LEWISTON, Maine, Oct. 28, 2019 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service financial institution, today reported net income of $4.8 million, or $0.52 per diluted common share, for the quarter ended September 30, 2019, compared to net income of $4.5 million, or $0.49 per diluted common share, for the quarter ended September 30, 2018.
The Board of Directors declared a cash dividend of $0.01 per share, payable on November 22, 2019, to shareholders of record as of November 8, 2019.
“We started fiscal 2020 with a solid first quarter,” said Richard Wayne, Chief Executive Officer. “For the quarter, we earned $0.52 per diluted common share, a return on equity of 12.2%, a return on assets of 1.7%, and a net interest margin of 5.7%. Our Loan Acquisition and Servicing Group produced $69.2 million of loans, including originations of $40.6 million and purchases with an investment of $28.6 million during the quarter. Additionally, we began to realize interest expense savings due to both the redemption of the Trust Preferred Securities and a reduction of deposits held in cash on the balance sheet at a negative spread.”
As of September 30, 2019, total assets were $1.1 billion, a decrease of $30.8 million, or 2.7%, from total assets of $1.2 billion as of June 30, 2019. The principal components of the changes in the balance sheet follow:
1. The following table highlights the changes in the loan portfolio for the quarter ended September 30, 2019:
| September 30, 2019 Balance | June 30, 2019 Balance | Change ($) | Change (%) | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| LASG Purchased | $ | 332,227 | $ | 326,640 | $ | 5,587 | 1.71 | % | ||||||||
| LASG Originated | 457,350 | 493,413 | (36,063 | ) | (7.31 | %) | ||||||||||
| SBA | 58,270 | 63,053 | (4,783 | ) | (7.59 | %) | ||||||||||
| Community Banking | 86,192 | 91,954 | (5,762 | ) | (6.27 | %) | ||||||||||
| Total | $ | 934,039 | $ | 975,060 | $ | (41,021 | ) | (4.21 | %) | |||||||
Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended September 30, 2019 totaled $69.2 million, which consisted of $28.6 million of purchased loans, at an average price of 94.4% of unpaid principal balance, and $40.6 million of originated loans. This activity was offset by payoffs, paydowns and amortization in the LASG portfolios of $99.6 million. The Bank's Small Business Administration ("SBA") Division sold $2.4 million of the guaranteed portion of SBA loans in the secondary market, all of which were originated in the prior quarter. Residential loan production sold in the secondary market totaled $10.9 million for the quarter.
An overview of the Bank’s LASG portfolio follows:
| LASG Portfolio | |||||||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2019 | 2018 | ||||||||||||||||||||||
| Purchased | Originated | Total LASG | Purchased | Originated | Total LASG | ||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Loans purchased or originated during the period: | |||||||||||||||||||||||
| Unpaid principal balance | $ | 30,333 | $ | 40,537 | $ | 70,870 | $ | 37,077 | $ | 71,136 | $ | 108,213 | |||||||||||
| Net investment basis | 28,622 | 40,537 | 69,159 | 34,803 | 71,136 | 105,939 | |||||||||||||||||
| Loan returns during the period: | |||||||||||||||||||||||
| Yield | 9.73 | % | 7.57 | % | 8.46 | % | 9.46 | % | 7.43 | % | 8.31 | % | |||||||||||
| Total Return on Purchased Loans (1) | 9.73 | % | 7.57 | % | 8.46 | % | 9.46 | % | 7.43 | % | 8.31 | % | |||||||||||
| Total loans as of period end: | |||||||||||||||||||||||
| Unpaid principal balance | $ | 365,984 | $ | 457,350 | $ | 823,334 | $ | 336,908 | $ | 407,822 | $ | 744,730 | |||||||||||
| Net investment basis | 332,227 | 457,350 | 789,577 | 300,548 | 407,822 | 708,370 | |||||||||||||||||
(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 decreased by $34.4 million, or 3.7%, from June 30, 2019, attributable primarily to decreases in time deposits of $29.7 million, or 5.9%, and money market accounts of $5.9 million, or 2.2%, due to the continued intentional run-off of excess deposits.
3. Shareholders’ equity increased by $4.5 million, or 2.9%, from June 30, 2019, primarily due to net income of $4.8 million, offset by an increase in accumulated other comprehensive loss of $298 thousand.
Net income increased by $242 thousand to $4.8 million for the quarter ended September 30, 2019, compared to net income of $4.5 million for the quarter ended September 30, 2018.
- Net interest and dividend income before provision for loan losses increased by $1.4 million to $15.7 million for the quarter ended September 30, 2019, compared to $14.4 million for the quarter ended September 30, 2018. The increase was primarily due to higher transactional income in the purchased portfolio, and higher average balances in the LASG portfolio and yields in the loan portfolio, as well as a decrease in interest expense on subordinated debt due to lower average balances resulting from the redemption of Trust Preferred Securities in May 2019. These changes were partially offset by higher funding costs.
The following table summarizes interest income and related yields recognized on the loan portfolios:
| Interest Income and Yield on Loans | |||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||
| 2019 | 2018 | ||||||||||||||||
| Average | Interest | Average | Interest | ||||||||||||||
| Balance (1) | Income | Yield | Balance (1) | Income | Yield | ||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Community Banking | $ | 90,384 | $ | 1,267 | 5.58 | % | $ | 120,340 | $ | 1,522 | 5.02 | % | |||||
| SBA | 62,755 | 1,469 | 9.31 | % | 71,165 | 1,285 | 7.16 | % | |||||||||
| LASG: | |||||||||||||||||
| Originated | 469,307 | 8,928 | 7.57 | % | 398,333 | 7,464 | 7.43 | % | |||||||||
| Purchased | 328,819 | 8,040 | 9.73 | % | 304,107 | 7,254 | 9.46 | % | |||||||||
| Total LASG | 798,126 | 16,968 | 8.46 | % | 702,440 | 14,718 | 8.31 | % | |||||||||
| Total | $ | 951,265 | $ | 19,704 | 8.24 | % | $ | 893,945 | $ | 17,525 | 7.78 | % | |||||
| (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 September 30, 2018, transactional income for the quarter ended September 30, 2019 increased by $493 thousand, while regularly scheduled interest and accretion increased by $293 thousand due to the increase in average balances. The total return on purchased loans for the quarter ended September 30, 2019 was 9.7%, an increase from 9.5% for the quarter ended September 30, 2018. The following table details the total return on purchased loans:
| Total Return on Purchased Loans | |||||||||||
| Three Months Ended September 30, | |||||||||||
| 2019 | 2018 | ||||||||||
| Income | Return (1) | Income | Return (1) | ||||||||
| (Dollars in thousands) | |||||||||||
| Regularly scheduled interest and accretion | $ | 6,054 | 7.33 | % | $ | 5,761 | 7.51 | % | |||
| Transactional income: | |||||||||||
| Gain on loan sales | - | 0.00 | % | - | 0.00 | % | |||||
| Gain on sale of real estate owned | - | 0.00 | % | - | 0.00 | % | |||||
| Accelerated accretion and loan fees | 1,986 | 2.40 | % | 1,493 | 1.95 | % | |||||
| Total transactional income | 1,986 | 2.40 | % | 1,493 | 1.95 | % | |||||
| Total | $ | 8,040 | 9.73 | % | $ | 7,254 | 9.46 | % | |||
(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales and gains on real estate owned recorded during the period divided by the average invested balance, which includes purchased loans held for sale, on an annualized basis. The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter. Total return is considered a non-GAAP financial measure.
2. Provision (credit) for loan losses decreased by $668 thousand for the quarter ended September 30, 2019, compared to the quarter ended September 30, 2018, primarily due to the decrease in loan balances over the current quarter, as compared to an increase in loan balances in the quarter ended September 30, 2018.
3. Noninterest income decreased by $378 thousand for the quarter ended September 30, 2019, compared to the quarter ended September 30, 2018, principally due to the following:
- A decrease in gain on sale of SBA loans of $599 thousand, due to lower volume of SBA loans sold in the quarter due to lower originations in recent quarters; partially offset by,
- An increase in bank-owned life insurance income of $131 thousand, due to a gain from death benefit proceeds recognized in the current quarter; and
- An increase in net unrealized gain on equity securities of $80 thousand.
4. Noninterest expense increased by $999 thousand for the quarter ended September 30, 2019 compared to the quarter ended September 30, 2018, primarily due to the following:
- An increase in salaries and employee benefits of $878 thousand, primarily due to increases in stock-based compensation, regular compensation, and incentive compensation;
- An increase in data processing fees of $383 thousand, primarily due to increased IT outsourcing costs and the reclassification of IT professional costs from professional fees and occupancy and equipment expense; and
- An increase in loan acquisition and collection expenses of $172 thousand, largely driven by increased loan and collection expenses incurred on loan workouts in the LASG portfolios; partially offset by,
- A decrease in occupancy and equipment expense of $229 thousand, primarily due to a decrease in computer equipment repairs and maintenance expense;
- A decrease in professional fees of $142 thousand, due to the reclassification of IT professional costs to data processing fees; and
- A decrease in FDIC insurance premium of $99 thousand, due to the Small Bank Assessment Credit received in the quarter.
5. Income tax expense increased by $427 thousand to $1.9 million, or an effective tax rate of 28.7%, for the quarter ended September 30, 2019, compared to $1.5 million, or an effective tax rate of 24.8%, for the quarter ended September 30, 2018. The increase in effective tax rate was primarily due to the update of state tax apportionment rates.
As of September 30, 2019, nonperforming assets totaled $16.0 million, or 1.43% of total assets, as compared to $16.7 million, or 1.45% of total assets, as of June 30, 2019. The decrease was primarily due to the payoff of a nonperforming Community Bank loan of $1.1 million during the current quarter.
As of September 30, 2019, past due loans totaled $14.0 million, or 1.50% of total loans, as compared to past due loans totaling $14.6 million, or 1.50% of total loans as of June 30, 2019.
As of September 30, 2019, the Bank’s Tier 1 leverage capital ratio was 14.1%, compared to 12.9% at June 30, 2019, and the Total capital ratio was 19.1% at September 30, 2019, as compared to 18.0% at June 30, 2019. Capital ratios were affected by earnings and lower assets in the quarter.
Investor Call Information
Richard Wayne, Chief Executive Officer of Northeast Bank, and Jean-Pierre Lapointe, Chief Financial Officer of Northeast Bank, will host a conference call to discuss first quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, October 29th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 9979819. 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 Lewiston, 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 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, 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 Bank 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; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; 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, 500 Canal Street, Lewiston, ME 04240
207.786.3245 ext. 3220
www.northeastbank.com
NBN-F
| NORTHEAST BANK | |||||||
| BALANCE SHEETS | |||||||
| (Unaudited) | |||||||
| (Dollars in thousands, except share and per share data) | |||||||
| September 30, 2019 | June 30, 2019 | ||||||
| Assets | |||||||
| Cash and due from banks | $ | 2,533 | $ | 2,482 | |||
| Short-term investments | 65,828 | 54,425 | |||||
| Total cash and cash equivalents | 68,361 | 56,907 | |||||
| Available-for-sale securities, at fair value | 74,256 | 75,774 | |||||
| Equity securities, at fair value | 7,022 | 6,938 | |||||
| Total investment securities | 81,278 | 82,712 | |||||
| Residential real estate loans held for sale | 1,707 | 3,179 | |||||
| SBA loans held for sale | - | 731 | |||||
| Total loans held for sale | 1,707 | 3,910 | |||||
| Loans: | |||||||
| Commercial real estate | 635,424 | 668,496 | |||||
| Commercial and industrial | 224,670 | 232,839 | |||||
| Residential real estate | 71,900 | 71,218 | |||||
| Consumer | 2,045 | 2,507 | |||||
| Total loans | 934,039 | 975,060 | |||||
| Less: Allowance for loan losses | 5,280 | 5,702 | |||||
| Loans, net | 928,759 | 969,358 | |||||
| Premises and equipment, net | 10,778 | 5,582 | |||||
| Real estate owned and other repossessed collateral, net | 1,936 | 1,957 | |||||
| Federal Home Loan Bank stock, at cost | 1,258 | 1,258 | |||||
| Intangible assets, net | 326 | 434 | |||||
| Loan servicing rights, net | 2,614 | 2,851 | |||||
| Bank-owned life insurance | 16,749 | 17,057 | |||||
| Other assets | 9,287 | 11,832 | |||||
| Total assets | $ | 1,123,053 | $ | 1,153,858 | |||
| Liabilities and Shareholders' Equity | |||||||
| Deposits: | |||||||
| Demand | $ | 67,481 | $ | 68,782 | |||
| Savings and interest checking | 103,508 | 101,061 | |||||
| Money market | 264,984 | 270,835 | |||||
| Time | 471,983 | 501,693 | |||||
| Total deposits | 907,956 | 942,371 | |||||
| Federal Home Loan Bank advances | 15,000 | 15,000 | |||||
| Subordinated debt | 14,857 | 14,829 | |||||
| Lease liability | 5,538 | 323 | |||||
| Other liabilities | 21,601 | 27,755 | |||||
| Total liabilities | 964,952 | 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 September 30, 2019 and June 30, 2019 | - | - | |||||
| Voting common stock, $1.00 par value, 25,000,000 shares authorized; | |||||||
| 8,994,129 and 8,997,326 shares issued and outstanding at September 30, 2019 and June 30, 2019, respectively | 8,994 | 8,997 | |||||
| Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; | |||||||
| 44,783 shares issued and outstanding at September 30, 2019 and June 30, 2019 | 45 | 45 | |||||
| Additional paid-in capital | 78,231 | 78,095 | |||||
| Retained earnings | 72,267 | 67,581 | |||||
| Accumulated other comprehensive loss | (1,436 | ) | (1,138 | ) | |||
| Total shareholders' equity | 158,101 | 153,580 | |||||
| Total liabilities and shareholders' equity | $ | 1,123,053 | $ | 1,153,858 | |||
| NORTHEAST BANK | |||||
| STATEMENTS OF INCOME | |||||
| (Unaudited) | |||||
| (Dollars in thousands, except share and per share data) | |||||
| Three Months Ended September 30, | |||||
| 2019 | 2018 | ||||
| Interest and dividend income: | |||||
| Interest and fees on loans | $ | 19,704 | $ | 17,525 | |
| Interest on available-for-sale securities | 451 | 362 | |||
| Other interest and dividend income | 340 | 880 | |||
| Total interest and dividend income | 20,495 | 18,767 | |||
| Interest expense: | |||||
| Deposits | 4,316 | 3,682 | |||
| Federal Home Loan Bank advances | 125 | 118 | |||
| Subordinated debt | 282 | 601 | |||
| Obligation under lease agreements | 35 | 7 | |||
| Total interest expense | 4,758 | 4,408 | |||
| Net interest and dividend income before provision (credit) for loan losses | 15,737 | 14,359 | |||
| Provision (credit) for loan losses | (136) | 532 | |||
| Net interest and dividend income after provision (credit) for loan losses | 15,873 | 13,827 | |||
| Noninterest income: | |||||
| Fees for other services to customers | 413 | 492 | |||
| Gain on sales of SBA loans | 252 | 851 | |||
| Gain on sales of residential loans held for sale | 213 | 174 | |||
| Net unrealized gain (loss) on equity securities | 40 | (40) | |||
| Loss on real estate owned, other repossessed collateral and premises and equipment, net | (2) | (40) | |||
| Bank-owned life insurance income | 241 | 110 | |||
| Other noninterest income | 19 | 7 | |||
| Total noninterest income | 1,176 | 1,554 | |||
| Noninterest expense: | |||||
| Salaries and employee benefits | 6,387 | 5,509 | |||
| Occupancy and equipment expense | 898 | 1,127 | |||
| Professional fees | 392 | 534 | |||
| Data processing fees | 984 | 601 | |||
| Marketing expense | 93 | 124 | |||
| Loan acquisition and collection expense | 611 | 439 | |||
| FDIC insurance premiums | (18) | 81 | |||
| Intangible asset amortization | 109 | 109 | |||
| Other noninterest expense | 898 | 831 | |||
| Total noninterest expense | 10,354 | 9,355 | |||
| Income before income tax expense | 6,695 | 6,026 | |||
| Income tax expense | 1,919 | 1,492 | |||
| Net income | $ | 4,776 | $ | 4,534 | |
| Weighted-average common shares outstanding: | |||||
| Basic | 9,043,761 | 8,995,925 | |||
| Diluted | 9,211,874 | 9,183,729 | |||
| Earnings per common share: | |||||
| Basic | $ | 0.53 | $ | 0.50 | |
| Diluted | 0.52 | 0.49 | |||
| Cash dividends declared per common share | $ | 0.01 | $ | 0.01 | |
| NORTHEAST BANK | |||||||||||||||||
| AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||
| 2019 | 2018 | ||||||||||||||||
| Interest | Average | Interest | Average | ||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||
| Assets: | |||||||||||||||||
| Interest-earning assets: | |||||||||||||||||
| Investment securities | $ | 82,081 | $ | 451 | 2.19 | % | $ | 87,873 | $ | 362 | 1.63 | % | |||||
| Loans (1) (2) (3) | 951,265 | 19,704 | 8.24 | % | 893,945 | 17,525 | 7.78 | % | |||||||||
| Federal Home Loan Bank stock | 1,258 | 19 | 6.01 | % | 1,652 | 24 | 5.76 | % | |||||||||
| Short-term investments (4) | 60,347 | 321 | 2.12 | % | 172,641 | 856 | 1.97 | % | |||||||||
| Total interest-earning assets | 1,094,951 | 20,495 | 7.45 | % | 1,156,111 | 18,767 | 6.44 | % | |||||||||
| Cash and due from banks | 2,629 | 2,571 | |||||||||||||||
| Other non-interest earning assets | 35,531 | 31,234 | |||||||||||||||
| Total assets | $ | 1,133,111 | $ | 1,189,916 | |||||||||||||
| Liabilities & Shareholders' Equity: | |||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||
| NOW accounts | $ | 65,405 | $ | 60 | 0.36 | % | $ | 69,705 | $ | 55 | 0.31 | % | |||||
| Money market accounts | 264,877 | 1,069 | 1.61 | % | 406,104 | 1,548 | 1.51 | % | |||||||||
| Savings accounts | 34,476 | 14 | 0.16 | % | 36,176 | 14 | 0.15 | % | |||||||||
| Time deposits | 484,115 | 3,173 | 2.61 | % | 406,151 | 2,065 | 2.02 | % | |||||||||
| Total interest-bearing deposits | 848,873 | 4,316 | 2.02 | % | 918,136 | 3,682 | 1.59 | % | |||||||||
| Federal Home Loan Bank advances | 15,000 | 125 | 3.32 | % | 15,000 | 118 | 3.12 | % | |||||||||
| Subordinated debt | 14,841 | 282 | 7.56 | % | 23,998 | 601 | 9.94 | % | |||||||||
| Lease liability | 5,690 | 35 | 2.45 | % | 560 | 7 | 4.96 | % | |||||||||
| Total interest-bearing liabilities | 884,404 | 4,758 | 2.14 | % | 957,694 | 4,408 | 1.83 | % | |||||||||
| Non-interest bearing liabilities: | |||||||||||||||||
| Demand deposits and escrow accounts | 85,090 | 82,005 | |||||||||||||||
| Other liabilities | 7,581 | 9,740 | |||||||||||||||
| Total liabilities | 977,075 | 1,049,439 | |||||||||||||||
| Shareholders' equity | 156,036 | 140,477 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,133,111 | $ | 1,189,916 | |||||||||||||
| Net interest income | $ | 15,737 | $ | 14,359 | |||||||||||||
| Interest rate spread | 5.31 | % | 4.61 | % | |||||||||||||
| Net interest margin (5) | 5.72 | % | 4.93 | % | |||||||||||||
| (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 | |||||||||||||||||||
| September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | |||||||||||||||
| Net interest income | $ | 15,737 | $ | 17,288 | $ | 15,033 | $ | 15,643 | $ | 14,359 | |||||||||
| Provision(credit) for loan losses | (136 | ) | 262 | 414 | 101 | 532 | |||||||||||||
| Noninterest income | 1,176 | 1,151 | 1,866 | 1,545 | 1,554 | ||||||||||||||
| Noninterest expense | 10,354 | 18,504 | 9,752 | 9,903 | 9,355 | ||||||||||||||
| Net income (loss) | 4,776 | (603 | ) | 4,828 | 5,125 | 4,534 | |||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||
| Basic | 9,043,761 | 9,041,926 | 9,044,230 | 9,048,397 | 8,995,925 | ||||||||||||||
| Diluted | 9,211,874 | 9,041,926 | 9,198,077 | 9,201,557 | 9,183,729 | ||||||||||||||
| Earnings(loss) per common share: | |||||||||||||||||||
| Basic | $ | 0.53 | $ | (0.07 | ) | $ | 0.53 | $ | 0.57 | $ | 0.50 | ||||||||
| Diluted | 0.52 | (0.07 | ) | 0.52 | 0.56 | 0.49 | |||||||||||||
| Operating earnings per common share: | |||||||||||||||||||
| Basic | $ | 0.53 | $ | 0.60 | $ | 0.53 | $ | 0.57 | $ | 0.50 | |||||||||
| Diluted | 0.52 | 0.59 | 0.52 | 0.56 | 0.49 | ||||||||||||||
| Dividends declared per common share | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||||||
| Return (loss) on average assets | 1.68 | % | (0.20 | %) | 1.63 | % | 1.70 | % | 1.51 | % | |||||||||
| Return (loss) on average equity | 12.18 | % | (1.58 | %) | 13.00 | % | 13.94 | % | 12.81 | % | |||||||||
| Net interest rate spread (1) | 5.31 | % | 5.55 | % | 4.81 | % | 5.00 | % | 4.61 | % | |||||||||
| Net interest margin (2) | 5.72 | % | 5.95 | % | 5.20 | % | 5.33 | % | 4.93 | % | |||||||||
| Efficiency ratio (non-GAAP) (3) | 61.22 | % | 100.35 | % | 57.71 | % | 57.62 | % | 58.79 | % | |||||||||
| Noninterest expense to average total assets | 3.64 | % | 6.18 | % | 3.29 | % | 3.28 | % | 3.12 | % | |||||||||
| Average interest-earning assets to average interest-bearing liabilities | 123.81 | % | 121.71 | % | 121.65 | % | 120.67 | % | 120.72 | % | |||||||||
| Operating return on average assets (non-GAAP) (4) | 1.68 | % | 1.81 | % | 1.63 | % | 1.70 | % | 1.51 | % | |||||||||
| Operating return on average equity (non-GAAP) (4) | 12.18 | % | 14.18 | % | 13.00 | % | 13.94 | % | 12.81 | % | |||||||||
| Operating efficiency ratio (non-GAAP) (3) (4) | 61.22 | % | 55.15 | % | 57.71 | % | 57.62 | % | 58.79 | % | |||||||||
| Operating noninterest expense to average total assets (non-GAAP) (4) | 3.64 | % | 3.40 | % | 3.29 | % | 3.28 | % | 3.12 | % | |||||||||
| As of: | |||||||||||||||||||
| September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | |||||||||||||||
| Nonperforming loans: | |||||||||||||||||||
| Originated portfolio: | |||||||||||||||||||
| Residential real estate | $ | 1,515 | $ | 2,772 | $ | 2,317 | $ | 2,595 | $ | 2,784 | |||||||||
| Commercial real estate | 4,530 | 3,892 | 3,336 | 2,764 | 1,703 | ||||||||||||||
| Commercial and industrial | 87 | 1,284 | 1,495 | 1,420 | 1,454 | ||||||||||||||
| Consumer | 136 | 148 | 236 | 216 | 185 | ||||||||||||||
| Total originated portfolio | 6,268 | 8,096 | 7,384 | 6,995 | 6,126 | ||||||||||||||
| Total purchased portfolio | 7,834 | 6,671 | 5,366 | 5,351 | 5,375 | ||||||||||||||
| Total nonperforming loans | 14,102 | 14,767 | 12,750 | 12,346 | 11,501 | ||||||||||||||
| Real estate owned and other repossessed collateral, net | 1,936 | 1,957 | 2,014 | 1,463 | 1,549 | ||||||||||||||
| Total nonperforming assets | $ | 16,038 | $ | 16,724 | $ | 14,764 | $ | 13,809 | $ | 13,050 | |||||||||
| Past due loans to total loans | 1.50 | % | 1.50 | % | 2.16 | % | 1.95 | % | 1.09 | % | |||||||||
| Nonperforming loans to total loans | 1.51 | % | 1.51 | % | 1.33 | % | 1.32 | % | 1.30 | % | |||||||||
| Nonperforming assets to total assets | 1.43 | % | 1.45 | % | 1.20 | % | 1.16 | % | 1.08 | % | |||||||||
| Allowance for loan losses to total loans | 0.57 | % | 0.58 | % | 0.59 | % | 0.57 | % | 0.60 | % | |||||||||
| Allowance for loan losses to nonperforming loans | 37.44 | % | 38.61 | % | 44.38 | % | 42.99 | % | 45.98 | % | |||||||||
| Commercial real estate loans to total capital (5) | 262.92 | % | 282.05 | % | 251.02 | % | 242.38 | % | 230.48 | % | |||||||||
| Net loans to core deposits (6) | 102.59 | % | 103.33 | % | 94.19 | % | 94.84 | % | 87.17 | % | |||||||||
| Purchased loans to total loans, including held for sale | 35.50 | % | 33.37 | % | 33.27 | % | 35.17 | % | 33.75 | % | |||||||||
| Equity to total assets | 14.08 | % | 13.31 | % | 12.44 | % | 12.44 | % | 11.81 | % | |||||||||
| Common equity tier 1 capital ratio | 16.92 | % | 15.89 | % | 16.23 | % | 16.04 | % | 16.50 | % | |||||||||
| Total capital ratio | 19.07 | % | 18.01 | % | 19.33 | % | 19.15 | % | 19.81 | % | |||||||||
| Tier 1 leverage capital ratio | 14.06 | % | 12.86 | % | 13.58 | % | 13.20 | % | 12.83 | % | |||||||||
| Total shareholders' equity | $ | 158,101 | $ | 153,580 | $ | 153,188 | $ | 148,491 | $ | 143,391 | |||||||||
| Less: Preferred stock | - | - | - | - | - | ||||||||||||||
| Common shareholders' equity | 158,101 | 153,580 | 153,188 | 148,491 | 143,391 | ||||||||||||||
| Less: Intangible assets (7) | (2,940 | ) | (3,285 | ) | (3,485 | ) | (3,583 | ) | (3,768 | ) | |||||||||
| Tangible common shareholders' equity (non-GAAP) | $ | 155,161 | $ | 150,295 | $ | 149,703 | $ | 144,908 | $ | 139,623 | |||||||||
| Common shares outstanding | 9,038,912 | 9,042,109 | 9,041,868 | 9,048,863 | 9,047,390 | ||||||||||||||
| Book value per common share | $ | 17.49 | $ | 16.98 | $ | 16.94 | $ | 16.41 | $ | 15.85 | |||||||||
| Tangible book value per share (non-GAAP) (8) | 17.17 | 16.62 | 16.56 | 16.01 | 15.43 | ||||||||||||||
(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 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). | |||||||||||||||||||
| (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. | |||||||||||||||||||