Northeast Bank Reports Second Quarter Results and Declares Dividend


LEWISTON, Maine, Jan. 27, 2020 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $4.9 million, or $0.53 per diluted common share, for the quarter ended December 31, 2019, compared to net income of $5.1 million, or $0.56 per diluted common share, for the quarter ended December 31, 2018. Net income for the six months ended December 31, 2019 was $9.6 million, or $1.05 per diluted common share, compared to $9.7 million, or $1.05 per diluted common share, for the six months ended December 31, 2018.

On January 24, 2020, the Board of Directors declared a cash dividend of $0.01 per share, payable on February 24, 2020, to shareholders of record as of February 10, 2020.

“During the second quarter, we generated a record level of loan originations and purchases, and at quarter end we surpassed $1 billion in total loans,” said Richard Wayne, Chief Executive Officer. “Our Loan Acquisition and Servicing Group produced $163.4 million of loans, including originations of $98.6 million and purchases with an investment of $64.8 million during the quarter. As a result, we earned $0.53 per diluted common share, a return on average equity of 12.1%, a return on average assets of 1.7%, and a net interest margin of 5.6%.”

As of December 31, 2019, total assets were $1.2 billion, an increase of $53.6 million, or 4.6%, from total assets of $1.2 billion as of June 30, 2019. The principal components of the changes in the balance sheet follow:

1. The following table highlights the changes in the loan portfolio for the three and six months ended December 31, 2019:

 Loan Portfolio Changes
 Three Months Ended December 31, 2019
 December 31, 2019
Balance
 September 30, 2019
Balance
  
Change ($)
 Change (%)
 (Dollars in thousands)
LASG Purchased$367,625 $332,227 $35,398  10.65%
LASG Originated 497,386  457,350 40,036  8.75%
SBA 54,572  58,270 (3,698) (6.35%)
Community Banking 81,195  86,192 (4,997) (5.80%)
Total$1,000,778 $934,039 $66,739  7.15%
  
  
  

Six Months Ended December 31, 2019
 December 31, 2019
Balance
 June 30, 2019
Balance
  
Change ($)
  Change (%)
 (Dollars in thousands)
LASG Purchased$367,625 $326,640 $40,985  12.55%
LASG Originated 497,386  493,413  3,973  0.81%
SBA 54,572  63,053  (8,481) (13.45%)
Community Banking 81,195  91,954  (10,759) (11.70%)
Total$1,000,778 $975,060 $25,718  2.64%
             

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended December 31, 2019 totaled $163.4 million, which consisted of $64.8 million of purchased loans, at an average price of 97.1% of unpaid principal balance, and $98.6 million of originated loans. The Bank sold the guaranteed portion of Small Business Administration ("SBA") loans totaling $4.0 million in the secondary market, of which $419 thousand were originated in the current quarter and $3.5 million were originated or purchased in the prior quarter. Residential loan production sold in the secondary market totaled $10.8 million for the quarter.

An overview of the Bank’s LASG portfolio follows:

 LASG Portfolio
 Three Months Ended December 31,
 2019  2018 
 Purchased Originated Total LASG Purchased Originated Total LASG
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$  66,784  $ 98,563  $  165,347  $  52,672  $  64,117  $  116,789 
Net investment basis 64,840     98,563     163,403   49,334     64,117     113,451 
                  
Loan returns during the period:                 
Yield 9.76%  7.67%  8.57%  10.30%  7.61%  8.75%
Total Return on Purchased Loans (1) 10.21%  7.67%  8.77%  10.30%  7.61%  8.75%
                  
                  
 Six Months Ended December 31,
 2019  2018 
 Purchased Originated Total LASG Purchased Originated Total LASG
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$  97,116  $139,100  $  236,216  $  89,748  $135,253  $  225,001 
Net investment basis 93,462   139,100     232,562   84,137   135,253     219,390 
                  
Loan returns during the period:                 
Yield 9.74%  7.62%  8.52%  9.88%  7.53%  8.53%
Total Return on Purchased Loans (1) 9.98%  7.62%  8.61%  9.88%  7.53%  8.53%
                  
Total loans as of period end:                 
Unpaid principal balance$401,393  $497,386  $  898,779  $368,345  $435,817  $  804,162 
Net investment basis 367,625   497,386     865,011   330,643   435,817     766,460 


(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.”

2. Deposits decreased by $3.5 million, or 0.4%, from June 30, 2019, attributable primarily to decreases in time deposits of $13.7 million, or 2.7%, demand deposits of $1.9 million, or 2.7%, and money market deposits of $1.8 million, or 0.7%, partially offset by an increase in savings and interest checking accounts of $13.9 million, or 13.8%.

3. Shareholders’ equity increased by $9.8 million, or 6.4%, from June 30, 2019, primarily due to net income of $9.6 million.

Net income decreased by $258 thousand to $4.9 million for the quarter ended December 31, 2019, compared to net income of $5.1 million for the quarter ended December 31, 2018.

1. Net interest and dividend income before provision for loan losses decreased by $98 thousand to $15.5 million for the quarter ended December 31, 2019, compared to $15.6 million for the quarter ended December 31, 2018. The decrease was primarily due to higher deposit and borrowing costs and lower transactional interest income in the purchased portfolio, partially offset by higher average balances in the LASG portfolio, as well as a decrease in interest expense on subordinated debt from the redemption of trust preferred securities in May 2019.

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

 Interest Income and Yield on Loans
 Three Months Ended December 31,
 2019  2018 
 Average Interest   Average Interest  
 Balance (1) Income Yield Balance (1) Income Yield
 (Dollars in thousands)
Community Banking$85,989 $  1,193 5.52% $108,344 $  1,448 5.30%
SBA 57,371  1,003 6.96%  73,467  1,440 7.78%
LASG:               
Originated  456,877    8,814 7.67%   420,816    8,077 7.61%
Purchased  345,748    8,480 9.76%   307,094    7,969 10.30%
Total LASG  802,625    17,294 8.57%   727,910    16,046 8.75%
Total$ 945,985 $  19,490 8.20% $ 909,721 $  18,934 8.26%
  

Six Months Ended December 31,
 2019  2018 
 Average Interest   Average Interest  
 Balance (1) Income Yield Balance (1) Income Yield
 (Dollars in thousands)
Community Banking$88,187 $  2,458 5.54% $114,342 $  2,970 5.15%
SBA 60,062  2,472 8.19%  72,316  2,726 7.48%
LASG:               
Originated  463,092    17,742 7.62%   409,575    15,541 7.53%
Purchased  337,284    16,521 9.74%   305,600    15,223 9.88%
Total LASG  800,376    34,263 8.52%   715,175    30,764 8.53%
Total$ 948,625 $  39,193 8.22% $ 901,833 $  36,460 8.02%
  
 (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 December 31, 2018, transactional income for the quarter ended December 31, 2019 increased by $241 thousand, while regularly scheduled interest and accretion increased by $665 thousand due to the increase in average balances. The total return on p­­­­­­­­urchased loans for the quarter ended December 31, 2019 was 10.2%, a decrease from 10.3% for the quarter ended December 31, 2018. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended December 31,
 2019  2018 
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$6,525 7.51% $5,860 7.57%
Transactional income:         
Gain on loan sales   - 0.00%    - 0.00%
Gain on real estate owned   395 0.45%    - 0.00%
Other noninterest income   - 0.00%    - 0.00%
Accelerated accretion and loan fees   1,955 2.25%    2,109 2.73%
Total transactional income   2,350 2.70%    2,109 2.73%
Total$  8,875 10.21% $  7,969 10.30%
  
 
 
 Six Months Ended December 31,
 2019  2018 
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$12,580 7.42% $11,621 7.54%
Transactional income:         
Gain on loan sales   - 0.00%    - 0.00%
Gain on real estate owned   395 0.24%    - 0.00%
Other noninterest income   - 0.00%    - 0.00%
Accelerated accretion and loan fees   3,941 2.32%    3,602 2.34%
Total transactional income   4,336 2.56%    3,602 2.34%
Total$  16,916 9.98% $  15,223 9.88%


(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 decreased by $208 thousand for the quarter ended December 31, 2019, compared to the quarter ended December 31, 2018, principally due to the following:

  • A decrease in gain on sale of SBA loans of $638 thousand, due to lower volume of SBA loans sold in the quarter due to lower originations in recent quarters; and
  • An increase in net unrealized loss on equity securities of $75 thousand; partially offset by,
  • An increase in gain on real estate owned of $338 thousand, due to the gain recorded on the transfer of a loan into real estate owned, partially offset by a write-down on an existing property; and
  • An increase in gain on sale of residential loans held for sale of $108 thousand, due to both a higher volume of loans sold and higher pricing on loans sold.

3. Noninterest expense decreased by $114 thousand for the quarter ended December 31, 2019 compared to the quarter ended December 31, 2018, primarily due to the following:

  • A decrease in professional fees of $211 thousand, due to a decrease in legal expenses related to the corporate reorganization completed in the prior period, as well as lower other professional fees;
  • A decrease in occupancy and equipment expense of $108 thousand, primarily due to a decrease in computer equipment repairs and maintenance expense; and
  • A decrease in loan acquisition and collection expense of $104 thousand, primarily due to collection expense reimbursements received during the quarter; partially offset by,
  • An increase in salaries and employee benefits of $227 thousand, primarily due to increases in regular compensation and incentive compensation, offset by a decrease in stock-based compensation; and
  • An increase in data processing fees of $172 thousand, primarily due to increased IT outsourcing costs. 

4. Income tax expense decreased by $76 thousand to $2.0 million, or an effective tax rate of 28.9%, for the quarter ended December 31, 2019, compared to $2.1 million, or an effective tax rate of 28.7%, for the quarter ended December 31, 2018.             

As of December 31, 2019, nonperforming assets totaled $21.3 million, or 1.76% of total assets, as compared to $16.7 million, or 1.45% of total assets, as of June 30, 2019. The increase was primarily due to one LASG originated loan totaling $2.7 million and three LASG purchased loans totaling $2.1 million that were placed on nonaccrual, offset by the payoff of one nonperforming Community Banking loan totaling $1.1 million during the six months ended December 31, 2019.

As of December 31, 2019, past due loans totaled $28.4 million, or 2.84% of total loans, as compared to past due loans totaling $14.6 million, or 1.50% of total loans as of June 30, 2019. The increase was primarily due to nine LASG purchased loans totaling $9.6 million, three LASG originated loans totaling $2.8 million, and six SBA loans totaling $1.9 million, becoming past due during the six months ended December 31, 2019.

As of December 31, 2019, the Bank’s Tier 1 leverage capital ratio was 14.3%, compared to 12.9% at June 30, 2019, and the Total capital ratio was 18.5% at December 31, 2019, as compared to 18.0% at June 30, 2019. Capital ratios were affected by earnings and lower average assets in the quarter.

Investor Call Information
Richard Wayne, Chief Executive Officer of Northeast Bank, and Jean-Pierre Lapointe, Chief Financial Officer of Northeast Bank, will host a conference call to discuss second quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, January 28th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 9080916. 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 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. 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 net operating earnings, operating earnings per common share, operating return on average assets, operating return on average equity, operating efficiency ratio, operating noninterest expense to average total assets, tangible common shareholders’ equity, tangible book value per share, total return on purchased loans, and efficiency ratio. 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, 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 Bank 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 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.

  
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 

NBN-F

 
NORTHEAST BANK
BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
 December 31, 2019 June 30, 2019
Assets     
Cash and due from banks$2,699  $2,482 
Short-term investments 83,641   54,425 
  Total cash and cash equivalents 86,340   56,907 
      
      
Available-for-sale debt securities, at fair value 72,895   75,774 
Equity securities, at fair value 7,038   6,938 
  Total investment securities 79,933   82,712 
      
Residential real estate loans held for sale 989   3,179 
SBA loans held for sale 1,342   731 
  Total loans held for sale 2,331   3,910 
      
Loans:     
  Commercial real estate 679,959   668,496 
  Commercial and industrial 234,815   232,839 
  Residential real estate 84,142   71,218 
  Consumer 1,862   2,507 
  Total loans 1,000,778   975,060 
  Less: Allowance for loan losses 5,405   5,702 
  Loans, net 995,373   969,358 
      
      
Premises and equipment, net 10,390   5,582 
Real estate owned and other repossessed collateral, net 2,505   1,957 
Federal Home Loan Bank stock, at cost 3,010   1,258 
Intangible assets, net 217   434 
Loan servicing rights, net 2,424   2,851 
Bank-owned life insurance 16,858   17,057 
Other assets 8,035   11,832 
  Total assets$1,207,416  $1,153,858 
      
Liabilities and Shareholders' Equity     
Deposits:     
  Demand$66,917  $68,782 
  Savings and interest checking 114,952   101,061 
  Money market 269,057   270,835 
  Time 487,983   501,693 
  Total deposits 938,909   942,371 
      
Federal Home Loan Bank advances 60,000   15,000 
Subordinated debt 14,884   14,829 
Lease liability 5,196   323 
Other liabilities 25,027   27,755 
  Total liabilities 1,044,016   1,000,278 
      
 

Commitments and contingencies
   -     - 
      
Shareholders' equity     
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares    
   issued and outstanding at December 31, 2019 and June 30, 2019   -     - 
Voting common stock, $1.00 par value, 25,000,000 shares authorized;     
9,007,230 and 8,997,326 shares issued and outstanding at    
  December 31, 2019 and June 30, 2019, respectively 9,007   8,997 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;     
  44,783 shares issued and outstanding at December 31, 2019 and June 30, 201945    45 
Additional paid-in capital 78,380   78,095 
Retained earnings 77,039   67,581 
Accumulated other comprehensive loss (1,071)  (1,138)
  Total shareholders' equity 163,400   153,580 
  Total liabilities and shareholders' equity$1,207,416  $1,153,858 


 
NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended December 31, Six Months Ended December 31, 
 2019 2018 2019 2018 
Interest and dividend income:            
  Interest and fees on loans$19,490 $18,934 $39,193 $36,460 
  Interest on available-for-sale securities 442  425  893  784 
  Other interest and dividend income 326  970  665  1,851 
 Total interest and dividend income 20,258  20,329  40,751  39,095 
             
             
Interest expense:
  Deposits 4,181  3,982  8,497  7,664 
  Federal Home Loan Bank advances 218  125  343  242 
  Subordinated debt 282  573  563  1,174 
  Obligation under capital lease agreements 32  6  68  14 
 Total interest expense 4,713  4,686  9,471  9,094 
             
Net interest and dividend income before provision for loan losses 15,545  15,643  31,280  30,001 
Provision for loan losses 243  101  106  633 
Net interest and dividend income after provision for loan losses 15,302  15,542  31,174  29,368 
             
             
Noninterest income:
 Fees for other services to customers 414  340  827  832 
 Gain on sales of SBA loans 304  942  556  1,793 
 Gain on sales of residential loans held for sale 212  104  425  279 
  Net unrealized (loss) gain on equity securities (25 50  15  10 
  Gain (loss) on real estate owned, other repossessed collateral 314  (24) 312  (64
  and premises and equipment, net
 Bank-owned life insurance income 108  110  350  219 
 Other noninterest income 10  23  28  29 
 Total noninterest income 1,337  1,545  2,513  3,098 
             
             
Noninterest expense:
 Salaries and employee benefits 5,926  5,699  12,312  11,208 
 Occupancy and equipment expense 849  957  1,747  2,084 
 Professional fees 445  656  837  1,190 
 Data processing fees 1,002  830  1,986  1,431 
 Marketing expense 55  130  148  253 
  Loan acquisition and collection expense 481  585  1,092  1,024 
 FDIC insurance premiums (credits) (1 81  (19 162 
 Intangible asset amortization 109  109  217  218 
 Other noninterest expense 923  856  1,824  1,687 
 Total noninterest expense 9,789  9,903  20,144  19,257 
             
Income before income tax expense 6,850  7,184  13,543  13,209 
Income tax expense 1,983  2,059  3,901  3,550 
Net income$4,867 $5,125 $9,642 $9,659 
             
             
             
Weighted-average shares outstanding:
 Basic 9,048,171  9,048,397  9,046,004  9,022,161 
 Diluted 9,223,137  9,201,557  9,217,544  9,192,643 
             
Earnings per common share:
             
  Basic$0.54 $0.57 $1.07 $1.07 
  Diluted 0.53  0.56  1.05  1.05 
 $0.01 $0.01 $0.02 $0.02 
Cash dividends declared per common share

 


 
NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended December 31,
 2019  2018 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$81,009 $442 2.17% $85,325 $425 1.98%
Loans (1) (2) (3) 945,985  19,490 8.20%  909,721  18,934 8.26%
Federal Home Loan Bank stock 2,079  18 3.44%  1,652  24 5.76%
Short-term investments (4) 77,268  308 1.59%  168,768  946 2.22%
Total interest-earning assets 1,106,341  20,258 7.28%  1,165,466  20,329 6.92%
Cash and due from banks 2,781       2,600     
Other non-interest earning assets 42,725       31,344     
Total assets$1,151,847      $1,199,410     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$70,737 $77 0.43% $74,027 $69 0.37%
Money market accounts 269,880  1,094 1.61%  373,409  1,461 1.55%
Savings accounts 34,317  15 0.17%  35,004  14 0.16%
Time deposits 464,424  2,995 2.57%  443,779  2,438 2.18%
  Total interest-bearing deposits 839,358  4,181 1.98%  926,219  3,982 1.71%
Federal Home Loan Bank advances 36,250  218 2.39%  15,000  125 3.31%
Subordinated debt 14,871  282 7.54%  24,087  573 9.44%
Capital lease obligations 5,365  32 2.37%  490  6 4.86%
Total interest-bearing liabilities 895,844  4,713 2.09%  965,796  4,686 1.92%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 85,894       81,223     
Other liabilities 9,940       6,513     
Total liabilities 991,678       1,053,532     
Shareholders' equity 160,169       145,878     
Total liabilities and shareholders' equity$1,151,847      $1,199,410     
                
  Net interest income   $15,545      $15,643  
                
Interest rate spread      5.19%       5.00%
Net interest margin (5)      5.59%       5.33%
                
(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.

 


 
NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Six Months Ended December 31,
 2019  2018 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$81,545 $893 2.18% $86,599 $784 1.80%
Loans (1) (2) (3) 948,625  39,193 8.22%  901,833  36,460 8.02%
Federal Home Loan Bank stock 1,669  37 4.41%  1,652  49 5.88%
Short-term investments (4) 68,808  628 1.82%  170,705  1,802 2.09%
Total interest-earning assets 1,100,647  40,751 7.36%  1,160,789  39,095 6.68%
Cash and due from banks 2,705       2,585     
Other non-interest earning assets 39,127       31,289     
Total assets$1,142,479      $1,194,663     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$68,071 $137 0.40% $71,866 $124 0.34%
Money market accounts 267,379  2,162 1.61%  389,757  3,008 1.53%
Savings accounts 34,397  30 0.17%  35,590  28 0.16%
Time deposits 474,270  6,168 2.59%  424,965  4,504 2.10%
  Total interest-bearing deposits 844,117  8,497 2.00%  922,178  7,664 1.65%
Federal Home Loan Bank advances 25,625  343 2.66%  15,000  242 3.20%
Subordinated debt 14,856  563 7.54%  24,042  1,174 9.69%
Capital lease obligations 5,527  68 2.45%  525  14 5.29%
Total interest-bearing liabilities 890,125  9,471 2.12%  961,745  9,094 1.88%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 85,491       81,615     
Other liabilities 8,760       8,126     
Total liabilities 984,376       1,051,486     
Shareholders' equity 158,103       143,177     
Total liabilities and shareholders' equity$1,142,479      $1,194,663     
                
  Net interest income   $31,280      $30,001  
                
Interest rate spread      5.25%       4.80%
Net interest margin (5)      5.65%       5.13%
                
(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.

 


 
NORTHEAST BANK
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended
 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018
 

Net interest income
$  15,545  $  15,737  $  17,288  $   15,033  $  15,643 
Provision (credit) for loan losses 243   (136)  262   414   101 
Noninterest income 1,337   1,176   1,151   1,866   1,545 
Noninterest expense 9,789   10,354   18,504   9,752   9,903 
Net income (loss) 4,867   4,776   (603)  4,828   5,125 
          
Weighted-average common shares outstanding:         
 Basic 9,048,171   9,043,761   9,041,926   9,044,230   9,048,397 
 Diluted 9,223,137   9,211,874   9,041,926   9,198,077   9,201,557 
 

Earnings (loss) per common share:
         
 Basic$  0.54  $   0.53  $   (0.07) $  0.53  $  0.57 
 Diluted   0.53     0.52     (0.07)    0.52     0.56 
          
Operating earnings per common share (4):         
 Basic$  0.54  $  0.53  $   0.60  $   0.53  $  0.57 
 Diluted   0.53     0.52     0.59     0.52     0.56 
          
Dividends declared per common share$   0.01  $   0.01  $   0.01  $   0.01  $   0.01 
          
Return (loss) on average assets 1.68%  1.68%  (0.20%)  1.63%  1.70%
Return (loss) on average equity 12.09%  12.18%  (1.58%)  13.00%  13.94%
Net interest rate spread (1) 5.19%  5.31%  5.55%  4.81%  5.00%
Net interest margin (2) 5.59%  5.72%  5.95%  5.20%  5.33%
Efficiency ratio (non-GAAP) (3) 57.98%  61.22%  100.35%  57.71%  57.62%
Noninterest expense to average total assets 3.38%  3.64%  6.18%  3.29%  3.28%
Average interest-earning assets to average
  interest-bearing liabilities
 123.50%  123.81%  121.71%  121.65%  120.67%
          
Operating return on average assets (non-GAAP) (4) 1.68%  1.68%  1.81%  1.63%  1.70%
Operating return on average equity (non-GAAP) (4) 12.09%  12.18%  14.18%  13.00%  13.94%
Operating efficiency ratio (non-GAAP) (3) (4) 57.98%  61.22%  55.15%  57.71%  57.62%
Operating noninterest expense to average total assets (non-
  GAAP) (4)
 3.38%  3.64%  3.40%  3.29%  3.28%
 As of:
 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018
Nonperforming loans:         
Originated portfolio:         
Residential real estate$  1,586  $  1,515  $   2,772  $  2,317  $  2,595 
Commercial real estate 8,032   4,530   3,892   3,336   2,764 
Commercial and industrial 622   87   1,284   1,495   1,420 
Consumer 59   136   148   236   216 
Total originated portfolio 10,299   6,268   8,096   7,384   6,995 
Total purchased portfolio 8,489   7,834   6,671   5,366   5,351 
Total nonperforming loans 18,788   14,102   14,767   12,750   12,346 
Real estate owned and other repossessed collateral, net 2,505   1,936   1,957   2,014   1,463 
Total nonperforming assets$  21,293  $  16,038  $  16,724  $  14,764  $  13,809 
          
Past due loans to total loans 2.84%  1.50%  1.50%  2.16%  1.95%
Nonperforming loans to total loans 1.88%  1.51%  1.51%  1.33%  1.32%
Nonperforming assets to total assets 1.76%  1.43%  1.45%  1.20%  1.16%
Allowance for loan losses to total loans 0.54%  0.57%  0.58%  0.59%  0.57%
Allowance for loan losses to nonperforming loans 28.77%  37.44%  38.61%  44.38%  42.99%
          
Commercial real estate loans to total capital (5) 292.58%  262.92%  282.05%  251.02%  242.38%
Net loans to core deposits (6) 106.52%  102.59%  103.33%  94.19%  94.84%
Purchased loans to total loans, including held for sale 36.65%  35.50%  33.37%  33.27%  35.17%
Equity to total assets 13.53%  14.08%  13.31%  12.44%  12.44%
Common equity tier 1 capital ratio 16.48%  16.92%  15.89%  16.23%  16.04%
Total capital ratio 18.52%  19.07%  18.01%  19.33%  19.15%
Tier 1 leverage capital ratio 14.26%  14.06%  12.86%  13.58%  13.20%
          
Total shareholders' equity$  163,400  $   158,101  $  153,580  $  153,188  $  148,491 
Less: Preferred stock   -     -     -     -     - 
Common shareholders' equity   163,400     158,101     153,580     153,188     148,491 
Less: Intangible assets (7)   (2,641)    (2,940)    (3,285)    (3,485)    (3,583)
Tangible common shareholders' equity (non-GAAP)$  160,759  $  155,161  $  150,295  $  149,703  $  144,908 
          
Common shares outstanding 9,052,013   9,038,912   9,042,109   9,041,868   9,048,863 
Book value per common share$   18.05  $   17.49  $   16.98  $   16.94  $   16.41 
Tangible book value per share (non-GAAP) (8)   17.76     17.17     16.62     16.56     16.01 
          
 
(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) Operating earnings per common share, operating return on average assets, operating return on average equity, operating efficiency ratio, and operating noninterest expense to average total assets utilize net operating earnings (non-GAAP). Net operating earnings is calculated as net loss of $603 thousand, less non-recurring reorganization expense, net of tax, of $6.0 million, for net operating earnings of $5.4 million.
(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.