NBN Northeast Bank

Northeast Bancorp (“Northeast” or the “Company”) (NASDAQ:NBN), a Maine-based full-service financial services company and parent of Northeast Bank (the “Bank”), today reported net income of $2.2 million, or $0.24 per diluted common share, for the quarter ended June 30, 2016, compared to net income of $2.2 million, or $0.22 per diluted common share, for the quarter ended June 30, 2015. Net income for the year ended June 30, 2016 was $7.6 million, or $0.80 per diluted common share, compared to $7.1 million, or $0.72 per diluted common share, for the year ended June 30, 2015.

The Board of Directors has also declared a cash dividend of $0.01 per share, payable on August 24, 2016 to shareholders of record as of August 10, 2016.

“We closed the year with a strong quarter,” said Richard Wayne, President and Chief Executive Officer. “For the quarter, we achieved earnings of $0.24 per share driven by solid SBA gains on sale and purchased loan transactional income. In addition to earnings growth, we generated loan volume of $96.6 million, including $50.6 million of loans produced by the Loan Acquisition and Servicing Group, $17.4 million of SBA loans and $28.6 million of residential and commercial loans produced by the Community Bank.  The growth of our balance sheet and earnings, coupled with the issuance of $15.05 million of subordinated notes in June, compliments our growth strategy and positions us well for the future.”

As of June 30, 2016, total assets were $986.2 million, an increase of $135.4 million, or 15.9%, compared to June 30, 2015. The principal components of the change in the balance sheet follow:

1. The loan portfolio – excluding loans held for sale – has grown by $80.3 million, or 13.1%, compared to June 30, 2015, principally on the strength of $81.8 million of net growth in commercial loans purchased or originated by the Bank’s Loan Acquisition and Servicing Group (“LASG”), net growth of $15.5 million in originations by the Bank’s Small Business Administration (“SBA”) National Division and net growth of $3.9 million in commercial originations by the Bank’s Community Banking Division. This net growth was offset by a pay down of one secured loan to a broker-dealer for $12.0 million in the LASG portfolio and a $20.9 million decrease in the Bank’s Community Banking Division residential and consumer loan portfolio.

Loans generated by the LASG totaled $50.6 million for the quarter ended June 30, 2016. The growth in LASG loans consisted of $18.8 million of purchased loans, at an average price of 91.1% of unpaid principal balance, and $31.8 million of originated loans. SBA loans closed during the quarter totaled $17.4 million, of which $16.1 million were fully funded in the quarter.  In addition, the Company sold $14.2 million of the guaranteed portion of SBA and United States Department of Agriculture (“USDA”) loans in the secondary market, of which $9.4 million were originated in the current quarter and $4.8 million were originated in prior quarters. Residential loan production sold in the secondary market totaled $19.9 million for the quarter.

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 June 30, 2016
				(Dollars in millions)
Total Loans		Purchased loans may not exceed 40% of total loans		$	67.1
Regulatory Capital		Non-owner occupied commercial real estate loans may not exceed 300% of total capital		$	180.0

      An overview of the Bank’s LASG portfolio follows:

	LASG Portfolio
	Three Months Ended June 30,
	2016																		2015
	Purchased				Originated				Secured Loans to    Broker-Dealers					Total LASG						Purchased					Originated						Secured Loans to Broker-Dealers						Total LASG
	(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance	$		20,588		$		31,826		$		-		$			52,414			$			25,785			$			29,193			$		-			$			54,978
Net investment basis			18,754				31,826				-					50,580						24,758						29,193					-						53,951
Loan returns during the period:
Yield (1)			10.88	%			6.98	%			0.51	%				8.19	%					13.11		%				5.56		%			0.49		%				8.79	%
Total Return (1) (2)			10.88	%			6.98	%			0.51	%				8.19	%					13.39		%				5.56		%			0.49		%				9.00	%

	Year Ended June 30,
	2016																				2015
	Purchased				Originated				Secured Loans to   Broker-Dealers					Total LASG							Purchased						Originated							Secured Loans to Broker-Dealers								Total LASG
	(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance	$		108,716		$		110,578		$		-		$			219,294				$			93,694			$				82,502			$				48,000				$			224,196
Net investment basis			99,999				110,578				-					210,577							82,654							82,502							48,000							213,156
Loan returns during the period:
Yield (1)			11.37	%			6.11	%			0.50	%				8.03	%						13.00	%						6.44	%						0.47	%						9.73	%
Total Return (1) (2)			11.38	%			6.10	%			0.50	%				8.04	%						13.33	%						6.75	%						0.47	%						10.02	%
Total loans as of period end:
Unpaid principal balance	$		271,268		$		174,918		$		48,000		$			494,186				$			239,933			$				118,416			$				60,000				$			418,349
Net investment basis			239,709				174,918				48,000					462,627							202,592							118,416							60,000							381,008
(1) The yield and total return on LASG originated loans includes $385 thousand of fees related to one loan in the quarter ended June 30, 2016.
(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, 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 $47.5 million, or 6.3% for the quarter, attributable primarily to growth in non-maturity (demand, savings and interest checking, and money market) accounts, which increased by $49.8 million, or 12.5%. For the year ended June 30, 2016, deposits increased $125.7 million, or 18.6%, primarily due to growth in non-maturity accounts of $120.3 million, or 36.6%, and growth in time deposits of $5.4 million, or 1.6%.

3. Stockholders’ equity increased by $3.9 million from June 30, 2015, due principally to earnings of $7.6 million, offset by $3.4 million in share repurchases (representing 322,900 shares). Additionally, there was an increase in stock-based compensation of $613 thousand, offset by a decrease in accumulated other comprehensive income of $618 thousand and $380 thousand in dividends paid on common stock.

Net income increased by $34 thousand to $2.2 million for the quarter ended June 30, 2016, compared to $2.2 million for the quarter ended June 30, 2015.

1. Net interest and dividend income before provision for loan losses increased by $1.4 million for the quarter ended June 30, 2016, compared to the quarter ended June 30, 2015. The increase is primarily due to higher average balances in the total loan portfolio.

The various components of transactional income are set forth in the table below entitled “Total Return on Purchased Loans.” When compared to the three months and year ended June 30, 2015, transactional income decreased by $906 thousand and $2.6 million, respectively. The following table summarizes interest income and related yields recognized on the loan portfolios:

	Interest Income and Yield on Loans
	Three Months Ended June 30,
	2016										2015
	Average			Interest							Average			Interest
	Balance (1)			Income (2)			Yield				Balance (1)			Income			Yield
	(Dollars in thousands)
Community Banking	$	212,625		$	2,589			4.90	%		$	228,558		$	2,839			4.98	%
SBA		30,599			490			6.44	%			8,860			126			5.70	%
LASG:
Originated		172,678			2,996			6.98	%			106,963			1,483			5.56	%
Purchased		232,610			6,294			10.88	%			195,016			6,375			13.11	%
Secured Loans to Broker-Dealers		54,001			68			0.51	%			60,003			73			0.49	%
Total LASG		459,289			9,358			8.19	%			361,982			7,931			8.79	%
Total	$	702,513		$	12,437			7.12	%		$	599,400		$	10,896			7.29	%
	Year Ended June 30,
	2016										2015
	Average			Interest							Average			Interest
	Balance (1)			Income (2)			Yield				Balance (1)			Income			Yield
	(Dollars in thousands)
Community Banking	$	218,649		$	10,483			4.79	%		$	233,506		$	11,599			4.97	%
SBA		23,786			1,448			6.09	%			2,622			148			5.64	%
LASG:
Originated		147,193			8,987			6.11	%			76,448			4,924			6.44	%
Purchased		216,763			24,638			11.37	%			203,822			26,500			13.00	%
Secured Loans to Broker-Dealers		58,511			293			0.50	%			44,942			212			0.47	%
Total LASG		422,467			33,918			8.03	%			325,212			31,636			9.73	%
Total	$	664,902		$	45,849			6.90	%		$	561,340		$	43,383			7.73	%

(1) Includes loans held for sale.

(2) SBA interest income includes SBA fees of $21 thousand and $33 thousand for the quarter and year ended June 30, 2016, respectively.

 

The yield on purchased loans for the quarter ended June 30, 2016 was 10.9% as compared to 13.4% in the quarter ended June 30, 2015, due to lower transactional income in the quarter. The following table details the total return on purchased loans:

	Total Return on Purchased Loans
	Three Months Ended June 30,
	2016							2015
	Income			Return (1)				Income			Return (1)
	(Dollars in thousands)
Regularly scheduled interest and accretion	$	4,770			8.25	%		$	4,132			8.43	%
Transactional income:
Gain on loan sales		-			0.00	%			-			0.00	%
Gain on sale of real estate owned		-			0.00	%			188			0.38	%
Other noninterest income		1			0.00	%			-			0.00	%
Accelerated accretion and loan fees		1,524			2.63	%			2,243			4.58	%
Total transactional income		1,525			2.63	%			2,431			4.96	%
Total	$	6,295			10.88	%		$	6,563			13.39	%

	Year Ended June 30,
	2016							2015
	Income			Return (1)				Income					Return (1)
	(Dollars in thousands)
Regularly scheduled interest and accretion	$	17,382			8.02	%		$		17,327				8.48	%
Transactional income:
Gain on loan sales		-			0.00	%				190				0.09	%
Gain on sale of real estate owned		23			0.01	%				607				0.30	%
Other noninterest income (loss)		12			0.00	%				(69	)			-0.03	%
Accelerated accretion and loan fees		7,256			3.35	%				9,173				4.49	%
Total transactional income		7,291			3.36	%				9,901				4.85	%
Total	$	24,673			11.38	%		$		27,228				13.33	%

(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, on an annualized basis.  The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter.

2. Noninterest income decreased by $656 thousand for the quarter ended June 30, 2016, compared to the quarter ended June 30, 2015, principally due to a decrease in gains realized on sale of portfolio loans. The recent quarter includes gains realized on sale of SBA and USDA loans of $1.6 million, compared to $1.9 million in the quarter ended June 30, 2015. Additionally, there was a decrease of $251 thousand in gain recognized on real estate owned and other repossessed collateral.

3. Noninterest expense increased by $569 thousand for the quarter ended June 30, 2016, compared to the quarter ended June 30, 2015, primarily due to an increase in salaries and employee benefits of $306 thousand, largely attributable to higher employee headcount.

At June 30, 2016, nonperforming assets totaled $9.5 million, or 0.96% of total assets, as compared to $12.4 million, or 1.46% of total assets, at June 30, 2015.

At June 30, 2016, the Company’s Tier 1 Leverage Ratio was 13.3%, compared to 14.5% at June 30, 2015, and the Total Capital Ratio was 20.4%, an increase from 20.1% at June 30, 2015. The increase resulted primarily from the issuance of $15.05 million of subordinated notes which qualify as Tier 2 Capital, offset by balance sheet growth and the effect of purchases under the Company’s share repurchase program in the current fiscal year.

Investor Call InformationRichard Wayne, Chief Executive Officer of Northeast Bancorp, and Brian Shaughnessy, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss fourth quarter earnings and business outlook at 10:00 a.m. Eastern Time on Thursday, July 28th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 49101566. 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 BancorpNortheast 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 National 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 MeasuresIn 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, and tangible book value per share. Northeast’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

Forward-Looking Statements Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Northeast believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates and real estate values; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; the risk that the Company may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Company’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K and updated by the Company’s Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. These statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.

NBN-F

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
	June 30, 2016					June 30, 2015
Assets
Cash and due from banks	$		2,459			$		2,789
Short-term investments			148,698					87,061
Total cash and cash equivalents			151,157					89,850
Available-for-sale securities, at fair value			100,572					101,908
Residential real estate loans held for sale			6,449					7,093
SBA loans held for sale			1,070					1,942
Total loans held for sale			7,519					9,035
Loans
Commercial real estate			426,568					348,676
Residential real estate			113,962					132,669
Commercial and industrial			145,956					123,133
Consumer			5,950					7,659
Total loans			692,436					612,137
Less: Allowance for loan losses			2,350					1,926
Loans, net			690,086					610,211
Premises and equipment, net			7,801					8,253
Real estate owned and other possessed collateral, net			1,652					1,651
Federal Home Loan Bank stock, at cost			2,408					4,102
Intangible assets, net			1,732					2,209
Bank owned life insurance			15,725					15,276
Other assets			7,501					8,223
Total assets	$		986,153			$		850,718
Liabilities and Stockholders' Equity
Deposits
Demand	$		66,686			$		60,383
Savings and interest checking			107,218					100,134
Money market			275,437					168,527
Time			351,091					345,715
Total deposits			800,432					674,759
Federal Home Loan Bank advances			30,075					30,188
Wholesale repurchase agreements			-					10,037
Short-term borrowings			-					2,349
Junior subordinated debentures issued to affiliated trusts			23,331					8,626
Capital lease obligation			1,128					1,368
Other liabilities			14,596					10,664
Total liabilities			869,562					737,991
Commitments and contingencies			-					-
Stockholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares
issued and outstanding at June 30, 2016 and June 30, 2015			-					-
Voting common stock, $1.00 par value, 25,000,000 shares authorized;
8,089,790 and 8,575,144 shares issued and outstanding at
June 30, 2016 and June 30, 2015, respectively			8,089					8,575
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;
1,227,683 and 1,012,739 shares issued and outstanding at June 30, 2016 and June 30, 2015, respectively			1,228					1,013
Additional paid-in capital			83,020					85,506
Retained earnings			26,160					18,921
Accumulated other comprehensive loss			(1,906	)				(1,288	)
Total stockholders' equity			116,591					112,727
Total liabilities and stockholders' equity	$		986,153			$		850,718

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,
	2016					2015			2016					2015
Interest and dividend income:
Interest and fees on loans	$		12,437			$	10,896		$		45,849			$	43,383
Interest on available-for-sale securities			230				215				930				913
Other interest and dividend income			161				74				456				292
Total interest and dividend income			12,828				11,185				47,235				44,588
Interest expense:
Deposits			1,671				1,329				6,027				5,010
Federal Home Loan Bank advances			253				256				1,027				1,101
Wholesale repurchase agreements			-				72				67				288
Short-term borrowings			1				8				20				29
Junior subordinated debentures issued to affiliated trusts			175				152				651				718
Obligation under capital lease agreements			15				18				63				74
Total interest expense			2,115				1,835				7,855				7,220
Net interest and dividend income before provision for loan losses			10,713				9,350				39,380				37,368
Provision for loan losses			317				240				1,618				717
Net interest and dividend income after provision for loan losses			10,396				9,110				37,762				36,651
Noninterest income:
Fees for other services to customers			393				406				1,657				1,494
Gain on sales of residential loans held for sale			392				493				1,684				1,877
Gain on sales of portfolio loans			1,620				1,926				4,178				2,821
(Loss) gain recognized on real estate owned and other repossessed collateral, net			(127	)			124				(255	)			428
Bank-owned life insurance income			113				111				449				440
Other noninterest income			20				7				60				29
Total noninterest income			2,411				3,067				7,773				7,089
Noninterest expense:
Salaries and employee benefits			5,592				5,286				19,548				18,817
Occupancy and equipment expense			1,291				1,277				5,227				4,939
Professional fees			421				505				1,463				1,658
Data processing fees			379				325				1,487				1,355
Marketing expense			85				41				285				244
Loan acquisition and collection expense			407				362				1,368				1,458
FDIC insurance premiums			135				133				489				504
Intangible asset amortization			108				129				477				589
Other noninterest expense			978				769				3,468				3,040
Total noninterest expense			9,396				8,827				33,812				32,604
Income before income tax expense			3,411				3,350				11,723				11,136
Income tax expense			1,212				1,185				4,104				3,995
Net income	$		2,199			$	2,165		$		7,619			$	7,141
Weighted-average shares outstanding:
Basic			9,319,522				9,773,228				9,474,999				9,980,733
Diluted			9,342,439				9,773,228				9,484,635				9,980,733
Earnings per common share:
Basic	$		0.24			$	0.22		$		0.80			$	0.72
Diluted			0.24				0.22				0.80				0.72
Cash dividends declared per common share	$		0.01			$	0.01		$		0.04			$	0.04

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
	Three Months Ended June 30,
	2016										2015
				Interest			Average							Interest			Average
	Average			Income/			Yield/				Average			Income/			Yield/
	Balance			Expense			Rate				Balance			Expense			Rate
Assets:
Interest-earning assets:
Investment securities	$	93,289		$	230			0.99	%		$	103,988		$	215			0.83	%
Loans (1) (2) (3)		702,513			12,455			7.13	%			599,400			10,914			7.30	%
Federal Home Loan Bank stock		2,570			23			3.60	%			4,102			18			1.76	%
Short-term investments (4)		113,636			138			0.49	%			91,060			56			0.25	%
Total interest-earning assets		912,008			12,846			5.67	%			798,550			11,203			5.63	%
Cash and due from banks		4,171										2,553
Other non-interest earning assets		36,411										36,334
Total assets	$	952,590									$	837,437
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts	$	72,012		$	51			0.28	%		$	64,533		$	41			0.25	%
Money market accounts		254,833			573			0.90	%			166,690			336			0.81	%
Savings accounts		36,167			12			0.13	%			35,835			12			0.13	%
Time deposits		356,418			1,035			1.17	%			342,849			940			1.10	%
Total interest-bearing deposits		719,430			1,671			0.93	%			609,907			1,329			0.87	%
Short-term borrowings		441			1			0.91	%			1,754			8			1.83	%
Borrowed funds		30,089			253			3.38	%			40,259			328			3.27	%
Junior subordinated debentures		8,954			175			7.86	%			8,602			152			7.09	%
Capital lease obligations		1,149			15			5.25	%			1,384			18			5.22	%
Total interest-bearing liabilities		760,063			2,115			1.12	%			661,906			1,835			1.11	%
Non-interest bearing liabilities:
Demand deposits and escrow accounts		68,314										56,754
Other liabilities		8,863										6,251
Total liabilities		837,240										724,911
Stockholders' equity		115,350										112,526
Total liabilities and stockholders' equity	$	952,590									$	837,437
Net interest income				$	10,731									$	9,368
Interest rate spread								4.55	%									4.52	%
Net interest margin (5)								4.73	%									4.71	%
(1)  Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate.
(2)  Includes loans held for sale.
(3)  Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4)  Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(5)  Net interest margin is calculated as net interest income divided by total interest-earning assets.

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
	Year Ended June 30,
	2016										2015
				Interest			Average							Interest			Average
	Average			Income/			Yield/				Average			Income/			Yield/
	Balance			Expense			Rate				Balance			Expense			Rate
Assets:
Interest-earning assets:
Investment securities	$	100,503		$	930			0.93	%		$	108,204		$	913			0.84	%
Loans (1) (2) (3)		664,902			45,921			6.91	%			561,340			43,456			7.74	%
Federal Home Loan Bank stock		2,960			113			3.82	%			4,102			67			1.63	%
Short-term investments (4)		91,563			343			0.37	%			92,354			225			0.24	%
Total interest-earning assets		859,928			47,307			5.50	%			766,000			44,661			5.83	%
Cash and due from banks		3,596										2,704
Other non-interest earning assets		35,607										33,741
Total assets	$	899,131									$	802,445
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts	$	68,304		$	182			0.27	%		$	63,181		$	162			0.26	%
Money market accounts		212,102			1,845			0.87	%			133,266			1,002			0.75	%
Savings accounts		36,062			48			0.13	%			34,495			46			0.13	%
Time deposits		349,978			3,952			1.13	%			340,046			3,800			1.12	%
Total interest-bearing deposits		666,446			6,027			0.90	%			570,988			5,010			0.88	%
Short-term borrowings		1,634			20			1.22	%			2,578			29			1.12	%
Borrowed funds		32,432			1,094			3.37	%			45,661			1,389			3.04	%
Junior subordinated debentures		8,762			651			7.43	%			8,531			718			8.42	%
Capital lease obligations		1,242			63			5.07	%			1,457			74			5.08	%
Total interest-bearing liabilities		710,516			7,855			1.11	%			629,215			7,220			1.15	%
Non-interest bearing liabilities:
Demand deposits and escrow accounts		67,041										54,940
Other liabilities		7,252										5,913
Total liabilities		784,809										690,068
Stockholders' equity		114,322										112,377
Total liabilities and stockholders' equity	$	899,131									$	802,445
Net interest income				$	39,452									$	37,441
Interest rate spread								4.39	%									4.68	%
Net interest margin (5)								4.59	%									4.89	%
(1)  Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate.
(2)  Includes loans held for sale.
(3)  Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4)  Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(5)  Net interest margin is calculated as net interest income divided by total interest-earning assets.

 

NORTHEAST BANCORP AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
	Three Months Ended:
	June 30, 2016				March 31, 2016				December  31, 2015				September 30, 2015				June 30, 2015
Net interest income	$	10,713			$	9,254			$	10,172			$	9,241			$	9,350
Provision for loan losses		317				236				896				169				240
Noninterest income		2,411				2,035				1,624				1,705				3,067
Noninterest expense		9,396				8,412				8,196				7,810				8,827
Net income		2,199				1,809				1,744				1,867				2,165
Weighted average common shares outstanding:
Basic		9,319,522				9,456,198				9,559,369				9,562,812				9,773,228
Diluted		9,342,439				9,459,611				9,569,585				9,562,812				9,773,228
Earnings per common share:
Basic	$	0.24			$	0.19			$	0.18			$	0.20			$	0.22
Diluted		0.24				0.19				0.18				0.20				0.22
Dividends per common share		0.01				0.01				0.01				0.01				0.01
Return on average assets		0.93	%			0.80	%			0.80	%			0.86	%			1.04	%
Return on average equity		7.67	%			6.33	%			6.07	%			6.55	%			7.72	%
Net interest rate spread (1)		4.55	%			4.06	%			4.67	%			4.25	%			4.51	%
Net interest margin (2)		4.73	%			4.25	%			4.87	%			4.45	%			4.70	%
Efficiency ratio (3)		71.59	%			74.52	%			69.48	%			71.35	%			71.09	%
Noninterest expense to average total assets		3.97	%			3.70	%			3.75	%			3.59	%			4.22	%
Average interest-earning assets to average interest-bearing liabilities		119.99	%			120.62	%			122.48	%			121.63	%			120.90	%
	As of:
	June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
Nonperforming loans:
Originated portfolio:
Residential real estate	$	2,613			$	3,566			$	3,263			$	3,165			$	3,021
Commercial real estate		474				602				399				529				994
Home equity		48				-				11				20				11
Commercial and industrial		17				2				2				2				2
Consumer		163				216				204				153				190
Total originated portfolio		3,315				4,386				3,879				3,869				4,218
Total purchased portfolio		4,512				4,364				2,221				6,939				6,532
Total nonperforming loans		7,827				8,750				6,100				10,808				10,750
Real estate owned and other possessed collateral, net		1,652				690				1,238				1,279				1,651
Total nonperforming assets	$	9,479			$	9,440			$	7,338			$	12,087			$	12,401
Past due loans to total loans		1.00	%			2.52	%			2.48	%			1.35	%			1.08	%
Nonperforming loans to total loans		1.13	%			1.25	%			0.90	%			1.73	%			1.76	%
Nonperforming assets to total assets		0.96	%			1.02	%			0.82	%			1.41	%			1.46	%
Allowance for loan losses to total loans		0.34	%			0.32	%			0.31	%			0.33	%			0.31	%
Allowance for loan losses to nonperforming loans		30.02	%			25.41	%			34.90	%			19.11	%			17.92	%
Commercial real estate loans to risk-based capital (4)		174.12	%			217.09	%			204.91	%			195.50	%			187.32	%
Net loans to core deposits (5)		87.15	%			93.48	%			94.37	%			91.04	%			91.85	%
Purchased loans to total loans, including held for sale		34.25	%			33.17	%			32.90	%			33.82	%			32.61	%
Equity to total assets		11.82	%			12.41	%			12.82	%			13.25	%			13.25	%
Common equity tier 1 capital ratio		17.97	%			17.46	%			18.11	%			19.69	%			19.82	%
Total capital ratio (6)		20.39	%			17.78	%			18.43	%			20.03	%			20.14	%
Tier 1 leverage capital ratio		13.27	%			13.57	%			14.31	%			14.23	%			14.49	%
Total stockholders' equity	$	116,591			$	114,526			$	114,613			$	113,704			$	112,727
Less: Preferred stock		-				-				-				-				-
Common stockholders' equity		116,591				114,526				114,613				113,704				112,727
Less: Intangible assets (7)		(3,503	)			(3,469	)			(3,336	)			(3,388	)			(3,312	)
Tangible common stockholders' equity (non-GAAP)	$	113,088			$	111,057			$	111,277			$	110,316			$	109,415
Common shares outstanding		9,317,473				9,330,873				9,519,729				9,592,329				9,587,883
Book value per common share	$	12.51			$	12.27			$	12.04			$	11.85			$	11.76
Tangible book value per share (non-GAAP) (8)		12.14				11.90				11.69				11.50				11.41
(1) The net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.
(2) The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
(3) The efficiency ratio represents non-interest expense divided by the sum of net interest income (before the loan loss provision) plus non-interest income.
(4) For purposes of calculating this ratio, commercial real estate includes all non-owner occupied commercial real estate loans defined as such by regulatory guidance, including all land development and construction loans.
(5) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held-for-sale.
(6) The Company’s adoption of Basel III went into effect as of March 31, 2015. The previous period ratios are the “Total Risk-Based Capital Ratio.”
(7) Includes the core deposit intangible asset, as well as the servicing rights asset which is included in other assets in the consolidated balance sheets.
(8) Tangible book value per share represents total stockholders' 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