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 30, 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 April 30, 2015, Northeast Bancorp, a Maine corporation (the “Company”), issued a press release announcing its earnings for the third 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 8.01

Other Events

 

Also on April 30, 2015, the Company announced that its Board of Directors has authorized the Company to amend the existing stock repurchase program to purchase an additional 500,000 shares of its common stock, representing 5.1% of the Company’s outstanding common shares or approximately $4.7 million based on the Company’s closing price on April 29, 2015.  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 30, 2017.

 

Item 9.01

Financial Statements and Exhibits

 

 

(c)

Exhibits

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated April 30, 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/ Brian Shaughnessy

 

Name:

Brian Shaughnessy

 

Title:

Chief Financial Officer and Treasurer

 

Date: April 30, 2015

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated April 30, 2015

 

4


Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

 

For More Information:

GRAPHIC

Claire S. Bean, COO

Northeast Bank, 500 Canal Street, Lewiston, ME 04240

207.786.3245 ext. 3202

www.northeastbank.com

 

 

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

 

Lewiston, ME (April 30, 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 $1.8 million, or $0.18 per diluted common share, for the quarter ended March 31, 2015, compared to net income of $437 thousand, or $0.04 per diluted common share, for the quarter ended March 31, 2014. Net income for the nine months ended March 31, 2015 was $5.0 million, compared to $2.2 million for the nine months ended March 31, 2014.

 

The Board of Directors has voted to amend the existing stock repurchase program to authorize the Company to purchase an additional 500,000 shares of its common stock, representing 5.1% of the Company’s outstanding common shares or approximately $4.7 million based on the Company’s closing price on April 29, 2015.  Under the existing program, implemented in April 2014, the Company has purchased 783,336 shares through April 29, 2015 and 86,664 shares remain available for repurchase under the program on that date, prior to the 500,000 share increase in the repurchase plan. The amended stock repurchase program will expire on April 30, 2017.

 

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

 

“We continue to make progress in the execution of our business plan,” said Richard Wayne, President and Chief Executive Officer. “We’ve begun to see results from our new SBA Lending Division, with SBA loan originations totaling $9.4 million for the quarter. It was also a strong quarter for transactional income, which totaled $2.7 million and contributed to our 4.8% net interest margin for the period. As always, we remain focused on the further leveraging of our operating infrastructure and the effective deployment of our capital.”

 

“With regard to capital, we continue to believe that our shares are undervalued, based on current market prices,” said Mr. Wayne.  “Our goal in implementing the amendment to the existing stock repurchase program is to continue to enhance shareholder value.”

 

At March 31, 2015, total assets were $832.9 million, an increase of $71.0 million, or 9.3%, 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 $62.8 million, or 12.2%, compared to June 30, 2014, the result of net growth of $67.1 million in commercial loans purchased or originated by the Bank’s Loan Acquisition and Servicing Group (“LASG”), offset by a $4.3 million decrease in the Bank’s Community Banking Division loan portfolio.

 

New loans generated by the LASG totaled $35.8 million and $156.1 million for the three and nine-month periods, respectively, ending March 31, 2015. The quarterly growth in LASG loans consisted of $5.1 million

 



 

of purchased loans, at an average price of 92.3%, and $30.7 million of originated loans. Small Business Administration (“SBA”) loans originated during the quarter totaled $9.4 million, of which $3.1 million were sold in the secondary market. Residential and consumer loan production sold in the secondary market totaled $20.0 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 March 31, 2015

 

 

 

 

 

(Dollars in millions)

 

Total Loans

 

Purchased loans may not exceed 40% of total loans

 

$

62.9

 

Regulatory Capital

 

Non- owner occupied commercial real estate loans may not exceed 300% of total risk-based capital

 

$

155.2

 

 

An overview of the Bank’s LASG portfolio follows:

 

 

 

LASG Portfolio

 

 

 

Three Months Ended March 31,

 

 

 

2015

 

2014

 

 

 

Purchased

 

Originated

 

Secured Loans to
Broker-Dealers

 

Total LASG

 

Purchased

 

Originated

 

Secured Loans to
Broker-Dealers

 

Total LASG

 

 

 

(Dollars in thousands)

 

Loans purchased or originated during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

5,484

 

$

18,760

 

$

12,000

 

$

36,244

 

$

19,050

 

$

11,158

 

$

 

$

30,208

 

Net investment basis

 

5,063

 

18,697

 

12,000

 

35,760

 

16,300

 

11,158

 

 

27,458

 

Loan returns during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

12.87%

 

5.67%

 

0.46%

 

9.37%

 

9.51%

 

6.95%

 

0.61%

 

8.11%

 

Total Return (1)

 

13.60%

 

5.67%

 

0.46%

 

9.81%

 

10.39%

 

7.10%

 

0.61%

 

8.71%

 

 

 

 

Nine Months Ended March 31,

 

 

 

2015

 

2014

 

 

 

Purchased

 

Originated

 

Secured Loans to
Broker-Dealers

 

Total LASG

 

Purchased

 

Originated

 

Secured Loans to
Broker-Dealers

 

Total LASG

 

 

 

(Dollars in thousands)

 

Loans purchased or originated during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

67,909

 

$

50,315

 

$

48,000

 

$

166,224

 

$

53,044

 

$

54,722

 

$

 

$

107,766

 

Net investment basis

 

57,896

 

50,236

 

48,000

 

156,132

 

46,267

 

54,722

 

 

100,989

 

Loan returns during the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

12.97%

 

6.91%

 

0.47%

 

10.12%

 

11.17%

 

7.42%

 

0.61%

 

9.55%

 

Total Return (1)

 

13.36%

 

7.40%

 

0.47%

 

10.48%

 

11.60%

 

7.50%

 

0.61%

 

9.87%

 

Total loans as of period end:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

$

234,672

 

$

92,542

 

$

60,000

 

$

387,214

 

$

221,597

 

$

64,700

 

$

24,000

 

$

310,297

 

Net investment basis

 

$

195,683

 

$

92,414

 

$

60,000

 

$

348,097

 

$

184,959

 

$

64,724

 

$

24,000

 

$

273,683

 

 


(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 $23.5 million, or 3.7%, for the quarter, attributable primarily to growth in non-maturity accounts, which increased by $20.1 million, or 6.9%, for the three months ended March 31, 2015, as well as an increase of $3.3 million in time deposits. For the nine-month period, deposits increased by $80.8 million, or 14.1%. 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 increased by $421 thousand from June 30, 2014, due principally to earnings of $5.0 million, as well as $504 thousand of scheduled amortization of stock-based compensation, offset by $4.4

 



 

million in share repurchases (representing 479,936 shares), a decrease in accumulated other comprehensive income of $365 thousand and $302 thousand in dividends paid on common stock. During the quarter, there were 31,250 shares repurchased for $291 thousand.

 

Net income from continuing operations increased by $1.3 million to $1.8 million for the quarter ended March 31, 2015, compared to $437 thousand for the quarter ended March 31, 2014.

 

1.              Net interest and dividend income before provision for loan losses increased by $2.0 million, or 28.2%, for the quarter ended March 31, 2015 compared to the quarter ended March 31, 2014, 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 March 31, 2015 increased by $64.6 million, and average loans increased by $58.9 million, when compared to the three months ended March 31, 2014. For the nine months ended March 31, 2015, average total interest-earning assets increased by $66.9 million and average loans increased by $60.5 million compared to the nine months ended March 31, 2014.

 

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 nine month periods ended March 31, 2014, transactional interest income increased by $2.0 million and $3.9 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 March 31,

 

 

 

2015

 

2014

 

 

 

Average

 

Interest

 

 

 

Average

 

Interest

 

 

 

 

 

Balance

 

Income

 

Yield

 

Balance

 

Income

 

Yield

 

 

 

(Dollars in thousands)

 

Community Banking Division

 

$

232,369

 

$

2,823

 

4.93%

 

$

249,962

 

$

3,183

 

5.16%

 

LASG:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated

 

80,567

 

1,127

 

5.67%

 

59,526

 

1,020

 

6.95%

 

Purchased

 

208,487

 

6,614

 

12.87%

 

177,559

 

4,164

 

9.51%

 

Secured Loans to Broker-Dealers

 

48,551

 

55

 

0.46%

 

24,000

 

36

 

0.61%

 

Total LASG

 

337,605

 

7,796

 

9.37%

 

261,085

 

5,220

 

8.11%

 

Total

 

$

569,974

 

$

10,619

 

7.56%

 

$

511,047

 

$

8,403

 

6.67%

 

 

 

 

Nine Months Ended March 31,

 

 

 

2015

 

2014

 

 

 

Average

 

Interest

 

 

 

Average

 

Interest

 

 

 

 

 

Balance

 

Income

 

Yield

 

Balance

 

Income

 

Yield

 

 

 

(Dollars in thousands)

 

Community Banking Division

 

$

236,584

 

$

8,782

 

4.94%

 

$

246,539

 

$

9,809

 

5.30%

 

LASG:

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated

 

66,314

 

3,441

 

6.91%

 

45,379

 

2,527

 

7.42%

 

Purchased

 

206,747

 

20,125

 

12.97%

 

175,383

 

14,711

 

11.17%

 

Secured Loans to Broker-Dealers

 

39,054

 

139

 

0.47%

 

20,890

 

95

 

0.61%

 

Total LASG

 

312,115

 

23,705

 

10.12%

 

241,652

 

17,333

 

9.55%

 

Total

 

$

548,699

 

$

32,487

 

7.89%

 

$

488,191

 

$

27,142

 

7.41%

 

 

The yield on purchased loans for the three and nine months ended March 31, 2015 increased primarily due to unscheduled loan payoffs, which resulted in immediate recognition in interest income of the discount associated with the prepaid loans. The following table details the “total return” on purchased loans, which includes transactional income of $2.7 million for the quarter ended March 31, 2015, an increase of $2.0 million from the quarter ended March 31, 2014.  Additionally, total transactional income for the nine months ended March 31, 2015 increased by $3.8 million, compared to the nine months ended March 31, 2014. The following table summarizes the total return recognized on the purchased loan portfolio.

 



 

 

 

Total Return on Purchased Loans

 

 

 

Three Months Ended March 31,

 

 

 

2015

 

2014

 

 

 

Income

 

Return (1)

 

Income

 

Return (1)

 

 

 

(Dollars in thousands)

 

Regularly scheduled interest and accretion

 

$

4,322

 

8.41%

 

$

3,880

 

8.83%

 

Transactional income:

 

 

 

 

 

 

 

 

 

Gains on loan sales

 

 

0.00%

 

349

 

0.79%

 

Gain on sale of real estate owned

 

379

 

0.74%

 

56

 

0.13%

 

Other noninterest income

 

 

0.00%

 

 

0.00%

 

Accelerated accretion and loan fees

 

2,292

 

4.46%

 

284

 

0.65%

 

Total transactional income

 

2,671

 

5.20%

 

689

 

1.57%

 

Total

 

$

6,993

 

13.60%

 

$

4,569

 

10.39%

 

 

 

 

Nine Months Ended March 31,

 

 

 

2015

 

2014

 

 

 

Income

 

Return (1)

 

Income

 

Return (1)

 

 

 

(Dollars in thousands)

 

Regularly scheduled interest and accretion

 

$

13,195

 

8.50%

 

$

11,632

 

8.80%

 

Transactional income:

 

 

 

 

 

 

 

 

 

Gains on loan sales

 

190

 

0.12%

 

576

 

0.44%

 

Gain on sale of real estate owned

 

419

 

0.27%

 

56

 

0.04%

 

Other noninterest income

 

 

0.00%

 

 

0.00%

 

Accelerated accretion and loan fees

 

6,930

 

4.47%

 

3,079

 

2.33%

 

Total transactional income

 

7,539

 

4.86%

 

3,711

 

2.81%

 

Total

 

$

20,734

 

13.36%

 

$

15,343

 

11.60%

 

 


(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 $246 thousand for the quarter ended March 31, 2015, compared to the quarter ended March 31, 2014, principally due to the following:

 

·                  An increase of $192 thousand in gains recognized on Real Estate Owned/Other Assets Acquired (“REO/OAA”);

·                  An increase of $90 thousand in gains realized on sale of loans held for sale in the secondary market, due principally to an increase in purchase-related mortgage loan activity in the current period;

·                  An increase of $52 thousand in gains realized on sale of portfolio loans. The recent quarter includes gains realized on sale of SBA loans of $425 thousand, compared to zero in the quarter ended March 31, 2014; and

·                  A decrease of $82 thousand in fees and other services to customers, primarily due to a decrease in servicing rights related to loans paid off or sold.

 

3.              Noninterest expense increased by $369 thousand for the quarter ended March 31, 2015, compared to the quarter ended March 31, 2014, principally due to the following:

 

·                  An increase of $557 thousand in salaries and employee benefits, principally due to increased employee head count; and

·                  A decrease of $172 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 $104 thousand.

 

4.              The Company’s effective tax rate for the quarter ended March 31, 2015 was 36.17%, compared to 39.64% for the quarter ended March 31, 2014. The decrease in the quarter was primarily due to fluctuations in projected pre-tax income and permanent book to tax differences for the prior fiscal year.

 



 

At March 31, 2015, nonperforming assets totaled $14.1 million, or 1.7% 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 nine months ended March 31, 2015 was mainly due to the addition of one purchased loan relationship.

 

At March 31, 2015, the Company’s Tier 1 Leverage Ratio was 15.0%, a decrease from 15.9% at June 30, 2014, and the Total Capital Ratio was 21.2%, a decrease from 23.7% at June 30, 2014. The decreases resulted primarily from balance sheet growth, risk weighting adjustment due to the effect of the adoption of Basel III, and the effect of purchases under the Company’s share repurchase program in the nine months ended March 31, 2015.

 

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 third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Friday, May 1, 2015. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 34175780. 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.

 

Forward-Looking Statements

 

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)

 

 

 

March 31, 2015

 

June 30, 2014

 

Assets

 

 

 

 

 

Cash and due from banks

 

$

2,496

 

$

3,372

 

Short-term investments

 

102,577

 

78,887

 

Total cash and cash equivalents

 

105,073

 

82,259

 

 

 

 

 

 

 

Available-for-sale securities, at fair value

 

105,523

 

113,881

 

Loans held for sale

 

4,439

 

11,945

 

 

 

 

 

 

 

Loans

 

 

 

 

 

Commercial real estate

 

327,767

 

316,098

 

Residential real estate

 

136,778

 

148,634

 

Commercial and industrial

 

106,271

 

41,800

 

Consumer

 

8,377

 

9,884

 

Total loans

 

579,193

 

516,416

 

Less: Allowance for loan losses

 

1,741

 

1,367

 

Loans, net

 

577,452

 

515,049

 

 

 

 

 

 

 

Premises and equipment, net

 

8,095

 

9,135

 

Real estate owned and other possessed collateral, net

 

3,694

 

1,991

 

Regulatory stock, at cost

 

4,102

 

4,102

 

Intangible assets, net

 

2,338

 

2,798

 

Bank owned life insurance

 

15,165

 

14,836

 

Other assets

 

7,047

 

5,935

 

Total assets

 

$

832,928

 

$

761,931

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Deposits

 

 

 

 

 

Demand

 

$

50,870

 

$

50,140

 

Savings and interest checking

 

98,050

 

98,340

 

Money market

 

163,004

 

83,901

 

Time

 

343,253

 

341,948

 

Total deposits

 

655,177

 

574,329

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

30,216

 

42,824

 

Wholesale repurchase agreements

 

10,077

 

10,199

 

Short-term borrowings

 

2,861

 

2,984

 

Junior subordinated debentures issued to affiliated trusts

 

8,578

 

8,440

 

Capital lease obligation

 

1,416

 

1,558

 

Other liabilities

 

12,116

 

9,531

 

Total liabilities

 

720,441

 

649,865

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at March 31, 2015 and June 30, 2014

 

 

 

Voting common stock, $1.00 par value, 25,000,000 shares authorized; 8,908,121 and 9,260,331 shares issued and outstanding at March 31, 2015 and June 30, 2014, respectively

 

8,908

 

9,260

 

Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 911,488 and 880,963 shares issued and outstanding at March 31, 2015 and June 30, 2014, respectively

 

911

 

881

 

Additional paid-in capital

 

87,348

 

90,914

 

Retained earnings

 

16,968

 

12,294

 

Accumulated other comprehensive income (loss)

 

(1,648

)

(1,283

)

Total stockholders’ equity

 

112,487

 

112,066

 

Total liabilities and stockholders’ equity

 

$

832,928

 

$

761,931

 

 



 

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,

 

 

 

2015

 

2014

 

2015

 

2014

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

10,619

 

$

8,403

 

$

32,487

 

$

27,142

 

Interest on available-for-sale securities

 

222

 

253

 

697

 

797

 

Other interest and dividend income

 

72

 

61

 

218

 

208

 

Total interest and dividend income

 

10,913

 

8,717

 

33,402

 

28,147

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

1,271

 

1,022

 

3,681

 

3,048

 

Federal Home Loan Bank advances

 

257

 

324

 

845

 

975

 

Wholesale repurchase agreements

 

71

 

93

 

216

 

285

 

Short-term borrowings

 

5

 

6

 

21

 

17

 

Junior subordinated debentures issued to affiliated trusts

 

171

 

140

 

566

 

525

 

Obligation under capital lease agreements

 

18

 

20

 

56

 

63

 

Total interest expense

 

1,793

 

1,605

 

5,385

 

4,913

 

 

 

 

 

 

 

 

 

 

 

Net interest and dividend income before provision for loan losses

 

9,120

 

7,112

 

28,017

 

23,234

 

Provision for loan losses

 

44

 

180

 

477

 

407

 

Net interest and dividend income after provision for loan losses

 

9,076

 

6,932

 

27,540

 

22,827

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Fees for other services to customers

 

303

 

385

 

1,089

 

1,246

 

Gain on sales of loans held for sale

 

355

 

265

 

1,384

 

1,145

 

Gain on sales of portfolio loans

 

425

 

373

 

950

 

603

 

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

 

357

 

165

 

303

 

50

 

Bank-owned life insurance income

 

110

 

108

 

329

 

342

 

Other noninterest income

 

4

 

12

 

23

 

46

 

Total noninterest income

 

1,554

 

1,308

 

4,078

 

3,432

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

4,316

 

3,759

 

13,586

 

12,624

 

Occupancy and equipment expense

 

1,278

 

1,450

 

3,662

 

4,075

 

Professional fees

 

386

 

366

 

1,153

 

1,115

 

Data processing fees

 

361

 

257

 

1,029

 

770

 

Marketing expense

 

54

 

86

 

203

 

225

 

Loan acquisition and collection expense

 

409

 

440

 

1,096

 

1,203

 

FDIC insurance premiums

 

137

 

127

 

371

 

354

 

Intangible asset amortization

 

128

 

162

 

460

 

582

 

Legal settlement recovery

 

 

 

 

(250

)

Other noninterest expense

 

816

 

869

 

2,272

 

2,284

 

Total noninterest expense

 

7,885

 

7,516

 

23,832

 

22,982

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax expense

 

2,745

 

724

 

7,786

 

3,277

 

Income tax expense

 

993

 

287

 

2,810

 

1,119

 

Net income from continuing operations

 

1,752

 

437

 

4,976

 

2,158

 

Income from discontinued operations before tax (benefit) expense

 

 

 

 

(12

)

Income tax (benefit) expense

 

 

 

 

(4

)

Net (loss) income from discontinued operations

 

 

 

 

(8

)

Net income

 

$

1,752

 

$

437

 

$

4,976

 

$

2,150

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

9,833,033

 

10,432,494

 

10,049,983

 

10,435,300

 

Diluted

 

9,833,033

 

10,432,494

 

10,049,983

 

10,435,300

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.18

 

$

004

 

$

0.50

 

$

0.21

 

Income from discontinued operations

 

0.00

 

0.00

 

0.00

 

0.00

 

Net Income

 

$

0.18

 

$

0.04

 

$

0.50

 

$

0.21

 

Diluted:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.18

 

$

0.04

 

$

0.50

 

$

0.21

 

Income from discontinued operations

 

0.00

 

0.00

 

0.00

 

0.00

 

Net Income

 

$

0.18

 

$

0.04

 

$

0.50

 

$

0.21

 

Cash dividends declared per common share

 

$

0.01

 

$

0.09

 

$

0.03

 

$

0.27

 

 



 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2015

 

2014

 

 

 

 

 

Interest

 

Average

 

 

 

Interest

 

Average

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities (1)

 

$

107,010

 

$

222

 

0.84%

 

$

114,925

 

$

253

 

0.89%

 

Loans (2) (3)

 

569,974

 

10,619

 

7.56%

 

511,047

 

8,403

 

6.67%

 

Regulatory stock

 

4,102

 

18

 

1.78%

 

5,721

 

16

 

1.13%

 

Short-term investments (4)

 

90,722

 

54

 

0.24%

 

75,506

 

45

 

0.24%

 

Total interest-earning assets

 

771,808

 

10,913

 

5.73%

 

707,199

 

8,717

 

5.00%

 

Cash and due from banks

 

2,919

 

 

 

 

 

2,833

 

 

 

 

 

Other non-interest earning assets

 

33,069

 

 

 

 

 

37,366

 

 

 

 

 

Total assets

 

$

807,796

 

 

 

 

 

$

747,398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

62,317

 

$

39

 

0.25%

 

$

61,028

 

$

40

 

0.27%

 

Money market accounts

 

153,487

 

300

 

0.79%

 

87,352

 

112

 

0.52%

 

Savings accounts

 

34,140

 

11

 

0.13%

 

35,052

 

12

 

0.14%

 

Time deposits

 

328,633

 

921

 

1.14%

 

325,505

 

858

 

1.07%

 

Total interest-bearing deposits

 

578,577

 

1,271

 

0.89%

 

508,917

 

1,022

 

0.81%

 

Short-term borrowings

 

2,356

 

5

 

0.86%

 

2,192

 

6

 

1.11%

 

Borrowed funds

 

43,718

 

346

 

3.21%

 

59,399

 

437

 

2.98%

 

Junior subordinated debentures

 

8,553

 

171

 

8.11%

 

8,374

 

140

 

6.78%

 

Total interest-bearing liabilities

 

633,204

 

1,793

 

1.15%

 

578,882

 

1,605

 

1.12%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits and escrow accounts

 

54,647

 

 

 

 

 

48,361

 

 

 

 

 

Other liabilities

 

8,516

 

 

 

 

 

5,920

 

 

 

 

 

Total liabilities

 

696,367

 

 

 

 

 

633,163

 

 

 

 

 

Stockholders’ equity

 

111,429

 

 

 

 

 

114,325

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

807,796

 

 

 

 

 

$

747,398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net interest income

 

 

 

$

9,120

 

 

 

 

 

$

7,112

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

4.58%

 

 

 

 

 

3.88%

 

Net interest margin (5)

 

 

 

 

 

4.79%

 

 

 

 

 

4.08%

 

 


(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)

 

 

 

Nine Months Ended March 31,

 

 

 

2015

 

2014

 

 

 

 

 

Interest

 

Average

 

 

 

Interest

 

Average

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

 

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities (1)

 

$

109,605

 

$

697

 

0.85%

 

$

117,053

 

$

797

 

0.91%

 

Loans (2) (3)

 

548,699

 

32,487

 

7.89%

 

488,191

 

27,142

 

7.41%

 

Regulatory stock

 

4,102

 

49

 

1.59%

 

5,721

 

68

 

1.58%

 

Short-term investments (4)

 

92,784

 

169

 

0.24%

 

77,334

 

140

 

0.24%

 

Total interest-earning assets

 

755,190

 

33,402

 

5.89%

 

688,299

 

28,147

 

5.45%

 

Cash and due from banks

 

2,755

 

 

 

 

 

2,975

 

 

 

 

 

Other non-interest earning assets

 

33,241

 

 

 

 

 

35,855

 

 

 

 

 

Total assets

 

$

791,186

 

 

 

 

 

$

727,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

62,731

 

$

121

 

0.26%

 

$

59,703

 

$

120

 

0.27%

 

Money market accounts

 

122,165

 

665

 

0.73%

 

86,421

 

338

 

0.52%

 

Savings accounts

 

34,049

 

34

 

0.13%

 

34,160

 

35

 

0.14%

 

Time deposits

 

339,116

 

2,861

 

1.12%

 

306,423

 

2,555

 

1.11%

 

Total interest-bearing deposits

 

558,061

 

3,681

 

0.88%

 

486,707

 

3,048

 

0.83%

 

Short-term borrowings

 

2,852

 

21

 

0.98%

 

2,290

 

17

 

0.99%

 

Borrowed funds

 

47,455

 

1,117

 

3.14%

 

59,778

 

1,323

 

2.95%

 

Junior subordinated debentures

 

8,507

 

566

 

8.86%

 

8,331

 

525

 

8.39%

 

Total interest-bearing liabilities

 

616,875

 

5,385

 

1.16%

 

557,106

 

4,913

 

1.17%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits and escrow accounts

 

54,339

 

 

 

 

 

50,662

 

 

 

 

 

Other liabilities

 

7,644

 

 

 

 

 

5,718

 

 

 

 

 

Total liabilities

 

678,858

 

 

 

 

 

613,486

 

 

 

 

 

Stockholders’ equity

 

112,328

 

 

 

 

 

113,643

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

791,186

 

 

 

 

 

$

727,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net interest income

 

 

 

$

28,017

 

 

 

 

 

$

23,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

4.73%

 

 

 

 

 

4.28%

 

Net interest margin (5)

 

 

 

 

 

4.94%

 

 

 

 

 

4.50%

 

 


(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:

 

 

 

March 31, 2015

 

December 31, 2014

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

Net interest income

 

$

9,120

 

$

9,426

 

$

9,471

 

$

8,484

 

$

7,112

 

Provision for loan losses

 

44

 

113

 

320

 

124

 

180

 

Noninterest income

 

1,554

 

1,370

 

1,154

 

1,437

 

1,308

 

Noninterest expense

 

7,885

 

8,210

 

7,737

 

8,795

 

7,516

 

Net income from continuing operations

 

1,752

 

1,580

 

1,644

 

542

 

437

 

Net income

 

1,752

 

1,580

 

1,644

 

542

 

437

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

9,833,033

 

10,132,349

 

10,180,038

 

10,314,197

 

10,432,494

 

Diluted

 

9,833,033

 

10,132,349

 

10,180,038

 

10,314,197

 

10,432,494

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

$

0.16

 

$

0.16

 

$

0.05

 

$

0.04

 

Diluted

 

0.18

 

0.16

 

0.16

 

0.05

 

0.04

 

Dividends per common share

 

0.01

 

0.01

 

0.01

 

0.01

 

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

0.88%

 

0.78%

 

0.85%

 

0.29%

 

0.24%

 

Return on average equity

 

6.38%

 

5.54%

 

5.80%

 

1.98%

 

1.55%

 

Net interest rate spread (1) 

 

4.59%

 

4.65%

 

4.95%

 

4.53%

 

3.87%

 

Net interest margin (2)

 

4.79%

 

4.87%

 

5.18%

 

4.75%

 

4.08%

 

Efficiency ratio (3)

 

73.87%

 

76.05%

 

72.82%

 

88.65%

 

89.26%

 

Noninterest expense to average total assets

 

3.96%

 

4.05%

 

4.02%

 

4.69%

 

4.08%

 

Average interest-earning assets to average interest-bearing liabilities

 

121.89%

 

122.32%

 

123.09%

 

121.92%

 

122.17%

 

 

 

 

As of:

 

 

 

March 31, 2015

 

December 31, 2014

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

Nonperforming loans:

 

 

 

 

 

 

 

 

 

 

 

Originated portfolio:

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

3,163

 

$

2,706

 

$

2,105

 

$

1,743

 

$

1,678

 

Commercial real estate

 

1,201

 

1,166

 

721

 

1,162

 

798

 

Home equity

 

11

 

11

 

28

 

160

 

214

 

Commercial business

 

 

 

 

5

 

 

Consumer

 

225

 

237

 

145

 

139

 

152

 

Total originated portfolio

 

4,600

 

4,120

 

2,999

 

3,209

 

2,842

 

Total purchased portfolio

 

5,850

 

8,129

 

4,287

 

4,116

 

4,582

 

Total nonperforming loans

 

10,450

 

12,249

 

7,286

 

7,325

 

7,424

 

Real estate owned and other possessed collateral, net

 

3,694

 

2,058

 

2,115

 

1,991

 

2,000

 

Total nonperforming assets

 

$

14,144

 

$

14,307

 

$

9,401

 

$

9,316

 

$

9,424

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due loans to total loans

 

2.57%

 

2.64%

 

1.40%

 

1.14%

 

1.44%

 

Nonperforming loans to total loans

 

1.80%

 

2.13%

 

1.34%

 

1.42%

 

1.44%

 

Nonperforming assets to total assets

 

1.70%

 

1.77%

 

1.20%

 

1.22%

 

1.26%

 

Allowance for loan losses to total loans

 

0.30%

 

0.29%

 

0.28%

 

0.26%

 

0.26%

 

Allowance for loan losses to nonperforming loans

 

16.66%

 

13.58%

 

21.12%

 

18.66%

 

18.12%

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

173.17%

 

190.05%

 

167.57%

 

176.98%

 

175.10%

 

Net loans to core deposits (5)

 

89.04%

 

91.79%

 

92.80%

 

92.13%

 

93.18%

 

Purchased loans to total loans, including held for sale

 

33.53%

 

37.97%

 

37.38%

 

38.51%

 

35.29%

 

Equity to total assets

 

13.51%

 

13.69%

 

14.48%

 

14.71%

 

15.18%

 

Common equity tier 1 capital ratio

 

20.90%

 

 

 

 

 

Total capital ratio (7)

 

21.21%

 

21.44%

 

22.97%

 

23.69%

 

24.21%

 

Tier 1 leverage capital ratio

 

14.96%

 

14.81%

 

15.89%

 

15.90%

 

16.28%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

$

112,487

 

$

110,923

 

$

113,242

 

$

112,066

 

$

114,008

 

Less: Preferred stock

 

 

 

 

 

 

Common stockholders’ equity

 

112,487

 

110,923

 

113,242

 

112,066

 

114,008

 

Less: Intangible assets

 

(2,338

)

(2,466

)

(2,632

)

(2,798

)

(2,962

)

Tangible common stockholders’ equity (non-GAAP)

 

$

110,149

 

$

108,457

 

$

110,610

 

$

109,268

 

$

111,046

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

9,819,609

 

9,846,387

 

10,248,034

 

10,141,294

 

10,432,494

 

Book value per common share

 

$

11.46

 

$

11.27

 

$

11.05

 

$

11.05

 

$

10.93

 

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

 

11.22

 

11.01

 

10.79

 

10.77

 

10.64

 

 

 

 

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

 

 

 

Three Months Ended:

 

 

 

March 31, 2015

 

December 31, 2014

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

Net income (GAAP)

 

$

1,752

 

$

1,580

 

$

1,644

 

$

542

 

$

437

 

Items excluded from operating earnings, net of tax:

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

Severance expense

 

8

 

36

 

52

 

407

 

35

 

Income from life insurance death benefits

 

 

 

 

148

 

84

 

Legal settlement expense and related professional fees

 

 

 

 

 

 

Total after-tax items

 

8

 

36

 

52

 

555

 

119

 

Net operating earnings (non-GAAP)

 

$

1,760

 

$

1,616

 

$

1,696

 

$

1,097

 

$

556

 

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

 

$

0.18

 

$

0.16

 

$

0.17

 

$

0.11

 

$

0.05

 

 


(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) The Company’s adoption of Basel III went into effect as of March 31, 2015. The previous period ratios are the “Total Risk-Based Capital Ratio.”