Northeast Bank Reports Third Quarter Results and Declares Dividend
PORTLAND, Maine, April 30, 2024 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $13.9 million, or $1.83 per diluted common share, for the quarter ended March 31, 2024, compared to net income of $12.5 million, or $1.69 per diluted common share, for the quarter ended March 31, 2023. Net income for the nine months ended March 31, 2024 was $43.1 million, or $5.67 per diluted common share, compared to $32.1 million, or $4.35 per diluted common share, for the nine months ended March 31, 2023.
The Board of Directors declared a cash dividend of $0.01 per share, payable on May 27, 2024, to shareholders of record as of May 13, 2024.
“We reported strong results in our third fiscal quarter and surpassed $3.0 billion in assets as of March 31, 2024,” said Rick Wayne, Chief Executive Officer. “Our National Lending Division portfolio increased by $39.3 million, or 1.5%, for the quarter ended March 31, 2024. For the nine months ended March 31, 2024, the National Lending Division portfolio increased by $128.3 million, or 5.2%, driven by fiscal year-to-date originations of $284.9 million and purchases of $238.5 million. Additionally, utilizing our at-the-market stock offering plan, we issued 180 thousand shares of common stock during the quarter at a weighted average net proceeds per share of $52.34.” Mr. Wayne continued, “For the quarter, we are reporting earnings of $1.83 per diluted common share, a return on average equity of 16.4%, and a return on average assets of 1.9%.”
As of March 31, 2024, total assets were $3.00 billion, an increase of $131.1 million, or 4.6%, from total assets of $2.87 billion as of June 30, 2023.
1. The following table highlights the changes in the loan portfolio for the three and nine months ended March 31, 2024: Loan Portfolio Changes Three Months Ended March 31, 2024 March 31, 2024 Balance December 31, 2023 Balance Change ($) Change (%) (Dollars in thousands)
National Lending Purchased $ 1,620,409 $ 1,646,756 $ (26,347 ) (1.60 %)
National Lending Originated 975,876 910,213 65,663 7.21 %
SBA National 36,375 29,052 7,323 25.21 %
Community Banking 24,121 25,038 (917 ) (3.66 %)
Total $ 2,656,781 $ 2,611,059 $ 45,722 1.75 % Nine Months Ended March 31, 2024 March 31, 2024 Balance June 30, 2023 Balance Change ($) Change (%) (Dollars in thousands)
National Lending Purchased $ 1,620,409 $ 1,480,119 $ 140,290 9.48 %
National Lending Originated 975,876 987,832 (11,956 ) (1.21 %)
SBA National 36,375 24,873 11,502 46.24 %
Community Banking 24,121 27,536 (3,415 ) (12.40 %)
Total $ 2,656,781 $ 2,520,360 $ 136,421 5.41 %
Loans generated by the Bank's National Lending Division for the quarter ended March 31, 2024 totaled $153.3 million, which consisted of $153.3 million of originated loans and no purchased loans.
An overview of the Bank’s National Lending Division portfolio follows:
National Lending Portfolio Three Months Ended March 31, 2024 2023 Purchased Originated Total Purchased Originated Total (Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance $ - $ 153,349 $ 153,349 $ 23,715 $ 117,108 $ 140,823
Net investment basis - 153,349 153,349 21,493 117,108 138,601
Loan returns during the period:
Yield 8.67 % 10.09 % 9.19 % 7.62 % 9.23 % 8.26 %
Total Return on Purchased Loans (1) 8.70 % N/A 8.70 % 7.62 % N/A 7.62 % Nine Months Ended March 31, 2024 2023 Purchased Originated Total Purchased Originated Total (Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance $ 271,741 $ 284,876 $ 556,617 $ 1,260,530 $ 472,820 $ 1,733,350
Net investment basis 238,477 284,876 523,353 1,095,003 472,820 1,567,823
Loan returns during the period:
Yield 8.95 % 9.97 % 9.34 % 7.83 % 8.57 % 8.20 %
Total Return on Purchased Loans (1) 8.98 % N/A 8.98 % 7.83 % N/A 7.83 %
Total loans as of period end:
Unpaid principal balance $ 1,794,669 $ 975,876 $ 2,770,545 $ 1,650,072 $ 994,707 $ 2,644,779
Net investment basis 1,620,409 975,876 2,596,285 1,460,598 994,707 2,455,305
(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains (losses) on real estate owned, release of allowance for credit losses on purchased loans, and other noninterest income recorded during the period divided by the average invested balance on an annualized basis. The total return on purchased loans does not include the effect of purchased loan charge-offs or recoveries during the period. Total return on purchased loans is considered a non-GAAP financial measure. See reconciliation in below table entitled “Total Return on Purchased Loans.”
2. Deposits increased by $289.5 million, or 14.9%, from June 30, 2023. The increase was primarily attributable to increases in time deposits of $327.7 million, or 35.6%, and savings and interest checking deposits of $79.3 million, or 13.3%, partially offset by a decrease in money market deposits of $116.4 million, or 41.9%. The significant drivers in the change in time deposits were the increase in brokered time deposits, which increased by $229.6 million, and Community Banking Division time deposits, which increased by $141.7 million compared to June 30, 2023, partially offset by the intentional runoff of Bulletin Board time deposits of $40.4 million.3. Federal Home Loan Bank (“FHLB”) advances decreased by $211.4 million, or 37.6%, from June 30, 2023. The decrease was attributable to the Bank’s decision to pay down advances funded with brokered time deposits.4. Shareholders’ equity increased by $55.3 million, or 18.6%, from June 30, 2023, primarily due to net income of $43.1 million and the issuance of 192 thousand shares of voting common stock, which added $10.0 million to shareholders’ equity.Net income increased by $1.4 million to $13.9 million for the quarter ended March 31, 2024, compared to net income of $12.5 million for the quarter ended March 31, 2023.
1. Net interest and dividend income before provision for credit losses increased by $4.3 million to $36.5 million for the quarter ended March 31, 2024, compared to $32.2 million for the quarter ended March 31, 2023. The increase was primarily due to the following:• An increase in interest income earned on loans of $9.6 million, primarily due to an increase in interest income earned on the National Lending Division’s purchased and originated portfolios, due to higher rates earned on both portfolios and higher average balances in the purchased portfolio; and• An increase in interest income earned on short-term investments of $1.3 million, due to higher rates earned and higher average balances; partially offset by,• An increase in deposit interest expense of $6.1 million, primarily due to higher rates in interest-bearing deposits; and• An increase in FHLB borrowings interest expense of $539 thousand, primarily due to higher average balances.
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, 2024 2023 Average Interest Average Interest Balance Income Yield Balance Income Yield (Dollars in thousands)
Community Banking $ 24,640 $ 387 6.32 % $ 29,157 $ 436 6.06 %
SBA National 35,848 1,159 13.00 % 28,288 851 12.20 %
National Lending:
Originated 953,401 23,909 10.09 % 981,660 22,347 9.23 %
Purchased 1,635,494 35,260 8.67 % 1,463,242 27,475 7.62 %
Total National Lending 2,588,895 59,169 9.19 % 2,444,902 49,822 8.26 %
Total $ 2,649,383 $ 60,715 9.22 % $ 2,502,347 51,109 8.28 % Nine Months Ended March 31, 2024 2023 Average Interest Average Interest Balance Income Yield Balance Income Yield (Dollars in thousands)
Community Banking $ 25,786 $ 1,242 6.41 % $ 31,002 $ 1,490 6.40 %
SBA National 30,125 2,833 12.52 % 28,945 2,191 10.08 %
National Lending:
Originated 951,129 71,284 9.97 % 898,467 57,770 8.57 %
Purchased 1,558,362 104,780 8.95 % 901,377 52,965 7.83 %
Total National Lending 2,509,491 176,064 9.34 % 1,799,844 110,735 8.20 %
Total $ 2,565,402 $ 180,139 9.35 % $ 1,859,791 114,416 8.20 %
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, 2023, transactional income decreased by $1.9 million for the quarter ended March 31, 2024, and regularly scheduled interest and accretion increased by $9.8 million primarily due to the increase in average balances. The total return on purchased loans for the quarter ended March 31, 2024 was 8.7%, an increase from 7.6% for the quarter ended March 31, 2023. The following table details the total return on purchased loans:
Total Return on Purchased Loans Three Months Ended March 31, 2024 2023 Income Return (1) Income Return (1) (Dollars in thousands)
Regularly scheduled interest and accretion $ 34,045 8.37 % $ 24,280 6.73 %
Transactional income:
Release of allowance for credit losses on purchased loans 130 0.03 % - 0.00 %
Accelerated accretion and loan fees 1,215 0.30 % 3,195 0.89 %
Total transactional income 1,345 0.33 % 3,195 0.89 %
Total $ 35,390 8.70 % $ 27,475 7.62 % Nine Months Ended March 31, 2024 2023 Income Return (1) Income Return (1) (Dollars in thousands)
Regularly scheduled interest and accretion $ 98,505 8.41 % $ 44,968 6.65 %
Transactional income:
Release of allowance for credit losses on purchased loans 356 0.03 % - 0.00 %
Accelerated accretion and loan fees 6,275 0.54 % 7,997 1.18 %
Total transactional income 6,631 0.57 % 7,997 1.18 %
Total $ 105,136 8.98 % $ 52,965 7.83 %
(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, and gains (losses) on real estate owned, and release of allowance for credit losses on purchased loans 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. Total return is considered a non-GAAP financial measure.2. The provision for credit losses for the third quarter of fiscal year 2024 was reported using the CECL methodology, whereas the third quarter of fiscal year 2023 provision for credit losses was reported using the incurred loss methodology. Provision for credit losses decreased by $80 thousand to a provision of $596 thousand for the quarter ended March 31, 2024, compared to a provision of $676 thousand in the quarter ended March 31, 2023.3. Noninterest income increased by $354 thousand for the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023, principally due to the following:• An increase in gain on sale of Small Business Administration (“SBA”) loans of $787 thousand, due to the sale of $18.9 million in SBA loans during the quarter ended March 31, 2024 as compared to the sale of $3.7 million during the quarter ended March 31, 2023; partially offset by,• A decrease in correspondent fee income of $287 thousand from the recognition of correspondent fees and related net servicing income; and• An increase in unrealized loss on equity securities of $135 thousand.
4. Noninterest expense increased by $2.6 million for the quarter ended March 31, 2024 compared to the quarter ended March 31, 2023, primarily due to the following:• An increase in salaries and employee benefits expense of $2.4 million, primarily due to an additional accrual of $1.0 million in incentive compensation based on earnings for the nine months ended March 31, 2024, along with increases in regular compensation expense, and stock compensation expense;• An increase in other noninterest expense of $412 thousand, primarily due to a $130 thousand increase in deposit expense and a $103 thousand decrease in recovery on SBA servicing asset; and• An increase in loan expense of $362 thousand, primarily due to increased expenses in connection with the origination of SBA 7(a) loans; partially offset by,• A decrease in professional fees of $448 thousand, primarily due to decreases in legal and other professional fees.
5. Income tax expense increased by $766 thousand to $7.2 million, or an effective tax rate of 34.1%, for the quarter ended March 31, 2024, compared to $6.4 million, or an effective tax rate of 33.8%, for the quarter ended March 31, 2023. The increase in effective tax rate is primarily due to updates to permanent differences which increase taxable income.As of March 31, 2024, nonperforming assets totaled $27.9 million, or 0.93% of total assets, compared to $15.7 million, or 0.55% of total assets, as of June 30, 2023. The increase was primarily tied to four National Lending Division loans totaling $12.6 million which were placed on non-accrual during the nine months ended March 31, 2024.
As of March 31, 2024, past due loans totaled $30.1 million, or 1.13% of total loans, compared to past due loans totaling $13.1 million, or 0.52% of total loans, as of June 30, 2023.
As of March 31, 2024, the Bank’s Tier 1 leverage capital ratio was 11.8%, compared to 10.4% at June 30, 2023, and the Total risk-based capital ratio was 14.2% at March 31, 2024, compared to 12.3% at June 30, 2023. Capital ratios increased primarily due to increased earnings and the Total risk-based capital ratio also increased due to an increase in Tier 2 capital associated with the allowance for credit losses under CECL.
*Investor Call Information*
Rick Wayne, Chief Executive Officer, Richard Cohen, Chief Financial Officer, and Pat Dignan, Chief Operating 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 Wednesday, May 1*^*st**.* To access the conference call by phone, please go to this link (Phone Registration), and you will be provided with dial in details. The call will be available via live webcast, which can be viewed by accessing the Bank’s website at www.northeastbank.com and clicking on the About Us - Investor Relations section. To listen to the webcast, attendees are encouraged to visit the website at least fifteen minutes early to register, download and install any necessary audio software. Please note there will also be a slide presentation that will accompany the webcast. For those who cannot listen to the live broadcast, a replay will be available online for one year at www.northeastbank.com.
*About Northeast Bank*
Northeast Bank (NASDAQ: NBN) is a full-service bank headquartered in Portland, Maine. We offer personal and business banking services to the Maine market via seven 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 Measures*
In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures, including tangible common shareholders’ equity, tangible book value per share, total return on purchased loans, and efficiency ratio. The Bank’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
*Forward-Looking Statements *
Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in other documents we file with the Federal Deposit Insurance Corporation (the “FDIC”), in our annual reports to our shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters. Although the Bank believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Bank’s control. The Bank’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in 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 loans; changes in customer behavior due to political, business and economic conditions, including inflation and concerns about liquidity; turbulence in the capital and debt markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balances and mix of loans and deposits; changes in interest rates and real estate values; changes in loan collectability and increases in defaults and charge-off rates; decreases in the value of securities and other assets, adequacy of credit loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; competitive pressures from other financial institutions; changes in legislation or regulation and accounting principles, policies and guidelines; 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 FDIC. 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, 2024 June 30, 2023
Assets
Cash and due from banks $ 2,324 $ 2,515
Short-term investments 202,828 195,394
Total cash and cash equivalents 205,152 197,909
Available-for-sale debt securities, at fair value 53,029 53,403
Equity securities, at fair value 6,970 6,771
Total investment securities 59,999 60,174
Loans:
Commercial real estate 2,003,987 1,940,563
Commercial and industrial 585,033 499,815
Residential real estate 67,429 79,497
Consumer 332 485
Total loans 2,656,781 2,520,360
Less: Allowance for credit losses 25,942 7,304
Loans, net 2,630,839 2,513,056
Premises and equipment, net 27,575 27,737
Federal Home Loan Bank stock, at cost 15,915 24,644
Loan servicing rights, net 1,062 1,530
Bank-owned life insurance 18,712 18,364
Other assets 41,761 26,524
Total assets $ 3,001,015 $ 2,869,938
Liabilities and Shareholders' Equity
Deposits:
Demand $ 142,682 $ 143,738
Savings and interest checking 675,628 596,347
Money market 161,552 277,939
Time 1,246,848 919,183
Total deposits 2,226,710 1,937,207
Federal Home Loan Bank and other advances 351,173 562,615
Lease liability 20,860 21,918
Other liabilities 50,359 51,535
Total liabilities 2,649,102 2,573,275
Commitments and contingencies - -
Shareholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at March 31, 2024 and June 30, 2023 - -
Voting common stock, $1.00 par value, 25,000,000 shares authorized; 7,977,690 and 7,668,650 shares issued and outstanding at March 31, 2024 and June 30, 2023, respectively 7,978 7,669
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; No shares issued and outstanding at March 31, 2024 and June 30, 2023 - -
Additional paid-in capital 55,325 42,840
Retained earnings 288,864 246,872
Accumulated other comprehensive loss (254 ) (718 )
Total shareholders' equity 351,913 296,663
Total liabilities and shareholders' equity $ 3,001,015 $ 2,869,938
*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, 2024 2023 2024 2023
Interest and dividend income:
Interest and fees on loans $ 60,715 $ 51,109 $ 180,139 $ 114,416
Interest on available-for-sale securities 596 329 1,639 748
Other interest and dividend income 3,179 1,916 9,541 4,255
Total interest and dividend income 64,490 53,354 191,319 119,419
Interest expense:
Deposits 23,340 17,240 63,772 29,937
Federal Home Loan Bank advances 4,401 3,862 16,247 4,795
Obligation under capital lease agreements 237 13 664 46
Total interest expense 27,978 21,115 80,683 34,778
Net interest and dividend income before provision for loan losses 36,512 32,239 110,636 84,641
Provision for credit losses 596 676 1,221 1,851
Net interest and dividend income after provision for loan losses 35,916 31,563 109,415 82,790
Noninterest income:
Fees for other services to customers 320 372 1,218 1,142
Gain on sales of SBA loans 1,015 228 1,837 299
Net unrealized gain (loss) on equity securities (55 ) 80 17 (127 )
Gain (loss) on real estate owned, other repossessed collateral and premises and equipment, net - - (9 ) (73 )
Correspondent fee income 40 327 183 2,327
Gain on termination of interest rate swap - - - 96
Bank-owned life insurance income 116 110 348 329
Other noninterest income 106 71 194 154
Total noninterest income 1,542 1,188 3,788 4,147
Noninterest expense:
Salaries and employee benefits 10,784 8,434 30,409 25,149
Occupancy and equipment expense 1,072 1,061 3,277 3,113
Professional fees 503 951 1,784 1,931
Data processing fees 1,376 1,369 3,823 3,690
Marketing expense 256 187 738 583
Loan acquisition and collection expense 813 451 2,402 1,841
FDIC insurance expense 273 443 917 684
Other noninterest expense 1,352 940 4,138 3,183
Total noninterest expense 16,429 13,836 47,488 40,174
Income before income tax expense 21,029 18,915 65,715 46,763
Income tax expense 7,164 6,398 22,624 14,661
Net income $ 13,865 $ 12,517 $ 43,091 $ 32,102
Weighted-average shares outstanding:
Basic 7,509,320 7,352,447 7,510,065 7,307,142
Diluted 7,595,124 7,413,812 7,602,844 7,377,236
Earnings per common share:
Basic $ 1.85 $ 1.70 $ 5.74 $ 4.39
Diluted 1.83 1.69 5.67 4.35
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, 2024 2023 Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning assets:
Investment securities $ 60,211 $ 596 3.98 % $ 60,315 $ 329 2.16 %
Loans (1) (2) 2,649,383 60,715 9.22 % 2,502,347 51,109 8.10 %
Federal Home Loan Bank stock 17,636 449 10.24 % 13,958 76 2.16 %
Short-term investments (3) 204,869 2,730 5.36 % 174,431 1,840 4.19 %
Total interest-earning assets 2,932,099 64,490 8.85 % 2,751,051 53,354 7.69 %
Cash and due from banks 2,446 2,565
Other non-interest earning assets 50,227 67,861
Total assets $ 2,984,772 $ 2,821,477
Liabilities & Shareholders' Equity:
Interest-bearing liabilities:
NOW accounts $ 524,301 $ 5,767 4.42 % $ 543,050 $ 4,820 3.52 %
Money market accounts 190,379 1,619 3.42 % 253,542 1,372 2.15 %
Savings accounts 140,737 1,126 3.22 % 108,102 281 1.03 %
Time deposits 1,185,558 14,828 5.03 % 1,077,242 10,767 3.97 %
Total interest-bearing deposits 2,040,975 23,340 4.60 % 1,981,936 17,240 3.45 %
Federal Home Loan Bank advances 396,130 4,401 4.47 % 324,696 3,862 4.72 %
Lease liability 20,981 237 4.54 % 20,789 13 0.25 %
Total interest-bearing liabilities 2,458,086 27,978 4.58 % 2,327,421 21,115 3.60 %
Non-interest bearing liabilities:
Demand deposits and escrow accounts 163,042 201,354
Other liabilities 24,571 18,786
Total liabilities 2,645,699 2,547,561
Shareholders' equity 339,073 273,916
Total liabilities and shareholders' equity $ 2,984,772 $ 2,821,477
Net interest income $ 36,512 $ 32,239
Interest rate spread 4.27 % 4.19 %
Net interest margin (4) 5.01 % 4.75 %
Cost of funds (5) 4.29 % 3.39 %
(1) Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
(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.
(5) 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, 2024 2023 Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning assets:
Investment securities $ 60,060 $ 1,639 3.63 % $ 60,818 $ 748 1.64 %
Loans (1) (2) 2,565,402 180,139 9.35 % 1,859,791 114,416 8.20 %
Federal Home Loan Bank stock 20,415 1,331 8.68 % 7,317 137 2.49 %
Short-term investments (3) 204,252 8,210 5.35 % 162,136 4,118 3.38 %
Total interest-earning assets 2,850,129 191,319 8.93 % 2,090,062 119,419 7.61 %
Cash and due from banks 2,482 2,531
Other non-interest earning assets 58,609 85,970
Total assets $ 2,911,220 $ 2,178,563
Liabilities & Shareholders' Equity:
Interest-bearing liabilities:
NOW accounts $ 507,594 $ 16,548 4.34 % $ 529,482 $ 9,990 2.51 %
Money market accounts 226,072 5,760 3.39 % 249,353 2,583 1.38 %
Savings accounts 118,044 2,603 2.93 % 123,607 848 0.91 %
Time deposits 1,061,399 38,861 4.87 % 614,044 16,516 3.58 %
Total interest-bearing deposits 1,913,109 63,772 4.44 % 1,516,486 29,937 2.63 %
Federal Home Loan Bank advances 463,065 16,247 4.67 % 155,639 4,795 4.10 %
Lease liability 21,373 664 4.13 % 13,829 46 0.44 %
Total interest-bearing liabilities 2,397,547 80,683 4.48 % 1,685,954 34,778 2.75 %
Non-interest bearing liabilities:
Demand deposits and escrow accounts 166,955 219,785
Other liabilities 24,388 12,294
Total liabilities 2,588,890 1,918,033
Shareholders' equity 322,330 260,530
Total liabilities and shareholders' equity $ 2,911,220 $ 2,178,563
Net interest income $ 110,636 $ 84,641
Interest rate spread 4.45 % 4.86 %
Net interest margin (4) 5.17 % 5.39 %
Cost of funds (5) 4.19 % 2.43 %
(1) Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
(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.
(5) 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, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023
Net interest income $ 36,512 $ 37,000 $ 37,124 $ 34,155 $ 32,239
Provision for credit losses 596 436 190 453 676
Noninterest income 1,542 1,466 779 1,112 1,188
Noninterest expense 16,429 15,669 15,389 16,361 13,836
Net income 13,865 14,054 15,172 12,086 12,517
Weighted-average common shares outstanding:
Basic 7,509,320 7,505,109 7,479,837 7,459,074 7,352,447
Diluted 7,595,124 7,590,913 7,554,315 7,523,508 7,413,812
Earnings per common share:
Basic $ 1.85 $ 1.87 $ 2.03 $ 1.62 $ 1.70
Diluted 1.83 1.85 2.01 1.61 1.69
Dividends declared per common share $ 0.01 $ 0.01 $ 0.01 $ 0.01 $ 0.01
Return on average assets 1.87 % 1.93 % 2.12 % 1.70 % 1.80 %
Return on average equity 16.45 % 17.35 % 19.73 % 16.67 % 18.53 %
Net interest rate spread (1) 4.27 % 4.49 % 4.61 % 4.31 % 4.19 %
Net interest margin (2) 5.01 % 5.20 % 5.30 % 4.91 % 4.75 %
Efficiency ratio (non-GAAP) (3) 43.17 % 40.73 % 40.60 % 46.39 % 41.39 %
Noninterest expense to average total assets 2.21 % 2.15 % 2.15 % 2.30 % 1.99 %
Average interest-earning assets to average interest-bearing liabilities 119.28 % 118.52 % 118.82 % 117.73 % 118.20 % As of: March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023
Nonperforming loans:
Originated portfolio:
Residential real estate $ 2,573 $ 2,582 $ 289 $ 280 $ 379
Commercial real estate 2,075 2,075 1,973 3,548 3,355
Commercial and industrial 6,928 6,950 584 520 561
Consumer - - - - -
Total originated portfolio 11,576 11,607 2,846 4,348 4,295
Total purchased portfolio 16,370 19,165 14,603 11,335 10,227
Total nonperforming loans 27,946 30,772 17,449 15,683 14,522
Real estate owned and other repossessed collateral, net - - - - -
Total nonperforming assets $ 27,946 $ 30,772 $ 17,449 $ 15,683 $ 14,522
Past due loans to total loans 1.13 % 1.22 % 1.01 % 0.52 % 0.70 %
Nonperforming loans to total loans 1.05 % 1.18 % 0.69 % 0.62 % 0.58 %
Nonperforming assets to total assets 0.93 % 1.04 % 0.61 % 0.55 % 0.51 %
Allowance for credit losses to total loans 0.98 % 1.06 % 1.00 % 0.29 % 0.28 %
Allowance for credit losses to nonperforming loans 92.83 % 89.67 % 145.01 % 46.57 % 48.84 %
Net charge-offs (recoveries) $ 2,225 $ 995 $ 1,536 $ 240 $ (5 )
Commercial real estate loans to total capital (4) 509.08 % 544.34 % 546.91 % 595.38 % 614.90 %
Net loans to deposits 118.15 % 121.31 % 127.24 % 129.73 % 117.56 %
Purchased loans to total loans 60.99 % 63.07 % 59.98 % 58.73 % 58.20 %
Equity to total assets 11.73 % 11.03 % 10.83 % 10.34 % 9.90 %
Common equity tier 1 capital ratio 13.24 % 12.63 % 12.45 % 12.03 % 11.59 %
Total risk-based capital ratio 14.22 % 13.71 % 13.46 % 12.33 % 11.89 %
Tier 1 leverage capital ratio 11.79 % 11.28 % 10.95 % 10.38 % 10.06 %
Total shareholders’ equity $ 351,913 $ 327,540 $ 311,569 $ 296,663 $ 283,869
Less: Preferred stock - - - - -
Common shareholders’ equity 351,913 327,540 311,569 296,663 283,869
Less: Intangible assets (5) - - - - -
Tangible common shareholders' equity (non-GAAP) $ 351,913 $ 327,540 $ 311,569 $ 296,663 $ 283,869
Common shares outstanding 7,977,690 7,804,052 7,796,691 7,668,650 7,668,650
Book value per common share $ 44.11 $ 41.97 $ 39.96 $ 38.69 $ 37.02
Tangible book value per share (non-GAAP) (6) 44.11 41.97 39.96 38.69 37.02
(1) The net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.
(2) The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
(3) The efficiency ratio represents noninterest expense divided by the sum of net interest income (before the credit loss provision) plus noninterest 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) Includes the loan servicing rights asset.
(6) Tangible book value per share represents total shareholders’ equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
*For More Information:*
Richard Cohen, Chief Financial Officer
Northeast Bank, 27 Pearl Street, Portland, Maine 04101
207.786.3245 ext. 3249
www.northeastbank.com