UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 23, 2014

 

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 April 23, 2014, Northeast Bancorp, a Maine corporation (the “Company”), issued a press release announcing its earnings for the third quarter of fiscal 2014 and declaring the payment of a dividend. The full text of this press release is attached hereto as Exhibit 99.1.

 

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 8.01                                           Other Events

 

Also on April 23, 2014, the Company announced that its Board of Directors authorized the Company to purchase up to 870,000 shares of its common stock, representing 8.3% of the Company’s outstanding common shares and approximately $8.4 million based on the Company’s closing stock price on April 22, 2014.  Such purchases will be made in open market or in privately negotiated transactions from time to time and in such amounts as market conditions warrant.  The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities.  The stock repurchase program may be suspended or terminated at any time without prior notice, and will expire on April 23, 2016.

 

Item 9.01                                           Financial Statements and Exhibits

 

(c)                                                                                  Exhibits

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated April 23, 2014

 

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: April 23, 2014

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated April 23, 2014

 

4


Exhibit 99.1

 

FOR IMMEDIATE RELEASE

GRAPHIC

For More Information:

Claire S. Bean, CFO & COO

Northeast Bank, 500 Canal Street, Lewiston, ME 04240

207.786.3245 ext. 3202

www.northeastbank.com

 

 

Northeast Bancorp Reports Third Quarter Results, Announces Stock Repurchase Program and Reduction in Dividend

 

Lewiston, ME (April 23, 2014) — 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 available to common shareholders of $437 thousand, or $0.04 per diluted common share, for the quarter ended March 31, 2014, compared to net income available to common shareholders of $1.7 million, or $0.16 per diluted common share, for the quarter ended March 31, 2013. Net income available to common shareholders for the nine months ended March 31, 2014 was $2.2 million, compared to $3.9 million for the nine months ended March 31, 2013.

 

“The timing of income realized through our loan purchasing activities affected our results this quarter, as transactional income declined to $689 thousand as compared to $4.1 million for the quarter ended March 31, 2013. As we have noted in the past, transactional income on purchased loans can vary significantly from quarter to quarter, and income not recognized currently will benefit future periods,” said Richard Wayne, Chief Executive Officer. “Such fluctuations may continue to cause variability in our quarterly earnings per share, until moderated by the positive effect of growth in our balance sheet and the full leveraging of our capital.”

 

The Board of Directors has also voted to authorize the Company to purchase up to 870,000 shares of its common stock, representing 8.3% of the Company’s outstanding common shares and approximately $8.4 million based on the Company’s closing stock price on April 22, 2014. The Board of Directors has also declared a cash dividend of $0.01 per share, payable on May 19, 2014 to shareholders of record as of May 5, 2014.

 

“We believe that our shares are undervalued, based on current market prices,” said Mr. Wayne. “Our goal in implementing this stock repurchase plan is to enhance shareholder value and, coupled with a reduction in our common stock dividend, provide the Company with greater flexibility in managing its capital position as we continue to implement our growth strategy.”

 

Repurchases under the stock repurchase program will be made in open market or in privately negotiated transactions from time to time and in such amounts as market conditions warrant.  The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities.  The stock repurchase program may be suspended or terminated at any time without prior notice, and will expire on April 23, 2016.

 



 

At March 31, 2014, total assets were $750.9 million, an increase of $80.3 million, or 12.0%, compared to June 30, 2013. The principal components of the change in the Company’s balance sheet are as follows:

 

1.              The loan portfolio grew by $78.9 million, or 18.1%, compared to June 30, 2013, principally due to net growth of $68.0 million in commercial loans purchased or originated by the Bank’s Loan Acquisition and Servicing Group (“LASG”) and $10.9 million of net growth in loans originated by the Bank’s Community Banking Division.  As has been discussed in the Company’s prior SEC filings, the Company made certain commitments to the Board of Governors of the Federal Reserve System in connection with the merger of FHB Formation LLC with and into the Company in December 2010.  The Company’s loan purchase capacity under these conditions follow.

 

Basis for
Regulatory Condition

 

Condition

 

Purchased Loan Capacity at
March 31, 2014

 

 

 

 

 

(Dollars in millions)

 

Total Loans

 

Purchased loans may not exceed 40% of total loans

 

$

41.1

 

Regulatory Capital

 

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

 

$

153.6

 

 

An overview of the Bank’s LASG portfolio follows.

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

Purchased

 

Originated

 

Total LASG

 

Purchased

 

Originated

 

Total LASG

 

 

 

(Dollars in thousands)

 

Loans purchased or originated during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

19,050

 

$

11,158

 

$

30,208

 

$

13,971

 

$

2,800

 

$

16,771

 

Net investment basis

 

16,300

 

11,158

 

27,458

 

11,340

 

2,827

 

14,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan returns during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

9.51

%

5.13

%

8.11

%

17.76

%

9.43

%

16.84

%

Total Return (1)

 

10.39

%

5.13

%

8.71

%

22.02

%

9.43

%

20.64

%

 

 

 

Nine Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

Purchased

 

Originated

 

Total LASG

 

Purchased

 

Originated

 

Total LASG

 

 

 

(Dollars in thousands)

 

Loans purchased or originated during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

53,044

 

$

54,722

 

$

107,766

 

$

103,539

 

$

15,625

 

$

119,164

 

Net investment basis

 

46,267

 

54,722

 

100,989

 

75,553

 

15,652

 

91,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan returns during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

11.17

%

5.27

%

9.55

%

15.52

%

9.55

%

14.89

%

Total Return (1)

 

11.60

%

5.27

%

9.87

%

18.66

%

9.55

%

17.70

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans as of period end:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

221,597

 

$

88,700

 

$

310,297

 

$

166,360

 

$

17,871

 

$

184,231

 

Net investment basis

 

184,959

 

88,724

 

273,683

 

130,502

 

17,904

 

148,406

 

 


(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 and borrowings increased by $78.7 million and $1.6 million, respectively, from June 30, 2013.  Growth in each was tied to the Company’s strategy for funding its loan growth which, through the third quarter of fiscal 2014, included a component of duration-matched funding for residential mortgages.

 

Net income from continuing operations decreased by $1.2 million to $437 thousand for the quarter ended March 31, 2014, compared to $1.6 million for the quarter ended March 31, 2013.  Operating results for the current quarter included the following additional items of significance:

 

1.              Net interest income before provision for loan losses decreased by $1.1 million, or 13.8%, to $7.1 million for the quarter ended March 31, 2014 compared to the quarter ended March 31, 2013, primarily due to lower transactional interest income from purchased loan payoffs.  The various components of transactional income are set forth in the table below entitled “Total Return on Purchased Loans.”  When compared to the quarter ended March 31, 2013, transactional interest income decreased nearly $2.4 million, impacting the net interest margin, which declined to 4.08% from 5.07%.  The following table summarizes interest income and related yields recognized on the loan portfolios.

 



 

 

 

Interest Income and Yield on Loans

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

Average

 

Interest

 

 

 

Average

 

Interest

 

 

 

 

 

Balance

 

Income

 

Yield

 

Balance

 

Income

 

Yield

 

 

 

(Dollars in thousands)

 

Community Banking Division

 

$

249,962

 

$

3,183

 

5.16

%

$

244,397

 

$

3,529

 

5.86

%

LASG:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated — traditional

 

57,534

 

1,008

 

7.11

%

16,167

 

376

 

9.43

%

Originated — securities loans

 

25,992

 

48

 

0.75

%

 

 

0.00

%

Purchased

 

177,559

 

4,164

 

9.51

%

130,045

 

5,696

 

17.76

%

Total LASG

 

261,085

 

5,220

 

8.11

%

146,212

 

6,072

 

16.84

%

Total

 

$

511,047

 

$

8,403

 

6.67

%

$

390,609

 

$

9,601

 

9.97

%

 

 

 

Nine Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

Average

 

Interest

 

 

 

Average

 

Interest

 

 

 

 

 

Balance

 

Income

 

Yield

 

Balance

 

Income

 

Yield

 

 

 

(Dollars in thousands)

 

Community Banking Division

 

$

246,539

 

$

9,809

 

5.30

%

$

257,760

 

$

11,449

 

5.92

%

LASG:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated — traditional

 

44,631

 

2,513

 

7.50

%

12,974

 

930

 

9.55

%

Originated — securities loans

 

21,638

 

109

 

0.67

%

 

 

0.00

%

Purchased

 

175,383

 

14,711

 

11.17

%

110,151

 

12,830

 

15.52

%

Total LASG

 

241,652

 

17,333

 

9.55

%

123,125

 

13,760

 

14.89

%

Total

 

$

488,191

 

$

27,142

 

7.41

%

$

380,885

 

$

25,209

 

8.82

%

 

The yield on purchased loans in each period shown 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 total transactional income of $689 thousand for the quarter ended March 31, 2014, a decrease of $3.4 million from the quarter ended March 31, 2013.  The following table summarizes the total return recognized on the purchased loan portfolio.

 

 

 

Total Return on Purchased Loans

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

Income

 

Return (1)

 

Income

 

Return (1)

 

 

 

(Dollars in thousands)

 

Regularly scheduled interest and accretion

 

$

3,880

 

8.83

%

$

3,043

 

9.40

%

Transactional income:

 

 

 

 

 

 

 

 

 

Gains on loan sales

 

349

 

0.79

%

1,218

 

3.76

%

Gain on sale of real estate owned

 

56

 

0.13

%

211

 

0.65

%

Other noninterest income

 

 

0.00

%

 

0.00

%

Accelerated accretion and loan fees

 

284

 

0.65

%

2,653

 

8.20

%

Total transactional income

 

689

 

1.57

%

4,082

 

12.61

%

Total

 

$

4,569

 

10.39

%

$

7,125

 

22.02

%

 

 

 

Nine Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

Income

 

Return (1)

 

Income

 

Return (1)

 

 

 

(Dollars in thousands)

 

Regularly scheduled interest and accretion

 

$

11,632

 

8.80

%

$

7,813

 

9.35

%

Transactional income:

 

 

 

 

 

 

 

 

 

Gains on loan sales

 

576

 

0.44

%

2,035

 

2.44

%

Gain on sale of real estate owned

 

56

 

0.04

%

684

 

0.82

%

Other noninterest income

 

 

0.00

%

36

 

0.04

%

Accelerated accretion and loan fees

 

3,079

 

2.33

%

5,017

 

6.01

%

Total transactional income

 

3,711

 

2.81

%

7,772

 

9.30

%

Total

 

$

15,343

 

11.60

%

$

15,585

 

18.66

%

 


(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.              Noninterest income decreased by $1.3 million for the quarter ended March 31, 2014, compared to the quarter ended March 31, 2013, principally due to the following:

 

·                  A decrease of $855 thousand in gain on sales of portfolio loans (this is a component of transactional income, as noted above).

 

·                  A decrease of $360 thousand in gain on sales of loans held for sale, principally due to a significant decline in residential loan refinance activity.  The Company sold $15.3 million of residential loans in the quarter ended March 31, 2014, compared to $33.3 million in the quarter ended March 31, 2013.

 

·                  A decrease of $65 thousand in net gains on the disposition of other real estate owned.

 

·                  A decrease of $45 thousand in fee income, principally due to a decrease in transactional deposit account activity.

 

 

3.              Noninterest expense decreased by $612 thousand for the quarter ended March 31, 2014, compared to the quarter ended March 31, 2013, principally due to the following:

 

·                  A decrease of $928 thousand in salaries and employee benefits, principally related to a decline in incentive compensation.

 

·                  An increase of $232 thousand in occupancy and equipment expense, due to increased rent and utilities expense, depreciation, and software expenses.

 

·                  A decrease of $163 thousand in marketing expense, primarily due to a reduction in deposit marketing in fiscal 2014.

 

·                  An increase of $88 thousand in loan acquisition and collection expenses due, in part, to an increase of $5.0 million in loan purchases in the quarter ended March 31, 2014 over the same quarter in 2013.

 

·                  An increase of $204 thousand in other noninterest expense, principally due to non-capital expenditures associated with the Company’s upcoming core banking software system conversion.

 

At March 31, 2014, nonperforming assets totaled $9.4 million, or 1.3% of total assets, compared to $7.0 million, or 1.0% of total assets at June 30, 2013.  At March 31, 2014, $1.9 million of loans on nonaccrual status were current as to principal and interest payments, compared to $887 thousand at June 30, 2013.

 

At March 31, 2014, the Company’s Tier 1 leverage ratio was 16.3%, a decrease from 17.8% at June 30, 2013, and the total risk-based capital ratio was 24.1%, a decrease from 27.5% at June 30, 2013.

 



 

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 third quarter earnings and business outlook at 11:00 a.m. Eastern Time on Thursday, April 24, 2014. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 34221296. 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 that adversely affect borrowers’ ability to service and repay 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.

 

NBN-F

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

 

 

 

March 31, 2014

 

June 30, 2013

 

Assets

 

 

 

 

 

Cash and due from banks

 

$

2,677

 

$

3,238

 

Short-term investments

 

71,686

 

62,696

 

Total cash and cash equivalents

 

74,363

 

65,934

 

 

 

 

 

 

 

Available-for-sale securities, at fair value

 

112,732

 

121,597

 

Loans held for sale

 

9,827

 

8,594

 

 

 

 

 

 

 

Loans

 

 

 

 

 

Commercial real estate

 

299,898

 

264,448

 

Residential real estate

 

153,972

 

127,829

 

Construction

 

 

42

 

Commercial and industrial

 

49,554

 

29,720

 

Consumer

 

10,828

 

13,337

 

Total loans

 

514,252

 

435,376

 

Less: Allowance for loan losses

 

1,345

 

1,143

 

Loans, net

 

512,907

 

434,233

 

 

 

 

 

 

 

Premises and equipment, net

 

9,211

 

10,075

 

Real estate owned and other possessed collateral, net

 

2,000

 

2,134

 

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

 

5,721

 

5,721

 

Intangible assets, net

 

2,962

 

3,544

 

Bank owned life insurance

 

14,726

 

14,385

 

Other assets

 

6,444

 

4,422

 

Total assets

 

$

750,893

 

$

670,639

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Deposits

 

 

 

 

 

Demand

 

$

43,294

 

$

46,425

 

Savings and interest checking

 

100,961

 

90,970

 

Money market

 

86,735

 

84,416

 

Time

 

332,320

 

262,812

 

Total deposits

 

563,310

 

484,623

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

42,878

 

28,040

 

Wholesale repurchase agreements

 

10,240

 

25,397

 

Short-term borrowings

 

2,585

 

625

 

Junior subordinated debentures issued to affiliated trusts

 

8,396

 

8,268

 

Capital lease obligation

 

1,604

 

1,739

 

Other liabilities

 

7,872

 

8,145

 

Total liabilities

 

636,885

 

556,837

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at March 31, 2014 and June 30, 2013

 

 

 

Voting common stock, $1.00 par value, 25,000,000 shares authorized; 9,551,531 and 9,565,680 shares issued and outstanding at March 31, 2014 and June 30, 2013, respectively

 

9,552

 

9,566

 

Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 880,963 shares issued and outstanding at March 31, 2014 and June 30, 2013

 

881

 

881

 

Additional paid-in capital

 

93,371

 

92,745

 

Retained earnings

 

11,856

 

12,524

 

Accumulated other comprehensive loss

 

(1,652

)

(1,914

)

Total stockholders’ equity

 

114,008

 

113,802

 

Total liabilities and stockholders’ equity

 

$

750,893

 

$

670,639

 

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

 

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Interest on loans

 

$

8,403

 

$

9,601

 

$

27,142

 

$

25,209

 

Interest on available-for-sale securities

 

253

 

234

 

797

 

929

 

Other interest and dividend income

 

61

 

85

 

208

 

283

 

Total interest and dividend income

 

8,717

 

9,920

 

28,147

 

26,421

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

1,022

 

1,084

 

3,048

 

3,090

 

Federal Home Loan Bank advances

 

324

 

232

 

975

 

750

 

Wholesale repurchase agreements

 

93

 

135

 

285

 

515

 

Short-term borrowings

 

6

 

4

 

17

 

15

 

Junior subordinated debentures issued to affiliated trusts

 

140

 

190

 

525

 

574

 

Obligation under capital lease agreements

 

20

 

22

 

63

 

69

 

Total interest expense

 

1,605

 

1,667

 

4,913

 

5,013

 

 

 

 

 

 

 

 

 

 

 

Net interest and dividend income before provision for loan losses

 

7,112

 

8,253

 

23,234

 

21,408

 

Provision for loan losses

 

180

 

346

 

407

 

821

 

Net interest and dividend income after provision for loan losses

 

6,932

 

7,907

 

22,827

 

20,587

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Fees for other services to customers

 

385

 

430

 

1,246

 

1,202

 

Net securities gains

 

 

 

 

792

 

Gain on sales of loans held for sale

 

265

 

625

 

1,145

 

2,295

 

Gain on sales of portfolio loans

 

373

 

1,228

 

603

 

2,226

 

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

 

165

 

230

 

50

 

681

 

Bank-owned life insurance income

 

108

 

118

 

342

 

599

 

Other noninterest income

 

12

 

12

 

46

 

68

 

Total noninterest income

 

1,308

 

2,643

 

3,432

 

7,863

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

3,759

 

4,687

 

12,624

 

12,170

 

Occupancy and equipment expense

 

1,450

 

1,218

 

4,075

 

3,341

 

Professional fees

 

366

 

388

 

1,115

 

1,210

 

Data processing fees

 

257

 

239

 

770

 

671

 

Marketing expense

 

86

 

249

 

225

 

678

 

Loan acquisition and collection expense

 

440

 

352

 

1,203

 

1,285

 

FDIC insurance premiums

 

127

 

125

 

354

 

364

 

Intangible asset amortization

 

162

 

205

 

582

 

735

 

Legal settlement recovery

 

 

 

(250

)

 

Other noninterest expense

 

869

 

665

 

2,284

 

2,034

 

Total noninterest expense

 

7,516

 

8,128

 

22,982

 

22,488

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax expense

 

724

 

2,422

 

3,277

 

5,962

 

Income tax expense

 

287

 

792

 

1,119

 

1,913

 

Net Income from continuing operations

 

437

 

1,630

 

2,158

 

4,049

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations before income tax expense (benefit)

 

 

55

 

(12

)

253

 

Income tax expense (benefit)

 

 

19

 

(4

)

87

 

Net income (loss) from discontinued operations

 

 

36

 

(8

)

166

 

Net income

 

$

437

 

$

1,666

 

$

2,150

 

$

4,215

 

Net income available to common stockholders

 

$

437

 

$

1,666

 

$

2,150

 

$

3,860

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

10,432,494

 

10,425,576

 

10,435,300

 

10,397,280

 

Diluted

 

10,432,494

 

10,425,576

 

10,435,300

 

10,397,280

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.04

 

$

0.16

 

$

0.21

 

$

0.35

 

Income from discontinued operations

 

0.00

 

0.00

 

0.00

 

0.02

 

Net Income

 

$

0.04

 

$

0.16

 

$

0.21

 

$

0.37

 

Diluted:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.04

 

$

0.16

 

$

0.21

 

$

0.35

 

Income from discontinued operations

 

0.00

 

0.00

 

0.00

 

0.02

 

Net Income

 

$

0.04

 

$

0.16

 

$

0.21

 

$

0.37

 

Cash dividends declared per common share

 

$

0.09

 

$

0.09

 

$

0.27

 

$

0.27

 

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

 

 

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

 

$

114,925

 

$

253

 

0.89

%

$

131,006

 

$

234

 

0.72

%

Loans (1) (2)

 

511,047

 

8,403

 

6.67

%

390,609

 

9,601

 

9.97

%

Regulatory stock

 

5,721

 

16

 

1.13

%

5,391

 

4

 

0.30

%

Short-term investments (3)

 

75,506

 

45

 

0.24

%

133,025

 

81

 

0.25

%

Total interest-earning assets

 

707,199

 

8,717

 

5.00

%

660,031

 

9,920

 

6.10

%

Cash and due from banks

 

2,833

 

 

 

 

 

3,184

 

 

 

 

 

Other non-interest earning assets

 

37,366

 

 

 

 

 

36,694

 

 

 

 

 

Total assets

 

$

747,398

 

 

 

 

 

$

699,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

61,028

 

$

40

 

0.27

%

$

55,068

 

$

36

 

0.27

%

Money market accounts

 

87,352

 

112

 

0.52

%

70,613

 

102

 

0.59

%

Savings accounts

 

35,032

 

12

 

0.14

%

32,464

 

11

 

0.14

%

Time deposits

 

325,505

 

858

 

1.07

%

297,555

 

935

 

1.27

%

Total interest-bearing deposits

 

508,917

 

1,022

 

0.81

%

455,700

 

1,084

 

0.96

%

Short-term borrowings

 

2,192

 

6

 

1.11

%

1,889

 

4

 

0.86

%

Borrowed funds

 

59,399

 

437

 

2.98

%

64,212

 

389

 

2.46

%

Junior subordinated debentures

 

8,374

 

140

 

6.78

%

8,205

 

190

 

9.39

%

Total interest-bearing liabilities

 

578,782

 

1,605

 

1.12

%

530,006

 

1,667

 

1.28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits and escrow accounts

 

48,361

 

 

 

 

 

48,426

 

 

 

 

 

Other liabilities

 

5,920

 

 

 

 

 

5,921

 

 

 

 

 

Total liabilities

 

633,163

 

 

 

 

 

584,353

 

 

 

 

 

Stockholders’ equity

 

114,235

 

 

 

 

 

115,556

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

747,398

 

 

 

 

 

$

699,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

7,112

 

 

 

 

 

$

8,253

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

3.87

%

 

 

 

 

4.82

%

Net interest margin (4)

 

 

 

 

 

4.08

%

 

 

 

 

5.07

%

 


(1)         Includes loans held for sale.

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

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

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

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

 

 

Nine Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

 

 

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

 

$

117,053

 

$

797

 

0.91

%

$

132,835

 

$

929

 

0.93

%

Loans (1) (2)

 

488,191

 

27,142

 

7.41

%

380,885

 

25,209

 

8.82

%

Regulatory stock

 

5,721

 

68

 

1.58

%

5,446

 

42

 

1.03

%

Short-term investments (3)

 

77,334

 

140

 

0.24

%

130,991

 

241

 

0.25

%

Total interest-earning assets

 

688,299

 

28,147

 

5.45

%

650,157

 

26,421

 

5.41

%

Cash and due from banks

 

2,975

 

 

 

 

 

3,094

 

 

 

 

 

Other non-interest earning assets

 

35,855

 

 

 

 

 

37,571

 

 

 

 

 

Total assets

 

$

727,129

 

 

 

 

 

$

690,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

59,703

 

$

120

 

0.27

%

$

55,468

 

$

116

 

0.28

%

Money market accounts

 

86,421

 

338

 

0.52

%

56,739

 

221

 

0.52

%

Savings accounts

 

34,160

 

35

 

0.14

%

31,631

 

32

 

0.13

%

Time deposits

 

306,423

 

2,555

 

1.11

%

283,287

 

2,721

 

1.28

%

Total interest-bearing deposits

 

486,707

 

3,048

 

0.83

%

427,125

 

3,090

 

0.96

%

Short-term borrowings

 

2,290

 

17

 

0.99

%

1,397

 

15

 

1.43

%

Borrowed funds

 

59,778

 

1,323

 

2.95

%

81,183

 

1,334

 

2.19

%

Junior subordinated debentures

 

8,331

 

525

 

8.39

%

8,164

 

574

 

9.37

%

Total interest-bearing liabilities

 

557,106

 

4,913

 

1.17

%

517,869

 

5,013

 

1.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits and escrow accounts

 

50,662

 

 

 

 

 

50,192

 

 

 

 

 

Other liabilities

 

5,718

 

 

 

 

 

5,636

 

 

 

 

 

Total liabilities

 

613,486

 

 

 

 

 

573,697

 

 

 

 

 

Stockholders’ equity

 

113,643

 

 

 

 

 

117,125

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

727,129

 

 

 

 

 

$

690,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

23,234

 

 

 

 

 

$

21,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

4.27

%

 

 

 

 

4.12

%

Net interest margin (4)

 

 

 

 

 

4.50

%

 

 

 

 

4.39

%

 


(1)         Includes loans held for sale.

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

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

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

 



 

NORTHEAST BANCORP AND SUBSIDIARY

SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA

(Unaudited)

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

 

 

 

Three Months Ended:

 

 

 

March 31, 2014

 

December 31, 2013

 

September 30, 2013

 

June 30, 2013

 

March 31, 2013

 

Net interest income

 

$

7,112

 

$

9,017

 

$

7,107

 

$

8,539

 

$

8,253

 

Provision for loan losses

 

180

 

151

 

77

 

301

 

346

 

Noninterest income

 

1,308

 

835

 

1,288

 

1,443

 

2,643

 

Noninterest expense

 

7,516

 

7,614

 

7,852

 

9,467

 

8,128

 

Net income from continuing operations

 

437

 

1,411

 

310

 

247

 

1,630

 

Net income

 

437

 

1,393

 

320

 

205

 

1,666

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

10,432,494

 

10,432,833

 

10,440,513

 

10,446,643

 

10,425,576

 

Diluted

 

10,432,494

 

10,432,833

 

10,440,513

 

10,446,643

 

10,425,576

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

$

0.13

 

$

0.03

 

$

0.02

 

$

0.16

 

Diluted

 

$

0.04

 

0.13

 

0.03

 

0.02

 

0.16

 

Dividends per common share

 

0.09

 

0.09

 

0.09

 

0.09

 

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

0.24

%

0.76

%

0.18

%

0.12

%

0.97

%

Return on average equity

 

1.55

%

4.86

%

1.12

%

0.71

%

5.85

%

Net interest rate spread (1) 

 

3.87

%

4.94

%

3.99

%

5.07

%

4.82

%

Net interest margin (2)

 

4.08

%

5.16

%

4.24

%

5.32

%

5.07

%

Efficiency ratio (3)

 

89.26

%

77.28

%

93.53

%

94.84

%

74.60

%

Noninterest expense to average total assets

 

4.08

%

4.13

%

4.43

%

5.56

%

4.71

%

Average interest-earning assets to average interest-bearing liabilities

 

122.17

%

123.85

%

124.70

%

125.27

%

124.53

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of:

 

 

 

March 31, 2014

 

December 31, 2013

 

September 30, 2013

 

June 30, 2013

 

March 31, 2013

 

Nonperforming loans:

 

 

 

 

 

 

 

 

 

 

 

Originated portfolio:

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

1,678

 

$

1,895

 

$

1,945

 

$

2,346

 

$

2,296

 

Commercial real estate

 

798

 

487

 

471

 

473

 

631

 

Home equity

 

214

 

204

 

229

 

334

 

405

 

Commercial business

 

 

61

 

62

 

110

 

103

 

Consumer

 

152

 

259

 

259

 

136

 

258

 

Total originated portfolio

 

2,842

 

2,906

 

2,966

 

3,399

 

3,693

 

Total purchased portfolio

 

4,582

 

3,245

 

2,553

 

1,457

 

1,700

 

Total nonperforming loans

 

7,424

 

6,151

 

5,519

 

4,856

 

5,393

 

Real estate owned and other possessed collateral, net

 

2,000

 

3,211

 

3,413

 

2,134

 

2,038

 

Total nonperforming assets

 

$

9,424

 

$

9,362

 

$

8,932

 

$

6,990

 

$

7,431

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due loans to total loans

 

1.44

%

1.57

%

1.38

%

1.68

%

2.00

%

Nonperforming loans to total loans

 

1.44

%

1.23

%

1.14

%

1.12

%

1.42

%

Nonperforming assets to total assets

 

1.26

%

1.28

%

1.23

%

1.04

%

1.06

%

Allowance for loan losses to total loans

 

0.26

%

0.27

%

0.25

%

0.26

%

0.27

%

Allowance for loan losses to nonperforming loans

 

18.12

%

21.95

%

22.18

%

23.54

%

19.15

%

 

 

 

 

 

 

 

 

 

 

 

 

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

 

175.10

%

170.69

%

171.30

%

159.07

%

184.40

%

Net loans to core deposits (5)

 

93.18

%

95.10

%

93.04

%

92.94

%

77.72

%

Purchased loans to total loans, including held for sale

 

35.29

%

34.89

%

36.29

%

37.57

%

33.63

%

Equity to total assets

 

15.18

%

15.61

%

15.70

%

16.97

%

16.54

%

Tier 1 leverage capital ratio

 

16.28

%

16.66

%

17.23

%

17.78

%

17.41

%

Total risk-based capital ratio

 

24.21

%

24.61

%

25.63

%

27.54

%

30.71

%

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

$

114,008

 

$

114,383

 

$

113,846

 

$

113,802

 

$

115,737

 

Less: Preferred stock

 

 

 

 

 

 

Common stockholders’ equity

 

114,008

 

114,383

 

113,846

 

113,802

 

115,737

 

Less: Intangible assets

 

(2,962

)

(3,124

)

(3,334

)

(3,544

)

(3,751

)

Tangible common stockholders’ equity (non-GAAP)

 

$

111,046

 

$

111,259

 

$

110,512

 

$

110,258

 

$

111,986

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

10,432,494

 

10,432,494

 

10,433,550

 

10,446,643

 

10,446,643

 

Book value per common share

 

$

10.93

 

$

10.96

 

$

10.91

 

$

10.89

 

$

11.08

 

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

 

10.64

 

10.66

 

10.59

 

10.55

 

10.72

 

 

 

 

 

 

 

Reconciliation of Net Income Available to Common Shareholders (GAAP) to Net
Operating Earnings (non-GAAP) (7)

 

 

 

Three Months Ended:

 

 

 

March 31, 2014

 

December 31, 2013

 

September 30, 2013

 

June 30, 2013

 

March 31, 2013

 

Net income available to common shareholders (GAAP)

 

$

437

 

$

1,393

 

$

320

 

$

205

 

$

1,666

 

Items excluded from operating earnings, net of tax:

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

18

 

(10

)

42

 

(36

)

Severance expense

 

35

 

 

366

 

203

 

 

Legal settlement expense and related professional fees

 

 

 

(165

)

671

 

 

Total after-tax items

 

35

 

18

 

191

 

916

 

(36

)

Net operating earnings (non-GAAP)

 

$

472

 

$

1,411

 

$

511

 

$

1,121

 

$

1,630

 

Net operating earnings per share - basic (non-GAAP)

 

$

0.05

 

$

0.14

 

$

0.05

 

$

0.11

 

$

0.16

 

 


(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.

(5) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include 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.

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