Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 3, 2011

Commission File No. 1-14588

 

 

NORTHEAST BANCORP

(Exact name of Registrant as specified in its Charter)

 

 

 

Maine   01-0425066

(State or other jurisdiction

of incorporation)

 

(IRS Employer

Identification Number)

500 Canal Street

Lewiston, Maine

  04240
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (207) 786-3245

Former name or former address, if changed since last Report: N/A

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

¨ Pre-commencement to communications pursuant to Rule 13e-4(c) under the Exchange Act

 

 

 


Item 8.01. Other Events.

On April 30, 2012, Northeast Bancorp (“Northeast” or the “Company”) (NASDAQ: NBN), a Maine-based full-service financial services company and parent of Northeast Bank (the “Bank”), reported net income of $168 thousand, or $0.02 per diluted common share, for the quarter ended March 31, 2012. For the nine months ended March 31, 2012, the Company earned net income of $1.1 million, or $0.23 per diluted common share.

The Board of Directors has declared a cash dividend of $0.09 per share, payable on May 29, 2012 to shareholders of record as of May 14, 2012.

Results for the three and nine months ended March 31, 2012 include net income from discontinued operations of $14 thousand and $1.1 million, respectively. As announced in the first quarter of fiscal year 2012, the assets of Northeast’s insurance agency division were acquired by local agencies in two separate transactions. The sale yielded a pre-tax gain of $1.6 million and increased the Company’s tangible capital by $8.4 million. At March 31, 2012, the Company’s tangible book value per share was $15.94, compared to $13.58 at June 30, 2011.

During the nine month period ended March 31, 2012, the Company purchased loans totaling $59.8 million, and has since purchased an additional $14.6 million in the month ended April 30, 2012. The total return realized on this portfolio, including transactional income, was 13.9% for the quarter and 15.2% for the nine months ended March 31, 2012.

Quarterly results included the following items of significance:

 

  1. The Company’s net interest margin (“NIM”) was 3.44% for the quarter ended March 31, 2012. The Company’s NIM has benefited from growth in the Company’s purchased loan portfolio, which increased to $56.9 million at March 31, 2012 from $637 thousand at June 30, 2011. The yield on the purchased loan portfolio was 12.2% and 14.2% for the three and nine months ended March 31, 2012, respectively, compared to yields of 5.8% and 6.0% on the originated loan portfolio, respectively, for the same periods. The following summarizes interest income and related yields recognized on the Company’s purchased and originated loans.

 

     Interest Income and Yield on Loans  
      Three Months Ended March 31, 2012     Nine Months Ended March 31, 2012  
     Average
Balance
     Interest
Income
     Yield     Average
Balance
     Interest
Income
     Yield  
     (Dollars in thousands)  

Loans - originated

   $ 297,100       $ 4,298         5.82   $ 305,701       $ 13,751         5.99

Loans - purchased

     51,677         1,572         12.23     29,315         3,130         14.21
  

 

 

    

 

 

      

 

 

    

 

 

    

Total

   $ 348,777       $ 5,870         6.77   $ 335,016       $ 16,881         6.71
  

 

 

    

 

 

      

 

 

    

 

 

    

The yield on purchased loans was increased by unscheduled loan payoffs during the three and nine month periods ended March 31, 2012, which resulted in immediate recognition of the prepaid loans’ discount in interest income. The Company also realized $219 thousand related to sales of purchased loans during the quarter ended March 31, 2012. The following table details the “total return” on purchased loans, based on regularly scheduled interest and accretion, accelerated accretion, and other income recognized upon unscheduled loan payoffs or sales.

 

     Total Return on Purchased Loans  
     Three Months Ended     Nine Months Ended  
     March 31, 2012     March 31, 2012  
     Income      Return (1)     Income      Return (1)  
     (Dollars in thousands)  

Regularly scheduled interest and accretion

   $ 1,298         10.10   $ 2,374         10.78

Transactional income:

          

Gains on loan sales

     219         1.70     219         0.99

Accelerated accretion and fees recognized on loan payoffs

     274         2.13     756         3.43
  

 

 

      

 

 

    

Total

   $ 1,791         13.94   $ 3,349         15.20
  

 

 

      

 

 

    

 

(1) The total return on purchased loan represents interest and noninterest income recorded during the period divided by the average purchased loan balance, on an annualized basis.


  2. A net gain on sale of available-for-sale investment securities of $731 thousand.

 

  3. Increased noninterest expenses, including staffing and infrastructure costs associated with the Company’s investment in its new loan purchasing and deposit initiatives, to provide for future growth. The quarter also included certain non-recurring expenses, including compensation costs aggregating $201 thousand, largely the result of terminating the Company’s self-insured employee benefits program and replacing it with a third-party insurance program. The Company also incurred $207 thousand in nonrecurring professional fees, principally consulting costs associated with new information technology initiatives and nonrecurring legal expense.

Total assets declined by $1.4 million or 0.2% to $595.0 million at March 31, 2012, compared to total assets of $596.4 million at June 30, 2011. The principal components of the change in the balance sheet during the nine months ended March 31, 2012 were as follows:

 

  1. A $31.3 million, or 13.4%, decrease in cash and investments, principally as a result of growth in loans during the period. At quarter end, the Company continues to maintain a level of balance sheet liquidity that is intended, in part, for future purchases of commercial loans.

 

  2. Loan growth of $35.9 million, or 11.6%, principally due to growth of $56.3 million in loans purchased by the Company’s Loan Acquisition and Servicing Group, offset in part by amortization and payoffs from the originated loan portfolio of $20.4 million;

 

  3. A $4.6 million, or 3.7%, reduction in borrowed funds, resulting primarily from the $2.1 million repayment of insurance agency debt in connection with the sale of the Company’s insurance agency division assets;

 

  4. A $2.6 million, or 0.7%, increase in deposits. The Bank’s new affinity deposit program, ableBanking, recently launched its pilot program, and at quarter end had raised $1.1 million of new deposits.

 

  5. An $8.4 million, or 63.8%, decrease in intangible assets, resulting primarily from the sale of insurance agency division assets.

During the nine months ended March 31, 2012, nonperforming assets decreased by 22.8% to $6.1 million or 1.0% of total assets, from $7.9 million, or 1.3%, of total assets at June 30, 2011, and loans past due 30 days or more as a percentage of total loans decreased to 2.1% at March 31, 2012 from 2.4% at June 30, 2011.

At March 31, 2012, the Company’s Tier 1 leverage ratio was 11.9%, an increase from 10.4% at June 30, 2011 and the total risk-based capital ratio was 19.5%, an increase from 19.0% at June 30, 2011.

About Northeast Bancorp

Northeast Bancorp (NASDAQ: NBN) is the holding company for Northeast Bank, a full service bank headquartered in Lewiston, Maine. Northeast Bank derives its income from a combination of traditional banking services as well as from its Loan Acquisition and Servicing Group, which purchases performing commercial loans for the Bank’s portfolio. ableBanking, a division of Northeast Bank, which launched its pilot in the first quarter of calendar 2012, offers savings products to consumers online, through affinity partnerships with non-profit organizations. Northeast Bank operates ten full-service branches, four investment centers and three loan production offices that serve individuals and businesses located in western and south-central Maine and southern New Hampshire. Information regarding Northeast Bank can be found on its website at www.northeastbank.com.

On December 29, 2010, FHB Formation LLC (“FHB”) merged with and into Northeast, with Northeast as the surviving company. The Company applied the acquisition method of accounting, as described in Accounting Standards Codification 805, Business Combinations, to this transaction, which represents an acquisition by FHB of Northeast, with Northeast as the surviving company. As a result, the Company’s financial statements from the periods prior to the transaction date are not directly comparable to the financial statements for periods subsequent to the transaction date. To make this distinction, the Company has labeled balances and results of operations prior to the transaction date as “Predecessor Company” and balances and results of operations for periods subsequent to the transaction date as “Successor Company.” The lack of comparability arises from the assets and liabilities having new accounting bases as a result of recording them at their fair values as of the transaction date rather than at historical cost basis. To denote this lack of comparability, the Company has placed a heavy black line between the Successor Company and Predecessor Company columns in its consolidated financial statements and, where applicable, in this discussion.

Non-GAAP Financial Measure

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this Report contains certain non-GAAP financial measures. Northeast’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.


Statements in this Report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Northeast believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates and real estate values; competitive pressures from other financial institutions; the effects of a continuing deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; increasing government regulation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; changes in the rules of participation for the Troubled Asset Relief Program Capital Purchase Program promulgated by the U.S. Department of the Treasury under the Emergency Economic Stabilization Act of 2008, which may be changed unilaterally and restrictively by legislative or regulatory actions; establishment of a consumer financial protection bureau with broad authority to implement new consumer protection regulations; the risk that we may not be successful in the implementation of our business strategy; the risk that intangibles recorded in the Company’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K and updated by the Company’s Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. These statements speak only as of the date of this release and we do 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.


NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

 

     March 31, 2012     June 30, 2011  
Assets     

Cash and due from banks

   $ 2,609      $ 3,227   

Short-term investments

     62,271        80,704   
  

 

 

   

 

 

 

Total cash and cash equivalents

     64,880        83,931   

Available-for-sale securities, at fair value

     136,730        148,962   

Loans held for sale

     6,354        5,176   

Loans

    

Commercial real estate

     164,060        117,761   

Residential real estate

     140,226        145,477   

Construction

     1,497        2,015   

Commercial business

     21,635        22,225   

Consumer

     18,359        22,435   
  

 

 

   

 

 

 

Total loans

     345,777        309,913   

Less: Allowance for loan losses

     748        437   
  

 

 

   

 

 

 

Loans, net

     345,029        309,476   

Premises and equipment, net

     8,918        8,271   

Repossessed collateral, net

     915        690   

Accrued interest receivable

     1,659        1,244   

Federal Home Loan Bank stock, at cost

     4,602        4,889   

Federal Reserve Bank stock, at cost

     871        871   

Intangible assets, net

     4,749        13,133   

Bank owned life insurance

     14,171        13,794   

Other assets

     6,074        5,956   
  

 

 

   

 

 

 

Total assets

   $ 594,952      $ 596,393   
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity     

Liabilities

    

Deposits

    

Demand

   $ 41,613      $ 48,215   

Savings and interest checking

     88,860        89,804   

Money market

     45,589        48,695   

Time deposits

     227,673        214,404   
  

 

 

   

 

 

 

Total deposits

     403,735        401,118   

Federal Home Loan Bank advances

     43,567        43,922   

Structured repurchase agreements

     66,636        68,008   

Short-term borrowings

     1,836        2,515   

Junior subordinated debentures issued to affiliated trusts

     8,066        7,957   

Capital lease obligation

     1,953        2,075   

Other borrowings

     —          2,229   

Other liabilities

     4,289        3,615   
  

 

 

   

 

 

 

Total liabilities

     530,082        531,439   
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ equity

    

Preferred stock, $1.00 par value, 1,000,000 shares authorized; 4,227 shares issued and outstanding at March 31, 2012 and June 30, 2011; liquidation preference of $1,000 per share

     4        4   

Voting common stock, $1.00 par value, 13,500,000 shares authorized; 3,312,173 issued and outstanding at March 31, 2012 and June 30, 2011

     3,312        3,312   

Non-voting common stock, $1.00 par value, 1,500,000 shares authorized 195,351 issued and outstanding at March 31, 2012 and June 30, 2011

     195        195   

Warrants to purchase common stock

     406        406   

Additional paid-in capital

     50,129        49,700   

Unearned restricted stock

     (136     (163

Retained earnings

     11,601        11,726   

Accumulated other comprehensive loss

     (641     (226
  

 

 

   

 

 

 

Total stockholders’ equity

     64,870        64,954   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 594,952      $ 596,393   
  

 

 

   

 

 

 


NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

 

    Successor Company (1)          Predecessor Company (2)  
    Three Months Ended     Nine Months Ended     Three Months Ended     93 Days Ended          181 Days Ended  
    March 31, 2012     March 31, 2012     March 31, 2011     March 31, 2011          December 28, 2010  

Interest and dividend income:

             

Interest on loans

  $ 5,870      $ 16,881      $ 5,649      $ 5,845          $ 11,210   

Interest and dividends on available-for-sale securities

    422        1,602        910        954            3,111   

Dividends on regulatory stock

    15        48        12        13            18   

Other interest and dividend income

    45        128        33        34            39   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Total interest and dividend income

    6,352        18,659        6,604        6,846            14,378   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Interest expense:

             

Deposits

    875        2,548        774        816            2,796   

Federal Home Loan Bank advances

    256        772        284        299            918   

Structured repurchase agreements

    247        744        249        272            1,392   

Short-term borrowings

    7        15        60        67            376   

Junior subordinated debentures issued to affiliated trusts

    188        556        174        180            340   

Obligation under capital lease agreements

    25        76        26        28            55   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Total interest expense

    1,598        4,711        1,567        1,662            5,877   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Net interest and dividend income before provision for loan losses

    4,754        13,948        5,037        5,184            8,501   

Provision for loan losses

    100        634        49        49            912   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Net interest and dividend income after provision for loan losses

    4,654        13,314        4,988        5,135            7,589   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Noninterest income:

             

Fees for other services to customers

    326        1,036        310        323            698   

Net securities gains

    731        1,111        47        47            17   

Gain on sales of loans held for sale

    634        2,060        490        539            1,867   

Gain (loss) on sales of portfolio loans

    219        422        (195     (195         —     

Investment commissions

    720        2,111        709        734            1,174   

Bank-owned life insurance income

    124        377        126        131            250   

Bargain purchase gain

    —          —          296        15,216            —     

Other noninterest income

    13        120        144        152            225   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Total noninterest income

    2,767        7,237        1,927        16,947            4,231   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Noninterest expense:

             

Salaries and employee benefits

    4,093        11,539        3,958        4,097            4,949   

Occupancy and equipment expense

    970        2,735        773        795            1,352   

Professional fees

    539        1,231        374        383            509   

Data processing fees

    260        823        274        283            521   

Marketing expense

    142        487        216        220            230   

FDIC insurance premiums

    125        364        170        175            346   

Intangible asset amortization

    262        935        306        306            —     

Merger expense

    —          —          132        3,182            94   

Other noninterest expense

    861        2,668        893        997            1,454   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Total noninterest expense

    7,252        20,782        7,096        10,438            9,455   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Income (loss) from continuing operations before income tax expense (benefit)

    169        (231     (181     11,644            2,365   

Income tax expense (benefit)

    15        (209     (217     (233         698   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Net income (loss) from continuing operations

  $ 154      $ (22   $ 36      $ 11,877          $ 1,667   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Discontinued operations:

             

Income from discontinued operations

  $ —        $ 186      $ 184      $ 176          $ 94   

Gain on sale of discontinued operations

    22        1,551        —          —              105   

Income tax expense

    8        600        64        62            70   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Net income from discontinued operations

    14        1,137        120        114            129   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Net income

  $ 168      $ 1,115      $ 156      $ 11,991          $ 1,796   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Net income available to common stockholders

  $ 70      $ 821      $ 58      $ 11,891          $ 1,677   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Weighted-average shares outstanding:

             

Basic

    3,494,498        3,494,498        3,492,498        3,492,498            2,330,197   

Diluted

    3,512,273        3,494,498        3,559,873        3,560,278            2,354,385   

Earnings per common share:

             

Basic:

             

Income (loss) from continuing operations

  $ 0.02      $ (0.09   $ (0.01   $ 3.36          $ 0.66   

Income from discontinued operations

    0.00        0.32        0.03        0.03            0.06   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Net income

  $ 0.02      $ 0.23      $ 0.02      $ 3.39          $ 0.72   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Diluted:

             

Income (loss) from continuing operations

  $ 0.02      $ (0.09   $ (0.01   $ 3.30          $ 0.66   

Income from discontinued operations

    0.00        0.32        0.03        0.03            0.05   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

Net income

  $ 0.02      $ 0.23      $ 0.02      $ 3.33          $ 0.71   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

 

 

(1) “Successor Company” means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.
(2) “Predecessor Company” means Northeast Bancorp and its subsidiary prior to the closing of the merger with FHB Formation LLC on December 29, 2010.


NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

     Successor Company (1)  
     Three Months Ended March 31, 2012     Nine Months Ended March 31, 2012  
            Interest      Average            Interest      Average  
     Average      Income/      Yield/     Average      Income/      Yield/  
     Balance      Expense      Rate     Balance      Expense      Rate  

Assets:

                

Interest-earning assets:

                

Investment securities (3)

   $ 132,681       $ 422         1.28   $ 139,834       $ 1,602         1.52

Loans (4) (5)

     348,777         5,870         6.77     335,016         16,881         6.71

Regulatory stock

     5,697         15         1.06     5,740         48         1.11

Short-term investments (6)

     67,887         45         0.27     71,243         128         0.24
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-earning assets

     555,042         6,352         4.60     551,833         18,659         4.50
  

 

 

    

 

 

      

 

 

    

 

 

    

Cash and due from banks

     2,881              2,927         

Other non-interest earning assets

     35,651              37,143         
  

 

 

         

 

 

       

Total assets

   $ 593,574            $ 591,903         
  

 

 

         

 

 

       

Liabilities & Stockholders’ Equity:

                

Interest-bearing liabilities:

                

NOW accounts

   $ 54,242       $ 48         0.36   $ 55,080       $ 170         0.41

Money market accounts

     43,602         38         0.35     44,613         130         0.39

Savings accounts

     32,923         12         0.15     32,907         56         0.23

Time deposits

     227,182         777         1.38     221,127         2,192         1.32
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing deposits

     357,949         875         0.98     353,727         2,548         0.96

Short-term borrowings (7)

     1,321         7         2.13     1,030         15         1.94

Borrowed funds

     112,468         528         1.89     113,109         1,592         1.87

Junior subordinated debentures

     8,047         188         9.40     8,009         556         9.24
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing liabilities

     479,785         1,598         1.34     475,875         4,711         1.32
  

 

 

    

 

 

      

 

 

    

 

 

    

Interest-bearing liabilities of discontinued operations (8)

     —                380         

Non-interest bearing liabilities:

                

Demand deposits and escrow accounts

     44,249              45,771         

Other liabilities

     3,972              4,267         
  

 

 

         

 

 

       

Total liabilities

     528,006              526,293         

Stockholders’ equity

     65,568              65,610         
  

 

 

         

 

 

       

Total liabilities and stockholders’ equity

   $ 593,574            $ 591,903         
  

 

 

         

 

 

       

Net interest income

      $ 4,754            $ 13,948      
     

 

 

         

 

 

    

Interest rate spread

           3.26           3.18

Net interest margin (9)

           3.44           3.36

 

(1) “Successor Company” means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.
(2) “Predecessor Company” means Northeast Bancorp and its subsidiary prior to the closing of the merger with FHB Formation LLC on December 29, 2010 .
(3) Interest income and yield are stated on a fully tax-equivalent basis using a 30.84% tax rate.
(4) Includes Loans held for sale.
(5) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(6) Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(7) Short term borrowings include securities sold under repurchase agreements and sweep accounts.
(8) The average balance of borrowings associated with discontinued operations has been excluded from interest expense, interest rate spread, and net interest margin.
(9) Net interest margin is calculated as net interest income divided by total interest-earning assets.


NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

     Successor Company (1)           Predecessor Company (2)  
     Three Months Ended March 31, 2011           181 Days Ended December 28, 2010  
     Average
Balance
     Interest
Income/
Expense
     Average
Yield/
Rate
          Average
Balance
     Interest
Income/
Expense
     Average
Yield/
Rate
 

Assets:

                     

Interest-earning assets:

                     

Investment securities (3)

   $ 143,482       $ 910         2.67        $ 161,894       $ 3,182         3.96

Loans (4) (5)

     357,376         5,649         6.41          385,286         11,210         5.87

Regulatory stock

     5,486         12         0.89          5,486         18         0.66

Short-term investments (6)

     58,683         33         0.23          39,212         39         0.20
  

 

 

    

 

 

           

 

 

    

 

 

    

Total interest-earning assets

     565,027         6,604         4.76          591,878         14,449         4.92
  

 

 

    

 

 

           

 

 

    

 

 

    

Cash and due from banks

     3,423                   3,340         

Other non-interest earning assets

     44,046                   34,724         
  

 

 

              

 

 

       

Total assets

   $ 612,496                 $ 629,942         
  

 

 

              

 

 

       

Liabilities & Stockholders’ Equity:

                     

Interest-bearing liabilities:

                     

NOW accounts

   $ 55,994       $ 79         0.57        $ 53,780       $ 183         0.69

Money market accounts

     54,041         70         0.53          55,955         213         0.77

Savings accounts

     35,638         34         0.39          38,303         99         0.52

Time deposits

     198,172         591         1.21          196,318         2,301         2.36
  

 

 

    

 

 

           

 

 

    

 

 

    

Total interest-bearing deposits

     343,845         774         0.91          344,356         2,796         1.64

Short-term borrowings (7)

     34,822         60         0.70          53,873         376         1.41

Borrowed funds

     117,152         559         1.94          117,688         2,365         4.05

Junior subordinated debentures

     7,902         174         8.93          16,496         340         4.16
  

 

 

    

 

 

           

 

 

    

 

 

    

Total interest-bearing liabilities

     503,721         1,567         1.26          532,413         5,877         2.23
  

 

 

    

 

 

           

 

 

    

 

 

    

Interest-bearing liabilities of discontinued operations (8)

     2,134                   2,462         
 

Non-interest bearing liabilities:

                     

Demand deposits and escrow accounts

     37,379                   37,941         

Other liabilities

     4,444                   5,576         
  

 

 

              

 

 

       

Total liabilities

     547,678                   578,392         

Stockholders’ equity

     64,818                   51,550         
  

 

 

              

 

 

       

Total liabilities and stockholders’ equity

   $ 612,496                 $ 629,942         
  

 

 

              

 

 

       

Net interest income

      $ 5,037                 $ 8,572      
     

 

 

              

 

 

    

Interest rate spread

           3.50                2.69

Net interest margin (9)

           3.62                2.92

 

(1) “Successor Company” means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.
(2) “Predecessor Company” means Northeast Bancorp and its subsidiary prior to the closing of the merger with FHB Formation LLC on December 29, 2010.
(3) Interest income and yield are stated on a fully tax-equivalent basis using a 30.84 % tax rate.
(4) Includes Loans held for sale.
(5) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(6) Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(7) Short term borrowings include securities sold under repurchase agreements and sweep accounts.
(8) The average balance of borrowings associated with discontinued operations has been excluded from interest expense, interest rate spread, and net interest margin.
(9) Net interest margin is calculated as net interest income divided by total interest-earning assets.


NORTHEAST BANCORP AND SUBSIDIARY

SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA

(Unaudited)

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

 

     Successor Company (1)  
     Three Months
Ended

March 31,  2012
    Nine Months
Ended
March 31, 2012
 

Net interest income

   $ 4,754      $ 13,948   

Net income

   $ 168      $ 1,115   

Weighted average common shares outstanding:

    

Basic

     3,494,498        3,494,498   

Diluted

     3,512,273        3,494,498   

Earnings per common share:

    

Basic

   $ 0.02      $ 0.23   

Diluted

   $ 0.02      $ 0.23   

Dividends per common share

   $ 0.09      $ 0.27   

Return on average assets

     0.11     0.25

Return on average equity

     1.03     2.26

Net interest rate spread (2)

     3.26     3.18

Net interest margin (3)

     3.44     3.36

Efficiency ratio (4)

     96.42     98.10

Noninterest expense to average total assets

     4.91     4.67

Average interest-earning assets to average interest-bearing liabilities

     115.69     115.96
     Successor Company (1)  
         March 31, 2012     December 31, 2011     September 30, 2011     June 30, 2011      

Nonperforming loans:

        

Originated portfolio:

        

Residential real estate

   $ 3,067      $ 3,264      $ 2,733      $ 2,195   

Commercial real estate

     442        1,998        2,797        3,601   

Construction

     0        0        121        121   

Home equity

     255        182        205        205   

Commercial business

     1,108        1,119        1,224        559   

Consumer

     309        329        356        527   
  

 

 

   

 

 

   

 

 

   

 

 

 
     5,181        6,892        7,436        7,208   

Purchased portfolio:

        

Residential real estate

     0        0        0        0   

Commercial real estate

     0        0        0        0   

Commercial business

     0        0        0        0   
  

 

 

   

 

 

   

 

 

   

 

 

 
     0        0        0        0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming loans

     5,181        6,892        7,436        7,208   

Repossessed collateral

     915        837        463        690   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 6,096      $ 7,729      $ 7,899      $ 7,898   
  

 

 

   

 

 

   

 

 

   

 

 

 

Past due loans to total loans

     2.06     2.29     2.20     2.41

Ratio of nonperforming loans to total loans

     1.50     1.99     2.35     2.33

Ratio of nonperforming assets to total assets

     1.02     1.30     1.35     1.32

Allowance for loan losses to total loans

     0.22     0.21     0.22     0.14

Allowance for loan losses to nonperforming loans

     14.44     10.69     9.55     6.06

Commercial real estate loans to risk-based capital (5)

     238.25     236.88     194.08     200.53

Net loans to core deposits (6)

     88.65     91.34     84.75     84.40

Purchased loans to total loans

     16.16     14.83     3.90     0.21

Equity to total assets

     10.90     11.08     11.27     10.89

Tier 1 leverage capital ratio

     11.85     11.86     11.85     10.35

Total risk-based capital ratio

     19.49     19.28     21.02     18.99

Total stockholders’ equity

   $ 64,870      $ 65,900      $ 66,188      $ 64,954   

Less: Preferred stock

     (4,227     (4,227     (4,227     (4,227
  

 

 

   

 

 

   

 

 

   

 

 

 

Common stockholders’ equity

     60,643        61,673        61,961        60,727   

Less: Intangible assets

     (4,749     (5,012     (5,348     (13,133
  

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common stockholders’ equity

   $ 55,894      $ 56,661      $ 56,613      $ 47,594   
  

 

 

   

 

 

   

 

 

   

 

 

 

Book value per common share

   $ 17.29      $ 17.58      $ 17.66      $ 17.33   

Tangible book value per share (7)

   $ 15.94      $ 16.15      $ 16.14      $ 13.58   

 

(1) “Successor Company” means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 2 9, 2010.
(2) 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.
(3) The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
(4) The efficiency ratio represents non-interest expense divided by the sum of net interest income (before the loan loss provision) plus non-interest income.
(5) For purposes of calculating this ratio, commercial real estate includes all those loans defined as such by regulatory guidance, including all land development and construction loans.
(6) Core deposits includes all non-maturity deposits and maturity deposits less than $2 50 thousand. Net loans includes loans held-for-sale.
(7) Tangible book value per share represents total stockholders’ equity less the sum of preferred stock and intangible assets divided by common shares outstanding.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.

 

NORTHEAST BANCORP
By:  

/s/ Claire S. Bean

Name:   Claire S. Bean
Title:   Chief Financial Officer

Date: May 3, 2012