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): October 24, 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 October 24, 2014, Northeast Bancorp, a Maine corporation (the “Company”), issued a press release announcing its earnings for the first quarter of fiscal 2015 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 October 24, 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: October 24, 2014

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated October 24, 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 First Quarter Results, Declares Dividend

 

Lewiston, ME (October 24, 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 $1.6 million, or $0.16 per diluted common share, for the quarter ended September 30, 2014, compared to net income available to common shareholders of $320 thousand, or $0.03 per diluted common share, for the quarter ended September 30, 2013.

 

The Board of Directors has declared a cash dividend of $0.01 per share, payable on November 20, 2014 to shareholders of record as of November 6, 2014.

 

“We are very pleased with the results for this quarter,” said Richard Wayne, President and Chief Executive Officer.  “We have continued to leverage our capital and increase our core earnings through a combination of higher net interest income and leveraging our existing operating platform and personnel.  We achieved a net interest margin of 5.2% on the strength of $2.0 million of transactional income on purchased loans.”

 

At September 30, 2014, total assets were $782.3 million, an increase of $20.4 million, or 2.7%, compared to June 30, 2014. The principal components of the change in the Company’s balance sheet are as follows:

 

1.              The loan portfolio — excluding loans held for sale — grew by $25.4 million, or 4.9%, compared to June 30, 2014, principally due to net growth of $33.4 million in commercial loans purchased or originated by the Bank’s Loan Acquisition and Servicing Group (“LASG”), offset by an $8.0 million decrease in the Bank’s Community Banking Division loan portfolio.

 

New loans generated by the LASG aggregated $53.5 million for the quarter, consisting of $13.2 million in purchases, at an average price of 81.7%, and $40.3 million of originations, the latter total including $36.0 million of loans to broker dealers secured by marketable securities. Residential and consumer loan production sold in the secondary market totaled $30.8 million for the quarter.

 

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 and commercial real estate loan availability under these conditions follow.

 

Basis for
Regulatory Condition

 

Condition

 

Availability at September 30,
2014

 

 

 

 

 

(Dollars in millions)

 

Total Loans

 

Purchased loans may not exceed 40% of total loans

 

$

24.0

 

Regulatory Capital

 

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

 

$

162.5

 

 



 

An overview of the LASG portfolio follows.

 

 

 

Three Months Ended September 30,

 

 

 

2014

 

2013

 

 

 

Purchased

 

Originated

 

Total LASG

 

Purchased

 

Originated

 

Total LASG

 

 

 

(Dollars in thousands)

 

Loans purchased or originated during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

16,117

 

$

40,358

 

$

56,475

 

$

18,331

 

$

26,426

 

$

44,757

 

Net investment basis

 

13,167

 

40,353

 

53,520

 

16,348

 

26,426

 

42,774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans as of period end:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

244,910

 

$

108,534

 

$

353,444

 

$

214,159

 

$

63,588

 

$

277,747

 

Net investment basis

 

205,928

 

108,497

 

314,425

 

177,412

 

63,618

 

241,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan returns during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

12.76

%

6.45

%

10.93

%

10.16

%

5.71

%

9.21

%

Total Return (1)

 

12.75

%

6.88

%

11.05

%

10.62

%

5.71

%

9.57

%

 


(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.

 

2.              Deposits increased by $19.5 million, or 3.4%, for the quarter, attributable primarily to growth in non-maturity accounts, which increased by $20.2 million, or 8.7%, for the three months ended September 30, 2014. This growth was centered mainly in money market accounts attracted through the Bank’s online-only ableBanking division.

 

3.              Stockholders’ equity increased by $1.2 million from June 30, 2014, due principally to earnings of $1.6 million, offset in part by a $368 thousand decrease in AOCI and $134 thousand in share repurchases (representing 14,400 shares).

 

Net income from continuing operations increased by $1.3 million to $1.6 million for the quarter ended September 30, 2014, compared to the quarter ended September 30, 2013. Earnings for the current quarter included the following items of significance:

 

1.              Net interest income before provision for loan losses increased by $2.4 million, or 33.3%, for the quarter ended September 30, 2014 compared to the quarter ended September 30, 2013, due primarily to higher transactional interest income from purchased loan payoffs and the positive effect of balance sheet growth. Average earning assets increased by $60.0 million, and average loans by $63.3 million, when compared to the first quarter of FY 2014.

 

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 September 30, 2013, transactional interest income increased by $1.3 million, boosting the net interest margin, which increased to 5.18% from 4.24%.  The following table summarizes interest income and related yields recognized on the loan portfolios.

 

 

 

Interest Income and Yield on Loans

 

 

 

Three Months Ended September 30,

 

 

 

2014

 

2013

 

 

 

Average

 

Interest

 

 

 

Average

 

Interest

 

 

 

 

 

Balance

 

Income

 

Yield

 

Balance

 

Income

 

Yield

 

 

 

(Dollars in thousands)

 

Community Banking Division

 

$

241,165

 

$

3,062

 

5.04

%

$

242,700

 

$

3,342

 

5.46

%

LASG:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated

 

82,335

 

1,338

 

6.45

%

47,208

 

680

 

5.71

%

Purchased

 

202,856

 

6,522

 

12.76

%

173,167

 

4,435

 

10.16

%

Total LASG

 

285,191

 

7,860

 

10.93

%

220,375

 

5,115

 

9.21

%

Total

 

$

526,356

 

$

10,922

 

8.23

%

$

463,075

 

$

8,457

 

7.25

%

 

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 $2.0 million for the

 



 

quarter ended September 30, 2014, an increase of $1.1 million from the quarter ended September 30, 2013.  The following table summarizes the total return recognized on the purchased loan portfolio:

 

 

 

Total Return on Purchased Loans

 

 

 

Three Months Ended September 30,

 

 

 

2014

 

2013

 

 

 

Income

 

Return (1)

 

Income

 

Return (1)

 

 

 

(Dollars in thousands)

 

Regularly scheduled interest and accretion

 

$

4,497

 

8.80

%

$

3,739

 

8.54

%

Transactional income:

 

 

 

 

 

 

 

 

 

(Loss) gain on loan sales

 

(4

)

-0.01

%

216

 

0.49

%

Gain on sale of real estate owned

 

 

0.00

%

 

0.00

%

Other noninterest income

 

 

0.00

%

 

0.00

%

Accelerated accretion and loan fees

 

2,025

 

3.96

%

696

 

1.59

%

Total transactional income

 

2,021

 

3.95

%

912

 

2.08

%

Total

 

$

6,518

 

12.75

%

$

4,651

 

10.62

%

 

2.              Quarterly noninterest income of $1.2 million was $134 thousand lower than the quarter ended September 30, 2013, primarily due to a $136 thousand reduction in gains realized on sales of purchased loans.

 

3.              Noninterest expense decreased by $115 thousand for the quarter, measured against the quarter ended September 30, 2013. Comparing the two quarters, variances of significance are:

 

·                  Salaries and employee benefits decreased by $79 thousand, principally due to reductions in severance and overall employee head count, offset in part by higher incentive compensation expense;

·                  Occupancy and equipment costs declined by $125 thousand, the result of a reduction in software maintenance and depreciation expense following the conversion of the Bank’s core systems platform to an outsourced model in May 2014. The decrease in equipment expense was offset in part by higher conversion-related data processing fees, which increased by $88 thousand;

·                  Professional fees, which tend to fluctuate from quarter to quarter, were lower by $68 thousand;

·                  Loan expense decreased by $199 thousand, mainly due to lower loan acquisition and work-out expenses as well as a $78 thousand recovery of work-out expenses previously incurred;

·                  A $250 thousand insurance recovery was recognized in the quarter ended September 30, 2013.

 

4.              The Company’s effective tax rate for the quarter ended September 30, 2014 was 36.0%, compared to 33.5% for the quarter ended September 30, 2013. The increase in the quarter was primarily the result of a change in estimated state tax apportionment.

 

At September 30, 2014, nonperforming assets totaled $9.4 million, or 1.2% of total assets, compared to $9.3 million, or 1.2% of total assets at June 30, 2014 and $8.9 million, or 1.2% of total assets, at September 30, 2013.

 

At September 30, 2014, the Company’s Tier 1 leverage ratio was 15.9%, unchanged from June 30, 2014, and a decrease from 17.2% at September 30, 2013. The total risk-based capital ratio was 23.0% at September 30, 2014, a decrease from 23.7% at June 30, 2014 and 25.6% at September 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 first quarter earnings and business outlook at 10:00 a.m. Eastern Time on Monday, October 27, 2014. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 24713113. 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 two loan production offices that serve individuals and businesses located in western and south-central Maine and southern New Hampshire. 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 of compromises or breaches to our security systems; 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)

 

 

 

September 30, 2014

 

June 30, 2014

 

Assets

 

 

 

 

 

Cash and due from banks

 

$

2,313

 

$

3,372

 

Short-term investments

 

81,217

 

78,887

 

Total cash and cash equivalents

 

83,530

 

82,259

 

Available-for-sale securities, at fair value

 

110,347

 

113,881

 

Loans held for sale

 

9,069

 

11,945

 

Loans

 

 

 

 

 

Commercial real estate

 

311,632

 

316,098

 

Residential real estate

 

143,960

 

148,634

 

Commercial and industrial

 

76,940

 

41,800

 

Consumer

 

9,267

 

9,884

 

Total loans

 

541,799

 

516,416

 

Less: Allowance for loan losses

 

1,539

 

1,367

 

Loans, net

 

540,260

 

515,049

 

Premises and equipment, net

 

8,780

 

9,135

 

Real estate owned and other possessed collateral, net

 

2,115

 

1,991

 

Regulatory stock, at cost

 

4,102

 

4,102

 

Intangible assets, net

 

2,632

 

2,798

 

Bank owned life insurance

 

14,945

 

14,836

 

Other assets

 

6,511

 

5,935

 

Total assets

 

$

782,291

 

$

761,931

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Deposits

 

 

 

 

 

Demand

 

$

52,698

 

$

50,140

 

Savings and interest checking

 

96,814

 

98,340

 

Money market

 

103,054

 

83,901

 

Time

 

341,229

 

341,948

 

Total deposits

 

593,795

 

574,329

 

Federal Home Loan Bank advances

 

42,773

 

42,824

 

Wholesale repurchase agreements

 

10,158

 

10,199

 

Short-term borrowings

 

3,804

 

2,984

 

Junior subordinated debentures issued to affiliated trusts

 

8,485

 

8,440

 

Capital lease obligation

 

1,511

 

1,558

 

Other liabilities

 

8,523

 

9,531

 

Total liabilities

 

669,049

 

649,865

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

 

 

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

 

 

 

Voting common stock, $1.00 par value, 25,000,000 shares authorized; 9,367,071 and 9,260,331 shares issued and outstanding at September 30, 2014 and June 30, 2014, respectively

 

9,367

 

9,260

 

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

 

881

 

881

 

Additional paid-in capital

 

90,809

 

90,914

 

Retained earnings

 

13,836

 

12,294

 

Accumulated other comprehensive loss

 

(1,651

)

(1,283

)

Total stockholders’ equity

 

113,242

 

112,066

 

Total liabilities and stockholders’ equity

 

$

782,291

 

$

761,931

 

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

 

 

 

Three Months Ended September 30,

 

 

 

2014

 

2013

 

Interest and dividend income:

 

 

 

 

 

Interest on loans

 

$

10,922

 

$

8,457

 

Interest on available-for-sale securities

 

244

 

282

 

Other interest and dividend income

 

66

 

52

 

Total interest and dividend income

 

11,232

 

8,791

 

Interest expense:

 

 

 

 

 

Deposits

 

1,130

 

1,047

 

Federal Home Loan Bank advances

 

323

 

323

 

Wholesale repurchase agreements

 

73

 

95

 

Short-term borrowings

 

9

 

5

 

Junior subordinated debentures issued to affiliated trusts

 

206

 

192

 

Obligation under capital lease agreements

 

20

 

22

 

Total interest expense

 

1,761

 

1,684

 

Net interest and dividend income before provision for loan losses

 

9,471

 

7,107

 

Provision for loan losses

 

320

 

77

 

Net interest and dividend income after provision for loan losses

 

9,151

 

7,030

 

Noninterest income:

 

 

 

 

 

Fees for other services to customers

 

394

 

439

 

Gain on sales of loans held for sale

 

584

 

539

 

Gain on sales of portfolio loans

 

80

 

216

 

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

 

(23

)

(38

)

Bank-owned life insurance income

 

109

 

118

 

Other noninterest income

 

10

 

14

 

Total noninterest income

 

1,154

 

1,288

 

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

 

4,533

 

4,612

 

Occupancy and equipment expense

 

1,202

 

1,327

 

Professional fees

 

308

 

376

 

Data processing fees

 

345

 

277

 

Marketing expense

 

69

 

36

 

Loan acquisition and collection expense

 

274

 

473

 

FDIC insurance premiums

 

124

 

110

 

Intangible asset amortization

 

166

 

210

 

Legal settlement expense (recovery)

 

 

(250

)

Other noninterest expense

 

716

 

681

 

Total noninterest expense

 

7,737

 

7,852

 

Income from continuing operations before income tax expense

 

2,568

 

466

 

Income tax expense

 

924

 

156

 

Net Income from continuing operations

 

1,644

 

310

 

Income from discontinued operations before income tax expense

 

 

15

 

Income tax expense

 

 

5

 

Net income from discontinued operations

 

 

10

 

Net income

 

$

1,644

 

$

320

 

Net income available to common stockholders

 

$

1,644

 

$

320

 

Weighted-average shares outstanding:

 

 

 

 

 

Basic

 

10,180,038

 

10,440,513

 

Diluted

 

10,180,038

 

10,440,513

 

Earnings per common share:

 

 

 

 

 

Basic:

 

 

 

 

 

Income from continuing operations

 

$

0.16

 

$

0.03

 

Income from discontinued operations

 

0.00

 

0.00

 

Net Income

 

$

0.16

 

$

0.03

 

Diluted:

 

 

 

 

 

Income from continuing operations

 

$

0.16

 

$

0.03

 

Income from discontinued operations

 

0.00

 

0.00

 

Net Income

 

$

0.16

 

$

0.03

 

Cash dividends declared per common share

 

$

0.01

 

$

0.09

 

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended September 30,

 

 

 

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

 

$

112,250

 

$

244

 

0.86

%

$

119,298

 

$

282

 

0.94

%

Loans (1) (2)

 

526,356

 

10,922

 

8.23

%

463,075

 

8,457

 

7.25

%

Regulatory stock

 

4,102

 

15

 

1.45

%

5,721

 

4

 

0.28

%

Short-term investments (3)

 

82,762

 

51

 

0.24

%

77,408

 

48

 

0.25

%

Total interest-earning assets

 

725,470

 

11,232

 

6.14

%

665,502

 

8,791

 

5.24

%

Cash and due from banks

 

2,712

 

 

 

 

 

3,037

 

 

 

 

 

Other non-interest earning assets

 

34,736

 

 

 

 

 

34,012

 

 

 

 

 

Total assets

 

$

762,918

 

 

 

 

 

$

702,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

63,608

 

$

41

 

0.26

%

$

59,124

 

$

40

 

0.27

%

Money market accounts

 

86,294

 

110

 

0.51

%

85,688

 

112

 

0.52

%

Savings accounts

 

34,361

 

11

 

0.13

%

33,926

 

12

 

0.14

%

Time deposits

 

340,368

 

968

 

1.13

%

284,390

 

883

 

1.23

%

Total interest-bearing deposits

 

524,631

 

1,130

 

0.85

%

463,128

 

1,047

 

0.90

%

Short-term borrowings

 

3,320

 

9

 

1.08

%

2,278

 

5

 

0.87

%

Borrowed funds

 

52,979

 

416

 

3.12

%

59,986

 

440

 

2.91

%

Junior subordinated debentures

 

8,461

 

206

 

9.66

%

8,288

 

192

 

9.19

%

Total interest-bearing liabilities

 

589,391

 

1,761

 

1.19

%

533,680

 

1,684

 

1.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits and escrow accounts

 

53,245

 

 

 

 

 

50,391

 

 

 

 

 

Other liabilities

 

7,891

 

 

 

 

 

5,561

 

 

 

 

 

Total liabilities

 

650,527

 

 

 

 

 

589,632

 

 

 

 

 

Stockholders’ equity

 

112,391

 

 

 

 

 

112,919

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

762,918

 

 

 

 

 

$

702,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

9,471

 

 

 

 

 

$

7,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

4.95

%

 

 

 

 

3.99

%

Net interest margin (4)

 

 

 

 

 

5.18

%

 

 

 

 

4.24

%

 


(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.

 



 

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

 

 

 

Three Months Ended:

 

 

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

December 31, 2013

 

September 30, 2013

 

June 30, 2013

 

Net interest income

 

$

9,471

 

$

8,484

 

$

7,112

 

$

9,017

 

$

7,107

 

$

8,539

 

Provision for loan losses

 

320

 

124

 

180

 

151

 

77

 

301

 

Noninterest income

 

1,154

 

1,437

 

1,308

 

835

 

1,288

 

1,443

 

Noninterest expense

 

7,737

 

8,795

 

7,516

 

7,614

 

7,852

 

9,467

 

Net income from continuing operations

 

1,644

 

542

 

437

 

1,411

 

310

 

247

 

Net income

 

1,644

 

542

 

437

 

1,393

 

320

 

205

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

10,180,038

 

10,314,197

 

10,432,494

 

10,432,833

 

10,440,513

 

10,446,643

 

Diluted

 

10,180,038

 

10,314,197

 

10,432,494

 

10,432,833

 

10,440,513

 

10,446,643

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.16

 

$

0.05

 

$

0.04

 

$

0.13

 

$

0.03

 

$

0.02

 

Diluted

 

$

0.16

 

$

0.05

 

$

0.04

 

0.13

 

0.03

 

0.02

 

Dividends per common share

 

0.01

 

0.01

 

0.09

 

0.09

 

0.09

 

0.09

 

Return on average assets

 

0.85

%

0.29

%

0.24

%

0.76

%

0.18

%

0.12

%

Return on average equity

 

5.80

%

1.98

%

1.55

%

4.86

%

1.12

%

0.71

%

Net interest rate spread (1) 

 

4.96

%

4.53

%

3.87

%

4.94

%

3.99

%

5.07

%

Net interest margin (2)

 

5.18

%

4.75

%

4.08

%

5.16

%

4.24

%

5.32

%

Efficiency ratio (3)

 

72.82

%

88.65

%

89.26

%

77.28

%

93.53

%

94.84

%

Noninterest expense to average total assets

 

4.02

%

4.69

%

4.08

%

4.13

%

4.43

%

5.56

%

Average interest-earning assets to average interest-bearing liabilities

 

123.09

%

121.92

%

122.17

%

123.85

%

124.70

%

125.27

%

 

 

 

As of:

 

 

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

December 31, 2013

 

September 30, 2013

 

June 30, 2013

 

Nonperforming loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated portfolio:

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

2,110

 

$

1,743

 

$

1,678

 

$

1,895

 

$

1,945

 

$

2,346

 

Commercial real estate

 

716

 

1,162

 

798

 

487

 

471

 

473

 

Home equity

 

28

 

160

 

214

 

204

 

229

 

334

 

Commercial business

 

 

5

 

 

61

 

62

 

110

 

Consumer

 

145

 

139

 

152

 

259

 

259

 

136

 

Total originated portfolio

 

2,999

 

3,209

 

2,842

 

2,906

 

2,966

 

3,399

 

Total purchased portfolio

 

4,287

 

4,116

 

4,582

 

3,245

 

2,553

 

1,457

 

Total nonperforming loans

 

7,286

 

7,325

 

7,424

 

6,151

 

5,519

 

4,856

 

Real estate owned and other possessed collateral, net

 

2,115

 

1,991

 

2,000

 

3,211

 

3,413

 

2,134

 

Total nonperforming assets

 

$

9,401

 

$

9,316

 

$

9,424

 

$

9,362

 

$

8,932

 

$

6,990

 

Past due loans to total loans

 

1.40

%

1.14

%

1.44

%

1.57

%

1.38

%

1.68

%

Nonperforming loans to total loans

 

1.34

%

1.42

%

1.44

%

1.23

%

1.14

%

1.12

%

Nonperforming assets to total assets

 

1.20

%

1.22

%

1.26

%

1.28

%

1.23

%

1.04

%

Allowance for loan losses to total loans

 

0.28

%

0.26

%

0.26

%

0.27

%

0.25

%

0.26

%

Allowance for loan losses to nonperforming loans

 

21.12

%

18.66

%

18.12

%

21.95

%

22.18

%

23.54

%

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

 

167.57

%

176.98

%

175.10

%

170.69

%

171.30

%

159.07

%

Net loans to core deposits (5)

 

92.80

%

92.13

%

93.18

%

95.10

%

93.04

%

92.94

%

Purchased loans to total loans, including held for sale

 

37.38

%

38.51

%

35.29

%

34.89

%

36.29

%

37.57

%

Equity to total assets

 

14.48

%

14.71

%

15.18

%

15.61

%

15.70

%

16.97

%

Tier 1 leverage capital ratio

 

15.89

%

15.90

%

16.28

%

16.66

%

17.23

%

17.78

%

Total risk-based capital ratio

 

22.97

%

23.69

%

24.21

%

24.61

%

25.63

%

27.54

%

Total stockholders’ equity

 

$

113,242

 

$

112,066

 

$

114,008

 

$

114,383

 

$

113,846

 

$

113,802

 

Less: Preferred stock

 

 

 

 

 

 

 

Common stockholders’ equity

 

113,242

 

112,066

 

114,008

 

114,383

 

113,846

 

113,802

 

Less: Intangible assets

 

(2,632

)

(2,798

)

(2,962

)

(3,124

)

(3,334

)

(3,544

)

Tangible common stockholders’ equity (non-GAAP)

 

$

110,610

 

$

109,268

 

$

111,046

 

$

111,259

 

$

110,512

 

$

110,258

 

Common shares outstanding

 

10,248,034

 

10,141,294

 

10,432,494

 

10,432,494

 

10,433,550

 

10,446,643

 

Book value per common share

 

$

11.05

 

$

11.05

 

$

10.93

 

$

10.96

 

$

10.91

 

$

10.89

 

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

 

10.79

 

10.77

 

10.64

 

10.66

 

10.59

 

10.55

 

 

 

 

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

 

 

 

Three Months Ended:

 

 

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

December 31, 2013

 

September 30, 2013

 

June 30, 2013

 

Net income available to common shareholders (GAAP)

 

$

1,644

 

$

542

 

$

437

 

$

1,393

 

$

320

 

$

205

 

Items excluded from operating earnings, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

18

 

(10

)

41

 

Severance expense

 

52

 

407

 

35

 

 

366

 

203

 

Software conversion expenses

 

 

148

 

84

 

59

 

 

 

Legal settlement expense and related professional fees

 

 

 

 

 

(165

)

672

 

Total after-tax items

 

52

 

555

 

119

 

77

 

191

 

916

 

Net operating earnings (non-GAAP)

 

$

1,696

 

$

1,097

 

$

556

 

$

1,470

 

$

511

 

$

1,121

 

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

 

$

0.17

 

$

0.11

 

$

0.05

 

$

0.14

 

$

0.05

 

$

0.11

 

 


(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.