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):  January 29, 2015

 

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 January 29, 2015, Northeast Bancorp, a Maine corporation (the “Company”), issued a press release announcing its earnings for the second 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 January 29, 2015

 

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 Operating Officer

 

Date: January 30, 2015

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated January 29, 2015

 

4


Exhibit 99.1

 

FOR IMMEDIATE RELEASE

GRAPHIC

For More Information:

Claire S. Bean, COO

Northeast Bank, 500 Canal Street, Lewiston, ME 04240

207.786.3245 ext. 3202

www.northeastbank.com

 

 

Northeast Bancorp Reports Second Quarter Results, Declares Dividend

 

Lewiston, ME (January 29, 2015) 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 $1.6 million, or $0.16 per diluted common share, for the quarter ended December 31, 2014, compared to net income of $1.4 million, or $0.13 per diluted common share, for the quarter ended December 31, 2013. Net income for the six months ended December 31, 2014 was $3.2 million, compared to $1.7 million for the six months ended December 31, 2013.

 

The Board of Directors has declared a cash dividend of $0.01 per share, payable on February 26, 2015 to shareholders of record as of February 12, 2015.

 

“We closed another productive quarter,” said Richard Wayne, President and Chief Executive Officer. “Total loans grew by 6%, on the strength of 10% growth in our LASG loan book. Transactional income of $2.8 million produced a 13.7% return on purchased loans, contributing significantly to a 4.9% net interest margin for the period. We made significant progress in building out our new SBA lending initiative, hiring 7 new business development officers in November. And, in our continuing effort to improve returns for shareholders, we repurchased 434 thousand shares at an average price of $9.14.”

 

At December 31, 2014, total assets were $810.0 million, an increase of $48.1 million, or 6.3%, compared to June 30, 2014. The principal components of the change in the balance sheet follow:

 

 

1.              The loan portfolio — excluding loans held for sale — grew by $58.9 million, or 11.4%, compared to June 30, 2014, the result of net growth of $65.9 million in commercial loans purchased or originated by the Bank’s Loan Acquisition and Servicing Group (“LASG”), offset by a $7.0 million decrease in the Bank’s Community Banking Division loan portfolio.

 

New loans generated by the LASG totaled $68.2 million and $121.7 million for the three and six-month periods, respectively, ending December 31, 2014. The quarterly growth in LASG loans consisted of $39.7 million in purchases, at an average price of 85.7%, and $28.5 million in originations. Residential and consumer loan production sold in the secondary market totaled $26.0 million for the quarter.

 

As 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 December 31, 
2014

 

 

 

 

 

(Dollars in millions)

 

Total Loans

 

Purchased loans may not exceed 40% of total loans

 

$

19.7

 

Regulatory Capital

 

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

 

$

132.6

 

 

An overview of the Bank’s LASG portfolio follows:

 

 

 

LASG Portfolio

 

 

 

Three Months Ended December 31,

 

 

 

2014

 

2013

 

 

 

Purchased

 

Originated

 

Total LASG

 

Purchased

 

Originated

 

Total LASG

 

 

 

(Dollars in thousands)

 

Loans purchased or originated during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

46,307

 

$

28,579

 

$

74,886

 

$

15,663

 

$

17,138

 

$

32,801

 

Net investment basis

 

39,667

 

28,565

 

68,232

 

13,619

 

17,138

 

30,757

 

Loan returns during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

13.27

%

4.00

%

10.17

%

13.82

%

5.14

%

11.38

%

Total Return (1)

 

13.72

%

4.57

%

10.67

%

13.76

%

5.14

%

11.35

%

 

 

 

Six Months Ended December 31,

 

 

 

2014

 

2013

 

 

 

Purchased

 

Originated

 

Total LASG

 

Purchased

 

Originated

 

Total LASG

 

 

 

(Dollars in thousands)

 

Loans purchased or originated during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

62,425

 

$

68,915

 

$

131,340

 

$

33,994

 

$

43,564

 

$

77,558

 

Net investment basis

 

52,834

 

68,904

 

121,738

 

29,967

 

43,564

 

73,531

 

Loan returns during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

13.02

%

5.08

%

10.53

%

12.00

%

5.37

%

10.35

%

Total Return (1)

 

13.24

%

5.58

%

10.85

%

12.20

%

5.37

%

10.51

%

Total loans as of period end:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

262,445

 

$

126,620

 

$

389,065

 

$

212,767

 

$

78,828

 

$

291,595

 

Net investment basis

 

$

220,391

 

$

126,563

 

$

346,954

 

$

177,435

 

$

78,868

 

$

256,303

 

 


(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 $37.9 million, or 6.4%, for the quarter, attributable primarily to growth in non-maturity accounts, which increased by $39.2 million, or 15.5%, for the three months ended December 31, 2014, offset in part by a decrease of $1.3 million in time deposits. For the six-month period, deposits increased by $57.4 million, or 10.0%. Growth in both periods was attributable mainly to increases in money market accounts attracted through the Bank’s online-only ableBanking division.

 

3.              Stockholders’ equity decreased by $1.1 million from June 30, 2014, due principally to $4.1 million in share repurchases (representing 448,686 shares), a decrease in accumulated other comprehensive income of $358 thousand and $204 thousand in dividends paid on common stock, offset in part by earnings of $3.2 million and $297 thousand of scheduled amortization of stock-based compensation.

 

Net income from continuing operations increased by $169 thousand to $1.6 million for the quarter ended December 31, 2014, compared to $1.4 million for the quarter ended December 31, 2013.

 

1.              Net interest and dividend income before provision for loan losses increased by $409 thousand, or 4.5%, for the quarter ended December 31, 2014 compared to the quarter ended December 31, 2013, due primarily to higher transactional interest income from purchased loan payoffs and the positive effect of balance sheet growth. Average total interest-earning assets for the three months ended December 31, 2014 increased by $76.0 million, and average loans increased by $59.3 million, when compared to the three months ended December 31, 2013. For the six months ended December 31, 2014, average total interest-earning assets

 



 

increased by $68.0 million and average loans increased by $61.3 million compared to the six months ended December 31, 2013.

 

The various components of transactional income are set forth in the table below entitled “Total Return on Purchased Loans.”  When compared to the three and six month periods ended December 31, 2013, transactional interest income increased by $515 thousand and $1.8 million, respectively.  The following table summarizes interest income and related yields recognized on the loan portfolios.

 

 

 

Interest Income and Yield on Loans

 

 

 

Three Months Ended December 31,

 

 

 

2014

 

2013

 

 

 

Average

 

Interest

 

 

 

Average

 

Interest

 

 

 

 

 

Balance

 

Income

 

Yield

 

Balance

 

Income

 

Yield

 

 

 

(Dollars in thousands)

 

Community Banking Division

 

$

236,127

 

$

2,899

 

4.87

%

$

247,057

 

$

3,284

 

5.27

%

LASG:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated

 

105,167

 

1,060

 

4.00

%

68,449

 

886

 

5.14

%

Purchased

 

208,935

 

6,989

 

13.27

%

175,469

 

6,112

 

13.82

%

Total LASG

 

314,102

 

8,049

 

10.17

%

243,918

 

6,998

 

11.38

%

Total

 

$

550,229

 

$

10,948

 

7.89

%

$

490,975

 

$

10,282

 

8.31

%

 

 

 

Six Months Ended December 31,

 

 

 

2014

 

2013

 

 

 

Average

 

Interest

 

 

 

Average

 

Interest

 

 

 

 

 

Balance

 

Income

 

Yield

 

Balance

 

Income

 

Yield

 

 

 

(Dollars in thousands)

 

Community Banking Division

 

$

238,646

 

$

5,960

 

4.95

%

$

244,880

 

$

6,626

 

5.37

%

LASG:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated

 

93,751

 

2,399

 

5.08

%

57,828

 

1,566

 

5.37

%

Purchased

 

205,896

 

13,511

 

13.02

%

174,318

 

10,547

 

12.00

%

Total LASG

 

299,647

 

15,910

 

10.53

%

232,146

 

12,113

 

10.35

%

Total

 

$

538,293

 

$

21,870

 

8.06

%

$

477,026

 

$

18,739

 

7.79

%

 

The yield on purchased loans in each period shown increased primarily due to 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 ended December 31, 2014, an increase of $738 thousand from the quarter ended December 31, 2013. Additionally, total transactional income for the six months ended December 31, 2014 increased by $1.8 million, compared to the six months ended December 31, 2013. The following table summarizes the total return recognized on the purchased loan portfolio.

 

 

 

Total Return on Purchased Loans

 

 

 

Three Months Ended December 31,

 

 

 

2014

 

2013

 

 

 

Income

 

Return (1)

 

Income

 

Return (1)

 

 

 

(Dollars in thousands)

 

Regularly scheduled interest and accretion

 

$

4,376

 

8.31

%

$

4,014

 

9.02

%

Transactional income:

 

 

 

 

 

 

 

 

 

Gains on loan sales

 

194

 

0.37

%

11

 

0.02

%

Gain on sale of real estate owned

 

40

 

0.08

%

 

0.00

%

Other noninterest income

 

 

0.00

%

 

0.00

%

Accelerated accretion and loan fees

 

2,613

 

4.96

%

2,098

 

4.72

%

Total transactional income

 

2,847

 

5.41

%

2,109

 

4.74

%

Total

 

$

7,223

 

13.72

%

$

6,123

 

13.76

%

 



 

 

 

Six Months Ended December 31,

 

 

 

2014

 

2013

 

 

 

Income

 

Return (1)

 

Income

 

Return (1)

 

 

 

(Dollars in thousands)

 

Regularly scheduled interest and accretion

 

$

8,873

 

8.55

%

$

7,753

 

8.78

%

Transactional income:

 

 

 

 

 

 

 

 

 

Gains on loan sales

 

190

 

0.18

%

227

 

0.26

%

Gain on sale of real estate owned

 

40

 

0.04

%

 

0.00

%

Other noninterest income

 

 

0.00

%

 

0.00

%

Accelerated accretion and loan fees

 

4,638

 

4.47

%

2,794

 

3.16

%

Total transactional income

 

4,868

 

4.69

%

3,021

 

3.42

%

Total

 

$

13,741

 

13.24

%

$

10,774

 

12.20

%

 


(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 increased by $535 thousand for the quarter ended December 31, 2014, compared to the quarter ended December 31, 2013, principally due to the following:

 

·                  An increase of $432 thousand in gain on sales of portfolio loans, realized primarily on the sale of the guaranteed portion of SBA loans. The Company recognized $445 thousand in gains on SBA loans sold for the three months ended December 31, 2014, compared to no SBA gain for the quarter ended December 31, 2013; and

·                  An increase of $106 thousand in gains realized on sale of residential loans originated for sale in the secondary market, due principally to an increase in purchase-related mortgage loan activity in the current period.

 

3.              Noninterest expense increased by $596 thousand for the quarter ended December 31, 2014, compared to the quarter ended December 31, 2013, principally due to the following:

 

·                  An increase of $484 thousand in salaries and employee benefits, principally due to increased employee head count and incentive compensation, offset by a decrease in group insurance expense and employee stock options expense;

·                  An increase of $177 thousand in professional fees, due primarily to fees for temporary consulting services;

·                  An increase of $123 thousand in loan acquisition and collection expenses, due in part to an increased level of loan purchases in the quarter ended December 31, 2014 when compared to the quarter ended December 31, 2013; and

·                  A decrease of $130 thousand in occupancy and equipment expense, 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 data processing fees, which increased by $70 thousand.

 

4.              The Company’s effective tax rate for the quarter ended December 31, 2014 was 36.1%, compared to 32.4% for the quarter ended December 31, 2013. The increase in the quarter was primarily the result of a change in estimated state tax apportionment.

 

At December 31, 2014, nonperforming assets totaled $14.3 million, or 1.8% of total assets, as compared to $9.3 million, or 1.2% of total assets at June 30, 2014.  The increase in nonperforming assets during the six months ended December 31, 2014 was mainly due to the addition of one recently-purchased loan relationship.

 

At December 31, 2014, the Company’s Tier 1 leverage capital ratio was 14.8%, a decrease from 15.9% at June 30, 2014, and the total risk-based capital ratio was 21.4%, a decrease from 23.7% at June 30, 2014. The decreases resulted primarily from balance sheet growth and the effect of purchases under the Company’s share repurchase program in the six months ended December 31, 2014.

 



 

Investor Call Information

 

Richard Wayne, Chief Executive Officer of Northeast Bancorp, Claire Bean, Chief Operating Officer of Northeast Bancorp, and Brian Shaughnessy, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss second quarter earnings and business outlook at 9:00 a.m. Eastern Time on Friday, January 30, 2015. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 70956761. 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. In addition, the Small Business Lending division supports the needs of growing businesses nationally. 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 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.

 

NBN-F

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

 

 

 

December 31, 2014

 

June 30, 2014

 

Assets

 

 

 

 

 

Cash and due from banks

 

$

2,626

 

$

3,372

 

Short-term investments

 

80,643

 

78,887

 

Total cash and cash equivalents

 

83,269

 

82,259

 

Available-for-sale securities, at fair value

 

107,841

 

113,881

 

Loans held for sale

 

5,154

 

11,945

 

Loans

 

 

 

 

 

Commercial real estate

 

343,479

 

316,098

 

Residential real estate

 

140,019

 

148,634

 

Commercial and industrial

 

82,939

 

41,800

 

Consumer

 

8,898

 

9,884

 

Total loans

 

575,335

 

516,416

 

Less: Allowance for loan losses

 

1,664

 

1,367

 

Loans, net

 

573,671

 

515,049

 

Premises and equipment, net

 

8,494

 

9,135

 

Real estate owned and other possessed collateral, net

 

2,058

 

1,991

 

Regulatory stock, at cost

 

4,102

 

4,102

 

Intangible assets, net

 

2,466

 

2,798

 

Bank owned life insurance

 

15,055

 

14,836

 

Other assets

 

7,925

 

5,935

 

Total assets

 

$

810,035

 

$

761,931

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Deposits

 

 

 

 

 

Demand

 

$

51,920

 

$

50,140

 

Savings and interest checking

 

95,373

 

98,340

 

Money market

 

144,523

 

83,901

 

Time

 

339,904

 

341,948

 

Total deposits

 

631,720

 

574,329

 

Federal Home Loan Bank advances

 

35,244

 

42,824

 

Wholesale repurchase agreements

 

10,117

 

10,199

 

Short-term borrowings

 

2,775

 

2,984

 

Junior subordinated debentures issued to affiliated trusts

 

8,530

 

8,440

 

Capital lease obligation

 

1,464

 

1,558

 

Other liabilities

 

9,262

 

9,531

 

Total liabilities

 

699,112

 

649,865

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

 

 

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

 

 

 

Voting common stock, $1.00 par value, 25,000,000 shares authorized; 8,965,424 and 9,260,331 shares issued and outstanding at December 31, 2014 and June 30, 2014, respectively

 

8,965

 

9,260

 

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

 

881

 

881

 

Additional paid-in capital

 

87,404

 

90,914

 

Retained earnings

 

15,314

 

12,294

 

Accumulated other comprehensive income (loss)

 

(1,641

)

(1,283

)

Total stockholders’ equity

 

110,923

 

112,066

 

Total liabilities and stockholders’ equity

 

$

810,035

 

$

761,931

 

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

 

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Interest on loans

 

$

10,948

 

$

10,282

 

$

21,870

 

$

18,739

 

Interest on available-for-sale securities

 

232

 

262

 

475

 

544

 

Other interest and dividend income

 

79

 

96

 

146

 

147

 

Total interest and dividend income

 

11,259

 

10,640

 

22,491

 

19,430

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

1,281

 

979

 

2,410

 

2,026

 

Federal Home Loan Bank advances

 

265

 

327

 

588

 

651

 

Wholesale repurchase agreements

 

73

 

98

 

145

 

192

 

Short-term borrowings

 

7

 

6

 

16

 

11

 

Junior subordinated debentures issued to affiliated trusts

 

188

 

192

 

394

 

385

 

Obligation under capital lease agreements

 

19

 

21

 

38

 

43

 

Total interest expense

 

1,833

 

1,623

 

3,591

 

3,308

 

Net interest and dividend income before provision for loan losses

 

9,426

 

9,017

 

18,900

 

16,122

 

Provision for loan losses

 

113

 

151

 

433

 

227

 

Net interest and dividend income after provision for loan losses

 

9,313

 

8,866

 

18,467

 

15,895

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Fees for other services to customers

 

392

 

421

 

786

 

861

 

Gain on sales of loans held for sale

 

447

 

341

 

1,029

 

880

 

Gain on sales of portfolio loans

 

445

 

13

 

525

 

230

 

(Loss) gain recognized on real estate owned and other repossessed collateral, net

 

(31

)

(77

)

(54

)

(115

)

Bank-owned life insurance income

 

110

 

116

 

219

 

234

 

Other noninterest income

 

7

 

21

 

19

 

34

 

Total noninterest income

 

1,370

 

835

 

2,524

 

2,124

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

4,737

 

4,253

 

9,270

 

8,865

 

Occupancy and equipment expense

 

1,181

 

1,311

 

2,384

 

2,601

 

Professional fees

 

458

 

281

 

766

 

657

 

Data processing fees

 

347

 

277

 

692

 

554

 

Marketing expense

 

80

 

103

 

148

 

139

 

Loan acquisition and collection expense

 

413

 

290

 

687

 

763

 

FDIC insurance premiums

 

110

 

117

 

234

 

227

 

Intangible asset amortization

 

166

 

210

 

331

 

420

 

Legal settlement recovery

 

 

 

 

(250

)

Other noninterest expense

 

718

 

772

 

1,437

 

1,490

 

Total noninterest expense

 

8,210

 

7,614

 

15,949

 

15,466

 

Income from continuing operations before income tax expense

 

2,473

 

2,087

 

5,042

 

2,553

 

Income tax expense

 

893

 

676

 

1,818

 

832

 

Net income from continuing operations

 

1,580

 

1,411

 

3,224

 

1,721

 

Income from discontinued operations before tax (benefit) expense

 

 

(27

)

 

(12

)

Income tax (benefit) expense

 

 

(9

)

 

(4

)

Net (loss) income from discontinued operations

 

 

(18

)

 

(8

)

Net income

 

$

1,580

 

$

1,393

 

$

3,224

 

$

1,713

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

10,132,349

 

10,432,833

 

10,155,598

 

10,436,673

 

Diluted

 

10,132,349

 

10,432,833

 

10,155,598

 

10,436,673

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.16

 

$

0.13

 

$

0.32

 

$

0.16

 

Income from discontinued operations

 

0.00

 

0.00

 

0.00

 

0.00

 

Net Income

 

$

0.16

 

$

0.13

 

$

0.32

 

$

0.16

 

Diluted:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.16

 

$

0.13

 

$

0.32

 

$

0.16

 

Income from discontinued operations

 

0.00

 

0.00

 

0.00

 

0.00

 

Net Income

 

$

0.16

 

$

0.13

 

$

0.32

 

$

0.16

 

Cash dividends declared per common share

 

$

0.01

 

$

0.09

 

$

0.02

 

$

0.18

 

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended December 31,

 

 

 

2014

 

2013

 

 

 

 

 

Interest

 

Average

 

 

 

Interest

 

Average

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities (1)

 

$

 109,498

 

$

 232

 

0.84

%

$

 116,888

 

$

 262

 

0.89

%

Loans (2) (3)

 

550,229

 

10,948

 

7.89

%

490,975

 

10,282

 

8.31

%

Regulatory stock

 

4,102

 

15

 

1.45

%

5,721

 

48

 

3.33

%

Short-term investments (4)

 

104,822

 

64

 

0.24

%

79,049

 

48

 

0.24

%

Total interest-earning assets

 

768,651

 

11,259

 

5.81

%

692,633

 

10,640

 

6.09

%

Cash and due from banks

 

2,637

 

 

 

 

 

3,053

 

 

 

 

 

Other non-interest earning assets

 

32,500

 

 

 

 

 

36,222

 

 

 

 

 

Total assets

 

$

 803,788

 

 

 

 

 

$

 731,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

 62,259

 

$

 40

 

0.25

%

$

 58,987

 

$

 40

 

0.27

%

Money market accounts

 

127,394

 

241

 

0.75

%

86,245

 

114

 

0.52

%

Savings accounts

 

33,648

 

12

 

0.14

%

33,540

 

12

 

0.14

%

Time deposits

 

348,118

 

988

 

1.13

%

309,790

 

813

 

1.04

%

Total interest-bearing deposits

 

571,419

 

1,281

 

0.89

%

488,562

 

979

 

0.80

%

Short-term borrowings

 

2,869

 

7

 

0.97

%

2,397

 

6

 

0.99

%

Borrowed funds

 

45,587

 

357

 

3.11

%

59,941

 

446

 

2.95

%

Junior subordinated debentures

 

8,508

 

188

 

8.77

%

8,331

 

192

 

9.14

%

Total interest-bearing liabilities

 

628,383

 

1,833

 

1.16

%

559,231

 

1,623

 

1.15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits and escrow accounts

 

55,131

 

 

 

 

 

53,184

 

 

 

 

 

Other liabilities

 

7,130

 

 

 

 

 

5,677

 

 

 

 

 

Total liabilities

 

690,644

 

 

 

 

 

618,092

 

 

 

 

 

Stockholders’ equity

 

113,144

 

 

 

 

 

113,816

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

 803,788

 

 

 

 

 

$

 731,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

 9,426

 

 

 

 

 

$

 9,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

4.65

%

 

 

 

 

4.94

%

Net interest margin (5)

 

 

 

 

 

4.87

%

 

 

 

 

5.16

%

 


(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)

 

 

 

Six Months Ended December 31,

 

 

 

2014

 

2013

 

 

 

 

 

Interest

 

Average

 

 

 

Interest

 

Average

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities (1)

 

$

110,874

 

$

475

 

0.85

%

$

118,093

 

$

544

 

0.91

%

Loans (2) (3)

 

538,293

 

21,870

 

8.06

%

477,026

 

18,739

 

7.79

%

Regulatory stock

 

4,102

 

31

 

1.50

%

5,721

 

52

 

1.80

%

Short-term investments (4)

 

93,792

 

115

 

0.24

%

78,228

 

95

 

0.24

%

Total interest-earning assets

 

747,061

 

22,491

 

5.97

%

679,068

 

19,430

 

5.68

%

Cash and due from banks

 

2,674

 

 

 

 

 

3,045

 

 

 

 

 

Other non-interest earning assets

 

33,326

 

 

 

 

 

35,117

 

 

 

 

 

Total assets

 

$

783,061

 

 

 

 

 

$

717,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

62,934

 

$

81

 

0.26

%

$

59,055

 

$

80

 

0.27

%

Money market accounts

 

106,844

 

365

 

0.68

%

85,967

 

226

 

0.52

%

Savings accounts

 

34,004

 

23

 

0.13

%

33,733

 

24

 

0.14

%

Time deposits

 

344,243

 

1,941

 

1.12

%

297,090

 

1,696

 

1.13

%

Total interest-bearing deposits

 

548,025

 

2,410

 

0.87

%

475,845

 

2,026

 

0.84

%

Short-term borrowings

 

3,095

 

16

 

1.03

%

2,337

 

11

 

0.93

%

Borrowed funds

 

49,283

 

771

 

3.10

%

59,964

 

886

 

2.93

%

Junior subordinated debentures

 

8,484

 

394

 

9.21

%

8,309

 

385

 

9.19

%

Total interest-bearing liabilities

 

608,887

 

3,591

 

1.17

%

546,455

 

3,308

 

1.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits and escrow accounts

 

54,187

 

 

 

 

 

51,788

 

 

 

 

 

Other liabilities

 

7,220

 

 

 

 

 

5,619

 

 

 

 

 

Total liabilities

 

670,294

 

 

 

 

 

603,862

 

 

 

 

 

Stockholders’ equity

 

112,767

 

 

 

 

 

113,368

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

783,061

 

 

 

 

 

$

717,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net interest income

 

 

 

$

18,900

 

 

 

 

 

$

16,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

4.80

%

 

 

 

 

4.48

%

Net interest margin (5)

 

 

 

 

 

5.02

%

 

 

 

 

4.71

%

 


(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

SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA

(Unaudited)

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

 

 

 

Three Months Ended:

 

 

 

December 31, 2014

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

December 31, 2013

 

Net interest income

 

$

9,426

 

$

9,471

 

$

8,484

 

$

7,112

 

$

9,017

 

Provision for loan losses

 

113

 

320

 

124

 

180

 

151

 

Noninterest income

 

1,370

 

1,154

 

1,437

 

1,308

 

835

 

Noninterest expense

 

8,210

 

7,737

 

8,795

 

7,516

 

7,614

 

Net income from continuing operations

 

1,580

 

1,644

 

542

 

437

 

1,411

 

Net income

 

1,580

 

1,644

 

542

 

437

 

1,393

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

10,132,349

 

10,180,038

 

10,314,197

 

10,432,494

 

10,432,833

 

Diluted

 

10,132,349

 

10,180,038

 

10,314,197

 

10,432,494

 

10,432,833

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.16

 

$

0.16

 

$

0.05

 

$

0.04

 

$

0.13

 

Diluted

 

0.16

 

0.16

 

0.05

 

0.04

 

0.13

 

Dividends per common share

 

0.01

 

0.01

 

0.01

 

0.09

 

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

0.78

%

0.85

%

0.29

%

0.24

%

0.76

%

Return on average equity

 

5.54

%

5.80

%

1.98

%

1.55

%

4.86

%

Net interest rate spread (1) 

 

4.65

%

4.95

%

4.53

%

3.87

%

4.94

%

Net interest margin (2)

 

4.87

%

5.18

%

4.75

%

4.08

%

5.16

%

Efficiency ratio (3)

 

76.05

%

72.82

%

88.65

%

89.26

%

77.28

%

Noninterest expense to average total assets

 

4.05

%

4.02

%

4.69

%

4.08

%

4.13

%

Average interest-earning assets to average interest-bearing liabilities

 

122.32

%

123.09

%

121.92

%

122.17

%

123.85

%

 

 

 

As of:

 

 

 

December 31, 2014

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

December 31, 2013

 

Nonperforming loans:

 

 

 

 

 

 

 

 

 

 

 

Originated portfolio:

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

2,706

 

$

2,105

 

$

1,743

 

$

1,678

 

$

1,895

 

Commercial real estate

 

1,166

 

721

 

1,162

 

798

 

487

 

Home equity

 

11

 

28

 

160

 

214

 

204

 

Commercial business

 

 

 

5

 

 

61

 

Consumer

 

237

 

145

 

139

 

152

 

259

 

Total originated portfolio

 

4,120

 

2,999

 

3,209

 

2,842

 

2,906

 

Total purchased portfolio

 

8,129

 

4,287

 

4,116

 

4,582

 

3,245

 

Total nonperforming loans

 

12,249

 

7,286

 

7,325

 

7,424

 

6,151

 

Real estate owned and other possessed collateral, net

 

2,058

 

2,115

 

1,991

 

2,000

 

3,211

 

Total nonperforming assets

 

$

14,307

 

$

9,401

 

$

9,316

 

$

9,424

 

$

9,362

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due loans to total loans

 

2.64

%

1.40

%

1.14

%

 

 

 

 

Nonperforming loans to total loans

 

2.13

%

1.34

%

1.42

%

 

 

 

 

Nonperforming assets to total assets

 

1.77

%

1.20

%

1.22

%

 

 

 

 

Allowance for loan losses to total loans

 

0.29

%

0.28

%

0.26

%

0.26

%

0.27

%

Allowance for loan losses to nonperforming loans

 

13.58

%

21.12

%

18.66

%

18.12

%

21.95

%

 

 

 

 

 

 

 

 

 

 

 

 

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

 

190.05

%

167.57

%

176.98

%

175.10

%

170.69

%

Net loans to core deposits (5)

 

91.79

%

92.80

%

92.13

%

93.18

%

95.10

%

Purchased loans to total loans, including held for sale

 

37.97

%

37.38

%

38.51

%

35.29

%

34.89

%

Equity to total assets

 

13.69

%

14.48

%

14.71

%

15.18

%

15.61

%

Tier 1 leverage capital ratio

 

14.81

%

15.89

%

15.90

%

16.28

%

16.66

%

Total risk-based capital ratio

 

21.44

%

22.97

%

23.69

%

24.21

%

24.61

%

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

$

110,923

 

$

113,242

 

$

112,066

 

$

114,008

 

$

114,383

 

Less: Preferred stock

 

 

 

 

 

 

Common stockholders’ equity

 

110,923

 

113,242

 

112,066

 

114,008

 

114,383

 

Less: Intangible assets

 

(2,466

)

(2,632

)

(2,798

)

(2,962

)

(3,124

)

Tangible common stockholders’ equity (non-GAAP)

 

$

108,457

 

$

110,610

 

$

109,268

 

$

111,046

 

$

111,259

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

9,846,387

 

10,248,034

 

10,141,294

 

10,432,494

 

10,432,494

 

Book value per common share

 

$

11.27

 

$

11.05

 

$

11.05

 

$

10.93

 

 

 

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

 

11.01

 

10.79

 

10.77

 

10.64

 

10.66

 

 

 

 

Reconciliation of Net Income (GAAP) to Net Operating Earnings (non-GAAP)

 

 

 

Three Months Ended:

 

 

 

December 31, 2014

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

December 31, 2013

 

Net income (GAAP)

 

$

1,580

 

$

1,644

 

$

542

 

$

437

 

$

1,393

 

Items excluded from operating earnings, net of tax:

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

18

 

Income from life insurance death benefits

 

36

 

52

 

407

 

35

 

 

Severance expense

 

 

 

148

 

84

 

59

 

Legal settlement expense and related professional fees

 

 

 

 

 

 

Total after-tax items

 

36

 

52

 

555

 

119

 

77

 

Net operating earnings (non-GAAP)

 

$

1,616

 

$

1,696

 

$

1,097

 

$

556

 

$

1,470

 

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

 

$

0.16

 

$

0.17

 

$

0.11

 

$

0.05

 

$

0.14

 

 


(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.