Northeast Bank Reports Fourth Quarter Results, Record Annual Earnings and Declares Dividend

Lewiston, Maine, UNITED STATES


PORTLAND, Maine, July 28, 2021 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $21.4 million, or $2.54 per diluted common share, for the quarter ended June 30, 2021, compared to net income of $11.2 million, or $1.33 per diluted common share, for the quarter ended June 30, 2020. Net income for the year ended June 30, 2021 was $71.5 million, or $8.55 per diluted common share, compared to $22.7 million, or $2.53 per diluted common share, for the year ended June 30, 2020. Net income for the quarter and year ended June 30, 2021 included $12.6 million and $46.7 million, respectively, of net gains on the sale of U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans sold during the quarter and year ended June 30, 2021, which had an after-tax earnings per diluted common share impact of $1.06 and $3.95, respectively.

The Board of Directors declared a cash dividend of $0.01 per share, payable on August 27, 2021, to shareholders of record as of August 13, 2021.

“We closed our fiscal year with another strong quarter,” said Rick Wayne, Chief Executive Officer. “For the fourth fiscal quarter, we originated $563.0 million of Round 2 PPP loans, sold $671.4 million to The Loan Source, Inc., and generated $12.6 million of net gains. For the year ended June 30, 2021, we originated $2.84 billion of PPP loans to over 30,000 borrowers with 287,000 associated jobs. Additionally, in the fourth quarter, we generated $6.7 million of correspondent fee income under the arrangement with Loan Source and ACAP SME, LLC. As correspondent, we facilitated for Loan Source purchases of $4.4 billion of PPP loans during the quarter and cumulative purchases of $11.2 billion through June 30, 2021. Our national lending business remained strong, with originated and purchased loans of $147.8 million during the quarter and $478.4 million for the year, representing 11.5% annual growth.” Mr. Wayne continued, “As a result, we are reporting earnings of $2.54 per diluted common share, a return on average equity of 38.0%, a return on average assets of 4.6%, and an efficiency ratio of 25.0% for the quarter.”

As of June 30, 2021, total assets were $2.17 billion, an increase of $916.8 million, or 72.9%, from total assets of $1.26 billion as of June 30, 2020.

1.Cash and short-term investments increased by $866.8 million, or 603.4%, primarily due to the timing of a large deposit account related to PPP payoff collections and purchases that is subject to significant fluctuation given the PPP activity during the quarter ended June 30, 2021. Cash and short-term investments may fluctuate significantly and 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 months and year ended June 30, 2021:

        

 Loan Portfolio Changes
 Three Months Ended June 30, 2021
 June 30, 2021
Balance
 March 31, 2021
Balance
  Change ($)  Change (%)
 (Dollars in thousands)
National Lending Purchased$429,054 $433,497 $(4,443)  (1.02%)
National Lending Originated 523,535  473,930  49,605  10.47%
SBA National 39,549  42,707  (3,158)  (7.39%)
Community Banking 48,486  52,674  (4,188)  (7.95%)
Total$1,040,624 $1,002,808 $37,816  3.77%
  
 Year Ended June 30, 2021
 June 30, 2021
Balance
 June 30, 2020
Balance
 Change ($) Change (%)
 (Dollars in thousands)
National Lending Purchased$429,054 $386,624 $42,430  10.97%
National Lending Originated 523,535  467,612  55,923  11.96%
SBA National 39,549  47,095  (7,546)  (16.02%)
Community Banking 48,486  70,271  (21,785)  (31.00%)
Total$1,040,624 $971,602 $69,022  7.10%

Loans generated by the Bank's National Lending Division for the quarter ended June 30, 2021 totaled $147.8 million, which consisted of $33.8 million of purchased loans, at an average price of 95.1% of unpaid principal balance, and $114.0 million of originated loans.

Additionally, the Bank originated $563.0 million of loans in connection with the PPP and sold $671.4 million of PPP loans during the quarter ended June 30, 2021. The Bank recorded a net gain of $12.6 million from the sale of PPP loans, primarily resulting from the recognition of net deferred origination fees upon the sale of the loans.

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

 National Lending Portfolio
 Three Months Ended June 30,
 2021 2020
 Purchased Originated Total Purchased Originated Total
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$35,456  $114,020  $149,476  $14,611  $33,612  $48,223 
Net investment basis 33,732   114,020   147,752   12,744   33,612   46,356 
                  
Loan returns during the period:                 
Yield 8.99%  6.58%  7.68%  9.89%  7.13%  8.34%
Total Return on Purchased Loans (1) 8.99%  6.58%  7.68%  9.89%  7.13%  8.34%
                  
                  
 Years Ended June 30,
 2021  2020 
 Purchased Originated Total Purchased Originated Total
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$181,591  $308,862  $490,453  $182,588  $221,484  $404,072 
Net investment basis 169,489   308,862   478,351   171,262   221,484   392,746 
                  
Loan returns during the period:                 
Yield 8.91%  6.93%  7.84%  9.86%  7.43%  8.47%
Total Return on Purchased Loans (1) 8.91%  6.93%  7.84%  9.97%  7.43%  8.51%
                  
Total loans as of period end:                 
Unpaid principal balance$466,059  $523,535  $989,594  $421,659  $467,612  $889,271 
Net investment basis 429,054   523,535   952,589   386,624   467,612   854,236 
                  
                  

(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 $850.1 million, or 84.0%, from June 30, 2020. The increase was attributable to increases in demand deposits of $877.7 million, or 926.4%, and savings and interest checking accounts of $187.2 million, or 135.9%, partially offset by a decrease in time deposits of $199.6 million, or 41.8%, 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 forgiveness activity during the quarter ended June 30, 2021.
4.Shareholders’ equity increased by $67.7 million, or 41.1%, from June 30, 2020, primarily due to net income of $71.5 million. Shareholders’ equity also increased by $965 thousand as a result of stock options exercised, which resulted in 153 thousand shares of common stock issued, and increased by $978 thousand due to stock-based compensation. Partially offsetting these increases was the repurchase of 194,317 shares of common stock at a weighted average price per share of $29.56, which resulted in a $5.7 million decrease in shareholders’ equity.

Net income increased by $10.2 million to $21.4 million for the quarter ended June 30, 2021, compared to net income of $11.2 million for the quarter ended June 30, 2020.

1.Net interest and dividend income before provision for loan losses increased by $718 thousand to $18.1 million for the quarter ended June 30, 2021, compared to $17.4 million for the quarter ended June 30, 2020. The increase was primarily due to the following:
  • A decrease in deposit interest expense of $2.4 million, due to lower interest rates and lower average balances in interest-bearing deposits; partially offset by,
  • A decrease in PPP loan interest income of $677 thousand, due to lower average balances;
  • A decrease in interest income earned on the National Lending Division’s originated portfolio of $509 thousand, due to lower rates earned, partially offset by higher average balances; and
  • A decrease of $390 thousand in interest income earned on the Community Bank portfolio, due to lower average balances and average rates earned.

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,
 2021 2020
 Average Interest   Average Interest  
 Balance (1) Income Yield Balance (1) Income Yield
 (Dollars in thousands)
Community Banking$49,003 $585 4.79% $74,059 $975 5.30%
SBA National 41,331  606 5.88%  48,191  642 5.36%
National Lending:               
Originated 501,646  8,229 6.58%  492,612  8,738 7.13%
Purchased 424,102  9,507 8.99%  386,212  9,495 9.89%
Total National Lending 925,748  17,736 7.68%  878,824  18,233 8.34%
Total excluding SBA PPP$1,016,082 $18,927 7.47% $1,001,074 $19,850 8.17%
                
SBA PPP$172,787 $884 2.05% $223,804 $1,561 2.81%
Total including SBA PPP$1,188,869 $19,811 6.68% $1,224,878 $21,411 7.03%
  



 Year Ended June 30,
 2021 2020
 Average Interest   Average Interest  
 Balance (1) Income Yield Balance (1) Income Yield
 (Dollars in thousands)
Community Banking$56,711 $2,746 4.84% $82,472 $4,470 5.42%
SBA National 45,764  2,442 5.33%  55,511  4,066 7.32%
National Lending:               
Originated 469,632  32,560 6.93%  479,054  35,572 7.43%
Purchased 400,141  35,649 8.91%  356,958  35,201 9.86%
Total National Lending 869,773  68,209 7.84%  836,012  70,773 8.47%
Total excluding SBA PPP$972,248 $73,396 7.55% $973,995 $59,459 8.20%
                
SBA PPP$166,230 $3,522 2.12% $55,649 $1,561 2.81%
Total including SBA PPP$1,138,478 $76,918 6.76% $1,029,644 $80,870 7.85%

(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 June 30, 2020, transactional income decreased by $166 thousand for the quarter ended June 30, 2021, while regularly scheduled interest and accretion increased by $178 thousand due to the increase in average balances, partially offset by lower rates earned. The total return on purchased loans for the quarter ended June 30, 2021 was 9.0%, a decrease from 9.9% for the quarter ended June 30, 2020. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended June 30,
 2021 2020
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$7,070 6.69% $6,892 7.18%
Transactional income:         
Accelerated accretion and loan fees 2,437 2.30%  2,603 2.71%
Total transactional income 2,437 2.30%  2,603 2.71%
Total$9,507 8.99% $9,495 9.89%
  
  
 Year Ended June 30,
 2021 2020
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$27,536 6.88% $26,202 7.34%
Transactional income:         
Gain on real estate owned - 0.00%  395 0.11%
Accelerated accretion and loan fees 8,113 2.03%  8,999 2.52%
Total transactional income 8,113 2.03%  9,394 2.63%
Total$35,649 8.91% $35,596 9.97%

(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.Provision for loan losses decreased by $2.8 million to a credit of $1.9 million for the quarter ended June 30, 2021, from a $905 thousand provision in the quarter ended June 30, 2020. The decrease in the provision for loan losses reflects decreases in certain qualitative factors during the current quarter as a result of continued improvements from the COVID-19 pandemic, primarily in the SBA loan portfolio, partially offset by an increase in loan balances during the quarter.
3.Noninterest income increased by $9.8 million for the quarter ended June 30, 2021, compared to the quarter ended June 30, 2020, principally due to the following:
  • An increase in gain on sale of PPP loans of $2.9 million, due to the sale of PPP loans with a total principal balance of $671.4 million in the quarter ended June 30, 2021, as compared to the sale of PPP loans with a total balance of $457.6 million in the quarter ended June 30, 2020, which resulted in a net gain based on the recognition of net deferred fees; and
  • An increase in correspondent fee income of $6.6 million from the recognition of correspondent fees and net servicing income as a result of the correspondent arrangement entered into with The Loan Source, Inc. (“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$1,080 
Amortization of Purchased Accrued Interest 972 
Earned Net Servicing Interest 4,602 
Total$6,654 

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(3) 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
Q4 FY 2021 4,371,000 171 3,452 3,623
Total $11,231,400 $8,905 $11,308 $20,213
Less amounts recognized in Q4 FY 21 (1,080) (972) (2,052)
Less amounts recognized in previous quarters (3,001) (1,813) (4,814)
Amount remaining to be recognized $4,824 $8,523 $13,347


(1) - Northeast Bank's share
(2) - Expected to be recognized into income over life of loans
(3) - Loan Source’s ending PPP loan balance was $8.39 billion as of June 30, 2021

In addition to these increases:

  • A decrease in loss on assets held for sale of $337 thousand due to the fair value adjustment for PPP loans held for sale at June 30, 2020, as compared to no PPP loans held for sale at June 30, 2021.
4.Noninterest expense decreased by $741 thousand for the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020, primarily due to the following:
  • A decrease in salaries expense of $1.7 million, primarily due to a decrease of $1.4 million in incentive compensation due to the annual bonus true-up being recorded during the quarter ended March 31, 2021 as compared to the quarter ended June 30, 2020 and an increase of $733 thousand in deferred salaries contra-expense related to higher PPP originations, partially offset by an increase of $310 thousand in regular compensation, due to salary increases; partially offset by,
  • An increase in loan expense of $648 thousand, primarily due to $522 thousand in correspondent expenses associated with the Loan Source correspondent arrangement and increased collection legal expenses;
  • An increase in other noninterest expense of $158 thousand, primarily due to the quarterly valuation of the SBA servicing asset, which resulted in a $93 thousand recovery during the quarter ended June 30, 2021 as compared to a $190 thousand recovery during the quarter ended June 30, 2020; and
  • An increase in marketing expense of $154 thousand, due to increased website advertising and general production in connection with National Lending Division and deposit initiatives.
5.Income tax expense increased by $4.0 million to $8.9 million, or an effective tax rate of 29.4%, for the quarter ended June 30, 2021, compared to $4.9 million, or an effective tax rate of 30.4%, for the quarter ended June 30, 2020. The increase in income tax expense is due to the increase in pre-tax income. The decrease in the effective tax rate from June 30, 2020 is primarily due to a smaller year-end true-up adjustment related to state tax apportionment in the quarter ended June 30, 2021.

As of June 30, 2021, nonperforming assets totaled $20.4 million, or 0.94% of total assets, compared to $24.4 million, or 1.94% of total assets, as of June 30, 2020. As of June 30, 2021, past due loans totaled $11.3 million, or 1.08% 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 June 30, 2021, the Bank’s Tier 1 leverage capital ratio was 13.6%, compared to 13.4% at June 30, 2020, and the Total capital ratio was 24.3% at June 30, 2021, compared to 19.6% at June 30, 2020. Capital ratios were affected by earnings during the year ended June 30, 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 fourth quarter earnings and business outlook at 10:00 a.m. Eastern Time on Thursday, July 29th. Investors can access the call by dialing 800.773.2954 and entering the following passcode: 50197423. 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, net interest margin excluding PPP, and net interest margin excluding PPP and collection account. 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)
 June 30, 2021 June 30, 2020
Assets     
Cash and due from banks$2,850 $2,795
Short-term investments 1,007,641  140,862
Total cash and cash equivalents 1,010,491  143,657
      
      
Available-for-sale debt securities, at fair value 59,737  64,918
Equity securities, at fair value 7,230  7,239
Total investment securities 66,967  72,157
      
Residential real estate loans held for sale -  601
SBA loans held for sale -  28,852
Total loans held for sale -  29,453
      
      
Loans:     
Commercial real estate 725,287  679,537
Commercial and industrial 257,604  212,769
Residential real estate 56,591  77,722
Consumer 1,142  1,574
Total loans 1,040,624  971,602
Less: Allowance for loan losses 7,313  9,178
Loans, net 1,033,311  962,424
      
      
Premises and equipment, net 11,271  9,670
Real estate owned and other repossessed collateral, net 1,639  3,274
Federal Home Loan Bank stock, at cost 1,209  1,390
Loan servicing rights, net 2,061  2,113
Bank-owned life insurance 17,498  17,074
Other assets 29,955  16,423
Total assets$2,174,402 $1,257,635
      
Liabilities and Shareholders' Equity     
Deposits:     
Demand$972,495 $94,749
Savings and interest checking 325,062  137,824
Money market 287,033  302,343
Time 277,840  477,436
Total deposits 1,862,430  1,012,352
      
Federal Home Loan Bank advances 15,000  15,000
Paycheck Protection Program Liquidity Facility advances -  12,440
Subordinated debt 15,050  14,940
Lease liability 6,061  4,496
Other liabilities 43,470  33,668
Total liabilities 1,942,011  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 June 30, 2021 and 2020 -  -
Voting common stock, $1.00 par value, 25,000,000 shares authorized;     
8,150,480 and 8,153,841 shares issued and outstanding at    
June 30, 2021 and 2020, respectively 8,151  8,154
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; zero and 44,783 shares issued and outstanding at June 30, 2021 and 2020, respectively -  45
Additional paid-in capital 64,420  68,302
Retained earnings 161,132  89,960
Accumulated other comprehensive loss (1,312)  (1,722)
Total shareholders' equity 232,391  164,739
Total liabilities and shareholders' equity$2,174,402 $1,257,635


NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended June 30, Year Ended June 30, 
 2021 2020 2021 2020 
Interest and dividend income:            
Interest and fees on loans$19,811  $21,411  $76,918  $80,870  
Interest on available-for-sale securities 113   375   754   1,695  
Other interest and dividend income 201   59   453   1,119  
Total interest and dividend income 20,125   21,845   78,125   83,684  
             


Interest expense:
            
Deposits 1,477   3,858   8,867   16,583  
Federal Home Loan Bank advances 139   120   535   689  
Paycheck Protection Program Liquidity Facility 98   174   400   174  
Subordinated debt 282   282   1,126   1,126  
Obligation under capital lease agreements 27   27   111   125  
Total interest expense 2,023   4,461   11,039   18,697  
Net interest and dividend income before provision for loan losses 18,102   17,384   67,086   64,987  
Provision (credit) for loan losses (1,926)  905   (1,396)  4,500  
Net interest and dividend income after provision for loan losses 20,028   16,479   68,482   60,487  
             


Noninterest income:
            
Fees for other services to customers 441   477   1,869   1,619  
Gain on sales of PPP loans 12,577   9,702   46,701   9,702  
Gain on sales of SBA loans -   -   -   793  
Gain on sales of residential loans held for sale 1   37   107   600  
Net unrealized gain (loss) on equity securities 10   46   (104)  148  
Loss on real estate owned, other repossessed collateral and premises and equipment, net (129)  (263)  (473)  (15) 
Correspondent fee income 6,654   20   23,452   20  
Bank-owned life insurance income 106   108   424   566  
Loss on assets held for sale -   (337)  -   (337) 
Other noninterest income (loss) (10)  22   57   88  
Total noninterest income 19,650   9,812   72,033   13,184  
             


Noninterest expense:
            
Salaries and employee benefits 4,994   6,704   22,430   24,976  
Occupancy and equipment expense 912   922   3,825   3,588  
Professional fees 525   608   1,930   1,783  
Data processing fees 1,076   974   4,468   3,954  
Marketing expense 252   98   542   337  
Loan acquisition and collection expense 899   251   3,267   2,059  
FDIC insurance premiums (credits) 109   -   283   (15) 
Intangible asset amortization -   109   -   434  
Other noninterest expense 660   502   2,681   3,277  
Total noninterest expense 9,427   10,168   39,426   40,393  
Income before income tax expense 30,251   16,123   101,089   33,278  
Income tax expense 8,881   4,904   29,586   10,541  
Net income$21,370  $11,219  $71,503  $22,737  
             
Weighted-average shares outstanding:            
Basic 8,318,689   8,337,088   8,275,577   8,859,037  
Diluted 8,397,897   8,405,665   8,360,355   8,991,428  


Earnings per common share:
            
Basic$2.57  $1.35  $8.64  $2.57  
Diluted 2.54   1.33   8.55   2.53  


Cash dividends declared per common share
$0.01  $0.01  $0.04  $0.04  

 

NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended June 30,
 2021 2020
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$67,423 $113 0.67% $73,100 $375 2.06%
Loans (1) (2) (3) 1,188,869  19,811 6.68%  1,224,878  21,411 7.03%
Federal Home Loan Bank stock 1,825  9 1.98%  3,194  29 3.65%
Short-term investments (4) 561,813  192 0.14%  126,499  30 0.10%
Total interest-earning assets 1,819,930  20,125 4.44%  1,428,001  21,845 6.15%
Cash and due from banks 2,805       3,426     
Other non-interest earning assets 60,923       37,222     
Total assets$1,883,658      $1,468,649     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$238,462 $167 0.28% $89,194 $124 0.56%
Money market accounts 311,753  258 0.33%  290,643  828 1.15%
Savings accounts 46,087  19 0.17%  35,367  14 0.16%
Time deposits 289,705  1,033 1.43%  518,094  2,892 2.25%
Total interest-bearing deposits 886,007  1,477 0.67%  933,298  3,858 1.66%
Federal Home Loan Bank advances 27,348  139 2.04%  49,615  120 0.97%
PPPLF advances 115,571  98 0.34%  202,285  174 0.35%
Subordinated debt 15,035  282 7.52%  14,925  282 7.60%
Capital lease obligations 6,202  27 1.75%  4,616  27 2.35%
Total interest-bearing liabilities 1,050,163  2,023 0.77%  1,204,739  4,461 1.49%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 573,724       95,062     
Other liabilities 34,034       10,197     
Total liabilities 1,657,921       1,309,998     
Shareholders' equity 225,737       158,651     
Total liabilities and shareholders' equity$1,883,658      $1,468,649     
                
Net interest income   $18,102      $17,384  
                
Interest rate spread      3.67%       4.66%
Net interest margin (5)      3.99%       4.90%
                  
Cost of funds (6)      0.51
%
       1.38%
 
(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 Federal Reserve Bank and 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)
 Year Ended June 30,
 2021 2020
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$69,762 $754 1.08% $78,656 $1,695 2.15%
Loans (1) (2) (3) 1,138,478  76,918 6.76%  1,029,644  80,870 7.85%
Federal Home Loan Bank stock 1,750  61 3.49%  2,204  94 4.26%
Short-term investments (4) 314,405  392 0.12%  94,586  1,025 1.08%
Total interest-earning assets 1,524,395  78,125 5.12%  1,205,090  83,684 6.94%
Cash and due from banks 2,728       2,971     
Other non-interest earning assets 50,909       38,363     
Total assets$1,578,032      $1,246,424     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$167,505 $495 0.30% $75,984 $364 0.48%
Money market accounts 312,537  1,517 0.49%  276,264  4,096 1.48%
Savings accounts 39,844  57 0.14%  34,517  57 0.17%
Time deposits 424,894  6,798 1.60%  496,531  12,066 2.43%
Total interest-bearing deposits 944,780  8,867 0.94%  883,296  16,583 1.88%
Federal Home Loan Bank advances 24,072  535 2.22%  34,918  689 1.97%
PPPLF advances 114,341  400 0.35%  50,295  174 0.35%
Subordinated debt 14,995  1,126 7.51%  14,883  1,126 7.57%
Capital lease obligations 5,895  111 1.88%  5,169  125 2.42%
Total interest-bearing liabilities 1,104,083  11,039 1.00%  988,561  18,697 1.89%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 261,322       88,805     
Other liabilities 21,643       9,097     
Total liabilities 1,387,048       1,085,463     
Shareholders' equity 190,984       159,961     
Total liabilities and shareholders' equity$1,578,032      $1,246,424     
                
Net interest income   $67,086      $64,987  
                
Interest rate spread      4.12%       5.05%
Net interest margin (5)      4.40%       5.39%
                
Cost of funds (6)      0.81%       1.74%
                
(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 Federal Reserve Bank and 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
 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
Net interest income$18,102  $18,603  $15,388  $14,993  $17,384 
Provision (credit) for loan losses (1,926)  (211)  365   377   905 
Noninterest income 19,650   39,469   6,497   6,416   9,812 
Noninterest expense 9,427   9,636   10,428   9,933   10,168 
Net income 21,370   34,162   8,176   7,794   11,219 
          
Weighted-average common shares outstanding:         
Basic 8,318,689   8,344,797   8,244,068   8,196,828   8,337,088 
Diluted 8,397,897   8,421,247   8,309,252   8,315,096   8,405,665 


Earnings per common share:
         
Basic$2.57  $4.09  $0.99  $0.95  $1.35 
Diluted 2.54   4.06   0.98   0.94   1.33 
          
Dividends declared per common share$0.01  $0.01  $0.01  $0.01  $0.01 
          
Return on average assets 4.55%  6.99%  2.66%  2.49%  3.07%
Return on average equity 37.97%  71.06%  18.37%  18.50%  28.44%
Net interest rate spread (1) 3.67%  3.79%  4.92%  4.65%  4.60%
Net interest margin (2) 3.99%  3.93%  5.23%  4.95%  4.90%
Net interest margin, excluding PPP (Non-GAAP) (3) 4.55%  4.64%  5.23%  5.00%  5.34%
Net interest margin, excluding PPP and collection account
(Non-GAAP) (4)
 5.56%  5.06%  5.23%  5.00%  5.34%
Efficiency ratio (non-GAAP) (5) 24.97%  16.59%  47.65%  46.40%  37.29%
Noninterest expense to average total assets 2.01%  1.97%  3.40%  3.17%  2.78%
Average interest-earning assets to average
interest-bearing liabilities
 173.30%  125.53%  129.68%  127.02%  118.53%
          
 As of:
 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
Nonperforming loans:         
Originated portfolio:         
Residential real estate$696  $643  $6,676  $704  $832 
Commercial real estate 5,756   4,790   8,329   6,856   6,861 
Commercial and industrial 286   1,408   1,978   2,013   2,058 
Consumer 43   23   30   26   29 
Total originated portfolio 6,781   6,864   17,013   9,599   9,780 
Total purchased portfolio 11,977   16,059   13,497   11,848   11,325 
Total nonperforming loans 18,758   22,923   30,510   21,447   21,105 
Real estate owned and other repossessed collateral, net 1,639   2,885   2,866   4,102   3,274 
Total nonperforming assets$20,397  $25,808  $33,376  $25,549  $24,379 
          
Past due loans to total loans 1.08%  1.67%  2.31%  2.03%  1.69%
Nonperforming loans to total loans 1.80%  2.29%  3.05%  2.30%  2.17%
Nonperforming assets to total assets 0.94%  1.51%  2.70%  2.03%  1.94%
Allowance for loan losses to total loans 0.70%  0.88%  0.99%  1.02%  0.94%
Allowance for loan losses to nonperforming loans 38.99%  38.48%  32.53%  44.46%  43.49%
          
Commercial real estate loans to total capital (6) 215.38%  223.09%  251.00%  248.47%  281.32%
Net loans to core deposits (7) 55.71%  76.99%  101.86%  91.74%  96.38%
Purchased loans to total loans, including held for sale 41.23%  43.22%  41.79%  38.40%  39.77%
Equity to total assets 10.69%  12.65%  14.74%  13.73%  13.10%
Common equity tier 1 capital ratio 22.16%  21.07%  17.93%  18.57%  17.13%
Total capital ratio 24.29%  23.39%  20.37%  21.19%  19.61%
Tier 1 leverage capital ratio 13.63%  14.32%  15.07%  14.02%  13.36%
          
Total shareholders' equity$232,391  $216,862  $181,962  $172,551  $164,739 
Less: Preferred stock -   -   -   -   - 
Common shareholders' equity 232,391   216,862   181,962   172,551   164,739 
Less: Intangible assets (8) (2,061)  (2,149)  (2,035)  (2,323)  (2,113)
Tangible common shareholders' equity (non-GAAP)$230,330  $214,713  $179,927  $170,228  $162,626 
          
Common shares outstanding 8,150,480   8,344,797   8,344,797   8,191,786   8,198,624 
Book value per common share$28.51  $25.99  $21.81  $21.06  $20.09 
Tangible book value per share (non-GAAP) (9) 28.26   25.73   21.56   20.78   19.84 
          
(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 $884 thousand, $2.6 million, $80 thousand, and $1.6 million, PPPLF interest expense of $98 thousand, $300 thousand, $2 thousand, and $174 thousand, and brokered CD interest expense of $0, $99 thousand, $0, and $0, as well as PPP loan average balances of $172.8 million, $481.9 million, $16.9 million and $223.8 million, for the quarters ended June 30, 2021, March 31, 2021, September 30, 2020 and June 30, 2020, respectively.
(4) Net interest margin excluding PPP and collection account removes the PPP impact above and removes the effects of the cash held by the Bank from the correspondent’s collection account in short-term investments, which had an average balance of $405.9 million and $121.7 million and earned $100 thousand and $29 thousand in interest income for the quarters ended June 30, 2021 and March 31, 2021, respectively.
(5) The efficiency ratio represents noninterest expense divided by the sum of net interest income (before the loan loss provision) plus noninterest income.
(6) 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.
(7) Core deposits exclude all maturity deposits greater than $250 thousand. Loans include loans held for sale, excluding PPP loans held for sale.
(8) Includes the loan servicing rights asset.
(9) 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, 27 Pearl Street, Portland, ME 04101
207.786.3245 ext. 3220
www.northeastbank.com