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Northeast Bancorp Reports Record Quarterly Results and Declares Dividend

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 OriginatedSecured 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 OriginatedSecured 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 owned36 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 income2,306 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 owned55 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 income6,597 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.


For More Information: Brian Shaughnessy, CFO Northeast Bank, 500 Canal Street, Lewiston, ME 04240 207.786.3245 ext. 3220 www.northeastbank.com

Source:Northeast Bancorp