LEWISTON, Maine, Jan. 21, 2009 (GLOBE NEWSWIRE) -- Northeast Bancorp (Nasdaq:NBN), the parent company of Northeast Bank (www.northeastbank.com), reported net income for the quarter ended December 31, 2008 of $293,575 or $.12 per diluted share, an increase of $224,459 or 424% over the linked quarter ended September 30, 2008 and a decrease of $108,853 or 27% over the quarter ended December 31, 2007. Results for the six months ended December 31, 2008 were $362,690 or $0.15 per diluted share, compared to net income for the six months ended December 31, 2007 of $832,993 or $0.35 per diluted share.
Revenues from operations (net interest income plus noninterest income) continue to grow, reflecting an increase of approximately $1 million for the quarter ended December 31, 2008 as compared to the same period last year and an increase of approximately $2 million year to date over the same period last year. In addition, revenues from non-traditional banking services, such as insurance and investments, continue to keep pace, a 31% growth to date over last year.
Jim Delamater, President and CEO of Northeast Bancorp since 1981, states, "The economy is under tremendous pressure, and I am pleased that our long-term strategic plan remains on track to deliver a diverse array of financial products and services to our market areas. We continue to take actions to protect the integrity of our balance sheet in order to support the risk associated with the present economic downturn. As such, our earnings reflect the conservative manner in which we continue to manage our loan operations, steering clear of lending programs without traditional underwriting standards and maintaining our common-sense underwriting and risk-rating guidelines."
Net interest income increased 18% for the quarter ended December 31, 2008 compared to the quarter ended December 31, 2007, and 15% for the six months ended December 31, 2008 compared to the six months ended December 31, 2007. Net interest income increased primarily from a better net interest margin, which increased 33 basis points and 34 basis points, respectively, for the quarter and six months ended December 31, 2008. This increase in net interest margin was attributable to a decrease in cost of funds. Leveraging the balance sheet with investment securities increased earning assets some $29 million, which also contributed to increasing net interest income.
The Company reports that the decrease in net income in comparison to the same periods during the previous fiscal year was due in part to limited growth in the size of its loan portfolio and a build-up of loan loss reserves. Another contributing factor was the increase in non-interest expenses related to the previously reported expansion of Northeast Bank Insurance Group. This has been an aggressive move, made to diversify the company's revenue streams and has been ongoing over the past 24 months.
Compared to the quarter ended September 30, 2008, the balances of delinquent loans and non-performing loans and assets increased. As a result, the allowance for loan losses was increased during the quarter ended December 31, 2008 through a provision for loan losses of $504,000. The allowance represented 1.40% of total loans at December 31, 2008 compared to 1.38% of total loans at September 30, 2008. Management believes that the allowance for loan losses balance of $5.7 million at December 31, 2008 is sufficient to cover losses inherent in the loan portfolio on that date and is appropriate based on applicable accounting standards.
"There is no credit crunch at Northeast Bank. In fact, our expanded mortgage operations are very active, and we have been able to add experienced mortgage loan originators to support our growing demand for mortgage loans," explains Delamater.
The company had over $619 million in assets at December 31, 2008, with net loans demonstrating a slight increase of $420 thousand at December 31, 2008 as compared to December 31, 2007. Northeast Bancorp continues to grow and expand, this quarter announcing the opening of a four-person loan production office in Portsmouth, New Hampshire. The company now employs over 250 people and operates in both Maine and New Hampshire.
In addition to announcing earnings, the company declared the payment of its regular quarterly dividend of $0.09 per share, payable on February 20, 2009 to the shareholders of record as of January 30, 2009. The company has paid a dividend every quarter since going public in 1987.
Delamater notes, "Northeast Bancorp is well positioned for the future as we embrace a visionary business model that delivers one-stop shopping for financial products. We continue to generate upwards of 40% of our revenue from non-interest sources, a level that is well above that of our peers. We will continue to forge ahead, developing new technologies and launching new products to meet the growing needs of our customers, while maintaining the value and diversity of the Northeast Bancorp franchise for our shareholders."
Capital Purchase Program (CPP)
During this past quarter, the company announced that it received $4,227,000 in capital from the U.S. Treasury's Capital Purchase Program, which was designed specifically for healthy banks to help stimulate the economy. In return, the company issued the U.S. Treasury shares of Northeast Bancorp preferred stock and warrants to purchase Northeast Bancorp common stock. The $4,227,000 in capital represents approximately 1% of Northeast's risk-based assets, the minimum level for participation in the program. Northeast's risk-based capital ratio was 12.10% at December 31, 2008, well above required regulatory levels.
"With the downshift in the economy, it is our responsibility to help our customers and provide viable and affordable financing options and, when necessary, loan work-outs and modifications," explains Delamater. "This relatively small injection of capital received through CPP is being invested back into our markets in the form of new loans for borrowers."
About Northeast Bancorp
Northeast Bancorp (Nasdaq:NBN) is the holding company for Northeast Bank, a leader in delivering one-stop shopping for financial services. Headquartered in Lewiston, Maine, Northeast Bank, together with its wholly owned subsidiary Northeast Bank Insurance Group Inc., derives its income from a combination of traditional banking services and non-traditional financial products and services including insurance and investments. Northeast Bank operates eleven traditional bank branches, fourteen insurance offices, three investment centers and a loan production office that serve seven counties in Maine and two in New Hampshire. Information regarding Northeast Bank can be found on its website at www.northeastbank.com or by contacting 1-800-284-5989.
The Northeast Bancorp logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4947
This communication contains certain "forward-looking statements." Although the Company 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. These statements speak only as of the date of this report and we do 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. For a more complete discussion of certain risks and uncertainties affecting the Company, please see "Item 1. Business-Forward-Looking Statements and Risk Factors" set forth in the Company's Form 10-K for the year ended June 30, 2008.
Customer access to securities is provided through Commonwealth Financial Network, Member NASD/SIPC. Important information--Securities, annuities, and insurance products are not deposit products, not FDIC insured, are subject to investment risk, including the possible loss of principal, and are not an obligation of or guaranteed by the Bank.
NORTHEAST BANCORP
(Dollars in Thousands, Except Per Share and Shares Outstanding Data)
(Unaudited)
Three Months Ended Six Months Ended
December 31, % December 31, %
--------- --------- --------- ---------
2008 2007 Change 2008 2007 Change
--------- --------- ------- --------- --------- -------
Selected
financial
information
Income
statement
data:
Interest
income $ 8,653 $ 9,073 -5% $ 17,248 $ 18,029 -4%
Interest
expense 4,426 5,503 -20% 8,980 10,867 -17%
--------- --------- --------- ---------
Net interest
income 4,227 3,570 18% 8,268 7,162 15%
Provision for
loan losses 504 180 180% 1,024 370 177%
--------- --------- --------- ---------
Net interest
income after
provision for
loan losses 3,723 3,390 10% 7,244 6,792 7%
Gain on sale
of loans 111 121 -8% 223 274 -19%
Gain (loss) on
securities 26 (2) -1400% (82) (8) 925%
Investment
brokerage
income 608 586 4% 1,028 984 4%
Insurance
agency income 1,431 1,099 30% 2,948 1,965 50%
Other
noninterest
income 575 592 -3% 1,194 1,171 2%
--------- --------- --------- ---------
Noninterest
Income 2,751 2,396 15% 5,311 4,386 21%
Noninterest
expense 6,141 5,281 16% 12,230 10,122 21%
--------- --------- --------- ---------
Operating
(loss) income
before income
tax 333 505 -34% 325 1,056 -69%
Income tax
(benefit)
expense 39 103 -62% (38) 223 -117%
--------- --------- --------- ---------
Net income $ 294 $ 402 -27% $ 363 $ 833 -56%
========= ========= ========= =========
Per share data:
Basic earnings
per common
share $ 0.12 $ 0.17 -29% $ 0.15 $ 0.35 -57%
Diluted
earnings per
common share $ 0.12 $ 0.17 -29% $ 0.15 $ 0.35 -57%
Weighted
average
shares
outstanding:
Basic 2,321,264 2,357,104 -2% 2,318,353 2,386,528 -3%
Diluted 2,321,480 2,370,853 -2% 2,330,163 2,402,895 -3%
Book value per
share $ 18.82 $ 17.73 $ 18.82 $ 17.73
Tangible book
value per
share $ 13.46 $ 11.91 $ 13.46 $ 11.91
Net interest
margin 2.99% 2.66% 2.95% 2.71%
Net interest
spread 2.82% 2.39% 2.76% 2.40%
Return on
average
assets
(annualized) 0.19% 0.28% 0.12% 0.29%
Return on
equity
(annualized) 2.75% 3.85% 1.74% 4.01%
Tier I
leverage
ratio (Bank) 7.62% 6.89% 7.62% 6.89%
Tier I risk-
based capital
ratio (Bank) 10.85% 9.61% 10.85% 9.61%
Total risk-
based capital
ratio (Bank) 12.10% 10.86% 12.10% 10.86%
Efficiency
ratio 88% 89% 90% 88%
Nonperforming
loans 7,369 6,610 7,369 6,610
Total
nonperforming
assets 8,111 6,610 8,111 6,610
Nonperforming
loans as a %
of total
loans 1.81% 1.62% 1.81% 1.62%
Nonperforming
assets as a %
of total
assets 1.31% 1.12% 1.31% 1.12%
December 31, %
----------------------
2008 2007 Change
--------- --------- -------
Balance sheet highlights:
Available-for-sale securities,
at fair value $ 157,834 $ 129,754 22%
Loans held for sale 1,357 706 92%
Loans 408,243 408,236 0%
Allowance for loan losses 5,721 5,756 -1%
Goodwill & intangibles 12,451 13,537 -8%
Total assets 618,653 588,398 5%
Deposits:
NOW and money market 71,221 63,772 12%
Savings 18,559 19,674 -6%
Certificates of deposits 224,943 225,975 0%
Brokered time deposits 17,547 20,957 -16%
Noninterest-bearing deposits 32,721 33,271 -2%
--------- ---------
Total deposits 364,991 363,649 0%
Borrowings 203,406 180,523 13%
Shareholders' equity 47,914 41,219 16%
Shares outstanding 2,321,332 2,324,182 0%