LEWISTON, Maine, April 25, 2017 (GLOBE NEWSWIRE) — Northeast Bancorp (“Northeast” or the “Company”) (NASDAQ:NBN), a Maine-based full-service financial services company and parent of Northeast Bank (the “Bank”), today reported net income of $3.5 million, or $0.39 per diluted common share, for the quarter ended March 31, 2017, compared to net income of $1.8 million, or $0.19 per diluted common share, for the quarter ended March 31, 2016. Net income for the nine months ended March 31, 2017 was $8.3 million, or $0.93 per diluted common share, compared to $5.4 million, or $0.57 per diluted common share, for the nine months ended March 31, 2016.
The Board of Directors has also declared a cash dividend of $0.01 per share, payable on May 22, 2017 to shareholders of record as of May 8, 2017.
“Our strong growth in fiscal year 2017 continued in the third quarter,” said Richard Wayne, President and Chief Executive Officer. “We achieved record earnings of 39 cents per share through solid loan volume, purchased loan transactional income and SBA gains. Our Loan Acquisition and Servicing Group produced $89.7 million of loans, our SBA Division closed $22.6 million of loans, the purchased loan portfolio yielded 11.9%, and the SBA gain on sale was $951 thousand. In addition, in the current quarter, we strategically repositioned our balance sheet with the payoff of $48.0 million of secured loans to broker-dealers and the sale of a commercial loan portfolio of $18.3 million. The payoff of these lower yielding assets provides capacity for higher yielding loan growth in the future. This quarterly activity helped drive our return on equity to 12.0%, our return on assets to 1.4%, and our efficiency ratio to 59.9%.”
As of March 31, 2017, total assets were $1.0 billion, an increase of $40.9 million, or 4.2%, from total assets of $986.2 million as of June 30, 2016. The principal components of the change in the balance sheet follow:
1. Bank wide, the Company originated $125.4 million of loans during the quarter ended March 31, 2017. Loans generated by the Bank’s Loan Acquisition and Servicing Group (“LASG”) totaled $89.7 million, which consisted of $7.9 million of purchased loans, at an average price of 91.3% of unpaid principal balance, and $81.8 million of originated loans. The Bank’s Small Business Administration and United States Department of Agriculture (“SBA”) Division closed $22.6 million of new loans during the quarter, of which $16.5 million were funded. In addition, the Company sold $9.9 million of the guaranteed portion of SBA loans in the secondary market, of which $2.6 million were originated in the current quarter and $7.3 million were originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $15.5 million for the quarter.
In totality, the loan portfolio – excluding loans held for sale – increased by $49.3 million, or 7.1%, compared to June 30, 2016, and decreased by $25.2 million, or 3.3%, compared to December 31, 2016. The decrease from December 31, 2016 is primarily attributable to the payoff of $48.0 million of secured loans to broker-dealers and the sale of a commercial loan portfolio of $18.3 million which, combined, had a weighted average yield of 1.92%.
The following table highlights the changes in the loan portfolio for the three and nine months ended March 31, 2017:
| Loan Portfolio Changes | ||||||||
| Three months ended March 31, 2017 |
Nine months ended March 31, 2017 |
|||||||
| (Dollars in thousands) | ||||||||
| LASG originations and acquisitions | $ | 89,667 | $ | 237,578 | ||||
| SBA and USDA funded originations | 16,549 | 56,853 | ||||||
| Community Banking Division originations | 13,036 | 63,776 | ||||||
| Payoff of secured loans to broker-dealers | (48,000 | ) | (48,000 | ) | ||||
| Commercial loan portfolio sale | (18,259 | ) | (18,259 | ) | ||||
| SBA and residential loan sales | (25,471 | ) | (92,956 | ) | ||||
| Payoffs, pay-downs and amortization, net | (52,732 | ) | (149,700 | ) | ||||
| Net change | $ | (25,210 | ) | $ | 49,292 | |||
As previously discussed in the Company’s SEC filings, the Company made certain commitments to the Board of Governors of the Federal Reserve System in connection with the merger of FHB Formation LLC with and into the Company in December 2010. The Company’s loan purchase and commercial real estate loan availability under these conditions follow:
| Basis for Regulatory Condition |
Condition | Availability at March 31, 2017 | |||
| (Dollars in millions) | |||||
| Total Loans | Purchased loans may not exceed 40% of total loans | $ | 101.0 | ||
| Regulatory Capital | Non-owner occupied commercial real estate loans may not exceed 300% of total capital | $ | 172.3 | ||
An overview of the Bank’s LASG portfolio follows:
| LASG Portfolio | ||||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||
| Purchased (1) | Originated | Secured Loans to Broker-Dealers |
Total LASG | Purchased | Originated | Secured Loans to Broker-Dealers |
Total LASG | |||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||
| Loans purchased or originated during the period: | ||||||||||||||||||||||||||||
| Unpaid principal balance | $ | 8,609 | $ | 81,806 | $ | – | $ | 90,415 | $ | 24,400 | $ | 27,846 | $ | – | $ | 52,246 | ||||||||||||
| Net investment basis | 7,861 | 81,806 | – | 89,667 | 21,934 | 27,846 | – | 49,780 | ||||||||||||||||||||
| Loan returns during the period: | ||||||||||||||||||||||||||||
| Yield | 11.89 | % | 6.44 | % | 1.13 | % | 8.68 | % | 9.88 | % | 5.83 | % | 0.50 | % | 7.15 | % | ||||||||||||
| Total Return (2) | 11.95 | % | 6.44 | % | 1.13 | % | 8.71 | % | 9.88 | % | 5.82 | % | 0.50 | % | 7.15 | % | ||||||||||||
| Nine Months Ended March 31, | ||||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||
| Purchased (1) | Originated | Secured Loans to Broker-Dealers |
Total LASG | Purchased | Originated | Secured Loans to Broker-Dealers |
Total LASG | |||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||
| Loans purchased or originated during the period: | ||||||||||||||||||||||||||||
| Unpaid principal balance | $ | 76,511 | $ | 169,831 | $ | – | $ | 246,342 | $ | 88,128 | $ | 78,752 | $ | – | $ | 166,880 | ||||||||||||
| Net investment basis | 67,747 | 169,831 | – | 237,578 | 81,245 | 78,752 | – | 159,997 | ||||||||||||||||||||
| Loan returns during the period: | ||||||||||||||||||||||||||||
| Yield | 11.77 | % | 6.10 | % | 0.82 | % | 8.36 | % | 11.54 | % | 5.75 | % | 0.50 | % | 7.97 | % | ||||||||||||
| Total Return (2) | 11.80 | % | 6.10 | % | 0.82 | % | 8.37 | % | 11.57 | % | 5.74 | % | 0.50 | % | 7.98 | % | ||||||||||||
| Total loans as of period end: | ||||||||||||||||||||||||||||
| Unpaid principal balance | $ | 268,651 | $ | 299,340 | $ | – | $ | 567,991 | $ | 266,223 | $ | 170,085 | $ | 60,000 | $ | 496,308 | ||||||||||||
| Net investment basis | 237,569 | 299,340 | – | 536,909 | 233,650 | 170,085 | 60,000 | 463,735 | ||||||||||||||||||||
| (1) Purchased loan balances include loans held for sale of $973 thousand. | ||||||||||||||||||||||||||||
| (2) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, and other noninterest income recorded during the period divided by the average invested balance, which includes 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. | ||||||||||||||||||||||||||||
2. Deposits increased by $9.9 million, or 1.2% for the quarter, attributable primarily to growth in non-maturity (demand, savings and interest checking, and money market) accounts, which increased by $24.5 million, or 4.9%, offset by a decrease in time deposits of $14.6 million, or 4.3%. For the nine months ended March 31, 2017, deposits increased $49.0 million, or 6.1%, due to growth in non-maturity accounts of $79.2 million, or 17.6%, offset by a decrease in time deposits of $30.1 million, or 8.6%.
3. Shareholders’ equity increased by $2.1 million from June 30, 2016, primarily due to earnings of $8.3 million, offset by $6.9 million in share repurchases (representing 645,238 shares). Additionally, there was stock-based compensation of $689 thousand, a decrease in accumulated other comprehensive loss of $313 thousand and $268 thousand in dividends paid on common stock.
Net income increased by $1.7 million to $3.5 million for the quarter ended March 31, 2017, compared to $1.8 million for the quarter ended March 31, 2016.
1. Net interest and dividend income before provision for loan losses increased by $3.2 million for the quarter ended March 31, 2017, compared to the quarter ended March 31, 2016. The increase is primarily due to higher transactional income on purchased loans and higher average balances in the total loan portfolio. This increase was partially offset by higher rates and volume in the deposit portfolio and the effect of the issuance of subordinated debt.
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, | |||||||||||||||||||
| 2017 | 2016 | ||||||||||||||||||
| Average | Interest | Average | Interest | ||||||||||||||||
| Balance (1) | Income | Yield | Balance (1) | Income | Yield | ||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Community Banking Division | $ | 188,748 | $ | 2,402 | 5.16 | % | $ | 219,001 | $ | 2,592 | 4.76 | % | |||||||
| SBA | 44,538 | 678 | 6.17 | % | 28,193 | 402 | 5.73 | % | |||||||||||
| LASG: | |||||||||||||||||||
| Originated | 256,778 | 4,075 | 6.44 | % | 159,976 | 2,317 | 5.83 | % | |||||||||||
| Purchased | 245,135 | 7,184 | 11.89 | % | 224,710 | 5,518 | 9.88 | % | |||||||||||
| Secured Loans to Broker-Dealers | 27,933 | 78 | 1.13 | % | 60,001 | 75 | 0.50 | % | |||||||||||
| Total LASG | 529,846 | 11,337 | 8.68 | % | 444,687 | 7,910 | 7.15 | % | |||||||||||
| Total | $ | 763,132 | $ | 14,417 | 7.66 | % | $ | 691,881 | $ | 10,904 | 6.34 | % | |||||||
| Nine Months Ended March 31, | |||||||||||||||||||
| 2017 | 2016 | ||||||||||||||||||
| Average | Interest | Average | Interest | ||||||||||||||||
| Balance (1) | Income | Yield | Balance (1) | Income | Yield | ||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Community Banking Division | $ | 199,566 | $ | 7,150 | 4.77 | % | $ | 220,582 | $ | 7,893 | 4.76 | % | |||||||
| SBA | 38,867 | 1,771 | 6.07 | % | 21,590 | 957 | 5.90 | % | |||||||||||
| LASG: | |||||||||||||||||||
| Originated | 219,140 | 10,030 | 6.10 | % | 138,760 | 5,991 | 5.75 | % | |||||||||||
| Purchased | 236,822 | 20,925 | 11.77 | % | 211,519 | 18,347 | 11.54 | % | |||||||||||
| Secured Loans to Broker-Dealers | 41,409 | 256 | 0.82 | % | 60,004 | 225 | 0.50 | % | |||||||||||
| Total LASG | 497,371 | 31,211 | 8.36 | % | 410,283 | 24,563 | 7.97 | % | |||||||||||
| Total | $ | 735,804 | $ | 40,132 | 7.27 | % | $ | 652,455 | $ | 33,413 | 6.82 | % | |||||||
| (1) Includes loans held for sale. | |||||||||||||||||||
The various components of transactional income are set forth in the table below entitled “Total Return on Purchased Loans.” When compared to the three and nine months ended March 31, 2016, transactional income increased by $1.4 million and $831 thousand, respectively. The total return on purchased loans for the three and nine months ended March 31, 2017 was 11.95% and 11.80%, respectively. The increase over the prior comparable periods was primarily due to higher average balances and transactional income in the three and nine months ended March 31, 2017. The following table details the total return on purchased loans:
| Total Return on Purchased Loans | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2017 | 2016 | ||||||||||
| Income | Return (1) | Income | Return (1) | ||||||||
| (Dollars in thousands) | |||||||||||
| Regularly scheduled interest and accretion | $ | 4,914 | 8.13 | % | $ | 4,606 | 8.25 | % | |||
| Transactional income: | |||||||||||
| Gain on loan sales | – | 0.00 | % | – | 0.00 | % | |||||
| Gain on sale of real estate owned | 36 | 0.06 | % | 1 | 0.00 | % | |||||
| Other noninterest income | – | 0.00 | % | – | 0.00 | % | |||||
| Accelerated accretion and loan fees | 2,270 | 3.76 | % | 912 | 1.63 | % | |||||
| Total transactional income | 2,306 | 3.82 | % | 913 | 1.63 | % | |||||
| Total | $ | 7,220 | 11.95 | % | $ | 5,519 | 9.88 | % | |||
| Nine Months Ended March 31, | |||||||||||
| 2017 | 2016 | ||||||||||
| Income | Return (1) | Income | Return (1) | ||||||||
| (Dollars in thousands) | |||||||||||
| Regularly scheduled interest and accretion | $ | 14,383 | 8.09 | % | $ | 12,615 | 7.94 | % | |||
| Transactional income: | |||||||||||
| Gain on loan sales | – | 0.00 | % | – | 0.00 | % | |||||
| Gain on sale of real estate owned | 55 | 0.03 | % | 23 | 0.01 | % | |||||
| Other noninterest income | – | 0.00 | % | 11 | 0.01 | % | |||||
| Accelerated accretion and loan fees | 6,542 | 3.68 | % | 5,732 | 3.61 | % | |||||
| Total transactional income | 6,597 | 3.71 | % | 5,766 | 3.63 | % | |||||
| Total | $ | 20,980 | 11.80 | % | $ | 18,381 | 11.57 | % | |||
| (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 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 $273 thousand for the quarter ended March 31, 2017, compared to the quarter ended March 31, 2016, principally due to the following:
- An increase in gain on sale of other loans of $365 thousand, due to the sale of a Community Banking Division commercial loan portfolio;
- An increase in fees for other services to customers of $88 thousand, due to an increase in SBA loan servicing fees; and
- An increase in gain recognized on real estate owned and other repossessed collateral, net of $74 thousand, due to the sale of Community Banking Division real estate owned (“REO”).
- The increases in noninterest income were partially offset by a decrease in gain on sale of SBA loans of $254 thousand, due to a lower volume sold in the quarter.
3. Noninterest expense increased by $430 thousand for the quarter ended March 31, 2017, compared to the quarter ended March 31, 2016, primarily due to the following:
- An increase in loan expense of $431 thousand, largely driven by the expense related to increased loan acquisition and refinance activity, as well as increased REO activity and expense in the period; and
- An increase in salaries and employee benefits of $357 thousand, primarily due to severance expense of $304 thousand recognized in the three months ended March 31, 2017.
- The increases in noninterest expense were partially offset by a decrease in other noninterest expense of $390 thousand, primarily resulting from a mortgage insurance recovery from a legacy mortgage insurance premium plan of $167 thousand and a decrease in impairment on servicing assets as no impairment was booked in the three months ended March 31, 2017.
As of March 31, 2017, nonperforming assets totaled $18.6 million, or 1.81% of total assets, as compared to $13.3 million, or 1.32% of total assets, as of December 31, 2016, and $9.5 million, or 0.96% of total assets, as of June 30, 2016. The increase of $5.3 million from December 31, 2016 is primarily due to three loans placed on non-accrual totaling $4.6 million.
As of March 31, 2017, past due loans totaled $24.1 million, or 3.25% of total loans, as compared to $21.9 million, or 2.85% of total loans, as of December 31, 2016, and $6.9 million, or 1.00% of total loans as of June 30, 2016. The increase of $2.2 million from December 31, 2016 includes two loans totaling $2.1 million which were 30-59 days past due as of March 31, 2017, and have been paid current in April.
As of March 31, 2017, the Company’s Tier 1 Leverage Ratio was 12.5%, compared to 13.3% at June 30, 2016, and the Total Capital Ratio was 19.3%, compared to 20.4% at June 30, 2016. The decreases resulted primarily from loan growth and the effect of purchases under the Company’s share repurchase program.
Investor Call Information
Richard Wayne, Chief Executive Officer of Northeast Bancorp, and Brian Shaughnessy, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Wednesday, April 26th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 10568713. The call will be available via live webcast, which can be viewed by accessing the Company’s website at www.northeastbank.com and clicking on the About Us – Investor Relations section. To listen to the webcast, attendees are encouraged to visit the website at least fifteen minutes early to register, download and install any necessary audio software. Please note there will also be a slide presentation that will accompany the webcast. For those who cannot listen to the live broadcast, a replay will be available online for one year at www.northeastbank.com.
About Northeast Bancorp
Northeast Bancorp (NASDAQ:NBN) is the holding company for Northeast Bank, a full-service bank headquartered in Lewiston, Maine. We offer traditional banking services through the Community Banking Division, which operates ten full-service branches that serve customers located in western, central, and southern Maine. From our Maine and Boston locations, we also lend throughout the New England area. Our Loan Acquisition and Servicing Group (“LASG”) purchases and originates commercial loans on a nationwide basis. In addition, our SBA Division supports the needs of growing businesses nationally. ableBanking, a division of Northeast Bank, offers savings products to consumers online. Information regarding Northeast Bank can be found on its website 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, and efficiency ratio. Northeast’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
Forward-Looking Statements
Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Northeast believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates and real estate values; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; the risk that the Company may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Company’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K and updated by the Company’s Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. These statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.
NBN-F
| NORTHEAST BANCORP AND SUBSIDIARY | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (Unaudited) | |||||||
| (Dollars in thousands, except share and per share data) | |||||||
| March 31, 2017 | June 30, 2016 | ||||||
| Assets | |||||||
| Cash and due from banks | $ | 3,559 | $ | 2,459 | |||
| Short-term investments | 143,883 | 148,698 | |||||
| Total cash and cash equivalents | 147,442 | 151,157 | |||||
| Available-for-sale securities, at fair value | 98,865 | 100,572 | |||||
| Residential real estate loans held for sale | 1,424 | 6,449 | |||||
| SBA loans held for sale | 3,210 | 1,070 | |||||
| Total loans held for sale | 4,634 | 7,519 | |||||
| Loans | |||||||
| Commercial real estate | 479,260 | 426,568 | |||||
| Residential real estate | 103,254 | 113,962 | |||||
| Commercial and industrial | 154,343 | 145,956 | |||||
| Consumer | 4,871 | 5,950 | |||||
| Total loans | 741,728 | 692,436 | |||||
| Less: Allowance for loan losses | 3,375 | 2,350 | |||||
| Loans, net | 738,353 | 690,086 | |||||
| Premises and equipment, net | 7,002 | 7,801 | |||||
| Real estate owned and other repossessed collateral, net | 3,761 | 1,652 | |||||
| Federal Home Loan Bank stock, at cost | 1,938 | 2,408 | |||||
| Intangible assets, net | 1,408 | 1,732 | |||||
| Bank owned life insurance | 16,065 | 15,725 | |||||
| Other assets | 7,578 | 7,501 | |||||
| Total assets | $ | 1,027,046 | $ | 986,153 | |||
| Liabilities and Shareholders’ Equity | |||||||
| Deposits | |||||||
| Demand | $ | 72,369 | $ | 66,686 | |||
| Savings and interest checking | 108,507 | 107,218 | |||||
| Money market | 347,658 | 275,437 | |||||
| Time | 320,945 | 351,091 | |||||
| Total deposits | 849,479 | 800,432 | |||||
| Federal Home Loan Bank advances | 20,017 | 30,075 | |||||
| Subordinated debt | 23,544 | 23,331 | |||||
| Capital lease obligation | 938 | 1,128 | |||||
| Other liabilities | 14,393 | 14,596 | |||||
| Total liabilities | 908,371 | 869,562 | |||||
| Commitments and contingencies | – | – | |||||
| Shareholders’ equity | |||||||
| Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares | |||||||
| issued and outstanding at March 31, 2017 and June 30, 2016 | – | – | |||||
| Voting common stock, $1.00 par value, 25,000,000 shares authorized; | |||||||
| 7,824,085 and 8,089,790 shares issued and outstanding at March 31, 2017 and June 30, 2016, respectively | 7,824 | 8,089 | |||||
| Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; | |||||||
| 991,194 and 1,227,683 shares issued and outstanding at March 31, 2017 and June 30, 2016, respectively | 991 | 1,228 | |||||
| Additional paid-in capital | 77,249 | 83,020 | |||||
| Retained earnings | 34,204 | 26,160 | |||||
| Accumulated other comprehensive loss | (1,593 | ) | (1,906 | ) | |||
| Total shareholders’ equity | 118,675 | 116,591 | |||||
| Total liabilities and shareholders’ equity | $ | 1,027,046 | $ | 986,153 | |||
| NORTHEAST BANCORP AND SUBSIDIARY | |||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||
| (Unaudited) | |||||||||||||
| (Dollars in thousands, except share and per share data) | |||||||||||||
| Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||
| Interest and dividend income: | |||||||||||||
| Interest and fees on loans | $ | 14,417 | $ | 10,904 | $ | 40,132 | $ | 33,413 | |||||
| Interest on available-for-sale securities | 261 | 236 | 748 | 700 | |||||||||
| Other interest and dividend income | 282 | 119 | 669 | 295 | |||||||||
| Total interest and dividend income | 14,960 | 11,259 | 41,549 | 34,408 | |||||||||
| Interest expense: | |||||||||||||
| Deposits | 1,855 | 1,566 | 5,407 | 4,356 | |||||||||
| Federal Home Loan Bank advances | 159 | 255 | 634 | 774 | |||||||||
| Wholesale repurchase agreements | – | – | – | 65 | |||||||||
| Short-term borrowings | – | 5 | – | 19 | |||||||||
| Subordinated debt | 475 | 164 | 1,401 | 476 | |||||||||
| Obligation under capital lease agreements | 12 | 15 | 39 | 49 | |||||||||
| Total interest expense | 2,501 | 2,005 | 7,481 | 5,739 | |||||||||
| Net interest and dividend income before provision for loan losses | 12,459 | 9,254 | 34,068 | 28,669 | |||||||||
| Provision for loan losses | 384 | 236 | 1,205 | 1,301 | |||||||||
| Net interest and dividend income after provision for loan losses | 12,075 | 9,018 | 32,863 | 27,368 | |||||||||
| Noninterest income: | |||||||||||||
| Fees for other services to customers | 516 | 428 | 1,405 | 1,264 | |||||||||
| Gain on sales of residential loans held for sale | 281 | 335 | 1,160 | 1,292 | |||||||||
| Gain on sales of SBA loans | 951 | 1,205 | 3,411 | 2,558 | |||||||||
| Gain on sale of other loans | 365 | – | 365 | – | |||||||||
| Gain (loss) recognized on real estate owned and other repossessed collateral, net | 20 | (54 | ) | 9 | (127 | ) | |||||||
| Bank-owned life insurance income | 113 | 112 | 341 | 336 | |||||||||
| Other noninterest income | 62 | 9 | 115 | 39 | |||||||||
| Total noninterest income | 2,308 | 2,035 | 6,806 | 5,362 | |||||||||
| Noninterest expense: | |||||||||||||
| Salaries and employee benefits | 5,203 | 4,846 | 15,678 | 13,956 | |||||||||
| Occupancy and equipment expense | 1,299 | 1,327 | 3,781 | 3,937 | |||||||||
| Professional fees | 370 | 348 | 1,265 | 1,042 | |||||||||
| Data processing fees | 455 | 394 | 1,286 | 1,109 | |||||||||
| Marketing expense | 89 | 64 | 272 | 200 | |||||||||
| Loan acquisition and collection expense | 728 | 297 | 1,502 | 961 | |||||||||
| FDIC insurance premiums | 78 | 125 | 224 | 354 | |||||||||
| Intangible asset amortization | 107 | 108 | 324 | 369 | |||||||||
| Other noninterest expense | 513 | 903 | 2,093 | 2,489 | |||||||||
| Total noninterest expense | 8,842 | 8,412 | 26,425 | 24,417 | |||||||||
| Income before income tax expense | 5,541 | 2,641 | 13,244 | 8,313 | |||||||||
| Income tax expense | 2,080 | 832 | 4,932 | 2,892 | |||||||||
| Net income | 3,461 | 1,809 | 8,312 | 5,421 | |||||||||
| Weighted-average shares outstanding: | |||||||||||||
| Basic | 8,830,442 | 9,456,198 | 8,923,280 | 9,526,302 | |||||||||
| Diluted | 8,893,534 | 9,459,611 | 8,963,483 | 9,531,747 | |||||||||
| Earnings per common share: | |||||||||||||
| Basic | $ | 0.39 | $ | 0.19 | $ | 0.93 | $ | 0.57 | |||||
| Diluted | 0.39 | 0.19 | 0.93 | 0.57 | |||||||||
| Cash dividends declared per common share | $ | 0.01 | $ | 0.01 | $ | 0.03 | $ | 0.03 | |||||
| NORTHEAST BANCORP AND SUBSIDIARY | |||||||||||||||||
| CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||
| 2017 | 2016 | ||||||||||||||||
| Interest | Average | Interest | Average | ||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||
| Assets: | |||||||||||||||||
| Interest-earning assets: | |||||||||||||||||
| Investment securities | $ | 96,868 | $ | 261 | 1.09 | % | $ | 100,904 | $ | 236 | 0.94 | % | |||||
| Loans (1) (2) (3) | 763,132 | 14,435 | 7.67 | % | 691,881 | 10,922 | 6.35 | % | |||||||||
| Federal Home Loan Bank stock | 1,938 | 24 | 5.02 | % | 2,571 | 22 | 3.44 | % | |||||||||
| Short-term investments (4) | 128,082 | 258 | 0.82 | % | 80,789 | 97 | 0.48 | % | |||||||||
| Total interest-earning assets | 990,020 | 14,978 | 6.14 | % | 876,145 | 11,277 | 5.18 | % | |||||||||
| Cash and due from banks | 2,875 | 3,841 | |||||||||||||||
| Other non-interest earning assets | 31,606 | 34,045 | |||||||||||||||
| Total assets | $ | 1,024,501 | $ | 914,031 | |||||||||||||
| Liabilities & Stockholders’ Equity: | |||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||
| NOW accounts | $ | 69,773 | $ | 49 | 0.28 | % | $ | 65,985 | $ | 42 | 0.28 | % | |||||
| Money market accounts | 338,662 | 807 | 0.97 | % | 223,835 | 491 | 0.88 | % | |||||||||
| Savings accounts | 36,940 | 13 | 0.14 | % | 36,453 | 12 | 0.13 | % | |||||||||
| Time deposits | 329,442 | 986 | 1.21 | % | 357,857 | 1,021 | 1.15 | % | |||||||||
| Total interest-bearing deposits | 774,817 | 1,855 | 0.97 | % | 684,130 | 1,566 | 0.92 | % | |||||||||
| Short-term borrowings | – | – | 0.00 | % | 2,136 | 5 | 0.94 | % | |||||||||
| Federal Home Loan Bank advances | 20,021 | 159 | 3.22 | % | 30,117 | 255 | 3.41 | % | |||||||||
| Subordinated debt | 23,506 | 475 | 8.20 | % | 8,746 | 164 | 7.54 | % | |||||||||
| Capital lease obligations | 961 | 12 | 5.06 | % | 1,211 | 15 | 4.98 | % | |||||||||
| Total interest-bearing liabilities | 819,305 | 2,501 | 1.24 | % | 726,340 | 2,005 | 1.11 | % | |||||||||
| Non-interest bearing liabilities: | |||||||||||||||||
| Demand deposits and escrow accounts | 81,901 | 66,384 | |||||||||||||||
| Other liabilities | 6,659 | 6,429 | |||||||||||||||
| Total liabilities | 907,865 | 799,153 | |||||||||||||||
| Stockholders’ equity | 116,636 | 114,878 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,024,501 | $ | 914,031 | |||||||||||||
| Net interest income (5) | $ | 12,477 | $ | 9,272 | |||||||||||||
| Interest rate spread | 4.90 | % | 4.07 | % | |||||||||||||
| Net interest margin (6) | 5.11 | % | 4.26 | % | |||||||||||||
| (1) Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate. | |||||||||||||||||
| (2) Includes loans held for sale. | |||||||||||||||||
| (3) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income. | |||||||||||||||||
| (4) Short term investments include FHLB overnight deposits and other interest-bearing deposits. | |||||||||||||||||
| (5) Includes tax exempt interest income of $18 thousand for the three months ended March 31, 2017 and March 31, 2016. | |||||||||||||||||
| (6) Net interest margin is calculated as net interest income divided by total interest-earning assets. | |||||||||||||||||
| NORTHEAST BANCORP AND SUBSIDIARY | |||||||||||||||||
| CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Nine Months Ended March 31, | |||||||||||||||||
| 2017 | 2016 | ||||||||||||||||
| Interest | Average | Interest | Average | ||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||
| Assets: | |||||||||||||||||
| Interest-earning assets: | |||||||||||||||||
| Investment securities | $ | 94,824 | $ | 748 | 1.05 | % | $ | 102,890 | $ | 700 | 0.91 | % | |||||
| Loans (1) (2) (3) | 735,804 | 40,185 | 7.28 | % | 652,455 | 33,467 | 6.83 | % | |||||||||
| Federal Home Loan Bank stock | 2,250 | 70 | 4.14 | % | 3,089 | 90 | 3.88 | % | |||||||||
| Short-term investments (4) | 132,280 | 599 | 0.60 | % | 84,258 | 205 | 0.32 | % | |||||||||
| Total interest-earning assets | 965,158 | 41,602 | 5.74 | % | 842,692 | 34,462 | 5.44 | % | |||||||||
| Cash and due from banks | 2,860 | 3,405 | |||||||||||||||
| Other non-interest earning assets | 32,554 | 35,345 | |||||||||||||||
| Total assets | $ | 1,000,572 | $ | 881,442 | |||||||||||||
| Liabilities & Stockholders’ Equity: | |||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||
| NOW accounts | $ | 70,814 | $ | 152 | 0.29 | % | $ | 67,078 | $ | 130 | 0.26 | % | |||||
| Money market accounts | 314,259 | 2,242 | 0.95 | % | 197,962 | 1,273 | 0.86 | % | |||||||||
| Savings accounts | 35,964 | 37 | 0.14 | % | 36,027 | 36 | 0.13 | % | |||||||||
| Time deposits | 327,664 | 2,976 | 1.21 | % | 347,847 | 2,917 | 1.12 | % | |||||||||
| Total interest-bearing deposits | 748,701 | 5,407 | 0.96 | % | 648,914 | 4,356 | 0.89 | % | |||||||||
| Short-term borrowings | – | – | 0.00 | % | 2,029 | 19 | 1.25 | % | |||||||||
| Federal Home Loan Bank advances | 25,768 | 634 | 3.28 | % | 33,207 | 839 | 3.36 | % | |||||||||
| Subordinated debt | 23,431 | 1,401 | 7.97 | % | 8,698 | 476 | 7.28 | % | |||||||||
| Capital lease obligations | 1,024 | 39 | 5.07 | % | 1,272 | 49 | 5.13 | % | |||||||||
| Total interest-bearing liabilities | 798,924 | 7,481 | 1.25 | % | 694,120 | 5,739 | 1.10 | % | |||||||||
| Non-interest bearing liabilities: | |||||||||||||||||
| Demand deposits and escrow accounts | 79,352 | 66,619 | |||||||||||||||
| Other liabilities | 7,738 | 6,720 | |||||||||||||||
| Total liabilities | 886,014 | 767,459 | |||||||||||||||
| Stockholders’ equity | 114,558 | 113,983 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,000,572 | $ | 881,442 | |||||||||||||
| Net interest income (5) | $ | 34,121 | $ | 28,723 | |||||||||||||
| Interest rate spread | 4.49 | % | 4.34 | % | |||||||||||||
| Net interest margin (6) | 4.71 | % | 4.54 | % | |||||||||||||
| (1) Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate. | |||||||||||||||||
| (2) Includes loans held for sale. | |||||||||||||||||
| (3) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income. | |||||||||||||||||
| (4) Short term investments include FHLB overnight deposits and other interest-bearing deposits. | |||||||||||||||||
| (5) Includes tax exempt interest income of $53 thousand and $54 thousand for the nine months ended March 31, 2017 and March 31, 2016, respectively. | |||||||||||||||||
| (6) Net interest margin is calculated as net interest income divided by total interest-earning assets. | |||||||||||||||||
| NORTHEAST BANCORP AND SUBSIDIARY | |||||||||||||||||||
| SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| (Dollars in thousands, except share and per share data) | |||||||||||||||||||
| Three Months Ended: | |||||||||||||||||||
| March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | |||||||||||||||
| Net interest income | $ | 12,459 | $ | 11,833 | $ | 9,775 | $ | 10,713 | $ | 9,254 | |||||||||
| Provision for loan losses | 384 | 628 | 193 | 317 | 236 | ||||||||||||||
| Noninterest income | 2,308 | 2,690 | 1,808 | 2,411 | 2,035 | ||||||||||||||
| Noninterest expense | 8,842 | 8,956 | 8,626 | 9,396 | 8,412 | ||||||||||||||
| Net income | 3,461 | 3,100 | 1,751 | 2,199 | 1,809 | ||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||
| Basic | 8,830,442 | 8,831,235 | 9,106,144 | 9,319,522 | 9,456,198 | ||||||||||||||
| Diluted | 8,893,534 | 8,864,618 | 9,133,383 | 9,342,439 | 9,459,611 | ||||||||||||||
| Earnings per common share: | |||||||||||||||||||
| Basic | $ | 0.39 | $ | 0.35 | $ | 0.19 | $ | 0.24 | $ | 0.19 | |||||||||
| Diluted | 0.39 | 0.35 | 0.19 | 0.24 | 0.19 | ||||||||||||||
| Dividends per common share | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||||||
| Return on average assets | 1.37 | % | 1.24 | % | 0.70 | % | 0.93 | % | 0.80 | % | |||||||||
| Return on average equity | 12.03 | % | 10.92 | % | 6.07 | % | 7.67 | % | 6.33 | % | |||||||||
| Net interest rate spread (1) | 4.90 | % | 4.72 | % | 3.86 | % | 4.55 | % | 4.06 | % | |||||||||
| Net interest margin (2) | 5.11 | % | 4.94 | % | 4.07 | % | 4.73 | % | 4.25 | % | |||||||||
| Efficiency ratio (non-GAAP) (3) | 59.88 | % | 61.67 | % | 74.47 | % | 71.59 | % | 74.52 | % | |||||||||
| Noninterest expense to average total assets | 3.50 | % | 3.59 | % | 3.47 | % | 3.97 | % | 3.70 | % | |||||||||
| Average interest-earning assets to average interest-bearing liabilities | 120.84 | % | 120.73 | % | 120.86 | % | 119.99 | % | 120.62 | % | |||||||||
| As of: | |||||||||||||||||||
| March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | |||||||||||||||
| Nonperforming loans: | |||||||||||||||||||
| Originated portfolio: | |||||||||||||||||||
| Residential real estate | $ | 3,265 | $ | 2,827 | $ | 3,273 | $ | 2,613 | $ | 3,566 | |||||||||
| Commercial real estate | 420 | 396 | 361 | 474 | 602 | ||||||||||||||
| Home equity | 48 | 48 | 48 | 48 | – | ||||||||||||||
| Commercial and industrial | 2,636 | 2,659 | 347 | 17 | 2 | ||||||||||||||
| Consumer | 65 | 48 | 121 | 163 | 216 | ||||||||||||||
| Total originated portfolio | 6,434 | 5,978 | 4,150 | 3,315 | 4,386 | ||||||||||||||
| Total purchased portfolio | 8,388 | 4,219 | 4,773 | 4,512 | 4,364 | ||||||||||||||
| Total nonperforming loans | 14,822 | 10,197 | 8,923 | 7,827 | 8,750 | ||||||||||||||
| Real estate owned and other possessed collateral, net | 3,761 | 3,145 | 3,774 | 1,652 | 690 | ||||||||||||||
| Total nonperforming assets | $ | 18,583 | $ | 13,342 | $ | 12,697 | $ | 9,479 | $ | 9,440 | |||||||||
| Past due loans to total loans | 3.25 | % | 2.85 | % | 1.36 | % | 1.00 | % | 2.52 | % | |||||||||
| Nonperforming loans to total loans | 2.00 | % | 1.33 | % | 1.24 | % | 1.13 | % | 1.25 | % | |||||||||
| Nonperforming assets to total assets | 1.81 | % | 1.32 | % | 1.29 | % | 0.96 | % | 1.02 | % | |||||||||
| Allowance for loan losses to total loans | 0.46 | % | 0.41 | % | 0.35 | % | 0.34 | % | 0.32 | % | |||||||||
| Allowance for loan losses to nonperforming loans | 22.77 | % | 30.47 | % | 28.08 | % | 30.02 | % | 25.41 | % | |||||||||
| Commercial real estate loans to risk-based capital (4) | 181.83 | % | 197.11 | % | 179.96 | % | 174.12 | % | 217.09 | % | |||||||||
| Net loans to core deposits (5) | 87.46 | % | 92.04 | % | 90.22 | % | 87.15 | % | 93.48 | % | |||||||||
| Purchased loans to total loans, including held for sale | 31.87 | % | 32.91 | % | 32.54 | % | 34.25 | % | 33.17 | % | |||||||||
| Equity to total assets | 11.55 | % | 11.35 | % | 11.32 | % | 11.82 | % | 12.41 | % | |||||||||
| Common equity tier 1 capital ratio | 15.80 | % | 14.94 | % | 15.34 | % | 17.97 | % | 17.46 | % | |||||||||
| Total capital ratio | 19.30 | % | 18.31 | % | 18.81 | % | 20.39 | % | 17.78 | % | |||||||||
| Tier 1 leverage capital ratio | 12.46 | % | 12.60 | % | 12.25 | % | 13.27 | % | 13.57 | % | |||||||||
| Total shareholders’ equity | $ | 118,675 | $ | 114,942 | $ | 111,553 | $ | 116,591 | $ | 114,526 | |||||||||
| Less: Preferred stock | – | – | – | – | – | ||||||||||||||
| Common shareholders’ equity | 118,675 | 114,942 | 111,553 | 116,591 | 114,526 | ||||||||||||||
| Less: Intangible assets (6) | (3,898 | ) | (3,856 | ) | (3,797 | ) | (3,503 | ) | (3,469 | ) | |||||||||
| Tangible common shareholders’ equity (non-GAAP) | $ | 114,777 | $ | 111,086 | $ | 107,756 | $ | 113,088 | $ | 111,057 | |||||||||
| Common shares outstanding | 8,815,279 | 8,831,235 | 8,831,235 | 9,317,473 | 9,330,873 | ||||||||||||||
| Book value per common share | $ | 13.46 | $ | 13.02 | $ | 12.63 | $ | 12.51 | $ | 12.27 | |||||||||
| Tangible book value per share (non-GAAP) (7) | 13.02 | 12.58 | 12.20 | 12.14 | 11.90 | ||||||||||||||
| (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 non-interest expense divided by the sum of net interest income (before the loan loss provision) plus non-interest income. | |||||||||||||||||||
| (4) For purposes of calculating this ratio, commercial real estate includes all non-owner occupied commercial real estate loans defined as such by regulatory guidance, including all land development and construction loans. | |||||||||||||||||||
| (5) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held-for-sale. | |||||||||||||||||||
| (6) Includes the core deposit intangible asset, as well as the servicing rights asset which is included in other assets in the consolidated balance sheets. | |||||||||||||||||||
| (7) Tangible book value per share represents total shareholders’ equity less the sum of preferred stock and intangible assets divided by common shares outstanding. | |||||||||||||||||||
CONTACT: For More Information: Brian Shaughnessy, CFO Northeast Bank, 500 Canal Street, Lewiston, ME 04240 207.786.3245 ext. 3220 www.northeastbank.com