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 available to
common shareholders of $542 thousand, or $0.05 per diluted common
share, for the quarter ended June 30, 2014, compared to net income
available to common shareholders of $205 thousand, or $0.02 per
diluted common share, for the quarter ended June 30, 2013. Net
income available to common shareholders for the year ended June 30,
2014 was $2.7 million, compared to $4.1 million for the year ended
June 30, 2013.
The current quarter and year included several non-recurring
items, related principally to severance costs, one-time costs
associated with the Bank’s core systems conversion and a legal
settlement recovery. Excluding these items, which the Company
considers to be non-core, net operating earnings were $1.1 million,
or $0.11 per share, for the quarter and $3.6 million, or $0.35 per
share, for the year ended June 30, 2014. Reported net income and
net operating earnings for the quarters and years ended June 30,
2014 and 2013, respectively, are set forth below:
Reconciliation of Net Income Available to
Common Shareholders (GAAP) to Net Operating Earnings
(non-GAAP)(1)
Three Months Ended June 30, Year Ended June
30, 2014 2013 2014 2013
(Dollars in thousands, except share and per share data) Net income
available to common shareholders (GAAP) $ 542 $ 205 $ 2,692 $ 4,065
Items excluded from operating earnings, net of tax: Discontinued
operations - 41 8 (125) Severance expense 407 203 808 203 Software
conversion expense 148 - 291 - Legal settlement expense and related
professional fees - 672 (165) 672 Total
after-tax items 555 916 942 750 Net
operating earnings (non-GAAP) $ 1,097 $ 1,121 $ 3,634 $ 4,815
Weighted average common shares outstanding - basic
10,314,197 10,446,643 10,404,784 10,409,588 Reported basic
earnings per share (GAAP) $ 0.05 $ 0.02 $ 0.26 $ 0.39 Items
excluded from operating earnings 0.06 0.09
0.09 0.07 Net operating earnings per share (non-GAAP) $ 0.11
$ 0.11 $ 0.35 $ 0.46 (1) Management believes operating earnings,
which exclude non-core items, provide a more meaningful
representation of the Company’s performance.
The Board of Directors has declared a cash dividend of $0.01 per
share, payable on August 21, 2014 to shareholders of record as of
August 7, 2014.
“It was a very productive and busy quarter,” said Rick Wayne,
President and Chief Executive Officer of Northeast. “We closed $75
million of loans, including commercial loan purchases and
originations totaling $45 million, while maintaining sound asset
quality. We generated a return of 12.2% on our purchased loan book,
supporting a net interest margin of 4.75% for the quarter. We
significantly enhanced our delivery platform with the successful
completion of our core systems conversion; this achievement and the
restructuring expenses we incurred will help us to better align
resources with our business objectives. Looking forward, we believe
our significant operational capacity, lending expertise and capital
resources leave us well-positioned for growth.”
At June 30, 2014, total assets were $761.9 million, an increase
of $91.3 million, or 13.6%, compared to June 30, 2013. The
principal components of the change in the Company’s balance sheet
are as follows:
1. The loan portfolio grew by $84.4 million,
or 19.0%, compared to June 30, 2013, principally due to net growth
of $75.3 million in commercial loans purchased or originated by the
Bank’s Loan Acquisition and Servicing Group (“LASG”) and $9.1
million of net growth in loans originated by the Bank’s Community
Banking Division.
For the quarter ended June 30, 2014,
significant loan growth by the LASG was largely offset by runoff,
resulting in a net increase in the LASG purchased and originated
portfolio of $7.3 million. Purchased loans of $33.6 million
produced a net increase of $18.5 million, net of pay-downs. LASG
originated loans totaling $11.5 million were more than offset by
pay-downs, in large part due to the payoff of a low-yielding $12
million securities loan.
As has been 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, 2014 (Dollars in millions) Total
Loans Purchased loans may not exceed 40% of total loans $ 13.2
Regulatory Capital Commercial real estate loans may not exceed 300%
of total risk-based capital $ 148.6
An overview of the LASG portfolio
follows.
Three Months Ended June 30, 2014 2013 Purchased
Originated Total LASG Purchased Originated
Total LASG (Dollars in thousands) Loans purchased or
originated during the period: Unpaid principal balance $ 38,244 $
11,503 $ 49,747 $ 51,677 $ 21,556 $ 73,233 Net investment basis
33,556 11,503 45,059 45,783 21,556 67,339 Loan returns
during the period: Yield 12.15% 5.43% 10.13% 17.30% 8.92% 16.21%
Total Return (1) 12.21% 7.46% 10.78% 17.53% 8.92% 16.41%
Year Ended June 30, 2014 2013 Purchased Originated Total LASG
Purchased Originated Total LASG (Dollars in thousands) Loans
purchased or originated during the period: Unpaid principal balance
$ 91,288 $ 66,225 $ 157,513 $ 155,216 $ 37,181 $ 192,397 Net
investment basis 79,823 66,225 146,048 121,336 37,208 158,544
Loan returns during the period: Yield 11.43% 5.29% 9.70%
16.04% 9.34% 15.28% Total Return (1) 11.76% 5.87% 10.11% 18.33%
9.34% 17.32% Total loans as of period end: Unpaid principal
balance $ 242,631 $ 77,588 $ 320,219 $ 204,276 $ 38,846 $ 243,122
Net investment basis 203,450 77,561 281,011 166,786 38,879 205,665
(1) The total return 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 and borrowings increased by $89.7
million and $1.7 million, respectively, from June 30, 2013.
Non-maturity deposits increased by $10.6 million, or 4.8%, for the
year while time deposits grew by 30.1% or $79.1 million. The latter
was centered in deposits raised through deposit listing services,
which the Bank uses when advantageous to acquire term funding
consistent with its asset/liability management objectives.
3. Stockholders’ equity decreased by $1.7
million from June 30, 2013, in part due to common stock dividends
of $2.9 million and $2.8 million of common stock repurchases
(representing 291,200 shares).
Net income from continuing operations increased by $296 thousand
to $542 thousand for the quarter ended June 30, 2014, compared to
the quarter ended June 30, 2013, both results affected by non-core
items as noted above. Earnings for the current quarter included the
following items of significance:
1. Net interest income before provision for
loan losses decreased slightly, by $55 thousand, or less than 1%,
for the quarter ended June 30, 2014 compared to the quarter ended
June 30, 2013, due to lower transactional interest income from
purchased loan payoffs offset by the positive effect of balance
sheet growth. Average earning assets increased by $72.4 million,
and average loans by $121.3 million, when compared to the fourth
quarter of FY 2013.
The various components of transactional
income are set forth in the table below entitled “Total Return on
Purchased Loans.” When compared to the quarter ended June 30, 2013,
transactional interest income decreased by $1.1 million, impacting
the net interest margin, which declined to 4.75% from 5.32%. 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, 2014 2013 Average
Interest Average
Interest Balance Income Yield Balance Income
Yield (Dollars in thousands) Community Banking Division $ 247,802 $
3,096 5.01% $ 235,455 $ 3,376 5.75% LASG: Originated 80,764 1,094
5.43% 20,723 461 8.92% Purchased 187,391 5,677 12.15%
138,445 5,971 17.30% Total LASG 268,155
6,771 10.13% 159,168 6,432 16.21% Total $ 515,957 $
9,867 7.67% $ 394,623 $ 9,808 9.97% Year Ended June 30, 2014
2013 Average Interest Average Interest Balance Income Yield Balance
Income Yield (Dollars in thousands) Community Banking Division $
246,853 $ 12,926 5.24% $ 252,199 $ 14,824 5.88% LASG: Originated
69,883 3,695 5.29% 14,906 1,392 9.34% Purchased 178,377
20,388 11.43% 117,205 18,801 16.04% Total LASG
248,260 24,083 9.70% 132,111 20,193
15.28% Total $ 495,113 $ 37,009 7.47% $ 384,310 $ 35,017 9.11%
The yield on purchased loans in each period shown was increased
by unscheduled loan payoffs, which resulted in immediate
recognition of the prepaid loans’ discount in interest income. The
following table details the “total return” on purchased loans,
which includes total transactional income of $1.7 million for the
quarter ended June 30, 2014, a decrease of $1.1 million from the
quarter ended June 30, 2013. The following table summarizes the
total return recognized on the purchased loan portfolio:
Total Return on Purchased Loans Three Months Ended June 30,
2014 2013 Income Return
(1) Income Return (1) (Dollars in thousands)
Regularly scheduled interest and accretion $ 4,050 8.64% $ 3,237
9.38% Transactional income: Gains on loan sales - 0.00% 80 0.23%
Gain on sale of real estate owned 44 0.09% - 0.00% Other
noninterest income 4 0.01% - 0.00% Accelerated accretion and loan
fees 1,627 3.47% 2,734 7.92% Total transactional
income 1,675 3.57% 2,814 8.15% Total $ 5,725 12.21% $
6,051 17.53% Year Ended June 30, 2014 2013 Income Return (1)
Income Return (1) (Dollars in thousands) Regularly scheduled
interest and accretion $ 15,682 8.75% $ 11,038 9.35% Transactional
income: Gains on loan sales 576 0.32% 2,115 1.79% Gain on sale of
real estate owned 100 0.06% 684 0.58% Other noninterest income 4
0.00% 36 0.03% Accelerated accretion and loan fees 4,706
2.63% 7,763 6.58% Total transactional income 5,386
3.01% 10,598 8.98% Total $ 21,068 11.76% $ 21,636 18.33%
(1) The total return represents scheduled interest and
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. Quarterly noninterest income of $1.4
million was unchanged compared to the quarter ended June 30, 2013,
as a $318 thousand increase in gains on sales of commercial loans
offset a $209 thousand reduction in gains realized on sales of
residential mortgage loans. The decline in residential loan sale
gains was the result of a reduction in refinance activity compared
to the prior period.
3. Noninterest expense decreased by $672
thousand for the quarter ended June 30, 2014, compared to the
quarter ended June 30, 2013. Variances of significance are:
- An increase of $296 thousand in
salaries and employee benefits, principally related to an increase
in severance costs incurred between the two periods. Severance
costs of $652 thousand in the current quarter were primarily the
result of the elimination of two senior positions in the Community
Banking Division and a restructuring of the Bank’s information
technology infrastructure in light of the Bank’s core banking
systems conversion in May 2014;
- An increase of $64 thousand in
occupancy and equipment expense, principally related to a higher
level of software maintenance and depreciation;
- An increase of $91 thousand in data
processing, due to the conversion of the Bank’s core software to an
outsourced model during the quarter ended June 30, 2014;
- A decrease of $271 thousand in
marketing expense, due to a reduction in deposit and residential
mortgage marketing in fiscal 2014;
- A decrease of $145 thousand in loan
expense, principally due to lower loan acquisitions and work-out
expenses;
- Legal settlement expense in the amount
of $980 thousand incurred in the fourth quarter of 2013;
- An increase of $251 thousand in other
noninterest expense, principally due to contract termination costs
and one-time non-capital expenses associated with the recent core
banking systems conversion.
4. The Company’s effective tax rate for the
quarter ended June 30, 2014 was 45.9%, compared to 36.9% and 30.5%
for the fiscal years ended June 30, 2014 and 2013, respectively.
The increase in the quarter was primarily the result of a change in
estimated state tax apportionment. Absent this change, the
Company’s annual effective tax rate would have been approximately
33.3%.
At June 30, 2014, nonperforming assets totaled $8.9 million, or
1.2% of total assets, compared to $7.0 million, or 1.0% of total
assets at June 30, 2013.
At June 30, 2014, the Company’s Tier 1 leverage ratio was 15.9%,
a decrease from 17.8% at June 30, 2013, and the total risk-based
capital ratio was 23.7%, a decrease from 27.5% at June 30,
2013.
Investor Call
Information
Richard Wayne, Chief Executive Officer of Northeast Bancorp, and
Claire Bean, Chief Financial Officer of Northeast Bancorp, will
host a conference call to discuss fourth quarter earnings and
business outlook at 9:30 a.m. Eastern Time on Friday, July 25,
2014. Investors can access the call by dialing 877.878.2762 and
entering the following passcode: 77324290. 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 six loan production offices that serve individuals and
businesses located in western and south-central Maine, southern New
Hampshire and eastern Massachusetts. Northeast Bank’s Loan
Acquisition and Servicing Group purchases and originates commercial
loans for the Bank’s portfolio. 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.
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
continuing weakness in general economic conditions on a national
basis or in the local markets in which the Company operates,
including changes that adversely affect borrowers’ ability to
service and repay 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; increasing
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, 2014
June 30, 2013 Assets Cash and due from banks $ 3,372
$ 3,238 Short-term investments 78,887 62,696 Total
cash and cash equivalents 82,259 65,934 Available-for-sale
securities, at fair value 113,881 121,597 Loans held for sale
11,945 8,594 Loans Commercial real estate 316,098 264,490
Residential real estate 148,634 127,829 Commercial and industrial
41,800 29,720 Consumer 9,884 13,337 Total loans
516,416 435,376 Less: Allowance for loan losses 1,367
1,143 Loans, net 515,049 434,233 Premises and equipment, net
9,135 10,075 Real estate owned and other possessed collateral, net
1,991 2,134 Regulatory stock, at cost 4,102 5,721 Intangible
assets, net 2,798 3,544 Bank owned life insurance 14,836 14,385
Other assets 5,935 4,422 Total assets $ 761,931 $
670,639 Liabilities and Stockholders' Equity Deposits Demand
$ 50,140 $ 46,425 Savings and interest checking 98,340 90,970 Money
market 83,901 84,416 Time 341,948 262,812 Total
deposits 574,329 484,623 Federal Home Loan Bank advances
42,824 28,040 Wholesale repurchase agreements 10,199 25,397
Short-term borrowings 2,984 625 Junior subordinated debentures
issued to affiliated trusts 8,440 8,268 Capital lease obligation
1,558 1,739 Other liabilities 9,531 8,145 Total
liabilities 649,865 556,837 Commitments and
contingencies - - Stockholders' equity Preferred stock,
$1.00 par value, 1,000,000 shares authorized; no shares issued and
outstanding at June 30, 2014 and June 30, 2013 - - Voting common
stock, $1.00 par value, 25,000,000 shares authorized; 9,260,331 and
9,565,680 shares issued and outstanding at June 30, 2014 and June
30, 2013, respectively 9,260 9,566 Non-voting common stock, $1.00
par value, 3,000,000 shares authorized; 880,963 shares issued and
outstanding at June 30, 2014 and June 30, 2013 881 881 Additional
paid-in capital 90,914 92,745 Retained earnings 12,294 12,524
Accumulated other comprehensive loss (1,283) (1,914)
Total stockholders' equity 112,066 113,802 Total
liabilities and stockholders' equity $ 761,931 $ 670,639
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, 2014
2013 2014 2013 Interest and dividend income:
Interest on loans $ 9,867 $ 9,808 $ 37,009 $ 35,017 Interest on
available-for-sale securities 251 209 1,048 1,138 Other interest
and dividend income 106 105 314 388
Total interest and dividend income 10,224 10,122
38,371 36,543 Interest expense: Deposits 1,075
1,008 4,123 4,098 Federal Home Loan Bank advances 326 217 1,301 967
Wholesale repurchase agreements 72 136 357 651 Short-term
borrowings 7 4 24 19 Junior subordinated debentures issued to
affiliated trusts 240 195 765 769 Obligation under capital lease
agreements 20 23 83 92 Total interest
expense 1,740 1,583 6,653 6,596
Net interest and dividend income before provision for loan losses
8,484 8,539 31,718 29,947 Provision for loan losses 124
301 531 1,122 Net interest and dividend income
after provision for loan losses 8,360 8,238
31,187 28,825 Noninterest income: Fees for other
services to customers 398 446 1,644 1,648 Net securities gains - -
0 792 Gain on sales of loans held for sale 505 714 1,650 3,009 Gain
on sales of portfolio loans 403 85 1,006 2,311 Gain recognized on
real estate owned and other repossessed collateral, net 13 65 63
746 Bank-owned life insurance income 109 119 451 718 Other
noninterest income 9 14 55 82 Total
noninterest income 1,437 1,443 4,869
9,306 Noninterest expense: Salaries and employee benefits
5,162 4,866 17,786 17,036 Occupancy and equipment expense 1,336
1,272 5,448 4,626 Professional fees 316 286 1,285 1,450 Data
processing fees 374 283 1,209 972 Marketing expense 86 357 311
1,035 Loan acquisition and collection expense 336 481 1,539 1,766
FDIC insurance premiums 126 90 480 454 Intangible asset
amortization 164 208 746 943 Legal settlement expense (recovery) -
980 (250) 980 Other noninterest expense 895 644
3,223 2,693 Total noninterest expense 8,795
9,467 31,777 31,955 Income from
continuing operations before income tax expense 1,002 214 4,279
6,176 Income tax expense (benefit) 460 (32) 1,579
1,881 Net Income from continuing operations 542 246
2,700 4,295 Income (loss) from discontinued
operations before income tax expense (benefit) - (64) (12) 189
Income tax expense (benefit) - (23) (4)
64 Net income (loss) from discontinued operations -
(41) (8) 125 Net income $ 542 $ 205 $ 2,692 $ 4,420
Net income available to common stockholders $ 542 $ 205 $ 2,692 $
4,065 Weighted-average shares outstanding: Basic 10,314,197
10,446,643 10,404,784 10,409,588 Diluted 10,314,197 10,446,643
10,404,784 10,409,588 Earnings per common share: Basic: Income from
continuing operations $ 0.05 $ 0.02 $ 0.26 $ 0.39 Income from
discontinued operations 0.00 0.00 0.00 0.00 Net Income $
0.05 $ 0.02 $ 0.26 $ 0.39 Diluted: Income from continuing
operations $ 0.05 $ 0.02 $ 0.26 $ 0.39 Income from discontinued
operations 0.00 0.00 0.00 0.00 Net
Income $ 0.05 $ 0.02 $ 0.26 $ 0.39 Cash dividends declared per
common share $ 0.01 $ 0.09 $ 0.28 $ 0.36
NORTHEAST
BANCORP AND SUBSIDIARY CONSOLIDATED AVERAGE BALANCE SHEETS
AND ANNUALIZED YIELDS (Unaudited) (Dollars in thousands)
Three Months Ended June 30, 2014 2013
Interest Average
Interest Average Average Income/
Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense
Rate (Dollars in thousands) Assets: Interest-earning assets:
Investment securities $ 112,226 $ 251 0.90% $ 126,272 $ 209 0.66%
Loans (1) (2) 515,957 9,867 7.67% 394,623 9,808 9.97% Regulatory
stock 5,316 55 4.15% 5,253 33 2.52% Short-term investments (3)
83,194 51 0.25% 118,113 72 0.24% Total
interest-earning assets 716,693 10,224 5.72%
644,261 10,122 6.30% Cash and due from banks 2,606 2,978
Other non-interest earning assets 32,643 35,982 Total
assets $ 751,942 $ 683,221 Liabilities & Stockholders'
Equity: Interest-bearing liabilities: NOW accounts $ 62,427 $ 41
0.26% $ 56,650 $ 38 0.27% Money market accounts 85,119 110 0.52%
85,585 117 0.55% Savings accounts 35,080 11 0.13% 32,868 11 0.13%
Time deposits 340,214 913 1.08% 270,342
842 1.25% Total interest-bearing deposits 522,840 1,075 0.82%
445,445 1,008 0.91% Short-term borrowings 2,051 7 1.37% 1,697 4
0.95% Borrowed funds 54,522 418 3.08% 58,923 376 2.56% Junior
subordinated debentures 8,416 240 11.44% 8,245
195 9.49% Total interest-bearing liabilities 587,829
1,740 1.19% 514,310 1,583 1.23%
Non-interest bearing liabilities: Demand deposits and escrow
accounts 51,562 46,784 Other liabilities 2,955 6,900
Total liabilities 642,346 567,994 Stockholders' equity
109,596 115,227 Total liabilities and stockholders' equity $
751,942 $ 683,221 Net interest income $ 8,484 $ 8,539
Interest rate spread 4.53% 5.07% Net interest margin (4) 4.75%
5.32% (1) Includes loans held for sale. (2) Nonaccrual loans
are included in the computation of average, but unpaid interest has
not been included for purposes of determining interest income. (3)
Short term investments include FHLB overnight deposits and other
interest-bearing deposits. (4) 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, 2014 2013 Interest
Average Interest
Average Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate (Dollars in thousands)
Assets: Interest-earning assets: Investment securities $ 115,849 $
1,048 0.90% $ 131,199 $ 1,138 0.87% Loans (1) (2) 495,113 37,009
7.47% 384,310 35,017 9.11% Regulatory stock 5,620 123 2.19% 5,398
75 1.39% Short-term investments (3) 78,838 191 0.24%
127,781 313 0.24% Total interest-earning assets
695,420 38,371 5.52% 648,688 36,543
5.63% Cash and due from banks 2,876 3,065 Other non-interest
earning assets 33,958 37,206 Total assets $ 732,254 $
688,959 Liabilities & Stockholders' Equity:
Interest-bearing liabilities: NOW accounts $ 61,146 $ 162 0.26% $
55,763 $ 153 0.27% Money market accounts 85,333 447 0.52% 63,931
337 0.53% Savings accounts 34,391 44 0.13% 31,939 44 0.14% Time
deposits 314,848 3,470 1.10% 280,059
3,564 1.27% Total interest-bearing deposits 495,718 4,123 0.83%
431,692 4,098 0.95% Short-term borrowings 2,230 24 1.08% 1,472 19
1.29% Borrowed funds 58,468 1,741 2.98% 75,633 1,710 2.26% Junior
subordinated debentures 8,352 765 9.16% 8,185
769 9.40% Total interest-bearing liabilities 564,768
6,653 1.18% 516,982 6,596 1.28%
Non-interest bearing liabilities: Demand deposits and escrow
accounts 50,890 49,343 Other liabilities 3,962 5,982
Total liabilities 619,620 572,307 Stockholders' equity
112,634 116,652 Total liabilities and stockholders' equity $
732,254 $ 688,959 Net interest income $ 31,718 $ 29,947
Interest rate spread 4.34% 4.36% Net interest margin (4)
4.56% 4.62% (1) Includes loans held for sale. (2) Nonaccrual
loans are included in the computation of average, but unpaid
interest has not been included for purposes of determining interest
income. (3) Short term investments include FHLB overnight deposits
and other interest-bearing deposits. (4) 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, 2014
March 31, 2014 December 31, 2013
September 30, 2013
June 30, 2013 Net interest income
$ 8,484 $ 7,112 $ 9,017 $
7,107 $ 8,539 Provision for loan losses
124 180 151 77 301
Noninterest income
1,437 1,308 835 1,288 1,443 Noninterest
expense
8,795 7,516 7,614 7,852 9,467 Net income from
continuing operations
542 437 1,411 310 247 Net income
542 437 1,393 320 205 Weighted average common shares
outstanding: Basic
10,314,197 10,432,494 10,432,833
10,440,513 10,446,643 Diluted
10,314,197 10,432,494
10,432,833 10,440,513 10,446,643 Earnings per common share: Basic
$ 0.05 $ 0.04 $ 0.13 $ 0.03 $ 0.02 Diluted
$ 0.05 $
0.04 0.13 0.03 0.02 Dividends per common share
0.01 0.09
0.09 0.09 0.09 Return on average assets
0.29% 0.24%
0.76% 0.18% 0.12% Return on average equity
1.98% 1.55% 4.86%
1.12% 0.71% Net interest rate spread (1)
4.53% 3.87% 4.94%
3.99% 5.07% Net interest margin (2)
4.75% 4.08% 5.16% 4.24%
5.32% Efficiency ratio (3)
88.65% 89.26% 77.28% 93.53%
94.84% Noninterest expense to average total assets
4.69%
4.08% 4.13% 4.43% 5.56% Average interest-earning assets to
averageinterest-bearing liabilities
121.92% 122.17% 123.85%
124.70% 125.27% As of:
June 30, 2014 March 31, 2014
December 31, 2013 September 30, 2013 June 30, 2013 Nonperforming
loans: Originated portfolio: Residential real estate
$ 1,303
$ 1,678 $ 1,895 $ 1,945 $ 2,346 Commercial real estate
1,162
798 487 471 473 Home equity
160 214 204 229 334 Commercial
business
5 - 61 62 110 Consumer
124 152 259 259 136
Total originated portfolio
2,756 2,842 2,906 2,966 3,399
Total purchased portfolio
4,114 4,582 3,245 2,553 1,457
Total nonperforming loans
6,870 7,424 6,151 5,519 4,856 Real
estate owned and other possessed collateral, net
1,991 2,000
3,211 3,413 2,134 Total nonperforming assets
$ 8,861 $ 9,424
$ 9,362 $ 8,932 $ 6,990 Past due loans to total loans
1.14% 1.44% 1.57% 1.38% 1.68% Nonperforming loans to total
loans
1.33% 1.44% 1.23% 1.14% 1.12% Nonperforming assets to
total assets
1.16% 1.26% 1.28% 1.23% 1.04% Allowance for
loan losses to total loans
0.26% 0.26% 0.27% 0.25% 0.26%
Allowance for loan losses to nonperforming loans
19.90%
18.12% 21.95% 22.18% 23.54% Commercial real estate loans to
risk-based capital (4)
176.98% 175.10% 170.69% 171.30%
159.07% Net loans to core deposits (5)
92.13% 93.18% 95.10%
93.04% 92.94% Purchased loans to total loans, including held for
sale
38.51% 35.29% 34.89% 36.29% 37.57% Equity to total
assets
14.71% 15.18% 15.61% 15.70% 16.97% Tier 1 leverage
capital ratio
15.90% 16.28% 16.66% 17.23% 17.78% Total
risk-based capital ratio
23.74% 24.21% 24.61% 25.63% 27.54%
Total stockholders' equity
$ 112,066 $ 114,008 $
114,383 $ 113,846 $ 113,802 Less: Preferred stock
- - - - -
Common stockholders' equity
112,066 114,008 114,383 113,846
113,802 Less: Intangible assets
(2,798) (2,962) (3,124)
(3,334) (3,544) Tangible common stockholders' equity (non-GAAP)
$ 109,268 $ 111,046 $ 111,259 $ 110,512 $ 110,258
Common shares outstanding
10,141,294 10,432,494 10,432,494
10,433,550 10,446,643 Book value per common share
$ 11.05 $
10.93 $ 10.96 $ 10.91 $ 10.89 Tangible book value per share
(non-GAAP) (6)
10.77 10.64 10.66 10.59 10.55
Reconciliation of Net Income Available to Common Shareholders
(GAAP) to Net Operating Earnings (non-GAAP) (7) Three Months Ended:
June 30, 2014 March 31, 2014 December 31, 2013 September 30,
2013 June 30, 2013 Net income available to common shareholders
(GAAP)
$ 542 $ 437 $ 1,393 $ 320 $ 205 Items excluded from
operating earnings, net of tax: Discontinued operations
- -
18 (10) 41 Severance expense
407 35 - 366 203 Software
conversion expenses
148 84 59 - - Legal settlement expense
and related professional fees
- - - (165) 672 Total
after-tax items
555 119 77 191 916 Net operating earnings
(non-GAAP)
$ 1,097 $ 556 $ 1,470 $ 511 $ 1,121 Net operating
earnings per share - basic (non-GAAP)
$ 0.11 $ 0.05 $ 0.14 $
0.05 $ 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 those
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) Tangible book
value per share represents total stockholders' equity less the sum
of preferred stock and intangible assets divided by common shares
outstanding. (7) Management believes operating earnings, which
exclude non-core items, provide a more meaningful representation of
the Company's performance.
For More Information:Northeast BankClaire S. Bean, CFO
& COO, 207.786.3245 ext. 3202500 Canal Street, Lewiston, ME
04240www.northeastbank.com
Northeast Bank (NASDAQ:NBN)
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