NBN
$16.93
Northeast Bncp
($.43)
(2.48%)
Earnings Details
3rd Quarter March 2020
Wednesday, April 22, 2020 4:20:00 PM
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Summary

Northeast Bncp (NBN) Recent Earnings

Northeast Bncp (NBN) reported 3rd Quarter March 2020 earnings of $0.21 per share on revenue of $21.9 million. The consensus earnings estimate was $0.39 per share on revenue of $17.2 million. Revenue fell 0.4% compared to the same quarter a year ago.

Results
Reported Earnings
$0.21
Earnings Whisper
-
Consensus Estimate
$0.39
Reported Revenue
$21.9 Mil
Revenue Estimate
$17.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Northeast Bank Reports Third Quarter Results and Declares Dividend

PORTLAND, Maine, April 22, 2020 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $1.9 million, or $0.21 per diluted common share, for the quarter ended March 31, 2020, compared to net income of $4.8 million, or $0.52 per diluted common share, for the quarter ended March 31, 2019. Net income for the nine months ended March 31, 2020 was $11.5 million, or $1.25 per diluted common share, compared to $14.5 million, or $1.58 per diluted common share, for the nine months ended March 31, 2019. Results for the quarter and nine months ended March 31, 2020 were negatively impacted by (a) an increased provision for loan losses of $3.3 million ($0.26 per diluted common share), of which $3.0 million was allocated to the SBA portfolio, and (b) a non-recurring income tax expense of $554 thousand ($0.06 per diluted common share) related to the recapture of tax reserve for loan losses triggered by the repurchase of common stock during the quarter ended March 31, 2020.

On April 22, 2020, the Board of Directors declared a cash dividend of $0.01 per share, payable on May 21, 2020, to shareholders of record as of May 7, 2020.

“Our thoughts are with the individuals, families and communities, healthcare workers and first responders affected by COVID-19. We are pleased to participate in the Paycheck Protection Program, having originated in the initial phase 194 loans totaling $37.2 million,” said Rick Wayne, Chief Executive Officer. Mr. Wayne continued, “The Bank is working with our customers impacted by COVID-19 to provide effective solutions during the crisis. While we did not envision that the market event would be this global pandemic, our longstanding credit discipline has generated a strong loan portfolio with a weighted average loan-to-value of approximately 53%. For more information on the Bank’s asset quality, refer to https://investor.northeastbank.com/investor-relations.”

Discussing results, Mr. Wayne said “Our Loan Acquisition and Servicing Group produced $113.8 million of loans, including record purchases of $65.0 million and originations of $48.8 million during the quarter.” Mr. Wayne continued, “We are pleased to report that the remaining regulatory conditions from the 2010 merger have been waived. The Bank’s Tier 1 leverage capital ratio limit has been reduced from 10% to 9%, and Total capital ratio limit has been reduced from 13.5% to 12%. With this change, we are in conformity with many banks’ capital limits and now have more capacity to prudently grow our balance sheet.”

As of March 31, 2020, total assets were $1.23 billion, an increase of $77.6 million, or 6.7%, from total assets of $1.15 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 nine months ended March 31, 2020:

 Loan Portfolio Changes
 Three Months Ended March 31, 2020
 March 31, 2020 Balance December 31, 2019 Balance Change ($) Change (%)
        
 (Dollars in thousands)
LASG Purchased$395,944 $367,625 $28,319   7.70%
LASG Originated 512,964  497,386  15,578   3.13%
SBA 48,306  54,572  (6,266)  (11.48%)
Community Banking 76,706  81,195  (4,489)  (5.53%)
Total$1,033,920 $1,000,778 $33,142   3.31%
              
  
 Nine Months Ended March 31, 2020
 March 31, 2020 Balance June 30, 2019 Balance Change ($) Change (%)
        
 (Dollars in thousands)
LASG Purchased$395,944 $326,640 $69,304   21.22%
LASG Originated 512,964  493,413  19,551   3.96%
SBA 48,306  63,053  (14,747)  (23.39%)
Community Banking 76,706  91,954  (15,248)  (16.58%)
Total$1,033,920 $975,060 $58,860   6.04%

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended March 31, 2020 totaled $113.8 million, which consisted of $65.0 million of purchased loans, at an average price of 91.8% of unpaid principal balance, and $48.8 million of originated loans. The Bank sold the guaranteed portion of Small Business Administration ("SBA") loans totaling $4.1 million in the secondary market, all of which was originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $6.3 million for the quarter.

An overview of the Bank’s LASG portfolio follows:

 LASG Portfolio
 Three Months Ended March 31,
 2020 2019
 Purchased Originated Total LASG Purchased Originated Total LASG
            
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$70,860  $48,772  $119,632  $4,675  $84,546  $89,221 
Net investment basis 65,056   48,772   113,828   4,604   84,546   89,150 
                  
Loan returns during the period:                 
Yield 10.05%  7.35%  8.50%  9.49%  7.87%  8.56%
Total Return on Purchased Loans (1) 10.05%  7.35%  8.50%  10.22%  7.87%  8.87%
                  
 
Nine Months Ended March 31,
 2020 2019
 Purchased Originated Total LASG Purchased Originated Total LASG
            
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$167,977  $187,872  $355,849  $94,423  $219,348  $313,771 
Net investment basis 158,518   187,872   346,390   88,741   219,348   308,089 
                  
Loan returns during the period:                 
Yield 9.85%  7.53%  8.51%  9.75%  7.64%  8.54%
Total Return on Purchased Loans (1) 10.00%  7.53%  8.57%  10.00%  7.64%  8.65%
                  
Total loans as of period end:                 
Unpaid principal balance$432,920  $512,964  $945,884  $354,655  $478,020  $832,675 
Net investment basis 395,944   512,964   908,908   320,326   478,020   798,346 

(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 increased by $70.1 million, or 7.4%, from June 30, 2019, attributable primarily to increases in time deposits of $39.7 million, or 7.9%, money market accounts of $15.4 million, or 5.7%, and savings and interest checking accounts of $13.4 million, or 13.2%.

3. Shareholders’ equity increased by $5.9 million, or 3.9%, from June 30, 2019, primarily due to net income of $11.5 million, partially offset by the repurchase of 416,700 shares at a weighted average share price of $12.83, which resulted in a $5.3 million reduction in shareholders’ equity.

Net income decreased by $3.0 million to $1.9 million for the quarter ended March 31, 2020, compared to net income of $4.8 million for the quarter ended March 31, 2019.

1. Net interest and dividend income before provision for loan losses increased by $1.3 million to $16.3 million for the quarter ended March 31, 2020, compared to $15.0 million for the quarter ended March 31, 2019. The increase was primarily due to higher average balances in the LASG portfolio, higher transactional interest income in the purchased portfolio, lower deposit interest expense due to lower average balances and rates, and a decrease in interest expense on subordinated debt from the redemption of trust preferred securities in May 2019. This activity was partially offset by lower average balances and yields from short-term investments, the SBA portfolio, and the Community Banking Portfolio.

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,  
 2020 2019  
 Average Interest   Average Interest    
 Balance (1) Income Yield Balance (1) Income Yield  
              
 (Dollars in thousands)  
Community Banking$79,325 $1,036 5.25% $102,850 $1,348 5.32%  
SBA 53,643  952 7.14%  69,247  1,366 8.00%  
LASG:                 
Originated 497,773  9,092 7.35%  437,499  8,490 7.87%  
Purchased 367,486  9,186 10.05%  324,414  7,592 9.49%  
Total LASG 865,259  18,278 8.50%  761,913  16,082 8.56%  
  Total$998,227 $20,266 8.17% $934,010 $18,796 8.16%  
                    
 

Nine Months Ended March 31,
  
 2020 2019  
 Average Interest   Average Interest    
 Balance (1) Income Yield Balance (1) Income Yield  
              
 (Dollars in thousands)  
Community Banking$85,254 $3,494 5.45% $110,566 $4,319 5.20%  
SBA 57,939  3,424 7.87%  71,309  4,091 7.64%  
LASG:                 
Originated 474,568  26,834 7.53%  418,747  24,031 7.64%  
Purchased 347,278  25,707 9.85%  311,780  22,815 9.75%  
Total LASG 821,846  52,541 8.51%  730,527  46,846 8.54%  
  Total$965,039 $59,459 8.20% $912,402 $55,256 8.07%  

  (1)  Includes loans held for sale.
 


The components of total income on purchased loans are set forth in the table below entitled “Total Return on Purchased Loans.” Wh­en compared to the quarter ended March 31, 2019, transactional income for the quarter ended March 31, 2020 increased by $509 thousand, while regularly scheduled interest and accretion increased by $503 thousand due to the increase in average balances. The total return on p­­­­­­­­urchased loans for the quarter ended March 31, 2020 was 10.1%, a decrease from 10.2% for the quarter ended March 31, 2019. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended March 31,
 2020 2019
 Income Return (1) Income Return (1)
        
 (Dollars in thousands)
Regularly scheduled interest and accretion$6,731 7.36% $6,228 7.79%
Transactional income:         
Gain on loan sales - 0.00%  582 0.73%
Gain on real estate owned - 0.00%  - 0.00%
Other noninterest income - 0.00%  - 0.00%
Accelerated accretion and loan fees 2,455 2.69%  1,364 1.70%
Total transactional income 2,455 2.69%  1,946 2.43%
   Total$9,186 10.05% $8,174 10.22%
            
  
 Nine Months Ended March 31,
 2020 2019
 Income Return (1) Income Return (1)
        
 (Dollars in thousands)
Regularly scheduled interest and accretion$19,311 7.40% $17,849 7.63%
Transactional income:         
Gain on loan sales - 0.00%  582 0.25%
Gain on real estate owned 395 0.15%  - 0.00%
Other noninterest income - 0.00%  - 0.00%
Accelerated accretion and loan fees 6,396 2.45%  4,966 2.12%
Total transactional income 6,791 2.60%  5,548 2.37%
   Total$26,102 10.00% $23,397 10.00%
 
(1)  The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales and gains on real estate owned recorded during the period divided by the average invested balance, which includes purchased loans held for sale, on an annualized basis.  The total return does not include the effect of purchased loan charge-offs or recoveries in the periods shown. Total return is considered a non-GAAP financial measure.
 

2. Provision for loan losses increased by $3.1 million for the quarter ended March 31, 2020, compared to the quarter ended March 31, 2019, of which $3.0 million was allocated to the SBA portfolio.

3. Noninterest income decreased by $1.0 million for the quarter ended March 31, 2020, compared to the quarter ended March 31, 2019, primarily due to the following:

  • A decrease in gain on sale of other loans of $582 thousand, due to no loans sold during the current quarter, as compared to three LASG purchased loans sold in the quarter ended March 31, 2019;
  • A decrease in gain on sale of SBA loans of $331 thousand, due to a lower volume of SBA loans sold in the current quarter resulting from lower originations in previous quarters; and,
  • A decrease of $92 thousand in fees for other services to customers due to lower commercial loans servicing fees resulting from a higher volume of SBA loan payoffs.

4. Noninterest expense increased by $329 thousand for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019, primarily due to the following:

  • An increase in other noninterest expense of $203 thousand, due to a $215 thousand impairment charge on the SBA servicing asset, as compared to a $94 thousand recovery in the quarter ended March 31, 2019;
  • An increase in salaries and employee benefits of $178 thousand, primarily due to increases in regular compensation and incentive compensation, partially offset by a decrease in stock-based compensation;
  • An increase in data processing fees of $167 thousand, primarily due to increased IT outsourcing costs; and
  • An increase in loan acquisition and collection expense of $107 thousand, primarily related to increased costs associated with real estate owned properties; partially offset by,
  • A decrease in professional fees of $144 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; and
  • A decrease in Federal Deposit Insurance Corporation (“FDIC”) insurance expense of $77 thousand, primarily due to credits issued from the FDIC in the current quarter.

5. Income tax expense decreased by $169 thousand to $1.7 million, or an effective tax rate of 48.1%, for the quarter ended March 31, 2020, compared to $1.9 million, or an effective tax rate of 28.3%, for the quarter ended March 31, 2019. The decrease was primarily due to lower pre-tax income, which decreased by $3.1 million during the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019. Offsetting this activity was the Bank’s recording of a $554 thousand expense related to the recapture of the tax reserve for loan losses as a result of the repurchase of common stock during the quarter ended March 31, 2020. This is a one-time expense as the Bank has now recaptured all of its tax bad debt reserve, which arose from pre-1988 bad debt deductions taken for tax purposes in excess of net charge-offs, which now must be recaptured.  Because the Bank had only intended to use the reserve to absorb loan losses, no provision had been made for this liability.

As of March 31, 2020, nonperforming assets totaled $27.5 million, or 2.23% 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 four LASG purchased loans totaling $4.9 million, one LASG originated loan totaling $2.7 million, and two SBA loans totaling $2.1 million that were placed on nonaccrual, and a $1.2 million increase in real estate owned, due to three properties transferred in, partially offset by two properties sold during the nine months ended March 31, 2020.

As of March 31, 2020, past due loans totaled $36.4 million, or 3.52% 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 twenty LASG purchased loans totaling $14.4 million, one LASG originated loan totaling $2.7 million, and six SBA loans totaling $3.8 million, becoming past due during the nine months ended March 31, 2020. Of the twenty LASG purchased loans totaling $14.4 million, seven loans totaling $3.8 million were purchased during the quarter ended March 31, 2020.

As of March 31, 2020, the Bank’s Tier 1 leverage capital ratio was 13.0%, compared to 12.9% at June 30, 2019, and the Total capital ratio was 18.0% at March 31, 2020 and June 30, 2019. Effective April 13, 2020, the Bank’s Tier 1 leverage capital ratio limit is 9% and Total capital ratio limit is 12%.

Investor Call Information
Rick Wayne, Chief Executive Officer of Northeast Bank, Jean-Pierre Lapointe, Chief Financial Officer of Northeast Bank, and Pat Dignan, Executive Vice President and Chief Credit Officer of Northeast Bank, will host a conference call to discuss third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Thursday, April 23rd. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 8453418. 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 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, the 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; the length and extent of the economic contraction resulting from the COVID-19 pandemic; continued deterioration in 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 business and economic conditions or legislative or regulatory initiatives; continued 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.

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

NBN-F



NORTHEAST BANK
BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
 March 31, 2020 June 30, 2019
Assets     
Cash and due from banks$3,856  $2,482 
Short-term investments 84,919   54,425 
Total cash and cash equivalents 88,775   56,907 
      
      
Available-for-sale debt securities, at fair value 66,318   75,774 
Equity securities, at fair value 7,163   6,938 
Total investment securities 73,481   82,712 
      
Residential real estate loans held for sale 370   3,179 
SBA loans held for sale -   731 
Total loans held for sale 370   3,910 
      
      
Loans:     
Commercial real estate 696,403   668,496 
Commercial and industrial 251,688   232,839 
Residential real estate 83,830   71,218 
Consumer 1,999   2,507 
Total loans 1,033,920   975,060 
Less: Allowance for loan losses 8,809   5,702 
Loans, net 1,025,111   969,358 
      
      
Premises and equipment, net 9,810   5,582 
Real estate owned and other repossessed collateral, net 3,110   1,957 
Federal Home Loan Bank stock, at cost 1,306   1,258 
Intangible assets, net 109   434 
Loan servicing rights, net 2,007   2,851 
Bank-owned life insurance 16,965   17,057 
Other assets 10,414   11,832 
Total assets$1,231,458  $1,153,858 
      
Liabilities and Shareholders' Equity     
Deposits:     
Demand$70,443  $68,782 
Savings and interest checking 114,441   101,061 
Money market 286,240   270,835 
Time 541,390   501,693 
Total deposits 1,012,514   942,371 
      
Federal Home Loan Bank advances 15,000   15,000 
Subordinated debt 14,912   14,829 
Lease liability 4,846   323 
Other liabilities 24,661   27,755 
Total liabilities 1,071,933   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 March 31, 2020 and June 30, 2019 -   - 
Voting common stock, $1.00 par value, 25,000,000 shares authorized;     
8,588,989 and 8,997,326 shares issued and outstanding at    
March 31, 2020 and June 30, 2019, respectively 8,589   8,997 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;     
44,783 shares issued and outstanding at March 31, 2020 and June 30, 201945  45 
Additional paid-in capital 73,700   78,095 
Retained earnings 78,824   67,581 
Accumulated other comprehensive loss (1,633)  (1,138)
Total shareholders' equity 159,525   153,580 
Total liabilities and shareholders' equity$1,231,458  $1,153,858 


 
 
NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended March 31, Nine Months Ended March 31, 
 2020  2019 2020  2019  
Interest and dividend income:            
Interest and fees on loans$20,266  $18,796 $59,459  $55,256  
Interest on available-for-sale securities 426   444  1,320   1,229  
Other interest and dividend income 395   939  1,061   2,789  
Total interest and dividend income 21,087   20,179  61,840   59,274  
             
Interest expense:            
Deposits 4,228   4,447  12,725   12,111  
Federal Home Loan Bank advances 226   116  569   359  
Subordinated debt 282   578  845   1,752  
Obligation under capital lease agreements 30   5  98   19  
Total interest expense 4,766   5,146  14,237   14,241  
             
Net interest and dividend income before provision for loan losses 16,321   15,033  47,603   45,033  
Provision for loan losses 3,489   414  3,595   1,047  
Net interest and dividend income after provision for loan losses 12,832   14,619  44,008   43,986  
             
Noninterest income:            
Fees for other services to customers 316   408  1,142   1,240  
Gain on sales of SBA loans 237   568  793   2,361  
Gain on sales of residential loans held for sale 139   108  565   387  
Gain on sales of other loans -   582  -   582  
Net unrealized gain on equity securities 87   65  102   75  
Gain (loss) on real estate owned, other repossessed collateral
   and premises and equipment, net
 (64)  -  247   (64) 
Bank-owned life insurance income 108   108  457   328  
Other noninterest income 37   27  66   56  
Total noninterest income 860   1,866  3,372   4,965  
             
Noninterest expense:            
Salaries and employee benefits 5,960   5,782  18,272   16,991  
Occupancy and equipment expense 919   957  2,667   2,692  
Professional fees 339   483  1,175   1,516  
Data processing fees 994   827  2,980   2,764  
Marketing expense 91   160  239   413  
Loan acquisition and collection expense 716   609  1,807   1,633  
FDIC insurance premiums (credits) 4   81  (15)  242  
Intangible asset amortization 109   107  326   325  
Other noninterest expense 949   746  2,774   2,433  
Total noninterest expense 10,081   9,752  30,225   29,009  
             
Income before income tax expense 3,611   6,733  17,155   19,942  
Income tax expense 1,736   1,905  5,637   5,455  
Net income$1,875  $4,828 $11,518  $14,487  
             
             
Weighted-average shares outstanding:            
Basic 9,004,819   9,044,230  9,032,254   9,029,409  
Diluted 9,128,651   9,198,077  9,187,891   9,194,346  
                
Earnings per common share:            
             
Basic$0.21  $0.53 $1.28  $1.60  
Diluted 0.21   0.52  1.25   1.58  
                
Cash dividends declared per common share$0.01  $0.01 $0.03  $0.03  
 


 
NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended March 31,
 2020 2019
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$78,369 $426 2.19% $84,318 $444 2.14%
Loans (1) (2) (3) 998,227  20,266 8.17%  934,010  18,796 8.16%
Federal Home Loan Bank stock 2,295  29 5.08%  1,332  26 7.92%
Short-term investments (4) 114,794  366 1.28%  152,854  913 2.42%
Total interest-earning assets 1,193,685  21,087 7.11%  1,172,514  20,179 6.98%
Cash and due from banks 3,054       2,647     
Other non-interest earning assets 37,634       28,399     
Total assets$1,234,373      $1,203,560     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$78,777 $104 0.53% $68,869 $59 0.35%
Money market accounts 279,852  1,105 1.59%  318,423  1,251 1.59%
Savings accounts 33,912  13 0.15%  35,599  14 0.16%
Time deposits 519,980  3,006 2.33%  501,378  3,123 2.53%
Total interest-bearing deposits 912,521  4,228 1.86%  924,269  4,447 1.95%
Federal Home Loan Bank advances 39,011  226 2.33%  15,000  116 3.14%
Subordinated debt 14,897  282 7.61%  24,170  578 9.70%
Lease obligations 4,997  30 2.41%  419  5 4.84%
Total interest-bearing liabilities 971,426  4,766 1.97%  963,858  5,146 2.17%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 89,248       79,599     
Other liabilities 8,671       9,489     
Total liabilities 1,069,345       1,052,946     
Shareholders' equity 165,028       150,614     
Total liabilities and shareholders' equity$1,234,373      $1,203,560     
                
Net interest income   $16,321      $15,033  
                
Interest rate spread      5.14%       4.81%
Net interest margin (5)      5.50%       5.20%
                
(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)
 Nine Months Ended March 31,
 2020 2019
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$80,494 $  1,320 2.18% $85,850 $  1,229 1.91%
Loans (1) (2) (3)   965,039    59,459 8.20%    912,402    55,256 8.07%
Federal Home Loan Bank stock   1,876    66 4.68%    1,547    74 6.37%
Short-term investments (4)   84,025    995 1.58%    164,841    2,715 2.19%
Total interest-earning assets   1,131,434   61,840 7.27%    1,164,640    59,274 6.78%
Cash and due from banks   2,820         2,606     
Other non-interest earning assets   38,663         30,339     
Total assets$  1,172,887      $  1,197,585     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$71,614 $241 0.45% $70,882 $183 0.34%
Money market accounts   271,506    3,268 1.60%    366,326    4,259 1.55%
Savings accounts   34,236    43 0.17%    35,592    42 0.16%
Time deposits   489,396    9,173 2.49%    450,064    7,627 2.26%
  Total interest-bearing deposits   866,752    12,725 1.95%    922,864    12,111 1.75%
Federal Home Loan Bank advances   30,055    569 2.52%    15,000    359 3.19%
Subordinated debt   14,869    845 7.56%    24,084    1,752 9.69%
Lease obligations   5,352    98 2.44%    490    19 5.17%
Total interest-bearing liabilities   917,028    14,237 2.07%    962,438    14,241 1.97%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 86,735       80,953     
Other liabilities   8,730         8,575     
Total liabilities   1,012,493         1,051,966     
Shareholders' equity   160,394         145,619     
Total liabilities and shareholders' equity$  1,172,887      $  1,197,585     
                
  Net interest income   $  47,603      $  45,033  
                
Interest rate spread      5.20%       4.81%
Net interest margin (5)      5.60%       5.15%
                
(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
 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019
Net interest income$16,321  $15,545  $15,737  $17,288  $15,033 
Provision (credit) for loan losses 3,489   243   (136)  262   414 
Noninterest income 860   1,337   1,176   1,151   1,866 
Noninterest expense 10,081   9,789   10,354   18,504   9,752 
Net income (loss) 1,875   4,867   4,776   (603)  4,828 
          
Weighted-average common shares outstanding:         
Basic 9,004,819   9,048,171   9,043,761   9,041,926   9,044,230 
Diluted 9,128,651   9,223,137   9,211,874   9,041,926   9,198,077 

Earnings (loss) per common share:
         
Basic$0.21  $0.54  $0.53  $(0.07) $0.53 
Diluted 0.21   0.53   0.52   (0.07)  0.52 
          
Operating earnings per common share (4):         
Basic$0.21  $0.54  $0.53  $0.60  $0.53 
Diluted 0.21   0.53   0.52   0.59   0.52 
          
Dividends declared per common share$0.01  $0.01  $0.01  $0.01  $0.01 
          
Return (loss) on average assets 0.61%  1.68%  1.68%  (0.20%)  1.63%
Return (loss) on average equity 4.57%  12.09%  12.18%  (1.58%)  13.00%
Net interest rate spread (1) 5.14%  5.19%  5.31%  5.55%  4.81%
Net interest margin (2) 5.50%  5.59%  5.72%  5.95%  5.20%
Efficiency ratio (non-GAAP) (3) 58.68%  57.98%  61.22%  100.35%  57.71%
Noninterest expense to average total assets 3.28%  3.38%  3.64%  6.18%  3.29%
Average interest-earning assets to average
  interest-bearing liabilities
 122.88%  123.50%  123.81%  121.71%  121.65%
          
Operating return on average assets (non-GAAP) (4) 0.61%  1.68%  1.68%  1.81%  1.63%
Operating return on average equity (non-GAAP) (4) 4.57%  12.09%  12.18%  14.18%  13.00%
Operating efficiency ratio (non-GAAP) (3) (4) 58.68%  57.98%  61.22%  55.15%  57.71%
Operating noninterest expense to average total assets (non-
  GAAP) (4)
 3.28%  3.38%  3.64%  3.40%  3.29%
 
 As of:
 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019
Nonperforming loans:         
Originated portfolio:         
Residential real estate$1,187  $1,586  $1,515  $2,772  $2,317 
Commercial real estate 7,439   8,032   4,530   3,892   3,336 
Commercial and industrial 2,226   622   87   1,284   1,495 
Consumer 40   59   136   148   236 
Total originated portfolio 10,892   10,299   6,268   8,096   7,384 
Total purchased portfolio 13,485   8,489   7,834   6,671   5,366 
Total nonperforming loans 24,377   18,788   14,102   14,767   12,750 
Real estate owned and other repossessed collateral, net 3,110   2,505   1,936   1,957   2,014 
Total nonperforming assets$27,487  $21,293  $16,038  $16,724  $14,764 
          
Past due loans to total loans 3.52%  2.84%  1.50%  1.50%  2.16%
Nonperforming loans to total loans 2.36%  1.88%  1.51%  1.51%  1.33%
Nonperforming assets to total assets 2.23%  1.76%  1.43%  1.45%  1.20%
Allowance for loan losses to total loans 0.85%  0.54%  0.57%  0.58%  0.59%
Allowance for loan losses to nonperforming loans 36.14%  28.77%  37.44%  38.61%  44.38%
          
Commercial real estate loans to total capital (5) 304.40%  292.58%  262.92%  282.05%  251.02%
Net loans to core deposits (6) 102.04%  106.52%  102.59%  103.33%  94.19%
Purchased loans to total loans, including held for sale 38.28%  36.65%  35.50%  33.37%  33.27%
Equity to total assets 12.95%  13.53%  14.08%  13.31%  12.44%
Common equity tier 1 capital ratio 15.71%  16.48%  16.92%  15.89%  16.23%
Total capital ratio 18.03%  18.52%  19.07%  18.01%  19.33%
Tier 1 leverage capital ratio 13.04%  14.26%  14.06%  12.86%  13.58%
          
Total shareholders' equity$159,525  $163,400  $158,101  $153,580  $153,188 
Less: Preferred stock -   -   -   -   - 
Common shareholders' equity 159,525   163,400   158,101   153,580   153,188 
Less: Intangible assets (7) (2,116)  (2,641)  (2,940)  (3,285)  (3,485)
Tangible common shareholders' equity (non-GAAP)$157,409  $160,759  $155,161  $150,295  $149,703 
          
Common shares outstanding 8,633,772   9,052,013   9,038,912   9,042,109   9,041,868 
Book value per common share$18.48  $18.05  $17.49  $16.98  $16.94 
Tangible book value per share (non-GAAP) (8) 18.23   17.76   17.17   16.62   16.56 
          
(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 for the quarter ended June 30, 2019.
(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.
 

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Source: Northeast Bank