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Northeast Bank Reports Second Quarter Results and Declares Dividend

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Northeast Bank
·20 min read
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PORTLAND, Maine, Jan. 27, 2021 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $8.2 million, or $0.98 per diluted common share, for the quarter ended December 31, 2020, compared to net income of $4.9 million, or $0.53 per diluted common share, for the quarter ended December 31, 2019. Net income for the six months ended December 31, 2020 was $16.0 million, or $1.92 per diluted common share, compared to $9.6 million, or $1.05 per diluted common share, for the six months ended December 31, 2019.

The Board of Directors declared a cash dividend of $0.01 per share, payable on February 24, 2021, to shareholders of record as of February 10, 2021.

“We reported strong results in our second fiscal quarter,” said Rick Wayne, Chief Executive Officer. “We closed on our largest single loan pool purchase in the Bank’s history, which contributed to our National Lending team generating $175.9 million of new volume, consisting of $91.3 million of purchased loans and $84.6 million of originations.” Mr. Wayne continued, “For the quarter, we recognized $6.1 million of correspondent fee income under the arrangement with The Loan Source, Inc. (“Loan Source”) and ACAP SME, LLC, who purchased an additional $1.3 billion of Paycheck Protection Program loans during the quarter. As a result, we earned $0.98 per diluted common share, a return on average equity of 18.4%, a return on average assets of 2.7%, and a net interest margin of 5.2%.”

As of December 31, 2020, total assets were $1.23 billion, a decrease of $23.5 million, or 1.9%, from total assets of $1.26 billion as of June 30, 2020.

1. The following table highlights the changes in the loan portfolio for the three and six months ended December 31, 2020:

Loan Portfolio Changes

Three Months Ended December 31, 2020

December 31, 2020
Balance

September 30, 2020
Balance

Change ($)

Change (%)

(Dollars in thousands)

National Lending Purchased

$

418,584

$

358,203

$

60,381

16.86

%

National Lending Originated

478,423

462,974

15,449

3.34

%

SBA National

48,797

48,775

22

0.05

%

Community Banking

55,773

62,158

(6,385

)

(10.27

%)

Total

$

1,001,577

$

932,110

$

69,467

7.45

%

Six Months Ended December 31, 2020

December 31, 2020
Balance

June 30, 2020
Balance

Change ($)

Change (%)

(Dollars in thousands)

National Lending Purchased

$

418,584

$

386,624

$

31,960

8.27

%

National Lending Originated

478,423

467,612

10,811

2.31

%

SBA National

48,797

47,095

1,702

3.61

%

Community Banking

55,773

70,271

(14,498

)

(20.63

%)

Total

$

1,001,577

$

971,602

$

29,975

3.09

%

Loans generated by the Bank's National Lending Division for the quarter ended December 31, 2020 totaled $175.9 million, which consisted of $91.3 million of purchased loans, at an average price of 93.4% of unpaid principal balance, and $84.6 million of originated loans.

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

National Lending Portfolio

Three Months Ended December 31,

2020

2019

Purchased

Originated

Total

Purchased

Originated

Total

(Dollars in thousands)

Loans purchased or originated during the period:

Unpaid principal balance

$

97,759

$

84,607

$

182,366

$

66,784

$

98,563

$

165,347

Net investment basis

91,284

84,607

175,891

64,840

98,563

163,403

Loan returns during the period:

Yield

9.06

%

6.87

%

7.89

%

9.76

%

7.67

%

8.57

%

Total Return on Purchased Loans (1)

9.06

%

6.87

%

7.89

%

10.21

%

7.67

%

8.77

%

Six Months Ended December 31,

2020

2019

Purchased

Originated

Total

Purchased

Originated

Total

(Dollars in thousands)

Loans purchased or originated during the period:

Unpaid principal balance

$

103,588

$

125,515

$

229,103

$

97,116

$

139,100

$

236,216

Net investment basis

95,862

125,515

221,377

93,462

139,100

232,562

Loan returns during the period:

Yield

9.08

%

6.95

%

7.93

%

9.74

%

7.62

%

8.52

%

Total Return on Purchased Loans (1)

9.08

%

6.95

%

7.93

%

9.98

%

7.62

%

8.61

%

Total loans as of period end:

Unpaid principal balance

$

456,524

$

478,423

$

934,947

$

401,393

$

497,386

$

898,779

Net investment basis

418,584

478,423

897,007

367,625

497,386

865,011

(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, gains on real estate owned and other noninterest income recorded during the period divided by the average invested balance, which includes purchased loans held for sale, on an annualized basis. The total return on purchased loans does not include the effect of purchased loan charge-offs or recoveries during the period. Total return on purchased loans is considered a non-GAAP financial measure. See reconciliation in below table entitled “Total Return on Purchased Loans.”

2. Deposits decreased by $28.4 million, or 2.8%, from June 30, 2020. The decrease was attributable to a decrease in time deposits of $116.6 million, or 24.4% due to intentional runoff. The decrease was partially offset by increases in demand deposits of $33.2 million, or 35.0%, savings and interest checking accounts of $47.6 million, or 34.6%, and money market deposits of $7.3 million, or 2.4%.

3. Shareholders’ equity increased by $17.2 million, or 10.5%, from June 30, 2020, primarily due to net income of $16.0 million. Shareholders’ equity also increased by $1.0 million as a result of stock options exercised, which resulted in 153 thousand shares of common stock issued.

Net income increased by $3.3 million to $8.2 million for the quarter ended December 31, 2020, compared to net income of $4.9 million for the quarter ended December 31, 2019.

1. Net interest and dividend income before provision for loan losses decreased by $157 thousand to $15.4 million for the quarter ended December 31, 2020, compared to $15.5 million for the quarter ended December 31, 2019. The decrease was primarily due to lower interest income earned on loans, partially offset by a decrease in deposit interest expense. The decrease in interest income earned on loans was primarily due to lower average balances and rates earned on the National Lending originated, SBA, and Community Bank portfolios, partially offset by higher average balances in the National Lending purchased portfolio. The decrease in deposit interest expense was due to lower rates, partially offset by 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 December 31,

2020

2019

Average

Interest

Average

Interest

Balance (1)

Income

Yield

Balance (1)

Income

Yield

(Dollars in thousands)

Community Banking

$

57,801

$

658

4.52

%

$

85,989

$

1,193

5.52

%

SBA National

48,953

616

4.99

%

57,371

1,003

6.96

%

National Lending:

Originated

450,698

7,801

6.87

%

456,877

8,814

7.67

%

Purchased

395,692

9,033

9.06

%

345,748

8,480

9.76

%

Total National Lending

846,390

16,834

7.89

%

802,625

17,294

8.57

%

Total

$

953,144

$

18,108

7.54

%

$

945,985

$

19,490

8.20

%

Six Months Ended December 31,

2020

2019

Average

Interest

Average

Interest

Balance (1)

Income

Yield

Balance (1)

Income

Yield

(Dollars in thousands)

Community Banking

$

61,620

$

1,502

4.84

%

$

88,187

$

2,458

5.54

%

SBA National

48,444

1,171

4.80

%

60,062

2,472

8.19

%

SBA PPP

8,608

81

1.87

%

-

-

0.00

%

National Lending:

Originated

451,721

15,830

6.95

%

463,092

17,742

7.62

%

Purchased

384,946

17,629

9.08

%

337,284

16,521

9.74

%

Total National Lending

836,667

33,459

7.93

%

800,376

34,263

8.52

%

Total

$

955,339

$

36,213

7.52

%

$

948,625

$

39,193

8.22

%

(1) Includes loans held for sale.

The components of total income on purchased loans are set forth in the table below entitled “Total Return on Purchased Loans.” When compared to the quarter ended December 31, 2019, transactional income decreased by $430 thousand for the quarter ended December 31, 2020, while regularly scheduled interest and accretion increased by $588 thousand due to the increase in average balances. The total return on purchased loans for the quarter ended December 31, 2020 was 9.1%, a decrease from 10.2% for the quarter ended December 31, 2019. The following table details the total return on purchased loans:

Total Return on Purchased Loans

Three Months Ended December 31,

2020

2019

Income

Return (1)

Income

Return (1)

(Dollars in thousands)

Regularly scheduled interest and accretion

$

7,113

7.13

%

$

6,525

7.51

%

Transactional income:

Gain on real estate owned

-

0.00

%

395

0.45

%

Accelerated accretion and loan fees

1,920

1.93

%

1,955

2.25

%

Total transactional income

1,920

1.93

%

2,350

2.70

%

Total

$

9,033

9.06

%

$

8,875

10.21

%

Six Months Ended December 31,

2020

2019

Income

Return (1)

Income

Return (1)

(Dollars in thousands)

Regularly scheduled interest and accretion

$

13,677

7.05

%

$

12,580

7.42

%

Transactional income:

Gain on real estate owned

-

0.00

%

395

0.24

%

Accelerated accretion and loan fees

3,952

2.03

%

3,941

2.32

%

Total transactional income

3,952

2.03

%

4,336

2.56

%

Total

$

17,629

9.08

%

$

16,916

9.98

%

(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 increased by $5.2 million for the quarter ended December 31, 2020, compared to the quarter ended December 31, 2019, principally due to the following:

  • An increase in correspondent fee income of $6.1 million from the recognition of correspondent fees and net servicing income as a result of the correspondent arrangement entered into with Loan Source during the quarter ended June 30, 2020. The correspondent arrangement provides for the Bank to earn a correspondent fee when Loan Source purchases PPP loans and the Bank subsequently shares in net servicing income on such purchased PPP loans. Correspondent income for the quarter is comprised of the following components:

Income Earned

(In thousands)

Correspondent Fee

$

1,061

Amortization of Purchased Accrued Interest

613

Earned Net Servicing Interest

4,408

Total

$

6,082

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 Loans
Purchased by
Loan Source

Correspondent
Fee

Purchased
Accrued 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

Total

$

4,718,500

$

8,734

$

7,258

$

15,992

Less amounts recognized in Q2 FY 21

(1,061

)

(613

)

(1,674

)

Less amounts recognized in previous quarters

(842

)

(279

)

(1,121

)

Amount remaining to be recognized

$

6,831

$

6,366

$

13,197

(1) - Northeast Bank's share

(2) - Expected to be recognized into income over approximately 2 years

The increase in correspondent fee income was partially offset by:

  • An increase in loss on real estate owned (“REO”) of $501 thousand, due to a writedown and net loss on sales of REO properties in the quarter ended December 31, 2020, as compared to a gain recorded on the transfer of a loan into REO in the quarter ended December 31, 2019;

  • A decrease in gain on sale of SBA loans of $304 thousand, due to no SBA loans sold in the quarter ended December 31, 2020; and

  • A decrease in gain on sale of residential loans held for sale of $193 thousand, due to lower volume of loans sold as compared to the quarter ended December 31, 2019.

3. Noninterest expense increased by $639 thousand for the quarter ended December 31, 2020 compared to the quarter ended December 31, 2019, primarily due to the following:

  • An increase in loan expense of $343 thousand, primarily due to $424 thousand in correspondent expenses associated with the Loan Source arrangement, partially offset by an increase of $120 thousand of collection expense reimbursements received during the quarter ended December 31, 2020;

  • An increase in occupancy and equipment expense of $198 thousand, primarily due to increases in rent expense, depreciation and IT software expense in connection with the relocation of the Lewiston operations center and opening of a new office in New York City; and

  • An increase in FDIC insurance premium expense of $102 thousand, due to credits received during the quarter ended December 31, 2019, which have now run out.

4. Income tax expense increased by $933 thousand to $2.9 million, or an effective tax rate of 26.3%, for the quarter ended December 31, 2020, compared to $1.9 million, or an effective tax rate of 28.9%, for the quarter ended December 31, 2019. The increase in income tax expense is due to the increase in pre-tax income. The decrease in effective tax rate is primarily due to $472 thousand of tax benefits arising from the exercise of stock options during the quarter ended December 31, 2020.

As of December 31, 2020, nonperforming assets totaled $33.4 million, or 2.70% of total assets, as compared to $24.4 million, or 1.94% of total assets, as of June 30, 2020. The increase was primarily due to two National Lending originated loans totaling $8.0 million and two National Lending purchased loans totaling $1.2 million that were placed on nonaccrual during the six months ended December 31, 2020. Subsequent to the end of the quarter, a $6.0 million nonaccrual loan paid off in full.

As of December 31, 2020, past due loans totaled $23.1 million, or 2.31% of total loans, as compared to past due loans totaling $16.4 million, or 1.69% of total loans as of June 30, 2020. The increase was primarily due to one National Lending originated loan totaling $2.0 million and fifteen National Lending purchased loans totaling $4.8 million, becoming past due during the six months ended December 31, 2020.

As of December 31, 2020, the Bank’s Tier 1 leverage capital ratio was 15.1%, compared to 13.4% at June 30, 2020, and the Total capital ratio was 20.4% at December 31, 2020, as compared to 19.6% at June 30, 2020. Capital ratios were affected by earnings during the six months ended December 31, 2020.

Investor Call Information
Rick 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 second quarter earnings and business outlook at 10:00 a.m. Eastern Time on Thursday, January 28th. Investors can access the call by dialing 800.773.2954 and entering the following passcode: 50081035. 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 nine 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, efficiency ratio, and net interest margin excluding PPP. 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 negative impacts and disruptions of the 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; the length and extent of the economic contraction resulting from the COVID-19 pandemic; continued deterioration in employment levels, 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

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

NORTHEAST BANK

BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share and per share data)

December 31, 2020

June 30, 2020

Assets

Cash and due from banks

$

3,264

$

2,795

Short-term investments

106,096

140,862

Total cash and cash equivalents

109,360

143,657

Available-for-sale debt securities, at fair value

62,149

64,918

Equity securities, at fair value

7,275

7,239

Total investment securities

69,424

72,157

Residential real estate loans held for sale

161

601

SBA loans held for sale

-

28,852

Total loans held for sale

161

29,453

Loans:

Commercial real estate

700,413

679,537

Commercial and industrial

226,770

212,769

Residential real estate

73,060

77,722

Consumer

1,334

1,574

Total loans

1,001,577

971,602

Less: Allowance for loan losses

9,926

9,178

Loans, net

991,651

962,424

Premises and equipment, net

12,539

9,670

Real estate owned and other repossessed collateral, net

2,866

3,274

Federal Home Loan Bank stock, at cost

1,390

1,390

Loan servicing rights, net

2,035

2,113

Bank-owned life insurance

17,286

17,074

Other assets

27,380

16,423

Total assets

$

1,234,092

$

1,257,635

Liabilities and Shareholders' Equity

Deposits:

Demand

$

127,944

$

94,749

Savings and interest checking

185,465

137,824

Money market

309,658

302,343

Time

360,870

477,436

Total deposits

983,937

1,012,352

Federal Home Loan Bank advances

15,000

15,000

Paycheck Protection Program Liquidity Facility advances

-

12,440

Subordinated debt

14,995

14,940

Lease liability

6,796

4,496

Other liabilities

31,402

33,668

Total liabilities

1,052,130

1,092,896

Commitments and contingencies

-

-

Shareholders' equity

Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares

issued and outstanding at December 31, 2020 and June 30, 2020

-

-

Voting common stock, $1.00 par value, 25,000,000 shares authorized;

8,344,797 and 8,153,841 shares issued and outstanding at

December 31, 2020 and June 30, 2020, respectively

8,345

8,154

Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;

zero and 44,783 shares issued and outstanding at December 31, 2020 a
nd June 30, 2020, respectively

-

45

Additional paid-in capital

69,499

68,302

Retained earnings

105,766

89,960

Accumulated other comprehensive loss

(1,648

)

(1,722

)

Total shareholders' equity

181,962

164,739

Total liabilities and shareholders' equity

$

1,234,092

$

1,257,635


NORTHEAST BANK

STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except share and per share data)

Three Months Ended December 31,

Six Months Ended December 31,

2020

2019

2020

2019

Interest and dividend income:

Interest and fees on loans

$

18,108

$

19,490

$

36,213

$

39,193

Interest on available-for-sale securities

193

442

483

893

Other interest and dividend income

54

326

142

665

Total interest and dividend income

18,355

20,258

36,838

40,751

Interest expense:

Deposits

2,529

4,181

5,587

8,497

Federal Home Loan Bank advances

126

218

250

343

Paycheck Protection Program Liquidity Facility

-

-

2

-

Subordinated debt

282

282

563

563

Obligation under capital lease agreements

30

32

55

68

Total interest expense

2,967

4,713

6,457

9,471

Net interest and dividend income before provision for loan losses

15,388

15,545

30,381

31,280

Provision for loan losses

365

243

742

106

Net interest and dividend income after provision for loan losses

15,023

15,302

29,639

31,174

Noninterest income:

Fees for other services to customers

488

414

988

827

Gain on sales of PPP loans

4

-

1,114

-

Gain on sales of SBA loans

-

304

-

556

Gain on sales of residential loans held for sale

19

212

102

425

Net unrealized gain (loss) on equity securities

(16

)

(25

)

(16

)

15

Gain (loss) on real estate owned, other repossessed collateral

and premises and equipment, net

(187

)

314

(344

)

312

Correspondent fee income

6,082

-

10,829

-

Bank-owned life insurance income

106

108

212

350

Other noninterest income

1

10

28

28

Total noninterest income

6,497

1,337

12,913

2,513

Noninterest expense:

Salaries and employee benefits

5,971

5,926

12,322

Occupancy and equipment expense

1,047

849

1,974

1,747

Professional fees

443

445

806

837

Data processing fees

1,066

1,002

2,090

1,986

Marketing expense

120

55

161

148

Loan acquisition and collection expense

824

481

1,513

1,092

FDIC insurance premiums (credits)

101

(1

)

205

(19

)

Intangible asset amortization

-

109

-

217

Other noninterest expense

856

923

1,290

1,824

Total noninterest expense

10,428

9,789

20,361

20,144

Income before income tax expense

11,092

6,850

22,191

13,543

Income tax expense

2,916

1,983

6,221

3,901

Net income

$

8,176

$

4,867

$

15,970

$

9,642

Weighted-average shares outstanding:

Basic

8,244,068

9,048,171

8,220,604

9,046,004

Diluted

8,309,252

9,223,137

8,312,330

9,217,544

Earnings per common share:

Basic

$

0.99

$

0.54

$

1.94

$

1.07

Diluted

0.98

0.53

1.92

1.05

Cash dividends declared per common share

$

0.01

$

0.01

$

0.02

$

0.02


NORTHEAST BANK

AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

Three Months Ended December 31,

2020

2019

Interest

Average

Interest

Average

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Rate

Balance

Expense

Rate

Assets:

Interest-earning assets:

Investment securities

$

70,409

$

193

1.09

%

$

81,009

$

442

2.17

%

Loans (1) (2) (3)

953,144

18,108

7.54

%

945,985

19,490

8.20

%

Federal Home Loan Bank stock

1,390

13

3.71

%

2,079

18

3.44

%

Short-term investments (4)

143,272

41

0.11

%

77,268

308

1.59

%

Total interest-earning assets

1,168,215

18,355

6.23

%

1,106,341

20,258

7.28

%

Cash and due from banks

3,058

2,781

Other non-interest earning assets

46,730

42,725

Total assets

$

1,218,003

$

1,151,847

Liabilities & Shareholders' Equity:

Interest-bearing liabilities:

NOW accounts

$

128,337

$

113

0.35

%

$

70,737

$

77

0.43

%

Money market accounts

310,074

377

0.48

%

269,880

1,094

1.61

%

Savings accounts

37,301

12

0.13

%

34,317

15

0.17

%

Time deposits

388,669

2,027

2.07

%

464,424

2,995

2.57

%

Total interest-bearing deposits

864,381

2,529

1.16

%

839,358

4,181

1.98

%

Federal Home Loan Bank advances

15,000

126

3.33

%

36,250

218

2.39

%

Subordinated debt

14,981

282

7.47

%

14,871

282

7.54

%

Capital lease obligations

6,501

30

1.83

%

5,365

32

2.37

%

Total interest-bearing liabilities

900,863

2,967

1.31

%

895,844

4,713

2.09

%

Non-interest bearing liabilities:

Demand deposits and escrow accounts

123,413

85,894

Other liabilities

17,193

9,940

Total liabilities

1,041,469

991,678

Shareholders' equity

176,534

160,169

Total liabilities and shareholders' equity

$

1,218,003

$

1,151,847

Net interest income

$

15,388

$

15,545

Interest rate spread

4.92

%

5.19

%

Net interest margin (5)

5.23

%

5.59

%

(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.


NORTHEAST BANK

AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

Six Months Ended December 31,

2020

2019

Interest

Average

Interest

Average

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Rate

Balance

Expense

Rate

Assets:

Interest-earning assets:

Investment securities

$

71,275

$

483

1.34

%

$

81,545

$

893

2.18

%

Loans (1) (2) (3)

955,339

36,213

7.52

%

948,625

39,193

8.22

%

Federal Home Loan Bank stock

1,390

46

6.56

%

1,669

37

4.41

%

Short-term investments (4)

156,440

96

0.12

%

68,808

628

1.82

%

Total interest-earning assets

1,184,444

36,838

6.17

%

1,100,647

40,751

7.36

%

Cash and due from banks

2,992

2,705

Other non-interest earning assets

42,792

39,127

Total assets

$

1,230,228

$

1,142,479

Liabilities & Shareholders' Equity:

Interest-bearing liabilities:

NOW accounts

$

125,991

$

240

0.38

%

$

68,071

$

137

0.40

%

Money market accounts

311,173

912

0.58

%

267,379

2,162

1.61

%

Savings accounts

37,414

26

0.14

%

34,397

30

0.17

%

Time deposits

412,248

4,409

2.12

%

474,270

6,168

2.59

%

Total interest-bearing deposits

886,826

5,587

1.25

%

844,117

8,497

2.00

%

Federal Home Loan Bank advances

15,000

250

3.31

%

25,625

343

2.66

%

PPPLF advances

879

2

0.45

%

-

-

0.00

%

Subordinated debt

14,967

563

7.46

%

14,856

563

7.54

%

Capital lease obligations

5,404

55

2.02

%

5,527

68

2.45

%

Total interest-bearing liabilities

923,076

6,457

1.39

%

890,125

9,471

2.12

%

Non-interest bearing liabilities:

Demand deposits and escrow accounts

117,857

85,491

Other liabilities

17,441

8,760

Total liabilities

1,058,374

984,376

Shareholders' equity

171,854

158,103

Total liabilities and shareholders' equity

$

1,230,228

$

1,142,479

Net interest income

$

30,381

$

31,280

Interest rate spread

4.78

%

5.24

%

Net interest margin (5)

5.09

%

5.65

%

(1) Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.

(2) Includes loans held for sale.

(3) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.

(4) Short-term investments include FHLB overnight deposits and other interest-bearing deposits.

(5) Net interest margin is calculated as net interest income divided by total interest-earning assets.


NORTHEAST BANK

SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA

(Unaudited)

(Dollars in thousands, except share and per share data)

Three Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

Net interest income

$

15,388

$

14,993

$

17,384

$

16,321

$

15,545

Provision for loan losses

365

377

905

3,489

243

Noninterest income

6,497

6,416

9,812

860

1,337

Noninterest expense

10,428

9,933

10,268

10,081

9,789

Net income

8,176

7,794

11,219

1,875

4,867

Weighted-average common shares outstanding:

Basic

8,244,068

8,196,828

8,337,088

9,004,819

9,048,171

Diluted

8,309,252

8,315,096

8,405,665

9,128,651

9,223,137

Earnings per common share:

Basic

$

0.99

$

0.95

$

1.35

$

0.21

$

0.54

Diluted

0.98

0.94

1.33

0.21

0.53

Dividends declared per common share

$

0.01

$

0.01

$

0.01

$

0.01

$

0.01

Return on average assets

2.66

%

2.49

%

3.07

%

0.61

%

1.68

%

Return on average equity

18.37

%

18.50

%

28.44

%

4.57

%

12.09

%

Net interest rate spread (1)

4.92

%

4.65

%

4.60

%

5.14

%

5.19

%

Net interest margin (2)

5.23

%

4.95

%

4.90

%

5.50

%

5.59

%

Net interest margin, excluding PPP (Non-GAAP) (3)

5.23

%

5.00

%

5.34

%

5.50

%

5.59

%

Efficiency ratio (non-GAAP) (4)

47.65

%

46.40

%

37.29

%

58.68

%

57.98

%

Noninterest expense to average total assets

3.40

%

3.17

%

2.78

%

3.28

%

3.38

%

Average interest-earning assets to average
interest-bearing liabilities

129.68

%

127.02

%

118.53

%

122.88

%

123.50

%

As of:

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

Nonperforming loans:

Originated portfolio:

Residential real estate

$

6,676

$

704

$

832

$

1,187

$

1,586

Commercial real estate

8,329

6,856

6,861

7,439

8,032

Commercial and industrial

1,978

2,013

2,058

2,226

622

Consumer

30

26

29

40

59

Total originated portfolio

17,013

9,599

9,780

10,892

10,299

Total purchased portfolio

13,497

11,848

11,325

13,485

8,489

Total nonperforming loans

30,510

21,447

21,105

24,377

18,788

Real estate owned and other repossessed collateral, net

2,866

4,102

3,274

3,110

2,505

Total nonperforming assets

$

33,376

$

25,549

$

24,379

$

27,487

$

21,293

Past due loans to total loans

2.31

%

2.03

%

1.69

%

3.52

%

2.84

%

Nonperforming loans to total loans

3.05

%

2.30

%

2.17

%

2.36

%

1.88

%

Nonperforming assets to total assets

2.70

%

2.03

%

1.94

%

2.23

%

1.76

%

Allowance for loan losses to total loans

0.99

%

1.02

%

0.94

%

0.85

%

0.54

%

Allowance for loan losses to nonperforming loans

32.53

%

44.46

%

43.49

%

36.14

%

28.77

%

Commercial real estate loans to total capital (5)

251.00

%

248.47

%

281.32

%

304.40

%

292.58

%

Net loans to core deposits (6) (9)

101.86

%

91.74

%

96.38

%

102.04

%

106.52

%

Purchased loans to total loans, including held for sale

41.79

%

38.40

%

39.77

%

38.28

%

36.65

%

Equity to total assets

14.74

%

13.73

%

13.10

%

12.95

%

13.53

%

Common equity tier 1 capital ratio

17.93

%

18.57

%

17.13

%

15.71

%

16.48

%

Total capital ratio

20.37

%

21.19

%

19.61

%

18.03

%

18.52

%

Tier 1 leverage capital ratio

15.07

%

14.02

%

13.36

%

13.04

%

14.26

%

Total shareholders' equity

$

181,962

$

172,551

$

164,739

$

159,525

$

163,400

Less: Preferred stock

-

-

-

-

-

Common shareholders' equity

181,962

172,551

164,739

159,525

163,400

Less: Intangible assets (7)

(2,035

)

(2,323

)

(2,113

)

(2,116

)

(2,641

)

Tangible common shareholders' equity (non-GAAP)

$

179,927

$

170,228

$

162,626

$

157,409

$

160,759

Common shares outstanding

8,344,797

8,191,786

8,198,624

8,633,772

9,052,013

Book value per common share

$

21.81

$

21.06

$

20.09

$

18.48

$

18.05

Tangible book value per share (non-GAAP) (8)

21.56

20.78

19.84

18.23

17.76

(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 $80 thousand and $1.6 million and PPPLF interest expense of $2 thousand and $174 thousand for the quarters ended September 30, 2020 and June 30, 2020, respectively, as well as PPP loan average balances of $16.9 million and $223.8 million for the quarters ended September 30, 2020 and June 30, 2020, respectively.

(4) The efficiency ratio represents noninterest expense divided by the sum of net interest income (before the loan loss provision) plus noninterest income.

(5) For purposes of calculating this ratio, commercial real estate includes all non-owner occupied commercial real estate loans defined as such by regulatory guidance, including all land development and construction loans.

(6) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held for sale.

(7) Includes the core deposit intangible asset and loan servicing rights asset.

(8) Tangible book value per share represents total shareholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.

(9) Net loans and total loans, including loans held for sale, exclude PPP loans held for sale.