrease of $28.9 million, or 4.1%, compared to March 31, 2013. The principal components of the year-over-year and quarterly changes in the balance sheet follow:

 

1.              The loan portfolio grew by $79.1 million, or 22.2%, compared to June 30, 2012, principally due to net growth of $116.1 million in commercial loans purchased or originated by the Bank’s Loan Acquisition and Servicing Group (“LASG”), offset by net amortization and payoffs of $37.0 million in the Community Banking Division loan portfolio.

 



 

Compared to the quarter ended March 31, 2013, the Bank’s LASG loan portfolio increased $57.3 million, reflecting purchases and originations of $45.8 million and $21.6 million, respectively, offset by loan payoffs and asset sales totaling $9.9 million.  LASG originations during the quarter included $12.0 million secured by marketable securities and $9.6 million of loans secured by real estate.  Loan payoffs and asset sales during the quarter ended June 30, 2013 resulted in $2.8 million of transactional income, compared to $4.1 million in the quarter ended March 31, 2013 and $2.5 million in the quarter ended June 30, 2012.

 

As has been discussed in more detail in the Company’s SEC filings, in connection with the merger of FHB Formation LLC with and into the Company, the Company made certain commitments to the Board of Governors of the Federal Reserve System (the “Federal Reserve”), including a commitment to hold commercial real estate loans (including owner-occupied commercial real estate) to within 300% of total risk-based capital.  On June 28, 2013, the Federal Reserve approved the amendment of that commitment to exclude owner-occupied commercial real estate loans.  All other commitments made to the Federal Reserve in connection with the merger remain unchanged.   The Company’s loan purchasing capacity under these conditions follows:

 

Basis for Regulatory Condition

 

Condition

 

Remaining Purchased Loan
Capacity at June 30, 2013

 

 

 

 

 

(Dollars in millions)

 

Total Loans

 

Purchased loans may not exceed 40% of total loans

 

$

18.0

 

Regulatory Capital

 

Commercial real estate loans may not exceed 300% of total risk-based capital

 

$

172.3

 

 

To increase its capacity under the “Total Loans” regulatory condition, the Company will continue to hold in its portfolio, as necessary and on a duration—matched basis, residential fixed and adjustable rate loans that would otherwise be sold in the secondary market.

 

An overview of the LASG portfolio follows:

 

 

 

LASG Portfolio Overview

 

 

 

Three Months Ended June 30, 2013

 

Year Ended June 30, 2013

 

 

 

Purchased

 

Originated

 

Total LASG

 

Purchased

 

Originated

 

Total LASG

 

 

 

(Dollars in thousands)

 

Purchased or originated during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

51,677

 

$

21,556

 

$

73,233

 

$

155,216

 

$

37,181

 

$

192,397

 

Net investment basis

 

45,783

 

21,556

 

67,339

 

121,336

 

37,208

 

158,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals as of period end:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

 

 

 

 

 

 

$

204,276

 

$

38,846

 

$

243,122

 

Net investment basis

 

 

 

 

 

 

 

166,786

 

38,879

 

205,665

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Returns during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

17.30

%

8.92

%

16.21

%

16.04

%

9.34

%

15.28

%

Total Return (1)

 

17.53

%

8.92

%

16.41

%

18.33

%

9.34

%

17.32

%

 


(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, and other noninterest income recorded during the period divided by the average invested balance, on an annualized basis.

 

2.              Deposits increased by $62.4 million, or 14.8%, compared to June 30, 2012 primarily due to a $69.0 million increase in deposits raised through ableBanking, the Bank’s online affinity deposit platform.  During the quarter ended June 30, 2013, the Bank allowed $23.5 million of maturing time deposits to run-off, in a plan to reduce excess short-term balance sheet liquidity.

 

3.              Total borrowings decreased by $6.9 million and $56.8 million, for the quarter and year ended June 30, 2013, respectively, as the Bank did not replace maturing structured repurchase agreements and FHLB advances.

 

4.              Stockholders’ equity decreased by $5.3 million, or 4.5%, compared to June 30, 2013, primarily due to the redemption of TARP preferred stock and warrants totaling $4.3 million in the quarter ended December 31, 2012.  Stockholders’ equity decreased by $1.9 million, or 1.7%, compared to March 31, 2013, primarily due to unrealized losses on available-for-sale securities.

 



 

Net income decreased by $843 thousand to $205 thousand for the quarter ended June 30, 2013, compared to $1.0 million for the quarter ended June 30, 2012.  Income for the quarter ended June 30, 2013 included $926 thousand of nonrecurring expenses, net of tax, relating to the settlement of a lawsuit, and compensation expense associated with the Bank’s decision to exit the investment brokerage business and the resignation of a senior manager.  Operating results for the quarter included the following items of significance:

 

1.              Net interest income increased by $1.8 million, or 26.5%, to $8.5 million for the quarter compared to the quarter ended June 30, 2012, primarily due to growth in the purchased loan portfolio.  This result is evident in the net interest margin, which increased to 5.32% for the quarter ended June 30, 2013, compared to 4.63% for the quarter ended June 30, 2012, and 5.07% for the quarter ended March 31, 2013.

 

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

 

 

 

Interest Income and Yield on Loans

 

 

 

Three Months Ended June 30,

 

 

 

2013

 

2012

 

 

 

Average

 

Interest

 

 

 

Average

 

Interest

 

 

 

 

 

Balance

 

Income

 

Yield

 

Balance

 

Income

 

Yield

 

 

 

(Dollars in thousands)

 

Community Banking Division

 

$

235,455

 

$

3,376

 

5.75

%

$

280,079

 

$

4,299

 

6.17

%

LASG:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated

 

20,723

 

461

 

8.92

%

5,215

 

114

 

8.79

%

Purchased

 

138,445

 

5,971

 

17.30

%

68,352

 

3,440

 

20.24

%

Total LASG

 

159,168

 

6,432

 

16.21

%

73,567

 

3,554

 

19.43

%

Total

 

$

394,623

 

$

9,808

 

9.97

%

$

353,646

 

$

7,853

 

8.93

%

 

 

 

Year Ended June 30,

 

 

 

2013

 

2012

 

 

 

Average

 

Interest

 

 

 

Average

 

Interest

 

 

 

 

 

Balance

 

Income

 

Yield

 

Balance

 

Income

 

Yield

 

 

 

(Dollars in thousands)

 

Community Banking Division

 

$

252,199

 

$

14,824

 

5.88

%

$

297,348

 

$

18,047

 

6.07

%

LASG:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated

 

14,906

 

1,392

 

9.34

%

3,278

 

308

 

9.40

%

Purchased

 

117,205

 

18,801

 

16.04

%

39,022

 

6,379

 

16.35

%

Total LASG

 

132,111

 

20,193

 

15.28

%

42,300

 

6,687

 

15.81

%

Total

 

$

384,310

 

$

35,017

 

9.11

%

$

339,648

 

$

24,734

 

7.28

%

 



 

The yield on purchased loans was increased by unscheduled loan payoffs, which resulted in immediate recognition of the prepaid loans’ discount in interest income. The following table details the “total return” on purchased loans, which includes transactional income of $2.8 million for the quarter and $10.6 million for the year ended June 30, 2013.

 

 

 

Total Return on Purchased Loans

 

 

 

Three Months Ended June 30,

 

 

 

2013

 

2012

 

 

 

Income

 

Return (1)

 

Income

 

Return (1)

 

 

 

(Dollars in thousands)

 

Regularly scheduled interest and accretion

 

$

3,237

 

9.38

%

$

1,580

 

9.30

%

Transactional income:

 

 

 

 

 

 

 

 

 

Gains on loan sales

 

80

 

0.23

%

649

 

3.82

%

Gain on sale of real estate owned

 

 

0.00

%

 

0.00

%

Other noninterest income

 

 

0.00

%

 

0.00

%

Accelerated accretion and loan fees

 

2,734

 

7.92

%

1,860

 

10.94

%

Total transactional income

 

2,814

 

8.15

%

2,509

 

14.76

%

Total

 

$

6,051

 

17.53

%

$

4,089

 

24.06

%

 

 

 

Year Ended June 30,

 

 

 

2013

 

2012

 

 

 

Income

 

Return (1)

 

Income

 

Return (1)

 

 

 

(Dollars in thousands)

 

Regularly scheduled interest and accretion

 

$

11,038

 

9.35

%

$

3,762

 

9.64

%

Transactional income:

 

 

 

 

 

 

 

 

 

Gains on loan sales

 

2,115

 

1.79

%

868

 

2.22

%

Gain on sale of real estate owned

 

684

 

0.58

%

 

0.00

%

Other noninterest income

 

36

 

0.03

%

 

0.00

%

Accelerated accretion and loan fees

 

7,763

 

6.58

%

2,617

 

6.71

%

Total transactional income

 

10,598

 

8.98

%

3,485

 

8.93

%

Total

 

$

21,636

 

18.33

%

$

7,247

 

18.57

%

 


(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, and other noninterest income recorded during the period divided by the average invested balance, on an annualized basis.

 

3.              Noninterest income decreased by $334 thousand for the current quarter, compared to the quarter ended June 30, 2012, principally due to lower net gains on the sale of portfolio loans, which decreased by $564 thousand due to lower LASG loan sales in the quarter ended June 30, 2013. Gains on sales of residential mortgages increased to $714 thousand, up slightly compared to the June 30, 2012 quarter and an increase of 14.2% when compared to the March 31, 2013 quarter.

 

The Bank announced on July 2nd its intention to exit the investment brokerage business, over a transition period estimated at 60 to 90 days. For the year ended June 30, 2013, investment brokerage revenue totaled $2.9 million and contributed $267 thousand to the Company’s pre-tax income, net of direct expenses.

 

4.              Noninterest expense increased by $2.7 million for the current quarter, compared to the quarter ended June 30, 2012, principally due to the following:

 

·                  An increase of $1.4 million in employee compensation, due mainly to higher incentive compensation, severance, and increases in staffing levels.  Non-recurring compensation expense, associated with the departure of a senior manager and the Bank’s decision to exit the investment brokerage business, totaled $388 thousand for the quarter. Full-time equivalent employees increased by 16 over the past twelve months, as the Company has added staff to several operational areas and the LASG.

 

·                  An increase of $1.0 million related to the settlement of a lawsuit.  The summons and complaint was filed in August of 2011, in connection with a dispute regarding certain deposit account activity occurring in 2005 and 2006.

 

·                  An increase of $192 thousand in occupancy and equipment expense, principally due to increased rent associated with the relocation of the Company’s office in Boston, MA, and depreciation of investments in new technology, principally those associated with ableBanking.

 

·                  An increase of $173 thousand in loan acquisition and collection expenses, principally due to an increase in the size of the LASG portfolio, which has grown to $205.7 million from $89.6 million at June 30, 2012.

 



 

·                  An increase of $157 thousand in marketing expense, principally due to ableBanking and residential mortgage advertising.

 

At June 30, 2013, nonperforming assets were $7.0 million, or 1.0% of total assets, an increase of $42 thousand from June 30, 2012 and a decrease of $441 thousand from March 31, 2013.

 

At June 30, 2013, the Company’s Tier 1 leverage ratio was 17.8%, a decrease from 19.9% at June 30, 2012 and an increase from 17.4% at March 31, 2013.  At June 30, 2013, the Company’s total risk-based capital ratio was 27.5%, a decrease from 33.3% and 30.7% at June 30, 2012 and March 31, 2013, respectively.

 



 

Investor Call Information

 

Richard Wayne, Chief Executive Officer of Northeast Bancorp, and Claire Bean, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss fourth quarter earnings and business outlook at 11:00 a.m. Eastern Time on Tuesday, July 30, 2013.  Investors can access the call by dialing 877.878.2762 and entering the following passcode: 22872642. The call will be available via live webcast, which can be viewed by accessing the Company’s website at www.northeastbank.com and clicking on the About Us - Investor Relations section. To listen to the webcast, attendees are encouraged to visit the website at least fifteen minutes early to register, download and install any necessary audio software. Please note there will also be a slide presentation that will accompany the webcast. For those who cannot listen to the live broadcast, a replay will be available online for one year at www.northeastbank.com.

 

About Northeast Bancorp

 

Northeast Bancorp (NASDAQ: NBN) is the holding company for Northeast Bank, a full-service bank headquartered in Lewiston, Maine. Northeast Bank offers traditional banking services through its Community Banking Division, which operates ten full-service branches and six loan production offices that serve individuals and businesses located in western and south-central Maine, southern New Hampshire and southeastern Massachusetts. Northeast Bank’s Loan Acquisition and Servicing Group purchases and originates commercial loans for the Bank’s portfolio. ableBanking, a division of Northeast Bank, offers savings products to consumers online. Information regarding Northeast Bank can be found on its website at www.northeastbank.com.

 

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, including tangible common stockholders’ equity, tangible book value per share, and net operating earnings. 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.

 

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 continuing weakness in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; increasing government regulation; the risk that the Company may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Company’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K and updated by the Company’s Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. These statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.

 

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 77 Middle Street, Portland, ME 04101.

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

 

 

 

June 30,

 

 

 

2013

 

2012

 

Assets

 

 

 

 

 

Cash and due from banks

 

$

3,238

 

$

2,538

 

Short-term investments

 

62,696

 

125,736

 

Total cash and cash equivalents

 

65,934

 

128,274

 

 

 

 

 

 

 

Available-for-sale securities, at fair value

 

121,597

 

133,264

 

Loans held for sale

 

8,594

 

9,882

 

 

 

 

 

 

 

Loans

 

 

 

 

 

Commercial real estate

 

264,448

 

180,735

 

Residential real estate

 

127,829

 

137,571

 

Construction

 

42

 

1,187

 

Commercial and industrial

 

29,720

 

19,612

 

Consumer

 

13,337

 

17,149

 

Total loans

 

435,376

 

356,254

 

Less: Allowance for loan losses

 

1,143

 

824

 

Loans, net

 

434,233

 

355,430

 

 

 

 

 

 

 

Premises and equipment, net

 

10,075

 

9,205

 

Real estate owned and other repossessed collateral, net

 

2,134

 

834

 

Federal Home Loan Bank and Federal Reserve Bank stock, at cost

 

5,721

 

5,473

 

Intangible assets, net

 

3,544

 

4,487

 

Bank owned life insurance

 

14,385

 

14,295

 

Other assets

 

4,422

 

8,052

 

Total assets

 

$

670,639

 

$

669,196

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Liabilities

 

 

 

 

 

Deposits

 

 

 

 

 

Demand

 

$

46,425

 

$

45,323

 

Savings and interest checking

 

90,970

 

90,204

 

Money market

 

84,416

 

45,024

 

Time

 

262,812

 

241,637

 

Total deposits

 

484,623

 

422,188

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

28,040

 

43,450

 

Structured repurchase agreements

 

25,397

 

66,183

 

Short-term borrowings

 

625

 

1,209

 

Junior subordinated debentures issued to affiliated trusts

 

8,268

 

8,106

 

Capital lease obligation

 

1,739

 

1,911

 

Other liabilities

 

8,145

 

7,010

 

Total liabilities

 

556,837

 

550,057

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2013; 4,227 shares issued and outstanding at June 30, 2012; liquidation preference of $1,000 per share

 

 

4

 

Voting common stock, $1.00 par value, 25,000,000 and 13,500,000 shares authorized at June 30, 2013 and 2012, respectively; 9,565,680 and 9,307,127 issued and outstanding at June 30, 2013 and 2012, respectively

 

9,566

 

9,307

 

Non-voting common stock, $1.00 par value, 3,000,000 and 1,500,000 shares authorized at June 30, 2013 and 2012, respectively; 880,963 and 1,076,314 issued and outstanding at June 30, 2013 and 2012, respectively

 

881

 

1,076

 

Additional paid-in capital

 

92,745

 

96,359

 

Retained earnings

 

12,524

 

12,235

 

Accumulated other comprehensive (loss) income

 

(1,914

)

158

 

Total stockholders’ equity

 

113,802

 

119,139

 

Total liabilities and stockholders’ equity

 

$

670,639

 

$

669,196

 

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

 

 

 

Three Months Ended June 30,

 

Year Ended June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Interest on loans

 

$

9,808

 

$

7,853

 

$

35,017

 

$

24,734

 

Interest on available-for-sale securities

 

209

 

417

 

1,138

 

2,019

 

Other interest and dividend income

 

105

 

85

 

388

 

261

 

Total interest and dividend income

 

10,122

 

8,355

 

36,543

 

27,014

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

1,008

 

878

 

4,098

 

3,426

 

Federal Home Loan Bank advances

 

217

 

256

 

967

 

1028

 

Structured repurchase agreements

 

136

 

247

 

651

 

991

 

Short-term borrowings

 

4

 

6

 

19

 

21

 

Junior subordinated debentures issued to affiliated trusts

 

195

 

195

 

769

 

751

 

Obligation under capital lease agreements

 

23

 

24

 

92

 

100

 

Total interest expense

 

1,583

 

1,606

 

6,596

 

6,317

 

 

 

 

 

 

 

 

 

 

 

Net interest and dividend income before provision for loan losses

 

8,539

 

6,749

 

29,947

 

20,697

 

Provision for loan losses

 

301

 

312

 

1,122

 

946

 

Net interest and dividend income after provision for loan losses

 

8,238

 

6,437

 

28,825

 

19,751

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Fees for other services to customers

 

446

 

347

 

1,648

 

1,383

 

Net securities gains

 

 

 

792

 

1,111

 

Gain on sales of loans held for sale

 

714

 

701

 

3,009

 

2,761

 

Gain on sales of portfolio loans

 

85

 

649

 

2,311

 

1,071

 

Gain (loss) recognized on real estate owned and other repossessed collateral, net

 

65

 

(25

)

746

 

(5

)

Investment commissions

 

687

 

671

 

2,919

 

2,782

 

Bank-owned life insurance income

 

119

 

123

 

718

 

501

 

Other noninterest income

 

14

 

(2

)

82

 

72

 

Total noninterest income

 

2,130

 

2,464

 

12,225

 

9,676

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,486

 

4,095

 

19,218

 

15,634

 

Occupancy and equipment expense

 

1,283

 

1,091

 

4,766

 

3,826

 

Professional fees

 

424

 

477

 

1,634

 

1,708

 

Data processing fees

 

283

 

265

 

1,141

 

1,088

 

Marketing expense

 

361

 

204

 

1,049

 

691

 

Loan acquisition and collection expense

 

481

 

308

 

1,766

 

1,106

 

FDIC insurance premiums

 

90

 

118

 

454

 

482

 

Intangible asset amortization

 

208

 

262

 

943

 

1,198

 

Legal settlement expense

 

980

 

 

980

 

 

Other noninterest expense

 

622

 

653

 

2,734

 

2,497

 

Total noninterest expense

 

10,218

 

7,473

 

34,685

 

28,230

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax (benefit) expense

 

150

 

1,428

 

6,365

 

1,197

 

Income tax (benefit) expense

 

(55

)

390

 

1,945

 

181

 

Net income from continuing operations

 

$

205

 

$

1,038

 

$

4,420

 

$

1,016

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

$

 

$

 

$

 

$

186

 

Gain on sale of discontinued operations

 

 

15

 

 

1,566

 

Income tax expense

 

 

5

 

 

605

 

Net income from discontinued operations

 

$

 

$

10

 

$

 

$

1,147

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

205

 

$

1,048

 

$

4,420

 

$

2,163

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

205

 

$

950

 

$

4,065

 

$

1,771

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

10,446,643

 

6,605,465

 

10,409,588

 

4,277,777

 

Diluted

 

10,446,643

 

6,607,171

 

10,409,588

 

4,291,352

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.02

 

$

0.14

 

$

0.39

 

$

0.15

 

Income from discontinued operations

 

0.00

 

0.00

 

0.00

 

0.26

 

Net income

 

$

0.02

 

$

0.14

 

$

0.39

 

$

0.41

 

Diluted:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.02

 

$

0.14

 

$

0.39

 

$

0.15

 

Income from discontinued operations

 

0.00

 

0.00

 

0.00

 

0.26

 

Net income

 

$

0.02

 

$

0.14

 

$

0.39

 

$

0.41

 

Cash dividends declared per common share

 

$

0.09

 

$

0.09

 

$

0.36

 

$

0.36

 

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended June 30,

 

 

 

2013

 

2012

 

 

 

 

 

Interest

 

Average

 

 

 

Interest

 

Average

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

 

 

(Dollars in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities (1)

 

$

126,272

 

$

209

 

0.66

%

$

135,306

 

$

417

 

1.24

%

Loans (2) (3)

 

394,623

 

9,808

 

9.97

%

353,646

 

7,853

 

8.93

%

Regulatory stock

 

5,253

 

33

 

2.52

%

5,473

 

24

 

1.76

%

Short-term investments (4)

 

118,113

 

72

 

0.24

%

91,249

 

61

 

0.27

%

Total interest-earning assets

 

644,261

 

10,122

 

6.30

%

585,674

 

8,355

 

5.74

%

Cash and due from banks

 

2,978

 

 

 

 

 

2,858

 

 

 

 

 

Other non-interest earning assets

 

35,982

 

 

 

 

 

35,449

 

 

 

 

 

Total assets

 

$

683,221

 

 

 

 

 

$

623,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

56,650

 

$

38

 

0.27

%

$

55,638

 

$

43

 

0.31

%

Money market accounts

 

85,585

 

117

 

0.55

%

44,928

 

45

 

0.40

%

Savings accounts

 

32,868

 

11

 

0.13

%

32,472

 

11

 

0.14

%

Time deposits

 

270,342

 

842

 

1.25

%

231,805

 

779

 

1.35

%

Total interest-bearing deposits

 

445,445

 

1,008

 

0.91

%

364,843

 

878

 

0.97

%

Short-term borrowings

 

1,697

 

4

 

0.95

%

1,210

 

6

 

1.99

%

Borrowed funds

 

58,923

 

376

 

2.56

%

111,857

 

527

 

1.89

%

Junior subordinated debentures

 

8,245

 

195

 

9.49

%

8,085

 

195

 

9.70

%

Total interest-bearing liabilities

 

514,310

 

1,583

 

1.23

%

485,995

 

1,606

 

1.33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits and escrow accounts

 

46,784

 

 

 

 

 

46,415

 

 

 

 

 

Other liabilities

 

6,900

 

 

 

 

 

2,605

 

 

 

 

 

Total liabilities

 

567,984

 

 

 

 

 

535,015

 

 

 

 

 

Stockholders’ equity

 

115,227

 

 

 

 

 

88,966

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

683,221

 

 

 

 

 

$

623,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

8,539

 

 

 

 

 

$

6,749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

5.07

%

 

 

 

 

4.41

%

Net interest margin (5)

 

 

 

 

 

5.32

%

 

 

 

 

4.63

%

 


(1)         Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate.

(2)         Includes loans held for sale.

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

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

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

 


 


 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

 

 

Year Ended June 30,

 

 

 

2013

 

2012

 

 

 

 

 

Interest

 

Average

 

 

 

Interest

 

Average

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

 

 

(Dollars in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities (1)

 

$

131,199

 

$

1,138

 

0.87

%

$

138,708

 

$

2,019

 

1.46

%

Loans (2) (3)

 

384,310

 

35,017

 

9.11

%

339,648

 

24,734

 

7.28

%

Regulatory stock

 

5,398

 

75

 

1.39

%

5,673

 

72

 

1.27

%

Short-term investments (4)

 

127,781

 

313

 

0.24

%

76,217

 

189

 

0.25

%

Total interest-earning assets

 

648,688

 

36,543

 

5.63

%

560,246

 

27,014

 

4.82

%

Cash and due from banks

 

3,065

 

 

 

 

 

2,910

 

 

 

 

 

Other non-interest earning assets

 

37,206

 

 

 

 

 

36,803

 

 

 

 

 

Total assets

 

$

688,959

 

 

 

 

 

$

599,959

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

55,763

 

$

153

 

0.27

%

$

55,218

 

$

213

 

0.39

%

Money market accounts

 

63,931

 

337

 

0.53

%

44,692

 

175

 

0.39

%

Savings accounts

 

31,939

 

44

 

0.14

%

32,799

 

67

 

0.20

%

Time deposits

 

280,059

 

3,564

 

1.27

%

223,782

 

2,971

 

1.33

%

Total interest-bearing deposits

 

431,692

 

4,098

 

0.95

%

356,491

 

3,426

 

0.96

%

Short-term borrowings

 

1,472

 

19

 

1.29

%

1,075

 

21

 

1.95

%

Borrowed funds

 

75,633

 

1,710

 

2.26

%

112,812

 

2,119

 

1.87

%

Junior subordinated debentures

 

8,185

 

769

 

9.40

%

8,028

 

751

 

9.35

%

Total interest-bearing liabilities

 

516,982

 

6,596

 

1.28

%

478,406

 

6,317

 

1.32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities of discontinued operations (5)

 

 

 

 

 

 

271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits and escrow accounts

 

49,343

 

 

 

 

 

45,933

 

 

 

 

 

Other liabilities

 

5,982

 

 

 

 

 

3,932

 

 

 

 

 

Total liabilities

 

572,307

 

 

 

 

 

528,542

 

 

 

 

 

Stockholders’ equity

 

116,652

 

 

 

 

 

71,417

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

688,959

 

 

 

 

 

$

599,959

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

29,947

 

 

 

 

 

$

20,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

4.36

%

 

 

 

 

3.50

%

Net interest margin (6)

 

 

 

 

 

4.62

%

 

 

 

 

3.69

%

 


(1)

Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate.

(2)

Includes loans held for sale.

(3)

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

(4)

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

(5)

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

(6)

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

 



 

NORTHEAST BANCORP AND SUBSIDIARY

SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA

(Unaudited)

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

 

 

 

Three Months Ended

 

 

 

June 30, 2013

 

March 31, 2013

 

December 31, 2012

 

September 30, 2012

 

June 30, 2012

 

Net interest income

 

$

8,539

 

$

8,253

 

$

7,057

 

$

6,098

 

$

6,749

 

Provision for loan losses

 

301

 

346

 

247

 

228

 

312

 

Noninterest income

 

2,130

 

3,401

 

3,544

 

3,150

 

2,464

 

Noninterest expense

 

10,218

 

8,831

 

8,132

 

7,502

 

7,473

 

Net income from discontinued operations

 

 

 

 

 

10

 

Net income

 

205

 

1,666

 

1,517

 

1,034

 

1,048

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

10,446,643

 

10,425,576

 

10,383,441

 

10,383,441

 

6,605,465

 

Diluted

 

10,446,643

 

10,425,576

 

10,383,441

 

10,383,441

 

6,607,171

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

$

0.16

 

$

0.12

 

$

0.09

 

$

0.14

 

Diluted

 

0.02

 

0.16

 

0.12

 

0.09

 

0.14

 

Dividends per common share

 

0.09

 

0.09

 

0.09

 

0.09

 

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

0.12

%

0.97

%

0.87

%

0.61

%

0.68

%

Return on average equity

 

0.71

%

5.85

%

5.15

%

3.45

%

4.74

%

Net interest rate spread (1) 

 

5.07

%

4.82

%

4.02

%

3.52

%

4.41

%

Net interest margin (2)

 

5.32

%

5.07

%

4.28

%

3.80

%

4.63

%

Efficiency ratio (3)

 

95.77

%

75.78

%

76.71

%

81.12

%

81.11

%

Noninterest expense to average total assets

 

6.00

%

5.12

%

4.64

%

4.39

%

4.82

%

Average interest-earning assets to average interest-bearing liabilities

 

125.27

%

124.53

%

125.48

%

126.65

%

120.51

%

 

 

 

Asof

 

 

 

June30,2013

 

March 31, 2013

 

December 31, 2012

 

September 30, 2012

 

June 30, 2012

 

Nonperforming loans:

 

 

 

 

 

 

 

 

 

 

 

Originated portfolio:

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

2,346

 

$

2,296

 

$

3,512

 

$

3,184

 

$

3,090

 

Commercial real estate

 

473

 

631

 

624

 

626

 

417

 

Construction

 

 

 

 

 

 

Home equity

 

334

 

405

 

620

 

289

 

220

 

Commercial and industrial

 

110

 

103

 

123

 

133

 

1,008

 

Consumer

 

136

 

258

 

166

 

181

 

324

 

 

 

3,399

 

3,693

 

5,045

 

4,413

 

5,059

 

Purchased portfolio:

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

 

 

Commercial real estate

 

1,457

 

1,700

 

2,144

 

667

 

1,055

 

Commercial and industrial

 

 

 

 

 

 

 

 

1,457

 

1,700

 

2,144

 

667

 

1,055

 

Total nonperforming loans

 

4,856

 

5,393

 

7,189

 

5,080

 

6,114

 

Real estate owned and other repossessed collateral

 

2,134

 

2,038

 

2,633

 

2,645

 

834

 

Total nonperforming assets

 

$

6,990

 

$

7,431

 

$

9,822

 

$

7,725

 

$

6,948

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due loans to total loans

 

1.68

%

2.00

%

2.52

%

1.65

%

1.95

%

Nonperforming loans to total loans

 

1.12

%

1.42

%

1.83

%

1.35

%

1.72

%

Nonperforming assets to total assets

 

1.04

%

1.06

%

1.39

%

1.15

%

1.04

%

Allowance for loan losses to total loans

 

0.26

%

0.27

%

0.22

%

0.18

%

0.23

%

Allowance for loan losses to nonperforming loans

 

23.54

%

19.15

%

12.17

%

13.15

%

13.48

%

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans to risk-based capital (4)

 

159.07

%

184.40

%

193.74

%

167.62

%

148.28

%

Net loans to core deposits (5)

 

92.94

%

77.72

%

81.01

%

86.69

%

88.29

%

Purchased loans to total loans, including held for sale

 

37.57

%

33.63

%

33.36

%

27.68

%

23.07

%

Equity to total assets

 

16.97

%

16.54

%

16.31

%

17.72

%

17.83

%

Tier 1 leverage capital ratio

 

17.78

%

17.41

%

17.44

%

18.37

%

19.91

%

Total risk-based capital ratio

 

27.54

%

30.71

%

29.35

%

31.32

%

33.34

%

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

$

113,802

 

$

115,737

 

$

114,931

 

$

118,857

 

$

119,139

 

Less: Preferred stock

 

 

 

 

(4,227

)

(4,227

)

Common stockholders’ equity

 

$

113,802

 

$

115,737

 

114,931

 

114,630

 

114,912

 

Less: Intangible assets

 

(3,544

)

(3,751

)

(3,957

)

(4,222

)

(4,487

)

Tangible common stockholders’ equity (non-GAAP)

 

$

110,258

 

$

111,986

 

$

110,974

 

$

110,408

 

$

110,425

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

10,446,643

 

10,446,643

 

10,383,441

 

10,383,441

 

10,383,441

 

Book value per common share

 

$

10.89

 

$

11.08

 

$

11.07

 

$

11.04

 

$

11.07

 

Tangible book value per share (non-GAAP) (6)

 

$

10.55

 

$

10.72

 

$

10.69

 

$

10.63

 

$

10.63

 

 


(1)

The net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.

(2)

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

(3)

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

(4)

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. As of June 30, 2013, commercial real estate excludes loans secured by owner-occupied properties.

(5)

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

(6)

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