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Northeast Bancorp Reports Fourth Quarter Results, Declares Dividend

LEWISTON, Maine, July 28, 2015 (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 $2.2 million, or $0.22 per diluted common share, for the quarter ended June 30, 2015, compared to net income of $542 thousand, or $0.05 per diluted common share, for the quarter ended June 30, 2014. Net income for the year ended June 30, 2015 was $7.1 million, or $0.72 per diluted common share, compared to $2.7 million, or $0.26 per diluted common share, for the year ended June 30, 2014.

The Board of Directors has declared a cash dividend of $0.01 per share, payable on August 25, 2015 to shareholders of record as of August 11, 2015.

"We closed the year with our strongest quarter to date," said Richard Wayne, President and Chief Executive Officer. "Our new SBA Division originated loans totaling $22 million, generating $1.9 million in gains on the sale of $15 million of loans in the secondary market. Overall our loan portfolio increased 6% and strong transactional income of $2.4 million helped drive our net interest margin of 4.7% for the quarter."

"Looking back on the year, we made significant progress in the execution of our business plan," Wayne continued. "Loans increased by $96 million or 18%, growth we funded entirely with new deposits. We leveraged our operating platform, growing revenue by $7 million with a $900 thousand increase in noninterest expense. And, in our effort to improve shareholder returns, we repurchased 710,662 shares at a weighted average price of $9.38."

At June 30, 2015, total assets were $850.8 million, an increase of $88.9 million, or 11.7%, compared to June 30, 2014. The principal components of the change in the balance sheet follow:

1. The loan portfolio – excluding loans held for sale – grew by $95.7 million, or 18.5%, compared to June 30, 2014, the result of net growth of $99.9 million in commercial loans purchased or originated by the Bank's Loan Acquisition and Servicing Group ("LASG"), offset by a $4.2 million decrease in the Bank's Community Banking Division loan portfolio.

New loans generated by the LASG totaled $54.0 million and $213.2 million for the quarter and year ended June 30, 2015, respectively. The quarterly growth in LASG loans consisted of $24.8 million of purchased loans, at an average price of 96.0%, and $29.2 million of originated loans. Small Business Administration ("SBA") loans originated during the quarter totaled $21.5 million, of which $15.2 million were sold in the secondary market. Residential and consumer loan production sold in the secondary market totaled $25.5 million for the quarter.

As discussed in the Company's prior 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 June 30, 2015
(Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans $76.5
Regulatory Capital Non-owner occupied commercial real estate loans may not exceed 300% of total risk-based capital $136.5

An overview of the Bank's LASG portfolio follows:

LASG Portfolio
Three Months Ended June 30,
2015 2014
Purchased 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 $25,785 $29,193 $-- $54,978 $38,244 $11,503 $-- $49,747
Net investment basis 24,758 29,193 -- 53,951 33,556 11,503 -- 45,059
Loan returns during the period:
Yield 13.11% 5.56% 0.49% 8.79% 12.15% 6.77% 0.62% 10.13%
Total Return (1) 13.39% 5.56% 0.50% 9.00% 12.21% 9.35% 0.62% 10.78%
Year Ended June 30,
2015 2014
Purchased 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 $93,694 $82,502 $48,000 $224,196 $91,288 $54,225 $12,000 $157,513
Net investment basis 82,654 82,502 48,000 213,156 79,823 54,225 12,000 146,048
Loan returns during the period:
Yield 13.00% 6.44% 0.47% 9.73% 11.43% 7.49% 0.61% 9.70%
Total Return (1) 13.33% 6.75% 0.48% 10.02% 11.76% 8.48% 0.61% 10.11%
Total loans as of period end:
Unpaid principal balance $239,933 $118,416 $60,000 $418,349 $242,631 $65,558 $12,000 $320,219
Net investment basis $202,592 $118,261 $60,011 $380,864 $203,450 $65,561 $12,000 $281,011
(1) 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, on an annualized basis.

2. Deposits increased by $19.6 million, or 3.0%, from March 31, 2015, attributable primarily to growth in non-maturity accounts, which increased by $17.1 million, or 5.5%, for the quarter ended June 30, 2015, as well as an increase of $2.5 million in time deposits. For the year, deposits increased by $100.4 million, or 17.5%, mainly the result of increases in money market accounts attracted through the Bank's online-only ableBanking division.

3. Stockholders' equity increased by $773 thousand from June 30, 2014, due principally to earnings of $7.1 million, as well as $705 thousand of scheduled amortization of stock-based compensation, offset by $6.7 million in share repurchases (representing 710,662 shares), a decrease in accumulated other comprehensive income of $5 thousand and $402 thousand in dividends paid on common stock. During the quarter, there were 230,726 shares repurchased for $2.3 million.

Net income from continuing operations increased by $1.6 million to $2.2 million for the quarter ended June 30, 2015, compared to $542 thousand for the quarter ended June 30, 2014.

1. Net interest and dividend income before provision for loan losses increased by $866 thousand, or 10.2%, for the quarter ended June 30, 2015 compared to the quarter ended June 30, 2014, due primarily to higher transactional interest income from purchased loan payoffs, and the positive effect of balance sheet growth. Average total interest-earning assets for the three months ended June 30, 2015 increased by $81.9 million, primarily due to an increase in average loans by $83.4 million, when compared to the three months ended June 30, 2014. For the year ended June 30, 2015, average total interest-earning assets increased by $70.6 million, and average loans increased by $66.2 million, compared to the year ended June 30, 2014.

The various components of transactional income are set forth in the table below entitled "Total Return on Purchased Loans." When compared to the three months and year ended June 30, 2014, transactional interest income increased by $616 thousand and $4.5 million, respectively. 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,
2015 2014
Average Interest Average Interest
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking Division $237,418 $2,965 5.01% $247,802 $3,096 5.01%
LASG:
Originated 106,963 1,483 5.56% 63,226 1,067 6.77%
Purchased 195,016 6,375 13.11% 187,391 5,677 12.15%
Secured Loans to Broker-Dealers 60,003 73 0.49% 17,538 27 0.62%
Total LASG 361,982 7,931 8.79% 268,155 6,771 10.13%
Total $599,400 $10,896 7.29% $515,957 $9,867 7.67%
Year Ended June 30,
2015 2014
Average Interest Average Interest
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking Division $236,128 $11,747 4.97% $246,853 $12,926 5.24%
LASG:
Originated 76,448 4,924 6.44% 47,494 3,558 7.49%
Purchased 203,822 26,500 13.00% 178,377 20,388 11.43%
Secured Loans to Broker-Dealers 44,942 212 0.47% 22,389 137 0.61%
Total LASG 325,212 31,636 9.73% 248,260 24,083 9.70%
Total $561,340 $43,383 7.73% $495,113 $37,009 7.47%

The yield on purchased loans for the three months and year ended June 30, 2015 increased primarily due to unscheduled loan payoffs, which resulted in immediate recognition in interest income of the discount associated with the prepaid loans. The following table details the "total return" on purchased loans, which includes transactional income of $2.4 million for the quarter ended June 30, 2015, an increase of $756 thousand from the quarter ended June 30, 2014. Additionally, total transactional income for the year ended June 30, 2015 increased by $4.5 million, compared to the year ended June 30, 2014. The following tables summarize the total return recognized on the purchased loan portfolio.

Total Return on Purchased Loans
Three Months Ended June 30,
2015 2014
Income Return (1) Income Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion $4,132 8.43% $4,050 8.64%
Transactional income:
Gains on loan sales -- 0.00% -- 0.00%
Gain on sale of real estate owned 188 0.38% 44 0.09%
Other noninterest income -- 0.00% 4 0.01%
Accelerated accretion and loan fees 2,243 4.58% 1,627 3.47%
Total transactional income 2,431 4.96% 1,675 3.57%
Total $6,563 13.39% $5,725 12.21%
Year Ended June 30,
2015 2014
Income Return (1) Income Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion $17,327 8.48% $15,682 8.75%
Transactional income:
Gains on loan sales 190 0.09% 576 0.32%
Gain on sale of real estate owned 607 0.30% 100 0.06%
Other noninterest income (69) -0.03% 4 0.00%
Accelerated accretion and loan fees 9,173 4.49% 4,706 2.63%
Total transactional income 9,901 4.85% 5,386 3.01%
Total $27,228 13.33% $21,068 11.76%
(1) 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, on an annualized basis.

2. Noninterest income increased by $1.6 million for the quarter ended June 30, 2015, compared to the quarter ended June 30, 2014, principally due to the following:

  • An increase of $1.5 million in gains realized on sale of portfolio loans. The recent quarter includes gains realized on sale of SBA loans of $1.9 million, compared to a $403 thousand gain on sale of commercial loans in the quarter ended June 30, 2014; and
  • An increase of $111 thousand in gains recognized on Real Estate Owned/Other Assets Acquired ("REO/OAA").

3. Noninterest expense increased by $32 thousand for the quarter ended June 30, 2015, compared to the quarter ended June 30, 2014, principally due to the following:

  • An increase of $124 thousand in salaries and employee benefits, principally due to increased employee head count;
  • An increase of $189 thousand in professional fees primarily related to an increase in third party services; and
  • A decrease of $126 thousand in other noninterest expense, principally due to contract termination costs and one-time non-capital expenses associated with the core banking systems conversion that occurred during the quarter ended June 30, 2014.

At June 30, 2015, nonperforming assets totaled $12.4 million, or 1.5% of total assets, as compared to $8.9 million, or 1.2% of total assets at June 30, 2014. The increase in nonperforming assets during the year was primarily due to the addition of one purchased loan relationship.

At June 30, 2015, the Company's Tier 1 Leverage Ratio was 14.4%, a decrease from 15.9% at June 30, 2014, and the Total Capital Ratio was 20.1%, a decrease from 23.7% at June 30, 2014. The decreases resulted primarily from balance sheet growth and the effect of purchases under the Company's share repurchase program in the year ended June 30, 2015.

Investor Call Information

Richard Wayne, Chief Executive Officer of Northeast Bancorp, Claire Bean, Chief Operating Officer of Northeast Bancorp, and Brian Shaughnessy, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss fourth quarter earnings and business outlook at 10:00 a.m. Eastern Time on Wednesday, July 29, 2015. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 91797346. 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. Northeast Bank offers traditional banking services through its Community Banking Division, which operates ten full-service branches and two loan production offices that serve individuals and businesses located in western and south-central Maine and southern New Hampshire. Northeast Bank's Loan Acquisition and Servicing Group purchases and originates commercial loans for the Bank's portfolio. In addition, the Small Business Lending 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 Measure

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 stockholders' equity, tangible book value per share, and net operating earnings. 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)
June 30, 2015 June 30, 2014
Assets
Cash and due from banks $2,789 $3,372
Short-term investments 87,061 78,887
Total cash and cash equivalents 89,850 82,259
Available-for-sale securities, at fair value 101,908 113,881
Loans held for sale 9,035 11,945
Loans
Commercial real estate 348,676 316,098
Residential real estate 132,668 148,634
Commercial and industrial 123,134 41,800
Consumer 7,659 9,884
Total loans 612,137 516,416
Less: Allowance for loan losses 1,926 1,367
Loans, net 610,211 515,049
Premises and equipment, net 8,253 9,135
Real estate owned and other possessed collateral, net 1,651 1,991
Regulatory stock, at cost 4,102 4,102
Intangible assets, net 2,209 2,798
Bank owned life insurance 15,276 14,836
Other assets 8,335 5,935
Total assets $850,830 $761,931
Liabilities and Stockholders' Equity
Deposits
Demand $60,383 $50,140
Savings and interest checking 100,134 98,340
Money market 168,527 83,901
Time 345,715 341,948
Total deposits 674,759 574,329
Federal Home Loan Bank advances 30,188 42,824
Wholesale repurchase agreements 10,037 10,199
Short-term borrowings 2,349 2,984
Junior subordinated debentures issued to affiliated trusts 8,626 8,440
Capital lease obligation 1,368 1,558
Other liabilities 10,664 9,531
Total liabilities 737,991 649,865
Commitments and contingencies -- --
Stockholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2015 and June 30, 2014 -- --
Voting common stock, $1.00 par value, 25,000,000 shares authorized; 8,575,144 and 9,260,331 shares issued and outstanding at June 30, 2015 and June 30, 2014, respectively 8,575 9,260
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 1,012,739 and 880,963 shares issued and outstanding at June 30, 2015 and June 30, 2014, respectively 1,013 881
Additional paid-in capital 85,506 90,914
Retained earnings 19,033 12,294
Accumulated other comprehensive loss (1,288) (1,283)
Total stockholders' equity 112,839 112,066
Total liabilities and stockholders' equity $850,830 $761,931
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
Three Months Ended June 30, Year Ended June 30,
2015 2014 2015 2014
Interest and dividend income:
Interest and fees on loans $10,896 $9,867 $43,383 $37,009
Interest on available-for-sale securities 215 251 913 1,048
Other interest and dividend income 74 106 292 314
Total interest and dividend income 11,185 10,224 44,588 38,371
Interest expense:
Deposits 1,329 1,075 5,010 4,123
Federal Home Loan Bank advances 256 326 1,101 1,301
Wholesale repurchase agreements 72 72 288 357
Short-term borrowings 8 7 29 24
Junior subordinated debentures issued to affiliated trusts 152 240 718 765
Obligation under capital lease agreements 18 20 74 83
Total interest expense 1,835 1,740 7,220 6,653
Net interest and dividend income before provision for loan losses 9,350 8,484 37,368 31,718
Provision for loan losses 240 124 717 531
Net interest and dividend income after provision for loan losses 9,110 8,360 36,651 31,887
Noninterest income:
Fees for other services to customers 406 398 1,494 1,644
Gain on sales of loans held for sale 493 505 1,877 1,650
Gain on sales of portfolio loans 1,926 403 2,821 1,006
Gain recognized on real estate owned and other repossessed collateral, net 124 13 428 63
Bank-owned life insurance income 111 109 440 451
Other noninterest income 7 9 29 55
Total noninterest income 3,067 1,437 7,089 4,869
Noninterest expense:
Salaries and employee benefits 5,286 5,162 18,817 17,786
Occupancy and equipment expense 1,277 1,336 4,939 5,448
Professional fees 505 316 1,658 1,285
Data processing fees 325 374 1,355 1,209
Marketing expense 41 86 244 311
Loan acquisition and collection expense 362 336 1,458 1,539
FDIC insurance premiums 133 126 504 480
Intangible asset amortization 129 164 589 746
Legal settlement recovery -- -- -- (250)
Other noninterest expense 769 895 3,040 3,223
Total noninterest expense 8,827 8,795 32,604 31,777
Income from continuing operations before income tax expense 3,350 1,002 11,136 4,279
Income tax expense 1,185 460 3,995 1,579
Net income from continuing operations 2,165 542 7,141 2,700
Income from discontinued operations before tax (benefit) expense -- -- -- (12)
Income tax benefit -- -- -- (4)
Net loss from discontinued operations -- -- -- (8)
Net income $2,165 $542 $7,141 $2,692
Weighted-average shares outstanding:
Basic 9,773,228 10,314,197 9,980,733 10,404,784
Diluted 9,773,228 10,314,197 9,980,733 10,404,784
Earnings per common share:
Basic:
Income from continuing operations $0.22 $0.05 $0.72 $0.26
Income from discontinued operations 0.00 0.00 0.00 0.00
Net Income $0.22 $0.05 $0.72 $0.26
Diluted:
Income from continuing operations $0.22 $0.05 $0.72 $0.26
Income from discontinued operations 0.00 0.00 0.00 0.00
Net Income $0.22 $0.05 $0.72 $0.26
Cash dividends declared per common share $0.01 $0.01 $0.04 $0.28
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
Three Months Ended June 30,
2015 2014
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning assets:
Investment securities (1) $103,988 $215 0.83% $112,226 $251 0.90%
Loans (2) (3) 599,400 10,896 7.29% 515,957 9,867 7.67%
Regulatory stock 4,102 18 1.76% 5,316 55 4.15%
Short-term investments (4) 91,060 56 0.25% 83,194 51 0.25%
Total interest-earning assets 798,550 11,185 5.62% 716,693 10,224 5.72%
Cash and due from banks 2,553 2,606
Other non-interest earning assets 36,334 32,643
Total assets $837,437 $751,942
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts $64,533 $41 0.25% $62,427 $41 0.26%
Money market accounts 166,690 336 0.81% 85,119 110 0.52%
Savings accounts 35,835 12 0.13% 35,080 11 0.13%
Time deposits 342,849 940 1.10% 340,214 913 1.08%
Total interest-bearing deposits 609,907 1,329 0.87% 522,840 1,075 0.82%
Short-term borrowings 1,754 8 1.83% 2,051 7 1.37%
Borrowed funds 40,259 346 3.45% 54,522 418 3.08%
Junior subordinated debentures 8,602 152 7.09% 8,416 240 11.44%
Total interest-bearing liabilities 660,522 1,835 1.11% 587,829 1,740 1.19%
Non-interest bearing liabilities:
Demand deposits and escrow accounts 56,754 51,562
Other liabilities 7,635 2,955
Total liabilities 724,911 642,347
Stockholders' equity 112,526 109,596
Total liabilities and stockholders' equity $837,437 $751,942
Net interest income $9,350 $8,484
Interest rate spread 4.51% 4.53%
Net interest margin (5) 4.70% 4.75%
(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) 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)
Year Ended June 30,
2015 2014
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning assets:
Investment securities (1) $108,204 $913 0.84% $115,849 $1,048 0.90%
Loans (2) (3) 561,340 43,383 7.73% 495,113 37,009 7.47%
Regulatory stock 4,102 67 1.63% 5,620 123 2.19%
Short-term investments (4) 92,354 225 0.24% 78,838 191 0.24%
Total interest-earning assets 766,000 44,588 5.82% 695,420 38,371 5.52%
Cash and due from banks 2,704 2,876
Other non-interest earning assets 33,741 33,958
Total assets $802,445 $732,254
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts $63,181 $162 0.26% $61,146 $162 0.26%
Money market accounts 133,266 1,002 0.75% 85,333 447 0.52%
Savings accounts 34,495 46 0.13% 34,391 44 0.13%
Time deposits 340,046 3,800 1.12% 314,848 3,470 1.10%
Total interest-bearing deposits 570,988 5,010 0.88% 495,718 4,123 0.83%
Short-term borrowings 2,578 29 1.12% 2,230 24 1.08%
Borrowed funds 45,661 1,463 3.20% 58,468 1,741 2.98%
Junior subordinated debentures 8,531 718 8.42% 8,352 765 9.16%
Total interest-bearing liabilities 627,758 7,220 1.15% 564,768 6,653 1.18%
Non-interest bearing liabilities:
Demand deposits and escrow accounts 54,940 50,890
Other liabilities 7,370 3,962
Total liabilities 690,068 619,620
Stockholders' equity 112,377 112,634
Total liabilities and stockholders' equity $802,445 $732,254
Net interest income $37,368 $31,718
Interest rate spread 4.67% 4.34%
Net interest margin (5) 4.88% 4.56%
(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) 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:
June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014
Net interest income $9,350 $9,120 $9,426 $9,471 $8,484
Provision for loan losses 240 44 113 320 124
Noninterest income 3,067 1,554 1,370 1,154 1,437
Noninterest expense 8,827 7,885 8,210 7,737 8,795
Net income from continuing operations 2,165 1,752 1,580 1,644 542
Net income 2,165 1,752 1,580 1,644 542
Weighted average common shares outstanding:
Basic 9,773,228 9,833,033 10,132,349 10,180,038 10,314,197
Diluted 9,773,228 9,833,033 10,132,349 10,180,038 10,314,197
Earnings per common share:
Basic $0.22 $0.18 $0.16 $0.16 $0.05
Diluted 0.22 0.18 0.16 0.16 0.05
Dividends per common share 0.01 0.01 0.01 0.01 0.01
Return on average assets 1.04% 0.88% 0.78% 0.85% 0.29%
Return on average equity 7.72% 6.38% 5.54% 5.80% 1.98%
Net interest rate spread (1) 4.51% 4.59% 4.65% 4.95% 4.53%
Net interest margin (2) 4.70% 4.79% 4.87% 5.18% 4.75%
Efficiency ratio (3) 71.09% 73.87% 76.05% 72.82% 88.65%
Noninterest expense to average total assets 4.22% 3.96% 4.05% 4.02% 4.69%
Average interest-earning assets to average interest-bearing liabilities 120.90% 121.89% 122.32% 123.09% 121.92%
As of:
June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014
Nonperforming loans:
Originated portfolio:
Residential real estate $3,021 $3,163 $2,706 $2,105 $1,303
Commercial real estate 994 1,201 1,166 721 1,162
Home equity 11 11 11 28 160
Commercial business 2 -- -- -- 5
Consumer 190 225 237 145 124
Total originated portfolio 4,218 4,600 4,120 2,999 2,756
Total purchased portfolio 6,532 5,850 8,129 4,287 4,114
Total nonperforming loans 10,750 10,450 12,249 7,286 6,870
Real estate owned and other possessed collateral, net 1,651 3,694 2,058 2,115 1,991
Total nonperforming assets $12,401 $14,144 $14,307 $9,401 $8,861
Past due loans to total loans 1.08% 2.57% 2.64% 1.40% 1.14%
Nonperforming loans to total loans 1.76% 1.80% 2.13% 1.34% 1.33%
Nonperforming assets to total assets 1.46% 1.70% 1.77% 1.20% 1.16%
Allowance for loan losses to total loans 0.31% 0.30% 0.29% 0.28% 0.26%
Allowance for loan losses to nonperforming loans 17.92% 16.66% 13.58% 21.12% 19.90%
Commercial real estate loans to risk-based capital (4) 188.49% 173.17% 190.05% 167.57% 176.98%
Net loans to core deposits (5) 91.85% 89.04% 91.79% 92.80% 92.13%
Purchased loans to total loans, including held for sale 32.61% 33.53% 37.97% 37.38% 38.51%
Equity to total assets 13.26% 13.51% 13.69% 14.48% 14.71%
Common equity tier 1 capital ratio 19.75% 20.90% -- -- --
Total capital ratio (6) 20.07% 21.21% 21.44% 22.97% 23.74%
Tier 1 leverage capital ratio 14.42% 14.96% 14.81% 15.89% 15.90%
Total stockholders' equity $112,839 $112,487 $110,923 $113,242 $112,066
Less: Preferred stock -- -- -- -- --
Common stockholders' equity 112,839 112,487 110,923 113,242 112,066
Less: Intangible assets (2,209) (2,338) (2,466) (2,632) (2,798)
Tangible common stockholders' equity (non-GAAP) $110,630 $110,149 $108,457 $110,610 $109,268
Common shares outstanding 9,587,883 9,819,609 9,846,387 10,248,034 10,141,294
Book value per common share $11.77 $11.46 $11.27 $11.05 $11.05
Tangible book value per share (non-GAAP) (7) 11.54 11.22 11.01 10.79 10.77
Reconciliation of Net Income (GAAP) to Net Operating Earnings (non-GAAP)
Three Months Ended:
June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014
Net income (GAAP) $2,165 $1,752 $1,580 $1,644 $542
Items excluded from operating earnings, net of tax:
Discontinued operations -- -- -- -- --
Severance expense -- 8 36 52 407
Software conversion expense -- -- -- -- 148
Legal settlement expense and related professional fees -- -- -- -- --
Total after-tax items -- 8 36 52 555
Net operating earnings (non-GAAP) $2,165 $1,760 $1,616 $1,696 $1,097
Net operating earnings per share - basic (non-GAAP) $0.22 $0.18 $0.16 $0.17 $0.11
(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) The Company's adoption of Basel III went into effect as of March 31, 2015. The previous period ratios are the "Total Risk-Based Capital Ratio."
(7) Tangible book value per share represents total stockholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.

CONTACT: Claire S. Bean, COO Northeast Bank, 500 Canal Street, Lewiston, ME 04240 207.786.3245 ext. 3202 www.northeastbank.com

Source:Northeast Bancorp