Northeast Bank Reports Third Quarter Results and Declares Dividend

Apr 25th, 2022 16:16 EST

PORTLAND, Maine, April 25, 2022 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $10.6 million, or $1.36 per diluted common share, for the quarter ended March 31, 2022, compared to net income of $34.2 million, or $4.06 per diluted common share, for the quarter ended March 31, 2021. Net income for the nine months ended March 31, 2022 was $31.9 million, or $3.98 per diluted common share, compared to $50.1 million, or $6.01 per diluted common share, for the nine months ended March 31, 2021. Net income for the three and nine months ended March 31, 2021 included $33.0 million of net gains on the sale of U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans originated and sold during the quarter ended March 31, 2021, which had an after-tax earnings per diluted common share impact of $2.75 and $2.80, respectively.

The Board of Directors declared a cash dividend of $0.01 per share, payable on May 18, 2022, to shareholders of record as of May 4, 2022.

“We reported strong results in our third fiscal quarter,” said Rick Wayne, Chief Executive Officer. “Originations by our National Lending Division were particularly strong, with $152.1 million for the quarter, or $415.0 million for the fiscal year to date. This resulted in net growth in our originated portfolio of $61.3 million, or 9.9%, compared with December 31, 2021, or $157.0 million, or 30.0%, compared with June 30, 2021. We increased National Lending originated interest income by $2.5 million, or 29.6%, compared with the quarter ended March 31, 2021.” Mr. Wayne continued, “As a result of this activity, we are reporting earnings of $1.36 per diluted common share, a return on average equity of 17.6%, and a return on average assets of 2.8% for the quarter.”

As of March 31, 2022, total assets were $1.57 billion, a decrease of $608.3 million, or 28.0%, from total assets of $2.17 billion as of June 30, 2021.

1.   Cash and short-term investments decreased by $784.7 million, or 77.7%, primarily due to the timing of a large deposit account related to SBA PPP elevated loan payoff collections at June 30, 2021. Cash and short-term investments may fluctuate significantly while PPP collections, including forgiveness amounts, continue, depending on the timing of receipts and remittances of cash amounts.

2.   The following table highlights the changes in the loan portfolio for the three and nine months ended March 31, 2022:

 Loan Portfolio Changes
 Three Months Ended March 31, 2022
 March 31, 2022Balance December 31, 2021Balance Change ($) Change (%)
 (Dollars in thousands)
National Lending Purchased$479,824  $484,513  $(4,689) (0.97%)
National Lending Originated 680,568   619,223   61,345  9.91%
SBA National 34,574   35,682   (1,108) (3.11%)
Community Banking 37,359   41,766   (4,407) (10.55%)
Total$1,232,325  $1,181,184  $51,141  4.33%
  
 Nine Months Ended March 31, 2022
 March 31, 2022Balance June 30, 2021Balance Change ($) Change (%)
 (Dollars in thousands)
National Lending Purchased$479,824  $429,054  $50,770  11.83%
National Lending Originated 680,568   523,535   157,033  29.99%
SBA National 34,574   39,549   (4,975) (12.58%)
Community Banking 37,359   48,486   (11,127) (22.95%)
Total$1,232,325  $1,040,624  $191,701  18.42%

Loans generated by the Bank's National Lending Division for the quarter ended March 31, 2022 totaled $176.0 million, which consisted of $23.9 million of purchased loans, at an average price of 74.6% of unpaid principal balance, and $152.1 million of originated loans.

An overview of the Bank’s National Lending Division portfolio follows:

 National Lending Portfolio
 Three Months Ended March 31,
 2022 2021
 Purchased Originated Total Purchased Originated Total
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$32,079  $152,105  $184,184  $42,547  $69,327  $111,874 
Net investment basis 23,920   152,105   176,025   39,895   69,327   109,222 
                  
Loan returns during the period:                 
Yield 8.25%  6.94%  7.50%  8.48%  7.28%  7.83%
Total Return on Purchased Loans (1) 8.30%  N/A   8.30%  8.48%  N/A   8.48%
                  
 Nine Months Ended March 31,
 2022 2021
 Purchased Originated Total Purchased Originated Total
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$162,492  $414,989  $577,481  $146,135  $194,842  $340,977 
Net investment basis 151,412   414,989   566,401   135,757   194,842   330,599 
                  
Loan returns during the period:                 
Yield 8.80%  6.61%  7.55%  8.88%  7.06%  7.90%
Total Return on Purchased Loans (1) 8.80%  N/A   8.80%  8.88%  N/A   8.88%
                  
Total loans as of period end:                 
Unpaid principal balance$516,972  $680,568  $1,197,540  $471,778  $473,930  $945,708 
Net investment basis 479,824   680,568   1,160,392   433,497   473,930   907,427 

(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.”

3.   Deposits decreased by $594.3 million, or 31.9%, from June 30, 2021. The decrease was attributable to decreases in demand deposits of $590.6 million, or 60.7% and time deposits of $160.0 million, or 57.6%, partially offset by an increase in savings and interest checking deposits of $170.7 million, or 52.5%. The primary reason for the net decrease in deposits was due to timing of the receipt of short-term customer funds related to PPP payoff collections prior to June 30, 2021, which were subsequently used to pay down NEWITY’s PPP Liquidity Facility (“PPPLF”) balance during the nine months ended March 31, 2022.

4.   Shareholders’ equity increased by $15.1 million, or 6.5%, from June 30, 2021, primarily due to net income of $31.9 million, partially offset by the repurchase of 535 thousand shares of voting common stock at a weighted average price per share of $33.28, which resulted in a $17.8 million decrease to shareholders’ equity. Shareholders’ equity also increased by $1.4 million as a result of stock compensation expense recognized.

Net income decreased by $23.6 million to $10.6 million for the quarter ended March 31, 2022, compared to net income of $34.2 million for the quarter ended March 31, 2021.

1.   Net interest and dividend income before provision for loan losses increased by $2.4 million to $21.0 million for the quarter ended March 31, 2022, compared to $18.6 million for the quarter ended March 31, 2021. The increase was primarily due to the following:

  • An increase in interest income earned on the National Lending Division’s purchased and originated portfolios of $3.7 million, due to higher average balances, partially offset by lower rates earned in both portfolios;
  • A decrease in deposit interest expense of $887 thousand, due to lower interest rates and lower average balances;
  • A decrease of $300 thousand in interest expense due to advances taken from the PPPLF to fund PPP originations during the quarter ended March 31, 2021; and
  • A decrease of $282 thousand in interest expense due to the payoff of the subordinated debt; partially offset by,
  • A decrease in PPP loan interest income of $2.6 million, due to the significant decrease in PPP loans during the quarter ended March 31, 2022.

The following table summarizes interest income and related yields recognized on the loan portfolios:

 Interest Income and Yield on Loans
 Three Months Ended March 31,
 2022 2021
 Average Interest   Average Interest  
 Balance (1) Income Yield Balance (1) Income Yield
 (Dollars in thousands)
Community Banking$40,144  $550  5.56% $52,852  $658  5.05%
SBA National 34,605   577  6.76%  44,775   663  6.01%
National Lending:                   
Originated 643,707   11,021  6.94%  473,881   8,501  7.28%
Purchased 477,912   9,722  8.25%  406,979   8,513  8.48%
Total National Lending 1,121,619   20,743  7.50%  880,860   17,014  7.83%
Total excluding SBA PPP$1,196,368  $21,870  7.41% $978,487  $18,335  7.60%
                    
SBA PPP$462  $3  3.05% $481,853  $2,558  2.15%
Total including SBA PPP$1,196,830  $21,873  7.41% $1,460,340  $20,893  5.80%
  
 Interest Income and Yield on Loans
 Nine Months Ended March 31,
 2022 2021
 Average Interest   Average Interest  
 Balance (1) Income Yield Balance (1) Income Yield
 (Dollars in thousands)
Community Banking$42,995  $1,692  5.24% $59,272  $2,160  4.85%
SBA National 36,322   1,835  6.73%  47,236   1,835  5.17%
National Lending:                   
Originated 597,127   29,634  6.61%  459,000   24,331  7.06%
Purchased 452,603   29,883  8.80%  392,183   26,142  8.88%
Total National Lending 1,049,730   59,517  7.55%  851,183   50,473  7.90%
Total excluding SBA PPP$1,129,047  $63,044  7.44% $957,691  $54,468  7.58%
                    
SBA PPP$827  $17  2.74% $164,053  $2,638  2.14%
Total including SBA PPP$1,129,874  $63,061  7.43% $1,121,744  $57,106  6.78%
                       

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 March 31, 2021, transactional income increased by $888 thousand for the quarter ended March 31, 2022, and regularly scheduled interest and accretion increased by $377 thousand due to the increase in average balances. The total return on purchased loans for the quarter ended March 31, 2022 was 8.3%, a decrease from 8.5% for the quarter ended March 31, 2021. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended March 31,
 2022 2021
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$7,166  6.08% $6,789  6.77%
Transactional income:           
Gain on real estate owned 56  0.05%  -  0.00%
Accelerated accretion and loan fees 2,556  2.17%  1,724  1.71%
Total transactional income 2,612  2.22%  1,724  1.71%
Total$9,778  8.30% $8,513  8.48%
  
 Nine Months Ended March 31,
 2022 2021
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$21,379  6.29% $20,466  6.95%
Transactional income:           
Gain on real estate owned 31  0.00%  -  0.00%
Accelerated accretion and loan fees 8,504  2.51%  5,676  1.93%
Total transactional income 8,535  2.51%  5,676  1.93%
Total$29,914  8.80% $26,142  8.88%

(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.   Noninterest income decreased by $34.1 million for the quarter ended March 31, 2022, compared to the quarter ended March 31, 2021, principally due to the following:

  • A decrease in gain on sale of PPP loans of $33.0 million, due to the sale of PPP loans with a total principal balance of $2.14 billion, which resulted in a net gain based on the recognition of net deferred fees in the quarter ended March 31, 2021 as compared to no sales in the quarter ended March 31, 2022; and
  • A decrease in correspondent fee income of $1.0 million from the recognition of correspondent fees and net servicing income. Correspondent income for the quarters ended March 31, 2022 and 2021 is comprised of the following components:
 Three Months Ended March 31,
 2022 2021
        
  (In thousands)
Correspondent Fee$1,087  $1,098 
Amortization of Purchased Accrued Interest 1,690   922 
Earned Net Servicing Interest 2,193   3,950 
Total$4,970  $5,970 

In addition to the net servicing interest income, a summary of PPP loans purchased by Loan Source and related amounts that the Bank will earn over the expected life of the loans is as follows:

Quarter PPP LoansPurchased byLoan Source(3) CorrespondentFee PurchasedAccrued Interest(1) Total(2)
(In thousands)
Q4 FY 2020 $1,272,900  $2,891  $688  $3,579 
Q1 FY 2021  2,112,100   5,348   2,804   8,152 
Q2 FY 2021  1,333,500   495   3,766   4,261 
Q3 FY 2021  2,141,900   -   598   598 
Q4 FY 2021  4,371,000   171   2,703   2,874 
Q1 FY 2022  6,300   -   1   1 
Total $11,237,700  $8,905  $10,560  $19,465 
Less amounts recognized in Q3 FY 22   (1,087)  (1,690)  (2,777)
Less amounts recognized in previous quarters   (6,255)  (6,193)  (12,448)
Amount remaining to be recognized  $1,563  $2,677  $4,240 

(1) - The Bank's share(2) - Expected to be recognized into income over life of loans(3) - Loan Source’s ending PPP loan balance was $2.79 billion as of March 31, 2022

In addition to the decreases above:

  • An increase in unrealized loss on equity securities of $159 thousand.

3.   Noninterest expense increased by $1.8 million for the quarter ended March 31, 2022 compared to the quarter ended March 31, 2021, primarily due to the following:

  • An increase in salaries and employee benefits expense of $2.1 million, primarily due to a decrease in deferred salaries contra-expense related to PPP originations in the quarter ended March 31, 2021, partially offset by a decrease in bonus expense, due to a non-recurring increase in bonus expense in the quarter ended March 31, 2021 attributable to the high level of PPP originations and sales; and
  • An increase in other noninterest expense of $175 thousand, primarily due to a $184 thousand decrease in recovery on the SBA servicing asset; partially offset by,
  • A decrease in loan expense of $403 thousand, due to decreases in real estate owned (“REO”) expense and collection legal expense due to reimbursements, partially offset by an increase in other collection expense; and
  • A decrease in data processing fees of $135 thousand, primarily due to decreases in IT professional implementation expenses and computer service fees, partially offset by increases in software license expense and monitoring and support expense.

4.   Income tax expense decreased by $9.8 million to $4.7 million, or an effective tax rate of 30.6%, for the quarter ended March 31, 2022, compared to $14.5 million, or an effective tax rate of 29.8%, for the quarter ended March 31, 2021. The decrease in income tax expense is due to the decrease in pre-tax income. The increase in the effective tax rate from March 31, 2021 is primarily due to changes in state tax apportionment.

As of March 31, 2022, nonperforming assets totaled $17.9 million, or 1.14% of total assets, compared to $20.4 million, or 0.94% of total assets, as of June 30, 2021. The decrease was primarily due to the sale of three REO properties totaling $1.7 million and the paydown of one nonperforming National Lending originated loan totaling $1.0 million during the nine months ended March 31, 2022.

As of March 31, 2022, past due loans totaled $13.1 million, or 1.07% of total loans, compared to past due loans totaling $11.3 million, or 1.08% of total loans, as of June 30, 2021. The increase was primarily due to two National Lending purchased loans totaling $2.6 million that became past due, partially offset by the paydown of one National Lending originated loan totaling $1.0 million during the nine months ended March 31, 2022.

As of March 31, 2022, the Bank’s Tier 1 leverage capital ratio was 16.2%, compared to 13.6% at June 30, 2021, and the Total capital ratio was 20.6% at March 31, 2022, compared to 24.3% at June 30, 2021. Capital ratios were primarily affected by increased earnings and decreased assets, while the Total capital ratio was negatively impacted by the redemption of the subordinated debt on July 1, 2021.

Investor Call InformationRick Wayne, Chief Executive Officer, Jean-Pierre Lapointe, Chief Financial Officer, and Pat Dignan, Executive Vice President and Chief Credit Officer of Northeast Bank, will host a conference call to discuss third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, April 26th. Investors can access the call by dialing 866.374.5140 and entering the following PIN: 69980912#. 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 BankNortheast Bank (NASDAQ: NBN) is a full-service bank headquartered in Portland, Maine. We offer personal and business banking services to the Maine market via eight branches. Our National Lending Division 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 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 shareholders’ equity, tangible book value per share, total return on purchased loans, efficiency ratio, net interest margin excluding PPP, and net interest margin excluding PPP and collection account. 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, the ongoing negative impacts and disruptions of the ongoing COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; general business and economic conditions on a national basis and in the local markets in which the Bank operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in customer behavior due to changing political, business and economic conditions or legislative or regulatory initiatives; turbulence in the capital and debt markets; changes in interest rates and real estate values; increases in loan defaults and charge-off rates; decreases 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; competitive pressures from other financial institutions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; 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.

NBN-F

 
NORTHEAST BANK
BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
 March 31, 2022 June 30, 2021
Assets     
Cash and due from banks$2,319  $2,850 
Short-term investments 223,492   1,007,641 
Total cash and cash equivalents 225,811   1,010,491 
      
      
Available-for-sale debt securities, at fair value 55,723   59,737 
Equity securities, at fair value 6,955   7,230 
Total investment securities 62,678   66,967 
      
Loans:     
Commercial real estate 838,296   725,287 
Commercial and industrial 337,061   257,604 
Residential real estate 56,180   56,591 
Consumer 788   1,142 
Total loans 1,232,325   1,040,624 
Less: Allowance for loan losses 5,816   7,313 
Loans, net 1,226,509   1,033,311 
      
      
Premises and equipment, net 9,493   11,271 
Real estate owned and other repossessed collateral, net -   1,639 
Federal Home Loan Bank stock, at cost 1,282   1,209 
Loan servicing rights, net 1,696   2,061 
Bank-owned life insurance 17,815   17,498 
Other assets 20,832   29,955 
Total assets$1,566,116  $2,174,402 
      
Liabilities and Shareholders' Equity     
Deposits:     
Demand$381,866  $972,495 
Savings and interest checking 495,800   325,062 
Money market 272,614   287,033 
Time 117,842   277,840 
Total deposits 1,268,122   1,862,430 
      
Federal Home Loan Bank advances 15,000   15,000 
Subordinated debt -   15,050 
Lease liability 4,862   6,061 
Other liabilities 30,663   43,470 
Total liabilities 1,318,647   1,942,011 
      
Commitments and contingencies -   - 
      
      
Shareholders' equity     
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares    
issued and outstanding at March 31, 2022 and June 30, 2021 -   - 
Voting common stock, $1.00 par value, 25,000,000 shares authorized;     
7,727,312 and 8,150,480 shares issued and outstanding at    
March 31, 2022 and June 30, 2021, respectively 7,727   8,151 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;     
No shares issued and outstanding at March 31, 2022 and June 30, 2021-  - 
Additional paid-in capital 48,159   64,420 
Retained earnings 192,759   161,132 
Accumulated other comprehensive loss (1,176)  (1,312)
Total shareholders' equity 247,469   232,391 
Total liabilities and shareholders' equity$1,566,116  $2,174,402 
        

 
NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended March 31, Nine Months Ended March 31,
 2022 2021 2022 2021
Interest and dividend income:           
Interest and fees on loans$21,873  $20,893  $63,061  $57,106 
Interest on available-for-sale securities 65   158   235   641 
Other interest and dividend income 73   110   365   252 
Total interest and dividend income 22,011   21,161   63,661   57,999 
            
Interest expense:           
Deposits 916   1,803   3,408   7,390 
Federal Home Loan Bank advances 122   145   377   395 
Paycheck Protection Program Liquidity Facility -   300   -   302 
Subordinated debt -   282   -   845 
Obligation under capital lease agreements 21   28   70   84 
Total interest expense 1,059   2,558   3,855   9,016 
Net interest and dividend income before provision for loan losses 20,952   18,603   59,806   48,983 
Provision (credit) for loan losses (287)  (211)  (1,582)  531 
Net interest and dividend income after provision for loan losses 21,239   18,814   61,388   48,452 
            
Noninterest income:           
Fees for other services to customers 476   441   1,236   1,427 
Gain on sales of PPP loans -   33,010   86   34,124 
Gain on sales of residential loans held for sale -   4   -   105 
Net unrealized loss on equity securities (258)  (99)  (332)  (115)
Gain (loss) on real estate owned, other repossessed collateral and premises and equipment, net 56   -   55   (344)
Correspondent fee income 4,970   5,970   18,842   16,798 
Bank-owned life insurance income 105   105   317   318 
Other noninterest income 59   38   97   69 
Total noninterest income 5,408   39,469   20,301   52,382 
            
Noninterest expense:           
Salaries and employee benefits 7,258   5,113   22,226   17,436 
Occupancy and equipment expense 916   940   2,667   2,914 
Professional fees 540   599   1,455   1,405 
Data processing fees 1,167   1,302   3,341   3,392 
Marketing expense 160   130   511   290 
Loan acquisition and collection expense 452   855   2,911   2,368 
FDIC insurance premiums 98   119   298   324 
Other noninterest expense 810   578   2,518   1,868 
Total noninterest expense 11,401   9,636   35,927   29,997 
Income before income tax expense 15,246   48,647   45,762   70,837 
Income tax expense 4,659   14,485   13,895   20,705 
Net income$10,587  $34,162  $31,867  $50,132 
            
Weighted-average shares outstanding:           
Basic 7,687,737   8,344,797   7,907,398   8,261,248 
Diluted 7,790,963   8,421,247   7,998,221   8,347,882 
                
Earnings per common share:           
Basic$1.38  $4.09  $4.03  $6.07 
Diluted 1.36   4.06   3.98   6.01 
                
Cash dividends declared per common share$0.01  $0.01  $0.03  $0.03 
                

 

 
NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended March 31,
 2022 2021
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:                   
Interest-earning assets:                   
Investment securities$63,865  $65  0.41% $69,034  $158  0.93%
Loans (1) (2) (3) 1,196,830   21,873  7.41%  1,460,340   20,893  5.80%
Federal Home Loan Bank stock 1,280   6  1.90%  2,410   6  1.01%
Short-term investments (4) 226,820   67  0.12%  387,198   104  0.11%
Total interest-earning assets 1,488,795   22,011  6.00%  1,918,982   21,161  4.47%
Cash and due from banks 2,504         2,112       
Other non-interest earning assets 46,022         62,127       
Total assets$1,537,321        $1,983,221       
                    
Liabilities & Shareholders’ Equity:                   
Interest-bearing liabilities:                   
NOW accounts$353,019  $202  0.23% $180,630  $90  0.20%
Money market accounts 256,074   192  0.30%  316,116   347  0.45%
Savings accounts 126,902   167  0.53%  38,500   10  0.11%
Time deposits 134,558   355  1.07%  587,440   1,356  0.94%
Total interest-bearing deposits 870,553   916  0.43%  1,122,686   1,803  0.65%
Federal Home Loan Bank advances 15,000   122  3.30%  39,306   145  1.50%
PPPLF advances -   -  0.00%  345,063   300  0.35%
Subordinated debt -   -  0.00%  15,015   282  7.62%
Capital lease obligations 5,022   21  1.70%  6,588   28  1.72%
Total interest-bearing liabilities 890,575   1,059  0.48%  1,528,658   2,558  0.68%
                    
Non-interest bearing liabilities:                   
Demand deposits and escrow accounts 388,171         238,756       
Other liabilities 14,220         20,850       
Total liabilities 1,292,966         1,788,264       
Shareholders' equity 244,355         194,957       
Total liabilities and shareholders’ equity$1,537,321        $1,983,221       
                    
Net interest income    $20,952        $18,603   
                    
Interest rate spread        5.52%         3.79%
Net interest margin (5)        5.71%         3.93%
                      
Cost of funds (6)        0.34%         0.59%
                      
(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.
(6) Cost of funds is calculated as total interest expense divided by total interest-bearing liabilities plus demand deposits and escrow accounts.
 

 
NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Nine Months Ended March 31,
 2022 2021
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:                   
Interest-earning assets:                   
Investment securities$65,295  $235  0.48% $70,539  $641  1.21%
Loans (1) (2) (3) 1,129,874   63,061  7.43%  1,121,744   57,106  6.78%
Federal Home Loan Bank stock 1,237   19  2.05%  1,725   51  3.94%
Short-term investments (4) 330,722   346  0.14%  232,237   201  0.12%
Total interest-earning assets 1,527,128   63,661  5.55%  1,426,245   57,999  5.42%
Cash and due from banks 2,686         2,703       
Other non-interest earning assets 50,751         47,581       
Total assets$1,580,565        $1,476,529       
                    
Liabilities & Shareholders’ Equity:                   
Interest-bearing liabilities:                   
NOW accounts$303,525  $569  0.25% $143,938  $330  0.31%
Money market accounts 265,639   591  0.30%  312,797   1,259  0.54%
Savings accounts 99,725   361  0.48%  37,771   36  0.13%
Time deposits 207,304   1,887  1.21%  469,793   5,765  1.63%
Total interest-bearing deposits 876,193   3,408  0.52%  964,299   7,390  1.02%
Federal Home Loan Bank advances 15,000   377  3.35%  22,984   395  2.29%
PPPLF advances -   -  0.00%  113,932   302  0.35%
Subordinated debt -   -  0.00%  14,983   845  7.51%
Capital lease obligations 5,431   70  1.72%  5,793   84  1.93%
Total interest-bearing liabilities 896,624   3,855  0.57%  1,121,991   9,016  1.07%
                    
Non-interest bearing liabilities:                   
Demand deposits and escrow accounts 429,354         157,569       
Other liabilities 14,596         17,527       
Total liabilities 1,340,574         1,297,087       
Shareholders' equity 239,991         179,442       
Total liabilities and shareholders’ equity$1,580,565        $1,476,529       
                    
Net interest income    $59,806        $48,983   
                    
Interest rate spread        4.98%         4.35%
Net interest margin (5)        5.22%         4.58%
                      
Cost of funds (6)        0.39%         0.94%
                      
(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.
(6) Cost of funds is calculated as total interest expense divided by total interest-bearing liabilities plus demand deposits and escrow accounts.
 

 
NORTHEAST BANK
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended
 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
Net interest income$20,952  $20,055  $18,799  $18,102  $18,603 
Provision (credit) for loan losses (287)  (1,069)  (226)  (1,926)  (211)
Noninterest income 5,408   6,493   8,399   19,650   39,469 
Noninterest expense 11,401   11,187   13,338   9,427   9,636 
Net income 10,587   11,403   9,877   21,370   34,162 
          
Weighted-average common shares outstanding:         
Basic 7,687,737   7,952,938   8,132,131   8,318,689   8,344,797 
Diluted 7,790,963   8,041,476   8,212,836   8,397,897   8,421,247 
Earnings per common share:         
Basic$1.38  $1.43  $1.21  $2.57  $4.09 
Diluted 1.36   1.42   1.20   2.54   4.06 
          
Dividends declared per common share$0.01  $0.01  $0.01  $0.01  $0.01 
          
Return on average assets 2.79%  2.86%  2.41%  4.55%  6.99%
Return on average equity 17.57%  18.77%  16.70%  37.97%  71.06%
Net interest rate spread (1) 5.52%  4.99%  4.46%  3.67%  3.79%
Net interest margin (2) 5.71%  5.24%  4.74%  3.99%  3.93%
Net interest margin, excluding PPP (Non-GAAP) (3) 5.71%  5.24%  4.75%  4.55%  4.64%
Net interest margin, excluding PPP and collection account (Non-GAAP) (4) 6.72%  6.44%  6.00%  5.56%  5.06%
Efficiency ratio (non-GAAP) (5) 43.25%  42.14%  49.04%  24.97%  16.59%
Noninterest expense to average total assets 3.01%  2.80%  3.26%  2.01%  1.97%
Average interest-earning assets to average interest-bearing liabilities 167.20%  168.71%  174.98%  173.30%  125.53%
          
 As of:
 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
Nonperforming loans:         
Originated portfolio:         
Residential real estate$621  $611  $619  $696  $643 
Commercial real estate 6,608   7,963   6,644   5,756   4,790 
Commercial and industrial 230   311   1,510   286   1,408 
Consumer 12   20   39   43   23 
Total originated portfolio 7,471   8,905   8,812   6,781   6,864 
Total purchased portfolio 10,441   12,294   12,527   11,977   16,059 
Total nonperforming loans 17,912   21,199   21,339   18,758   22,923 
Real estate owned and other repossessed collateral, net -   53   821   1,639   2,885 
Total nonperforming assets$17,912  $21,252  $22,160  $20,397  $25,808 
          
Past due loans to total loans 1.07%  1.23%  1.39%  1.08%  1.67%
Nonperforming loans to total loans 1.45%  1.79%  1.99%  1.80%  2.29%
Nonperforming assets to total assets 1.14%  1.46%  1.60%  0.94%  1.51%
Allowance for loan losses to total loans 0.47%  0.51%  0.67%  0.70%  0.88%
Allowance for loan losses to nonperforming loans 32.47%  28.49%  33.58%  38.99%  38.48%
          
Commercial real estate loans to total capital (6) 252.90%  260.40%  232.10%  215.38%  223.09%
Net loans to core deposits (7) (10) 97.19%  102.53%  98.96%  55.71%  76.99%
Purchased loans to total loans, including held for sale 38.94%  41.02%  40.22%  41.23%  43.22%
Equity to total assets 15.80%  16.39%  17.32%  10.69%  12.65%
Common equity tier 1 capital ratio 20.13%  20.27%  22.03%  22.16%  21.07%
Total capital ratio 20.60%  20.79%  22.69%  24.29%  23.39%
Tier 1 leverage capital ratio 16.17%  15.19%  14.83%  13.63%  14.32%
          
Total shareholders’ equity$247,469  $239,237  $239,508  $232,391  $216,862 
Less: Preferred stock -   -   -   -   - 
Common shareholders’ equity 247,469   239,237   239,508   232,391   216,862 
Less: Intangible assets (8) (1,696)  (1,645)  (1,906)  (2,061)  (2,149)
Tangible common shareholders' equity (non-GAAP)$245,773  $237,592  $237,602  $230,330  $214,713 
          
Common shares outstanding 7,727,312   7,815,566   8,172,776   8,150,480   8,344,797 
Book value per common share$32.03  $30.61  $29.31  $28.51  $25.99 
Tangible book value per share (non-GAAP) (9) 31.81   30.40   29.07   28.26   25.73 
          
(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) Net interest margin excluding PPP removes the effects of the following: PPP loan interest income of $3 thousand, $2 thousand, $11 thousand, $884 thousand, and $2.6 million, PPPLF interest expense of $0, $0, $0, $98 thousand, and $300 thousand, and brokered CD interest expense of $0, $0, $0, $0, and $99 thousand, as well as PPP loan average balances of $462 thousand, $628 thousand, $1.4 million, $172.8 million, and $481.9 million, for the quarters ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021, and March 31, 2021, respectively.
(4) Net interest margin excluding PPP and collection account removes the PPP impact above and removes the effects of the cash held by the Bank from the correspondent’s collection account in short-term investments, which had an average balance of $244.0 million, $287.7 million, $334.3 million, $405.9 million, and $121.7 million and earned $60 thousand, $73 thousand, $84 thousand, $100 thousand, and $29 thousand in interest income for the quarters ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021, and March 31, 2021, respectively.
(5) The efficiency ratio represents noninterest expense divided by the sum of net interest income (before the loan loss provision) plus noninterest income.
(6) 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.
(7) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held for sale.
(8) Includes the loan servicing rights asset.
(9) Tangible book value per share represents total shareholders’ equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
(10) Net loans and total loans exclude PPP loans held for sale.
 

For More Information:Jean-Pierre Lapointe, Chief Financial OfficerNortheast Bank, 27 Pearl Street, Portland, ME 04101 207.786.3245 ext. 3220www.northeastbank.com

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