LEWISTON, Maine, Aug. 11, 2009 (GLOBE NEWSWIRE) -- Northeast Bancorp (Nasdaq:NBN), the parent Company of Northeast Bank (www.northeastbank.com), released its fiscal year end results. Overall revenues net of interest expense were $28,318,726 for year ended June 30, 2009, an increase of 13% over revenues for the same period in 2008.
The increase in net revenues was attributable to the Company's growth in noninterest income, particularly insurance brokerage commissions and gains on loan sales, and an improved net interest margin, resulting from a more favorable deposit pricing mix.
The Company reported net income of $958,989, or $0.36 per diluted common share, for the year ended June 30, 2009 compared to earnings of $1,931,289, or $0.82 per diluted common share for the prior year. For the quarter ended June 30, 2009, net income was $208,929, or $0.06 per diluted common share, compared to earnings of $426,127, or $0.18 per diluted common share, for the prior quarter.
Jim Delamater, President and CEO, said, "Despite the economic downturn we continue to experience a high demand for our products and services, especially in the mortgage and insurance lines of business. Our long-term plan is focused on growing revenues and creating a strong Northeast brand in the marketplace as the one-stop shop for financial products.
"We recognize the true value of a financial institution is the strength of its balance sheet and, thus, we have implemented comprehensive credit risk management practices that put the Company in a more favorable position to lend when others may be forced to pull back. In addition, we invested heavily in technology and training initiatives and expanded our reach into product and market areas that hold a greater promise for growth."
Over this past year, the Company completed its 8th insurance agency purchase since fiscal 2005, acquiring Goodrich Insurance Associates in Berwick, ME, continued to expand its mortgage lending operations, opened a loan production office in New Hampshire, introduced mobile banking and launched a variety of new retail products, including the new Northeast Bank Blue Sky Checking product (www.northeastbank.com/bluesky/).
The reduction in net income for the year was attributable to a variety of factors, including an increase in noninterest expense of $3,299,000, an increase in the provision for loan losses of $1,332,000, a decrease in investment brokerage income of $634,000, a one-time investment securities impairment expense of $330,000 and the one-time FDIC assessment of $275,000.
These items were partially offset by increases in net interest income of $2,440,000 and in gains on sales of loans of $904,000. For the year ended June 30, 2009, the net interest margin increased 29 basis points to 2.99% from 2.70% for the prior year. During the fourth quarter of fiscal year 2009, the Company's net interest margin increased 23 basis points to 3.04% from 2.81% in the fourth quarter of 2008. The increase reflects a growth in core deposits and a more favorable rate environment. Noninterest income increased 15% over the fourth quarter 2008 and 7% over the year end 2008 when compared to the prior year.
Excluding amortization of intangible expense, earnings per diluted share were $0.12 for the quarter ended June 30, 2009 and $0.23 for the quarter ended June 30, 2008. On the same basis, for the fiscal years ended June 30, 2009 and 2008 earnings per diluted share were $0.57 and $0.98, respectively. See footnote at the end of this release under the heading "Supplemental Reporting of Non-GAAP-Based Financial Measures."
"Over the past year, we continued to focus heavily on protecting the integrity of our balance sheet with the continued commitment to credit and interest rate risk management. As a result, we made the decision to exit the indirect lending market, further diversified our portfolio and implemented a policy of re-underwriting all commercial credits, even if it meant classifying more loans as non-performing," continued Delamater. "I feel proud that we had the courage to make the hard choices with our credit portfolio and reserves. The good news is that we are presently lending at record levels, while never abandoning our traditional credit standards."
At June 30, 2009, the loan loss reserve totaled $5,764,000. During the year $2,167,515 in loan loss provisions were offset by $2,059,515 in net charge offs, resulting in a net increase in the reserve from year to year of $108,000. With the decrease in total loans outstanding, the loan loss reserve coverage ratio of the allowance for loan losses to total loans increased from 1.39% to 1.47%.
Total assets were $598.1 million at year end, compared to $598.3 million at the end of fiscal year 2008. Book value per common share was $18.57. The Company remains well capitalized, with total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 13.23%, 11.81% and 8.12%, respectively, at June 30, 2009. At June 30, the Bank had risk-based capital ratios above regulatory well capitalized levels. During the fourth quarter, core deposits increased $23.7 million, a 7% increase over the level at June 30, 2008, which improved the Company's overall liquidity and cost of funds.
Delamater said, "We have maintained sufficient capital levels to support our current strategic direction. Although our current net income is adversely affected by aggressively increasing our reserves, we believe that aggressively increasing our allowance for loan losses is appropriate given the current concerns over credit quality in the marketplace."
"We continue to see healthy growth in both insurance brokerage revenue and from gain on loan sales. With the current market volatility, however, we are experiencing, as expected, a downturn in investment commission income," noted Delamater. "Management and the Board of Directors have chosen a direction for the company's future: implementing a full product and service diversification plan balanced against conservative and prudent risk management practices that we believe protects the organization and enhances our ability to take advantage of what we believe will be significant market opportunities in the near future."
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 release 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.
IMPORTANT NOTE: Securities and Advisory Services offered through Commonwealth Financial Network, Member FINRA, SIPC, a Registered Investment Advisor. Securities are not FDIC insured, not bank obligations or otherwise bank guaranteed and may lose value. Northeast Financial is located at 202 Rte 1, Suite 206, Falmouth ME 04105.
Supplemental Reporting of Non-GAAP-based Financial Measures
This press release contains certain financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP). Northeast's management uses these non-GAAP measures in its analysis of the Company's performance. The presentation of these non-GAAP financial measures is intended to supplement investors' understanding of Northeast's core business activities. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.
Earnings per share excluding amortization of customer list and intangibles is a non-GAAP-based financial measure calculated using non-GAAP-based amounts. The most directly comparable measure is earnings per share which is calculated using GAAP-based amounts. We calculate earnings per share excluding amortization of customer list and intangibles by excluding the amortization expense for the amortization of customer list and other intangibles recorded in connection with the acquisitions of insurance agencies from our calculation of earnings per share. Management uses earnings per share excluding amortization of customer list and intangibles in order to review our core operating results. Management believes that this is a better measure of our performance. A reconciliation of earnings per share to earnings per share excluding amortization of customer list and intangibles is set forth below.
Three Twelve
Amounts in thousands Months Months
except per share Ended Ended
amounts June 30 June 30
------------------ ------------------
2009 2008 2009 2008
------- ------- ------- -------
Earnings excluding
intangible
Amortization
Net income $ 209 $ 426 $ 959 $ 1,931
Add back intangible
expense, net of tax 120 116 489 399
------- ------- ------- -------
Adjusted net income $ 329 $ 542 $ 1,448 $ 2,330
======= ======= ======= =======
Adjusted net income
available to common
shareholders $ 269 $ 542 $ 1,314 $ 2,330
======= ======= ======= =======
Adjusted basic earnings
per common share $ 0.12 $ 0.23 $ 0.57 $ 0.99
Adjusted diluted earnings
per common share $ 0.12 $ 0.23 $ 0.57 $ 0.98
NORTHEAST BANCORP
(Dollars in Thousands, Except Per Share and Shares Outstanding Data)
(Unaudited)
Three Months Ended Twelve Months Ended
June 30, June 30,
--------- --------- % --------- --------- %
2009 2008 Change 2009 2008 Change
--------- --------- ---- --------- --------- ----
Selected
financial
information
Income
statement data:
Interest
income $ 8,182 $ 8,572 -5% $ 33,766 $ 35,397 -5%
Interest
expense 3,895 4,790 -19% 16,980 21,051 -19%
--------- --------- --------- ---------
Net interest
income 4,287 3,782 13% 16,786 14,346 17%
Provision for
loan losses 525 179 193% 2,168 836 159%
--------- --------- --------- ---------
Net interest
income after
provision
for loan
losses 3,762 3,603 4% 14,618 13,510 8%
Gain on sale
of loans 556 182 205% 1,519 615 147%
Gain on
securities,
net 350 34 929% 268 293 -9%
Investment
brokerage
income 313 558 -44% 1,589 2,223 -29%
Insurance
agency
income 1,392 1,411 -1% 5,865 5,364 9%
Other
noninterest
income 579 591 -2% 2,292 2,308 -1%
--------- --------- --------- ---------
Noninterest
Income 3,190 2,776 15% 11,533 10,803 7%
Noninterest
expense 6,753 5,886 15% 25,153 21,854 15%
--------- --------- --------- ---------
Operating
income
before
income tax 199 493 -60% 998 2,459 -59%
Income tax
(benefit)
expense (10) 67 -115% 39 528 -93%
--------- --------- --------- ---------
Net income $ 209 $ 426 -51% $ 959 $ 1,931 -50%
========= ========= ========= =========
Net income
available to
common
stockholder $ 148 $ 426 -65% $ 825 $ 1,931 -57%
========= ========= ========= =========
Per share data:
Basic earnings
per common
share $ 0.06 $ 0.18 -67% $ 0.36 $ 0.82 -56%
Diluted
earnings per
common share $ 0.06 $ 0.18 -67% $ 0.36 $ 0.82 -56%
Weighted
average
shares
outstanding:
Basic 2,321,332 2,315,182 0% 2,319,830 2,352,484 -1%
Diluted 2,321,617 2,322,869 0% 2,321,929 2,366,340 -2%
Book value
per share $ 18.57 $ 17.40 $ 18.57 $ 17.40
Tangible book
value per
share $ 13.05 $ 11.85 $ 13.05 $ 11.85
Net interest
margin 3.04% 2.81% 2.99% 2.70%
Net interest
spread 2.80% 2.52% 2.75% 2.38%
Return on
average
assets
(annualized) 0.14% 0.29% 0.16% 0.33%
Return on
equity
(annualized) 1.72% 4.01% 2.14% 4.63%
Tier I
leverage
ratio (Bank) 7.72% 7.06% 7.72% 7.06%
Tier I risk-
based
capital
ratio (Bank) 11.26% 9.60% 11.26% 9.60%
Total risk-
based
capital
ratio (Bank) 12.51% 10.85% 12.51% 10.85%
Efficiency
ratio 90% 90% 89% 87%
Nonperforming
loans 9,894 7,703 9,894 7,703
Total non-
performing
assets 10,567 8,381 10,567 8,381
Nonperforming
loans as a
% of total
loans 2.51% 1.88% 2.51% 1.88%
Nonperforming
assets as a
% of total
assets 1.77% 1.40% 1.77% 1.40%
June 30,
--------- --------- %
2009 2008 Change
--------- --------- ----
Balance sheet
highlights:
Available-
for-sale
securities,
at fair
value $148,410 $134,483 10%
Loans held
for sale 2,437 486 401%
Loans 393,651 409,194 -4%
Allowance for
loan losses 5,764 5,656 2%
Goodwill &
intangibles 12,802 12,835 0%
Total assets 598,148 598,274 0%
Deposits:
NOW and
money
market 83,515 70,138 19%
Savings 19,079 19,906 -4%
Certificates
of deposits 239,658 225,590 6%
Brokered
time
deposits 10,906 12,597 -13%
Noninterest-
bearing
deposits 32,228 35,143 -8%
--------- ---------
Total
deposits 385,386 363,374 6%
Borrowings 162,389 186,830 -13%
Stockholders'
equity 47,317 40,273 17%
Shares
outstanding 2,321,332 2,315,182 0%