Northeast Bank Reports Record Third Quarter Results and Declares Dividend

Lewiston, Maine, UNITED STATES


PORTLAND, Maine, April 21, 2021 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported record net income of $34.2 million, or $4.06 per diluted common share, for the quarter ended March 31, 2021, compared to net income of $1.9 million, or $0.21 per diluted common share, for the quarter ended March 31, 2020. Net income for the nine months ended March 31, 2021 was $50.1 million, or $6.01 per diluted common share, compared to $11.5 million, or $1.25 per diluted common share, for the nine months ended March 31, 2020. Net income for the three and nine months ended March 31, 2021 included $33.0 million of net gains on the sale of Paycheck Protection Program (“PPP”) loans originated and sold during the quarter ended March 31, 2021 under the current round of PPP, which had an after-tax earnings per diluted common share impact of $2.75 and $2.80, respectively.

The Board of Directors declared a cash dividend of $0.01 per share, payable on May 20, 2021, to shareholders of record as of May 6, 2021.

“We reported record results in our third fiscal quarter,” said Rick Wayne, Chief Executive Officer. “Over the past six months in anticipation of another round of PPP loans, we invested in technology, marketing and other initiatives to be able to source, underwrite and fund a significant volume of PPP loans in the event the program was reinstated. We are proud to report that our planning and investment paid off. Through March 31, we originated $2.25 billion of PPP loans to over 22,000 borrowers with over 286,000 associated jobs. Of the $2.25 billion of originated PPP loans, we sold $2.14 billion to The Loan Source, Inc. (“Loan Source”) during our third fiscal quarter, generating $33.0 million of net gains. We anticipate selling the remaining loans plus any additional PPP originations to Loan Source in our fourth fiscal quarter. In addition, we generated $6.0 million of correspondent fee income under the arrangement with Loan Source and ACAP SME, LLC. Our national origination and purchase business remained strong, with a total of $109.2 million of originated and purchased loans during the quarter.” Mr. Wayne continued, “As a result, we are reporting earnings of $4.06 per diluted common share, a return on average equity of 71.1%, a return on average assets of 7.0%, and an efficiency ratio of 16.6% for the quarter.”

As of March 31, 2021, total assets were $1.71 billion, an increase of $457.1 million, or 36.3%, from total assets of $1.26 billion as of June 30, 2020.

1.   Cash and short-term investments increased by $320.8 million, or 223.3%, primarily due to the timing of a large deposit account related to PPP payoff collections that is subject to significant fluctuation given the PPP activity during the quarter ended March 31, 2021. Cash and short-term investments may remain at an elevated level while PPP collections, including forgiveness amounts, continue, depending on the timing of receipts and remittances of cash amounts.


2.   The following table highlights the changes in the loan portfolio for the three and nine months ended March 31, 2021:

 Loan Portfolio Changes
 Three Months Ended March 31, 2021
 March 31, 2021
Balance
 December 31, 2020
Balance
  
Change ($)
 
Change (%)
  
  
 (Dollars in thousands)
National Lending Purchased$433,497 $418,584 $14,913 3.56%
National Lending Originated 473,930  478,423  (4,493) (0.94%)
SBA National 42,707  48,797  (6,090) (12.48%)
Community Banking 52,674  55,773  (3,099) (5.56%)
Total$1,002,808 $1,001,577 $1,231 0.12%
           
 Nine Months Ended March 31, 2021
 March 31, 2021
Balance
 June 30, 2020
Balance
  
Change ($)
 
Change (%)
  
  
 (Dollars in thousands)
National Lending Purchased$433,497 $386,624 $46,873 12.12%
National Lending Originated 473,930  467,612  6,318 1.35%
SBA National 42,707  47,095  (4,388) (9.32%)
Community Banking 52,674  70,271  (17,597) (25.04%)
Total$1,002,808 $971,602 $31,206 3.21%
           

Loans generated by the Bank's National Lending Division for the quarter ended March 31, 2021 totaled $109.2 million, which consisted of $39.9 million of purchased loans, at an average price of 93.8% of unpaid principal balance, and $69.3 million of originated loans.

Additionally, the Bank originated $2.25 billion of loans in connection with the PPP, of which $2.14 billion were sold during the quarter ended March 31, 2021. The Bank recorded a net gain of $33.0 million from the sale of PPP loans, primarily resulting from the recognition of net deferred origination fees upon the sale of the loans. The remaining $106.1 million of PPP loans are classified as held for sale at March 31, 2021, net of unamortized deferred fees.

An overview of the Bank’s National Lending Division portfolio follows:

 National Lending Portfolio
 Three Months Ended March 31,
 2021  2020 
 Purchased Originated Total Purchased Originated Total
  
  
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$42,547  $69,327  $111,874  $70,860  $48,772  $119,632 
Net investment basis 39,895   69,327   109,222   65,056   48,772   113,828 
                  
Loan returns during the period:                 
Yield 8.48%  7.28%  7.83%  10.05%  7.35%  8.50%
Total Return on Purchased Loans (1) 8.48%  7.28%  7.83%  10.05%  7.35%  8.50%
                  
  
  
 Nine Months Ended March 31,
 2021  2020 
 Purchased Originated Total Purchased Originated Total
  
  
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$146,135  $194,842  $340,977  $167,977  $187,872  $355,849 
Net investment basis 135,757   194,842   330,599   158,518   187,872   346,390 
                  
Loan returns during the period:                 
Yield 8.88%  7.06%  7.90%  9.85%  7.53%  8.51%
Total Return on Purchased Loans (1) 8.88%  7.06%  7.90%  10.00%  7.53%  8.57%
                  
Total loans as of period end:                 
Unpaid principal balance$471,778  $473,930  $945,708  $432,920  $512,964  $945,884 
Net investment basis 433,497   473,930   907,427   395,944   512,964   908,908 
                  

(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. See reconciliation in below table entitled “Total Return on Purchased Loans.”

3.   Deposits increased by $286.4 million, or 28.3%, from June 30, 2020. The increase was attributable to increases in demand deposits of $318.8 million, or 336.5%, and savings and interest checking accounts of $128.3 million, or 93.1%, partially offset by a decrease in time deposits of $181.4 million, or 38.0%, due to intentional runoff. The increase in demand deposits was primarily due to the timing of a large deposit account related to PPP collections and payoffs that is subject to significant fluctuation given the PPP activity during the quarter ended March 31, 2021.

4.   Shareholders’ equity increased by $52.1 million, or 31.6%, from June 30, 2020, primarily due to net income of $50.1 million. Shareholders’ equity also increased by $1.0 million as a result of stock options exercised, which resulted in 153 thousand shares of common stock issued, and increased by $661 thousand due to a decrease in accumulated other comprehensive loss.

Net income increased by $32.3 million to $34.2 million for the quarter ended March 31, 2021, compared to net income of $1.9 million for the quarter ended March 31, 2020.

1.   Net interest and dividend income before provision for loan losses increased by $2.3 million to $18.6 million for the quarter ended March 31, 2021, compared to $16.3 million for the quarter ended March 31, 2020. The increase was primarily due to the following:

  • A decrease in deposit interest expense of $2.4 million, due to lower interest rates, partially offset by higher average balances; and
  • An increase in PPP loan interest income of $2.6 million, due to higher interest income earned on PPP loans; partially offset by
  • A decrease in interest income earned on the National Lending Division’s purchased and originated portfolios of $1.3 million, due to lower interest rates in both portfolios and lower average balances in the National Lending Division’s originated portfolio; and
  • An increase of $300 thousand in interest expense due to advances taken from the Paycheck Protection Program Liquidity Facility (“PPPLF”) to fund PPP originations during the quarter ended March 31, 2021.

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,
 2021  2020 
 Average Interest   Average Interest  
 Balance (1) Income Yield Balance (1) Income Yield
  
 (Dollars in thousands)
Community Banking$52,852 $658 5.05% $79,325 $1,036 5.25%
SBA National 44,775  663 6.01%  53,643  952 7.14%
National Lending:               
Originated 473,881  8,501 7.28%  497,773  9,092 7.35%
Purchased 406,979  8,513 8.48%  367,486  9,186 10.05%
Total National Lending 880,860  17,014 7.83%  865,259  18,278 8.50%
Total excluding SBA PPP$978,487 $18,335 7.60% $998,227 $20,266 8.17%
                
SBA PPP$481,853 $2,558 2.15% $- $- 0.00%
Total including SBA PPP$1,460,340 $20,893 5.80% $998,227 $20,266 8.17%
                  
 Nine Months Ended March 31,
 2021  2020 
 Average Interest   Average Interest  
 Balance (1) Income Yield Balance (1) Income Yield
  
 (Dollars in thousands)
Community Banking$59,272 $2,160 4.85% $85,254 $3,494 5.45%
SBA National 47,236  1,835 5.17%  57,939  3,424 7.87%
National Lending:               
Originated 459,000  24,331 7.06%  474,568  26,834 7.53%
Purchased 392,183  26,142 8.88%  347,278  25,707 9.85%
Total National Lending 851,183  50,473 7.90%  821,846  52,541 8.51%
Total excluding SBA PPP$957,691 $54,468 7.58% $965,039 $59,459 8.20%
                
SBA PPP$164,053 $2,638 2.14% $- $- 0.00%
Total including SBA PPP$1,121,744 $57,106 6.78% $965,039 $59,459 8.20%
(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 quarter ended March 31, 2020, transactional income decreased by $731 thousand for the quarter ended March 31, 2021, while regularly scheduled interest and accretion increased by $58 thousand due to the increase in average balances. The total return on purchased loans for the quarter ended March 31, 2021 was 8.5%, a decrease from 10.1% for the quarter ended March 31, 2020. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended March 31,
 2021  2020 
 Income Return (1) Income Return (1)
  
 (Dollars in thousands)
Regularly scheduled interest and accretion$6,789 6.77% $6,731 7.36%
Transactional income:         
Gain on real estate owned - 0.00%  - 0.00%
Accelerated accretion and loan fees 1,724 1.71%  2,455 2.69%
Total transactional income 1,724 1.71%  2,455 2.69%
Total$8,513 8.48% $9,186 10.05%
            
  
 Nine Months Ended March 31,
 2021  2020 
 Income Return (1) Income Return (1)
  
 (Dollars in thousands)
Regularly scheduled interest and accretion$20,466 6.95% $19,311 7.40%
Transactional income:         
Gain on real estate owned - 0.00%  395 0.15%
Accelerated accretion and loan fees 5,676 1.93%  6,396 2.45%
Total transactional income 5,676 1.93%  6,791 2.60%
Total$26,142 8.88% $26,102 10.00%

(1)   The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales and gains on real estate owned 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 increased by $38.6 million for the quarter ended March 31, 2021, compared to the quarter ended March 31, 2020, principally due to the following:

  • An increase in gain on sale of PPP loans of $33.0 million, due to the sale of PPP loans with a total principal balance of $2.14 billion, which resulted in a net gain based on the recognition of net deferred fees in the quarter ended March 31, 2021; and
  • An increase in correspondent fee income of $6.0 million from the recognition of correspondent fees and net servicing income as a result of the correspondent arrangement entered into with Loan Source during the quarter ended June 30, 2020. Under the correspondent arrangement, the Bank earns a correspondent fee when Loan Source purchases PPP loans and the Bank subsequently shares in net servicing income on such purchased PPP loans. Correspondent income for the quarter is comprised of the following components:

  Income Earned 
 
 (In thousands) 
Correspondent Fee$1,098
Amortization of Purchased Accrued Interest 922
Earned Net Servicing Interest 3,950
Total$5,970

A summary of PPP loans purchased by Loan Source and related amounts that the Bank will earn over the expected life of the loans is as follows:



Quarter
 PPP Loans
Purchased by
Loan Source
 
Correspondent
Fee
 
Purchased Accrued
Interest
(1)
 

Total
(2)
  
 (In thousands) 
Q4 FY 2020 $       1,272,900 $           2,891  $              688  $         3,579 
Q1 FY 2021  2,112,100  5,348   2,804   8,152 
Q2 FY 2021  1,333,500  495   3,766   4,261 
Q3 FY 2021  2,141,900  -   598   598 
Total $       6,860,400 $          8,734  $           7,856  $        16,590 
             
Less amounts recognized in Q3 FY 21  (1,098)  (922)  (2,020)
Less amounts recognized in previous quarters  (1,903)  (891)  (2,794)
Amount remaining to be recognized $          5,733  $           6,043  $       11,776 


(1) - Northeast Bank's share
(2) - Expected to be recognized into income over approximate life of loans

These increases were partially offset by:

  • A decrease in gain on sale of SBA loans of $237 thousand, since no traditional SBA loans were sold in the quarter ended March 31, 2021; and
  • A decrease in gain on sale of residential loans held for sale of $135 thousand, due to lower volume of loans sold compared to the quarter ended March 31, 2020.

3. Noninterest expense decreased by $445 thousand for the quarter ended March 31, 2021 compared to the quarter ended March 31, 2020, primarily due to the following:

  • A decrease in salaries expense of $847 thousand, primarily due to an increase of $4.4 million in deferred salaries contra-expense related to PPP originations, partially offset by an increase of $3.3 million in bonus expense, attributable to the high level of PPP originations and sales; and
  • A decrease in other noninterest expense of $371 thousand, primarily due to the $276 thousand recovery on the SBA servicing asset during the quarter ended March 31, 2021, as compared to a $215 thousand write-down in the quarter ended March 31, 2020, partially offset by other expenses, including charitable contributions.

These decreases in noninterest expense were partially offset by:

  • An increase in data processing expense of $308 thousand, primarily due to increased IT hardware expense, computer service fees, and implementation fees;
  • An increase in professional fees of $260 thousand; and
  • An increase in loan expense of $139 thousand, primarily due to $422 thousand in correspondent expenses associated with the Loan Source arrangement, partially offset by an increase in collection expense reimbursements received during the quarter ended March 31, 2021.

4. Income tax expense increased by $12.7 million to $14.5 million, or an effective tax rate of 29.8%, for the quarter ended March 31, 2021, compared to $1.7 million, or an effective tax rate of 48.1%, for the quarter ended March 31, 2020. The increase in income tax expense is due to the increase in pre-tax income. The decrease in the effective tax rate from March 31, 2020 is primarily due to the Bank’s recording of a $554 thousand expense related to the recapture of the tax reserve for loan losses as a result of the repurchase of common stock in the quarter ended March 31, 2020. This was a one-time expense as the Bank has now recaptured all of its tax bad debt reserve, which arose from pre-1988 bad debt deductions taken for tax purposes in excess of net charge-offs, which had to be recaptured.

As of March 31, 2021, nonperforming assets totaled $25.8 million, or 1.51% of total assets, compared to $24.4 million, or 1.94% of total assets, as of June 30, 2020. As of March 31, 2021, past due loans totaled $16.7 million, or 1.67% of total loans, compared to past due loans totaling $16.4 million, or 1.69% of total loans, as of June 30, 2020.

As of March 31, 2021, the Bank’s Tier 1 leverage capital ratio was 14.3%, compared to 13.4% at June 30, 2020, and the Total capital ratio was 23.4% at March 31, 2021, compared to 19.6% at June 30, 2020. Capital ratios were affected by earnings during the nine months ended March 31, 2021.

Investor Call Information
Rick Wayne, Chief Executive Officer, Jean-Pierre Lapointe, Chief Financial Officer, and Pat Dignan, Executive Vice President and Chief Credit Officer of Northeast Bank, will host a conference call to discuss third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Thursday, April 22nd. Investors can access the call by dialing 800.773.2954 and entering the following passcode: 50138487. The call will be available via live webcast, which can be viewed by accessing the Bank’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 Bank
Northeast Bank (NASDAQ: NBN) is a full-service bank headquartered in Portland, Maine. We offer personal and business banking services to the Maine market via nine branches. Our National Lending Division purchases and originates commercial loans on a nationwide basis. 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, efficiency ratio, and net interest margin excluding PPP. The Bank’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 the Bank 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 Bank’s control. The Bank’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, the ongoing negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; general business and economic conditions on a national basis and in the local markets in which the Bank operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in customer behavior due to changing political, business and economic conditions or legislative or regulatory initiatives; turbulence in the capital and debt markets; changes in interest rates and real estate values; increases in loan defaults and charge-off rates; decreases 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; competitive pressures from other financial institutions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; the risk that the Bank may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Bank’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 Bank’s Annual Report on Form 10-K and updated by our Quarterly Reports on Form 10-Q and other filings submitted to the Federal Deposit Insurance Corporation. These statements speak only as of the date of this release and the Bank 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 BANK
BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
 March 31, 2021 June 30, 2020
Assets     
Cash and due from banks$2,630  $2,795 
Short-term investments 461,796   140,862 
Total cash and cash equivalents 464,426   143,657 
      
      
Available-for-sale debt securities, at fair value 60,859   64,918 
Equity securities, at fair value 7,199   7,239 
Total investment securities 68,058   72,157 
      
Residential real estate loans held for sale 177   601 
SBA loans held for sale 106,126   28,852 
Total loans held for sale 106,303   29,453 
      
      
Loans:     
Commercial real estate 708,477   679,537 
Commercial and industrial 225,729   212,769 
Residential real estate 67,389   77,722 
Consumer 1,213   1,574 
Total loans 1,002,808   971,602 
Less: Allowance for loan losses 8,820   9,178 
Loans, net 993,988   962,424 
      
      
Premises and equipment, net 11,908   9,670 
Real estate owned and other repossessed collateral, net 2,885   3,274 
Federal Home Loan Bank stock, at cost 1,390   1,390 
Loan servicing rights, net 2,149   2,113 
Bank-owned life insurance 17,391   17,074 
Other assets 46,221   16,423 
Total assets$1,714,719  $1,257,635 
      
Liabilities and Shareholders' Equity     
Deposits:     
Demand$413,570  $94,749 
Savings and interest checking 266,080   137,824 
Money market 323,027   302,343 
Time 296,027   477,436 
Total deposits 1,298,704   1,012,352 
      
Federal Home Loan Bank advances 15,000   15,000 
Paycheck Protection Program Liquidity Facility advances 108,101   12,440 
Subordinated debt 15,023   14,940 
Lease liability 6,471   4,496 
Other liabilities 54,558   33,668 
Total liabilities 1,497,857   1,092,896 
      
Commitments and contingencies -   - 
      
      
Shareholders' equity     
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares    
issued and outstanding at March 31, 2021 and June 30, 2020 -   - 
Voting common stock, $1.00 par value, 25,000,000 shares authorized;     
8,344,797 and 8,153,841 shares issued and outstanding at    
March 31, 2021 and June 30, 2020, respectively 8,345   8,154 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;     
zero and 44,783 shares issued and outstanding at March 31, 2021
     and June 30, 2020, respectively
 -  45 
Additional paid-in capital 69,734   68,302 
Retained earnings 139,844   89,960 
Accumulated other comprehensive loss (1,061)  (1,722)
Total shareholders' equity 216,862   164,739 
Total liabilities and shareholders' equity$1,714,719  $1,257,635 
        


NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended March 31, Nine Months Ended March 31, 
 2021  2020  2021  2020 
Interest and dividend income:            
Interest and fees on loans$20,893  $20,266  $57,106  $59,459 
Interest on available-for-sale securities 158   426   641   1,320 
Other interest and dividend income 110   395   252   1,061 
Total interest and dividend income 21,161   21,087   57,999   61,840 
                
                
Interest expense:               
Deposits 1,803   4,228   7,390   12,725 
Federal Home Loan Bank advances 145   226   395   569 
Paycheck Protection Program Liquidity Facility 300   -   302   - 
Subordinated debt 282   282   845   845 
Obligation under capital lease agreements 28   30   84   98 
Total interest expense 2,558   4,766   9,016   14,237 
             
Net interest and dividend income before provision for loan losses 18,603   16,321   48,983   47,603 
Provision for loan losses (211)  3,489   531   3,595 
Net interest and dividend income after provision for loan losses 18,814   12,832   48,452   44,008 
                
                
Noninterest income:               
Fees for other services to customers 441   316   1,427   1,142 
Gain on sales of PPP loans 33,010   -   34,124   - 
Gain on sales of SBA loans -   237   -   793 
Gain on sales of residential loans held for sale 4   139   105   565 
Net unrealized gain (loss) on equity securities (99)  87   (115)  102 
Gain (loss) on real estate owned, other repossessed collateral and premises and equipment, net -   (64)  (344)  247 
                
Correspondent fee income 5,970   -   16,798   - 
Bank-owned life insurance income 105   108   318   457 
Other noninterest income 38   37   69   66 
Total noninterest income 39,469   860   52,382   3,372 
             
             
Noninterest expense:
Salaries and employee benefits 5,113   5,960   17,436   18,272 
Occupancy and equipment expense 940   919   2,914   2,667 
Professional fees 599   339   1,405   1,175 
Data processing fees 1,302   994   3,392   2,980 
Marketing expense 130   91   290   239 
Loan acquisition and collection expense 855   716   2,368   1,807 
FDIC insurance premiums (credits) 119   4   324   (15)
Intangible asset amortization -   109   -   326 
Other noninterest expense 578   949   1,868   2,774 
Total noninterest expense 9,636   10,081   29,997   30,225 
             
Income before income tax expense 48,647   3,611   70,837   17,155 
Income tax expense 14,485   1,736   20,705   5,637 
Net income$34,162  $1,875  $50,132  $11,518 
                
                
                
Weighted-average shares outstanding:               
Basic 8,344,797   9,004,819   8,261,248   9,032,254 
Diluted 8,421,247   9,128,651   8,347,882   9,187,891 
                
Earnings per common share:               
             
Basic$4.09  $0.21  $6.07  $1.28 
Diluted 4.06   0.21   6.01   1.25 
                
Cash dividends declared per common share$0.01  $0.01  $0.03  $0.03 
                
 

 


NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended March 31,
 2021  2020 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$69,034 $158 0.93% $78,369 $426 2.19%
Loans (1) (2) (3) 1,460,340  20,893 5.80%  998,227  20,266 8.17%
Federal Home Loan Bank stock 2,410  6 1.01%  2,295  29 5.08%
Short-term investments (4) 387,198  104 0.11%  114,794  366 1.28%
Total interest-earning assets 1,918,982  21,161 4.47%  1,193,685  21,087 7.11%
Cash and due from banks 2,112       3,054     
Other non-interest earning assets 62,127       37,634     
Total assets$1,983,221      $1,234,373     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$180,630 $90 0.20% $78,777 $104 0.53%
Money market accounts 316,116  347 0.45%  279,852  1,105 1.59%
Savings accounts 38,500  10 0.11%  33,912  13 0.15%
Time deposits 587,440  1,356 0.94%  519,980  3,006 2.33%
Total interest-bearing deposits 1,122,686  1,803 0.65%  912,521  4,228 1.86%
Federal Home Loan Bank advances 39,306  145 1.50%  39,011  226 2.33%
PPPLF advances 345,063  300 0.35%  -  - 0.00%
Subordinated debt 15,015  282 7.62%  14,897  282 7.61%
Capital lease obligations 6,588  28 1.72%  4,997  30 2.41%
Total interest-bearing liabilities 1,528,658  2,558 0.68%  971,426  4,766 1.97%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 238,756       89,248     
Other liabilities 20,850       8,671     
Total liabilities 1,788,264       1,069,345     
Shareholders' equity 194,957       165,028     
Total liabilities and shareholders' equity$1,983,221      $1,234,373     
                
Net interest income   $18,603      $16,321  
                
Interest rate spread      3.79%       5.14%
Net interest margin (5)      3.93%       5.50%
                  
Cost of funds (6)      0.59
%
       1.81
%
 
(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) Net interest margin is calculated as net interest income divided by total interest-earning assets.
(6) Cost of funds is calculated as total interest expense divided by total interest-bearing liabilities plus demand deposits and escrow accounts. 


NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Nine Months Ended March 31,
 2021  2020 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$70,539 $    641 1.21% $80,494 $    1,320 2.18%
Loans (1) (2) (3)      1,121,744  57,106 6.78%  965,039     59,459 8.20%
Federal Home Loan Bank stock 1,725        51 3.94%  1,876        66 4.68%
Short-term investments (4)      232,237        201 0.12%       84,025        995 1.58%
Total interest-earning assets 1,426,245  57,999 5.42%  1,131,434  61,840 7.27%
Cash and due from banks 2,703       2,820     
Other non-interest earning assets      47,581       38,633     
Total assets$1,476,529      $1,172,887     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$143,938 $330 0.31% $71,614 $241 0.45%
Money market accounts      312,797      1,259 0.54%  271,506       3,268 1.60%
Savings accounts 37,771        36 0.13%  34,236        43 0.17%
Time deposits 469,793      5,765 1.63%  489,396      9,173 2.49%
Total interest-bearing deposits      964,299     7,390 1.02%  866,752     12,725 1.95%
Federal Home Loan Bank advances      22,984      395 2.29%       30,055       569 2.52%
PPPLF advances 113,932  302 0.35%  -  - 0.00%
Subordinated debt 14,983       845 7.51%  14,869       845 7.56%
Capital lease obligations 5,793      84 1.93%  5,352      98 2.44%
Total interest-bearing liabilities      1,121,991      9,016 1.07%       917,028      14,237 2.07%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 157,569       86,735     
Other liabilities        17,527              5,352     
Total liabilities      1,297,087            1,012,493     
Shareholders' equity 179,442       160,394     
Total liabilities and shareholders' equity$1,476,529      $1,172,887     
                
Net interest income   $    48,983      $   47,603  
                
Interest rate spread      4.35%       5.20%
Net interest margin (5)      4.58%       5.60%
                  
Cost of funds (6)
      0.94
%
       1.89
%
                  
(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) Net interest margin is calculated as net interest income divided by total interest-earning assets.
(6) Cost of funds is calculated as total interest expense divided by total interest-bearing liabilities plus demand deposits and escrow accounts.


 
NORTHEAST BANK
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended
 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020
Net interest income$18,603  $15,388  $14,993  $17,384  $16,321 
Provision (credit) for loan losses (211)  365   377   905   3,489 
Noninterest income 39,469   6,497   6,416   9,812   860 
Noninterest expense 9,636   10,428   9,933   10,268   10,081 
Net income 34,162   8,176   7,794   11,219   1,875 
          
Weighted-average common shares outstanding:         
Basic 8,344,797   8,244,068   8,196,828   8,337,088   9,004,819 
Diluted 8,421,247   8,309,252   8,315,096   8,405,665   9,128,651 
                    
Earnings per common share:                   
Basic$4.09  $0.99  $0.95  $1.35  $0.21 
Diluted 4.06   0.98   0.94   1.33   0.21 
          
Dividends declared per common share$0.01  $0.01  $0.01  $0.01  $0.01 
          
Return on average assets 6.99%  2.66%  2.49%  3.07%  0.61%
Return on average equity 71.06%  18.37%  18.50%  28.44%  4.57%
Net interest rate spread (1) 3.79%  4.92%  4.65%  4.60%  5.14%
Net interest margin (2) 3.93%  5.23%  4.95%  4.90%  5.50%
Net interest margin, excluding PPP (Non-GAAP) (3) 5.06%  5.23%  5.00%  5.34%  5.50%
Efficiency ratio (non-GAAP) (4) 16.59%  47.65%  46.40%  37.29%  58.68%
Noninterest expense to average total assets 1.97%  3.40%  3.17%  2.78%  3.28%
Average interest-earning assets to average interest-bearing liabilities 125.53%  129.68%  127.02%  118.53%  122.88%
                      
          
 As of:
 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020
Nonperforming loans:         
Originated portfolio:         
Residential real estate$643  $6,676  $704  $832  $1,187 
Commercial real estate 4,790   8,329   6,856   6,861   7,439 
Commercial and industrial 1,408   1,978   2,013   2,058   2,226 
Consumer 23   30   26   29   40 
Total originated portfolio 6,864   17,013   9,599   9,780   10,892 
Total purchased portfolio 16,059   13,497   11,848   11,325   13,485 
Total nonperforming loans 22,923   30,510   21,447   21,105   24,377 
Real estate owned and other repossessed collateral, net 2,885   2,866   4,102   3,274   3,110 
Total nonperforming assets$25,808  $33,376  $25,549  $24,379  $27,487 
          
Past due loans to total loans 1.67%  2.31%  2.03%  1.69%  3.52%
Nonperforming loans to total loans 2.29%  3.05%  2.30%  2.17%  2.36%
Nonperforming assets to total assets 1.51%  2.70%  2.03%  1.94%  2.23%
Allowance for loan losses to total loans 0.88%  0.99%  1.02%  0.94%  0.85%
Allowance for loan losses to nonperforming loans 38.48%  32.53%  44.46%  43.49%  36.14%
          
Commercial real estate loans to total capital (5) 223.09%  251.00%  248.47%  281.32%  304.40%
Net loans to core deposits (6) (9) 76.99%  101.86%  91.74%  96.38%  102.04%
Purchased loans to total loans, including held for sale 43.22%  41.79%  38.40%  39.77%  38.28%
Equity to total assets 12.65%  14.74%  13.73%  13.10%  12.95%
Common equity tier 1 capital ratio 21.07%  17.93%  18.57%  17.13%  15.71%
Total capital ratio 23.39%  20.37%  21.19%  19.61%  18.03%
Tier 1 leverage capital ratio 14.32%  15.07%  14.02%  13.36%  13.04%
          
Total shareholders' equity$216,862  $181,962  $172,551  $164,739  $159,525 
Less: Preferred stock         -           -           -           -           - 
Common shareholders' equity 216,862   181,962   172,551   164,739   159,525 
Less: Intangible assets (7) (2,149)  (2,035)  (2,323)  (2,113)  (2,116)
Tangible common shareholders' equity (non-GAAP)$214,713  $179,927  $170,228  $162,626  $157,409 
          
Common shares outstanding 8,344,797   8,344,797   8,191,786   8,198,624   8,633,772 
Book value per common share$25.99  $21.81  $21.06  $20.09  $18.48 
Tangible book value per share (non-GAAP) (8) 25.73   21.56   20.78   19.84   18.23 

 

(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) Net interest margin excluding PPP removes the effects of the following: PPP loan interest income of $2.6 million, $80 thousand and $1.6 million, interest income on short-term investments of $29 thousand, $0, and $0, related to average PPP collection account deposit balance, PPPLF interest expense of $300 thousand, $2 thousand and $174 thousand, and brokered CD interest expense of $99 thousand, $0, and $0, for the quarters ended March 31, 2021, September 30, 2020 and June 30, 2020, respectively, as well as PPP loan average balances of $481.9 million, $16.9 million and $223.8 million, and short-term investments average balance of $121.7 million, $0, and $0, for the quarters ended March 31, 2021, September 30, 2020 and June 30, 2020, respectively.
(4) The efficiency ratio represents noninterest expense divided by the sum of net interest income (before the loan loss provision) plus noninterest income.
(5) 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.
(6) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held for sale.
(7) Includes the core deposit intangible asset and loan servicing rights asset.
(8) Tangible book value per share represents total shareholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
(9) Net loans and total loans, including loans held for sale, exclude PPP loans held for sale.

For More Information:
Jean-Pierre Lapointe, Chief Financial Officer
Northeast Bank, 27 Pearl Street, Portland, ME 04101
207.786.3245 ext. 3220
www.northeastbank.com