Northeast Bancorp Reports Fourth Quarter and Fiscal Year Results and Declares Dividend

Lewiston, Maine, UNITED STATES


LEWISTON, Maine, July 30, 2018 (GLOBE NEWSWIRE) -- 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 $4.3 million, or $0.48 per diluted common share, for the quarter ended June 30, 2018, compared to net income of $4.0 million, or $0.45 per diluted common share, for the quarter ended June 30, 2017. Net income for the year ended June 30, 2018 was $16.2 million, or $1.77 per diluted common share, compared to $12.3 million, or $1.38 per diluted common share, for the year ended June 30, 2017.

On July 30, 2018, the Board of Directors declared a cash dividend of $0.01 per share, payable on August 24, 2018, to shareholders of record as of August 10, 2018.

“We closed the year with a strong quarter,” said Richard Wayne, President and Chief Executive Officer. “For the quarter, we earned $0.48 per diluted common share, a return on equity of 13.0%, a return on assets of 1.5%, and an efficiency ratio of 57.9%. For the fiscal year, we earned $1.77 per diluted common share, compared to $1.38 for the prior fiscal year, representing an increase of 28%. For the quarter, our Loan Acquisition and Servicing Group ("LASG") produced $119.2 million of loans, including originations of $66.6 million and purchases with a recorded investment of $52.6 million. This represents quarterly net growth in the LASG portfolio of $51.6 million, or 8.1%, and annual net growth of $111.4 million, or 19.3%.”

As of June 30, 2018, total assets were $1.2 billion, an increase of $80.9 million, or 7.5%, from total assets of $1.1 billion as of June 30, 2017. The principal components of the change in the balance sheet follow:

  1. The following table highlights the changes in the loan portfolio for the three months and year ended June 30, 2018 compared to the same periods in the prior year:
 Loan Portfolio Changes 
 Three Months Ended June 30, 2018 
 June 30, 2018
Balance
 March 31, 2018
Balance 
 Change ($)  Change (%) 
 (Dollars in thousands) 
LASG Purchased$290,972 $254,700 $36,272   14.24%
LASG Originated 397,363  381,990  15,373   4.02%
SBA 60,156  50,583  9,573   18.93%
Community Banking 123,311  129,156  (5,845)  (4.53%)
Total$871,802 $816,429 $55,373   6.78%
              
 Year Ended June 30, 2018 
 June 30, 2018
Balance
 June 30, 2017
Balance 
 Change ($)  Change (%) 
 (Dollars in thousands) 
LASG Purchased$290,972 $246,388  $44,584   18.10
%
LASG Originated 397,363  330,515   66,848   20.23
%
SBA 60,156  52,965   7,191  13.58%
Community Banking 123,311  149,327   (26,016)  (17.42
%)
Total$871,802 $779,195  $92,607   11.88
%

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended June 30, 2018 totaled $119.2 million, which consisted of $52.6 million of purchased loans, at an average price of 93.6% of unpaid principal balance, and $66.6 million of originated loans. The Bank's Small Business Administration ("SBA") Division closed $23.9 million and funded $21.3 million of new loans during the quarter ended June 30, 2018. In addition, the Company sold $10.9 million of the guaranteed portion of SBA loans in the secondary market, of which $7.5 million were originated in the current quarter and $3.4 million were originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $10.7 million for the quarter.

As previously discussed in the Company’s 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 June 30, 2018
    (Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans $  101.0
Regulatory Capital Non-owner occupied commercial real estate loans may not exceed 300% of total capital $   166.3
 

 
     

An overview of the Bank’s LASG portfolio follows:

 LASG Portfolio
 Three Months Ended June 30,
 2018  2017 
   Purchased  Originated Secured Loans to 
  Broker-Dealers
 Total LASG PurchasedOriginatedSecured Loans to Broker-DealersTotal LASG
              (Dollars in thousands)                   
Loans purchased or originated during the period: 
Unpaid principal balance$56,233 $66,588 $  - $122,821  $50,202 $67,860 $  - $118,062 
Net investment basis 52,637  66,588    -  119,225     45,060  67,860    -  112,920 
                   
 

Loan returns during the period:
  
Yield 10.87% 7.45%  0.00% 8.83%  13.64% 6.45%  0.00 9.61%
Total Return (1) 11.49% 7.45%  0.00 9.08%  13.78% 6.45%  0.00 9.68%
                  


 Twelve Months Ended June 30, 
 2018  2017
   Purchased Originated Secured Loans to 
  Broker-Dealers
 Total LASG  PurchasedOriginatedSecured Loans to
Broker-Dealers
Total LASG 
                  (Dollars in thousands)                 
Loans purchased or originated during the period:                      
Unpaid principal balance$137,249 $224,546 $  -  $  361,795   $126,713 
$237,691 
$  -  $  364,404 
Net investment basis  124,111    224,546  -   348,657     112,807    237,691  -    350,498 
                       
Loan returns during the period:          
Yield 11.35% 6.80% 0.00% 8.66   12.24 6.21 0.82%  8.69%
Total Return (1) 11.73% 6.80% 0.00% 8.82   12.30 6.21 0.82%  8.72%
                       
                       
Total loans as of period end:          
Unpaid principal balance$326,855 $397,363 $- $724,218   $279,854 
$330,515 
$-  $610,369 
Net investment basis 290,972  397,363  -  688,335    246,388  330,515  -   576,903 

(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, gains on real estate owned and other noninterest income recorded during the period divided by the average invested balance, which includes purchased loans held for sale, on an annualized basis.  The total return on purchased loans does not include the effect of purchased loan charge-offs or recoveries during the period. Total return on purchased loans is considered a non-GAAP financial measure.

  1. Deposits increased by $65.1 million, or 7.3%, from June 30, 2017 to June 30, 2018, attributable primarily to increases in money market accounts of $46.3 million, or 12.4%, and time deposits of $15.1 million, or 4.5%.
     
  2. Shareholders’ equity increased by $15.6 million, or 12.7%, from June 30, 2017 to June 30, 2018, primarily due to earnings of $16.2 million. Earnings were partially offset by stock option exercises which decreased additional paid-in-capital by $1.2 million. Additionally, there was stock based compensation of $870 thousand, an increase in accumulated other comprehensive loss of $129 thousand, and dividends paid on common stock of $355 thousand.

Net income increased by $317 thousand to $4.3 million for the quarter ended June 30, 2018, compared to net income of $4.0 million for the quarter ended June 30, 2017.

  1. Net interest and dividend income before provision for loan losses increased by $651 thousand for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017. The increase is primarily due to higher average balances in the loan portfolio. These increases were partially offset by higher funding costs and higher average deposit balances.

The following table summarizes interest income and related yields recognized on the loan portfolios:

 Interest Income and Yield on Loans 
 Three Months Ended June 30, 
 2018  2017  
 Average Interest   Average Interest   
 Balance (1) Income Yield Balance (1) Income Yield 
 (Dollars in thousands) 
Community Banking$128,296 $  1,630 5.10% $163,997 $  1,949 4.77% 
SBA 56,088  1,116 7.98%  55,229  848 6.16% 
LASG:                
Originated  381,783    7,088 7.45%   301,988    4,859 6.45% 
Purchased 259,119  7,021 10.87%   237,306  8,068 13.64% 
Total LASG  640,902    14,109 8.83%   539,294    12,927 9.61% 
Total$ 825,286 $  16,855 8.19% $ 758,520 $  15,724 8.31% 
                 
                 
        Year Ended June 30,        
 2018  2017  
 Average Interest   Average Interest   
 Balance (1) Income Yield Balance (1) Income Yield 
 (Dollars in thousands) 
Community Banking$139,239 $  6,871 4.93% $190,704 $  9,102 4.77% 
SBA 53,030  3,888 7.33%  42,946  2,619 6.10% 
LASG:                
Originated  350,427    23,834 6.80%   239,796    14,883 6.21% 
Purchased  242,652    27,553 11.35%   236,937    28,997 12.24% 
Secured Loans to Broker-Dealers -  - 0.00%  31,085  256 0.82% 
Total LASG  593,079    51,387 8.66%   507,818    44,136 8.69% 
Total$ 785,348 $  62,146 7.91% $ 741,468 $  55,857 7.53% 
 (1) Includes loans held for sale.              
                    

The components of total income on purchased loans are set forth in the table below entitled “Total Return on Purchased Loans.” Wh­en compared to the three months and year ended June 30, 2017, transactional income for the three months and year ended June 30, 2018 decreased by $1.2 million and $439 thousand, respectively. The total return on p­­­­­­­­urchased loans for the three months and year ended June 30, 2018 was 11.49% and 11.73%, respectively. The decrease over the prior comparable periods was primarily due to higher accelerated accretion in the three months and year ended June 30, 2017. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended June 30,
 2018  2017 
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$5,043 7.81% $4,588  7.76%
Transactional income:         
Gain on loan sales   402 0.62%    -  0.00%
Gain on sale of real estate owned   - 0.00%    93  0.16%
Other noninterest income (expense)   -  0.00%    (10) -0.02%
Accelerated accretion and loan fees   1,978 3.06%    3,480  5.88%
Total transactional income   2,380 3.68%    3,563  6.02%
Total$  7,423 11.49% $  8,151  13.78%


  
 Year Ended June 30,
 2018  2017 
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$18,752 7.73% $18,975  8.01%
Transactional income:         
Gain on loan sales    918 0.38%    -  0.00%
Gain on sale of real estate owned   - 0.00%    148  0.06%
Other noninterest income (expense)   -  0.00%    (12) 0.00%
Accelerated accretion and loan fees   8,801 3.62%    10,022  4.23%
Total transactional income   9,719 4.00%    10,158  4.29%
Total$  28,471 11.73% $  29,133  12.30%

(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, gains on real estate owned and other noninterest income recorded during the period divided by the average invested balance, which includes purchased loans held for sale, on an annualized basis.  The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter. Total return is considered a non-GAAP financial measure.

2. Noninterest income decreased by $931 thousand for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017, principally due to the following:

  • A decrease in gain on sale of SBA loans of $833 thousand, due to a lower volume of SBA loans sold in the quarter;
  • A decrease in fees for other services to customers of $161 thousand, due to lower commercial loan servicing fees; and
  • A decrease in gain on sale of residential loans of $134 thousand, due to lower volume of residential loans sold in the quarter.
  • The decreases in noninterest income were partially offset by an increase in gain on sale of other loans of $402 thousand, due to the sale of two LASG purchased loans in the quarter. 

3. Noninterest expense increased by $114 thousand for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017, primarily due to the following:

  • An increase in data processing fees of $142 thousand, primarily due to the increased cost associated with the outsourcing of data processing;
  • An increase in loan expense of $123 thousand, largely driven by higher expense related to loan acquisition and refinance activity; and
  • An increase in other noninterest expense of $43 thousand, primarily due to increased travel expense.
  • The increases in noninterest expense were partially offset by a decrease in salaries and employee benefits of $219 thousand, primarily due to lower headcount, and a decrease in incentive compensation for the quarter.   

4. Income tax expense decreased by $576 thousand for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017, primarily due to the following:

  • A decrease in the federal corporate income tax rate as a result of the Tax Cuts and Jobs Act signed into law on December 22, 2017, which resulted in a $464 thousand decrease in federal income tax expense; and
  • A decrease in income tax expense as a result of a $114 thousand income tax benefit arising from the treatment of stock options exercised under ASU 2016-09, Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, whereby the tax effects of exercised options are treated as a discrete item in the reporting period in which they occur.

As of June 30, 2018, nonperforming assets totaled $14.2 million, or 1.23% of total assets, as compared to $14.6 million, or 1.25% of total assets, as of March 31, 2018, and $14.8 million, or 1.37% of total assets, as of June 30, 2017.

As of June 30, 2018, past due loans totaled $7.7 million, or 0.89% of total loans, as compared to $11.2 million, or 1.37% of total loans as of March 31, 2018, and $13.4 million, or 1.72% of total loans as of June 30, 2017.

As of June 30, 2018, the Company’s Tier 1 leverage capital ratio was 13.1%, compared to 12.8% at June 30, 2017, and the Total capital ratio was 19.3%, compared to 19.5% at June 30, 2017.

Investor Call Information
Richard Wayne, Chief Executive Officer of Northeast Bancorp, and Jean-Pierre Lapointe, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss fourth quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, July 31st. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 5291318. 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. We offer personal and business banking services to the Maine market via ten branches. Our Loan Acquisition and Servicing Group purchases and originates commercial loans on a nationwide basis and our SBA Division supports the needs of growing businesses nationally. ableBanking, a division of Northeast Bank, offers online savings products to consumers nationwide. Information regarding Northeast Bank can be found at www.northeastbank.com.

Non-GAAP Financial Measures
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 shareholders’ equity, tangible book value per share, total return on purchased loans, and efficiency ratio. 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; changing government regulation; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; 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.


NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
 June 30, 2018 June 30, 2017
Assets     
Cash and due from banks$3,889  $3,582 
Short-term investments 153,513   159,701 
Total cash and cash equivalents 157,402   163,283 
      
      
Available-for-sale securities, at fair value 87,687   96,693 
      
Residential real estate loans held for sale 3,405   4,508 
SBA loans held for sale 3,750   191 
Total loans held for sale 7,155   4,699 
      
      
Loans     
Commercial real estate 579,450   498,004 
Commercial and industrial 188,852   175,654 
Residential real estate 100,256   101,168 
Consumer 3,244   4,369 
Total loans 871,802   779,195 
Less: Allowance for loan losses 4,807   3,665 
Loans, net 866,995   775,530 
      
      
Premises and equipment, net 6,591   6,937 
Real estate owned and other repossessed collateral, net 2,233   826 
Federal Home Loan Bank stock, at cost 1,652   1,938 
Intangible assets, net 867   1,300 
Loan servicing rights, net 2,970   2,846 
Bank-owned life insurance 16,620   16,179 
Other assets 7,564   6,643 
Total assets$1,157,736  $1,076,874 
      
Liabilities and Shareholders' Equity     
Deposits     
Demand$72,272  $69,827 
Savings and interest checking 109,637   108,417 
Money market 420,886   374,569 
Time 352,145   337,037 
Total deposits 954,940   889,850 
      
Federal Home Loan Bank advances 15,000   20,011 
Subordinated debt 23,958   23,620 
Capital lease obligation 605   873 
Other liabilities 24,803   19,723 
Total liabilities 1,019,306   954,077 
      
 

Commitments and contingencies
   -     - 
      
      
Shareholders' equity     
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares    
issued and outstanding at June 30, 2018 and June 30, 2017   -     - 
Voting common stock, $1.00 par value, 25,000,000 shares authorized;     
8,056,527 and 7,840,460 shares issued and outstanding    
at June 30, 2018 and June 30, 2017, respectively 8,057   7,841 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;     
882,314 and 991,194 shares issued and outstanding at June 30, 2018 and June 30, 2017, respectively882    991 
Additional paid-in capital 77,016   77,455 
Retained earnings 54,236   38,142 
Accumulated other comprehensive loss (1,761)  (1,632)
Total shareholders' equity 138,430   122,797 
Total liabilities and shareholders' equity$1,157,736  $1,076,874 



NORTHEAST BANCORP AND SUBSIDIARY 
CONSOLIDATED STATEMENTS OF INCOME 
(Unaudited) 
(Dollars in thousands, except share and per share data) 
 Three Months Ended June 30,  Year Ended June 30, 
 2018  2017  2018  2017 
Interest and dividend income:           
Interest and fees on loans$16,855  $15,724  $62,146  $55,857 
Interest on available-for-sale securities 298   271   1,111   1,018 
Other interest and dividend income 819   376   2,636   1,046 
Total interest and dividend income 17,972   16,371   65,893   57,921 
            
 

Interest expense:
           
Deposits 2,896   1,949   9,897   7,357 
Federal Home Loan Bank advances 109   166   547   800 
Subordinated debt 552   487   2,102   1,888 
Obligation under capital lease agreements 7   12   38   51 
Total interest expense 3,564   2,614   12,584   10,096 
            
Net interest and dividend income before provision for loan losses 14,408   13,757   53,309   47,825 
Provision for loan losses 254   389   1,410   1,594 
Net interest and dividend income after provision for loan losses 14,154   13,368   51,899   46,231 
            
 

Noninterest income:
           
Fees for other services to customers 386   547   1,822   1,952 
Gain on sales of residential loans held for sale 159   293   931   1,452 
Gain on sales of SBA loans 1,033   1,866   2,955   5,277 
Gain on sales of other loans 402   -   918   365 
Loss on real estate owned, other repossessed collateral
and premises and equipment, net
   (138)    (31)    (123)    (23)
Bank-owned life insurance income 109   114   441   454 
Other noninterest income 8   101   84   219 
Total noninterest income 1,959   2,890   7,028   9,696 
            
 

Noninterest expense:
           
Salaries and employee benefits 5,809   6,028   21,565   21,706 
Occupancy and equipment expense 1,166   1,222   4,585   5,002 
Professional fees 458   401   1,749   1,666 
Data processing fees 601   459   2,447   1,744 
Marketing expense 143   120   472   392 
Loan acquisition and collection expense 356   233   1,354   1,734 
FDIC insurance premiums 80   79   317   303 
Intangible asset amortization 108   108   433   432 
Other noninterest expense 757   714   2,808   2,810 
Total noninterest expense 9,478   9,364   35,730   35,789 
            
Income before income tax expense 6,635   6,894   23,197   20,138 
Income tax expense 2,291   2,867   7,031   7,799 
Net income$4,344  $4,027  $16,166  $12,339 
            
            
Weighted-average common shares outstanding:           
Basic 8,934,038   8,823,679   8,906,710   8,898,448 
Diluted 9,116,157   8,979,471   9,129,152   8,952,614 
Earnings per common share:           
            
Basic$0.49  $0.46  $1.81  $1.39 
Diluted 0.48   0.45     1.77      1.38 
 Cash dividends declared per common share$0.01  $0.01  $0.04  $0.04 



NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended June 30,
 2018  2017 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$88,933 $  298 1.34% $  98,033 $  271 1.11%
Loans (1) (2) (3) 825,286    16,855 8.19%    758,520    15,741 8.32%
Federal Home Loan Bank stock 1,655    24 5.82%    1,938    19 3.93%
Short-term investments (4) 178,244    795 1.79%    137,570    357 1.04%
Total interest-earning assets   1,094,118    17,972 6.59%    996,061    16,388 6.60%
Cash and due from banks   2,611         2,753     
Other non-interest earning assets   30,430         31,910     
Total assets$  1,127,159      $  1,030,724     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$73,357 $  59 0.32% $71,209 $  51 0.29%
Money market accounts   447,775    1,580 1.42%    345,352    878 1.02%
Savings accounts 37,799    14 0.15%    37,863    13 0.14%
Time deposits 309,362    1,243 1.61%    323,399    1,007 1.25%
Total interest-bearing deposits 868,293    2,896 1.34%    777,823    1,949 1.01%
Federal Home Loan Bank advances   15,000    109 2.91%    20,014    166 3.33%
Subordinated debt   23,915    552 9.26%    23,579    487 8.28%
Capital lease obligations    629    7 4.46%    896    12 5.37%
Total interest-bearing liabilities   907,837    3,564 1.57%    822,312    2,614 1.28%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts  76,368        80,188     
Other liabilities   8,654         7,181     
Total liabilities   992,859         909,681     
Shareholders' equity   134,300         121,043     
Total liabilities and shareholders' equity$  1,127,159      $  1,030,724     
                
Net interest income (5)   $14,408      $13,774  
                
Interest rate spread      5.02%       5.32%
Net interest margin (6)      5.28%       5.55%
                
(1)  Interest income and yield are stated on a fully tax-equivalent basis using the statutory 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)  Includes tax-exempt interest income of $0 and $17 thousand for the three months ended June 30, 2018 and June 30, 2017, respectively.
(6)  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)
 Year Ended June 30,
 2018  2017 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$92,599 $  1,111 1.20% $95,624 $  1,018 1.06%
Loans (1) (2) (3)   785,348    62,156 7.91%    741,468    55,928 7.54%
Federal Home Loan Bank stock   1,803    89 4.94%    2,172    90 4.14%
Short-term investments (4)   171,360    2,547 1.49%    133,599    956 0.72%
Total interest-earning assets   1,051,110    65,903 6.27%    972,863    57,992 5.96%
Cash and due from banks   2,889         2,833     
Other non-interest earning assets   31,550         32,394     
Total assets$  1,085,549      $  1,008,090     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$70,486 $210 0.30% $70,912 $204 0.29%
Money market accounts   407,680    5,145 1.26%    322,011    3,120 0.97%
Savings accounts   37,514    57 0.15%    36,438    50 0.14%
Time deposits   311,544    4,485 1.44%  326,601  3,983 1.22%
Total interest-bearing deposits   827,224    9,897 1.20%    755,962    7,357 0.97%
Federal Home Loan Bank advances   16,947    547 3.23%    24,334   800 3.29%
Subordinated debt   23,787    2,102 8.84%    23,468    1,888 8.04%
Capital lease obligations   730    38 5.21%    992    51 5.14%
Total interest-bearing liabilities   868,688    12,584 1.45%    804,756    10,096 1.25%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 79,767       79,560     
Other liabilities   7,472         7,599     
Total liabilities   955,927         891,915     
Shareholders' equity   129,622         116,175     
Total liabilities and shareholders' equity$  1,085,549      $  1,008,090     
                
Net interest income (5)   $  53,319      $   47,896  
                
Interest rate spread      4.82%       4.71%
Net interest margin (6)      5.07%       4.92%
                
(1)  Interest income and yield are stated on a fully tax-equivalent basis using the statutory 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)  Includes tax-exempt interest income of $10 thousand and $71 thousand for the year ended June 30, 2018 and June 30, 2017, respectively.
(6)  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:
 June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017
 

Net interest income
$  14,408  $  13,134  $  12,457  $   13,311  $  13,757 
Provision for loan losses 254   364   437   354   389 
Noninterest income 1,959   1,882   1,228   1,958   2,890 
Noninterest expense 9,478   8,975   8,563   8,714   9,364 
Net income 4,344   3,932   3,304   4,586   4,027 
          
Weighted-average common shares outstanding:         
Basic 8,934,038   8,927,544   8,924,495   8,841,511   8,823,679 
Diluted 9,116,157   9,143,177   9,168,084   9,089,936   8,979,471 
Earnings per common share:         
Basic$   0.49  $   0.44  $  0.37  $   0.52  $  0.46 
Diluted   0.48     0.43     0.36     0.50     0.45 
Dividends per common share   0.01     0.01     0.01     0.01     0.01 
          
Return on average assets 1.55%  1.43%  1.26%  1.71%  1.57%
Return on average equity 12.97%  12.15%  10.20%  14.61%  13.34%
Net interest rate spread (1) 5.02%  4.69%  4.68%  4.89%  5.32%
Net interest margin (2) 5.28%  4.94%  4.93%  5.13%  5.55%
Efficiency ratio (non-GAAP) (3) 57.91%  59.77%  62.57%  57.07%  56.25%
Noninterest expense to average total assets 3.37%  3.27%  3.27%  3.25%  3.64%
Average interest-earning assets to average
interest-bearing liabilities
 120.52%  120.27%  122.21%  121.09%  121.13%
          
 As of:
 June 30,2018 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017
Nonperforming loans:         
Originated portfolio:         
Residential real estate$  2,914  $  3,116  $  3,783  $  3,667  $  3,337 
Commercial real estate 1,499   1,408   2,537   2,409   413 
Home equity 298   255   107   58   58 
Commercial and industrial 1,368   636   2,555   2,629   2,600 
Consumer 134   136   147   131   103 
Total originated portfolio 6,213   5,551   9,129   8,894   6,511 
Total purchased portfolio 5,745   8,063   8,962   7,758   7,452 
Total nonperforming loans 11,958   13,614   18,091   16,652   13,963 
Real estate owned and other repossessed collateral, net 2,233   947   910   2,040   826 
Total nonperforming assets$  14,191  $  14,561  $  19,001  $  18,692  $  14,789 
          
Past due loans to total loans 0.89%  1.37%  3.87%  1.60%  1.72%
Nonperforming loans to total loans 1.37%  1.67%  2.34%  2.19%  1.79%
Nonperforming assets to total assets 1.23%  1.25%  1.84%  1.78%  1.37%
Allowance for loan losses to total loans 0.55%  0.57%  0.56%  0.53%  0.47%
Allowance for loan losses to nonperforming loans 40.20%  34.46%  24.07%  24.23%  26.25%
          
Commercial real estate loans to risk-based capital (4) 200.74%  186.07%  187.92%  166.15%  181.23%
Net loans to core deposits (5) 91.54%  83.65%  91.46%  88.68%  87.68%
Purchased loans to total loans, including held for sale 33.10%  31.02%  31.28%  30.11%  31.43%
Equity to total assets 11.96%  11.47%  12.57%  12.07%  11.40%
Common equity tier 1 capital ratio 16.02%  16.48%  16.74%  16.50%  16.00%
Total capital ratio 19.28%  19.92%  20.30%  20.04%  19.48%
Tier 1 leverage capital ratio 13.12%  12.88%  13.41%  12.77%  12.81%
          
Total shareholders' equity$  138,430  $  133,787  $  130,003  $  126,712  $  122,797 
Less: Preferred stock   -     -     -     -     - 
Common shareholders' equity   138,430     133,787     130,003     126,712     122,797 
Less: Intangible assets (6)   (3,837)    (3,973)    (4,087)    (4,146)    (4,146)
Tangible common shareholders' equity (non-GAAP)$  134,593  $  129,814  $   125,916  $  122,566  $  118,651 
          
Common shares outstanding 8,938,841   8,925,399   8,939,273     8,890,353     8,831,654 
Book value per common share$   15.49  $   14.99  $   14.54  $   14.25  $   13.90 
Tangible book value per share (non-GAAP) (7)   15.06     14.54     14.09     13.79     13.43 
          
          
(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 noninterest expense divided by the sum of net interest income (before the loan loss provision) plus noninterest income.
(4) For purposes of calculating this ratio, commercial real estate includes all non-owner occupied commercial real estate 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) Includes the core deposit intangible asset and loan servicing rights asset.
(7) Tangible book value per share represents total shareholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
 

For More Information:

Jean-Pierre Lapointe, Chief Financial Officer
Northeast Bank, 500 Canal Street, Lewiston, ME 04240
207.786.3245 ext. 3220
www.northeastbank.com