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WKN: A2PKVL | ISIN: US66405S1006 | Ticker-Symbol: 73K
Frankfurt
20.05.24
19:58 Uhr
52,00 Euro
+0,50
+0,97 %
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NORTHEAST BANK Chart 1 Jahr
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Northeast Bank Reports Second Quarter Results and Declares Dividend

PORTLAND, Maine, Jan. 30, 2024 (GLOBE NEWSWIRE) -- Northeast Bank (the "Bank") (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $14.1 million, or $1.85 per diluted common share, for the quarter ended December 31, 2023, compared to net income of $11.3 million, or $1.54 per diluted common share, for the quarter ended December 31, 2022. Net income for the six months ended December 31, 2023 was $29.2 million, or $3.86 per diluted common share, compared to $19.6 million, or $2.65 per diluted common share, for the six months ended December 31, 2022. Results for the quarter and six months ended December 31, 2023 were negatively impacted by a deferred tax asset write-down of $957 thousand ($0.13 per diluted common share impact) due to a change in Massachusetts tax law regarding income tax apportionment.

The Board of Directors declared a cash dividend of $0.01 per share, payable on February 26, 2024, to shareholders of record as of February 12, 2024.

"We had another strong quarter, with continued growth in our National Lending Division purchased portfolio," said Rick Wayne, Chief Executive Officer. "National Lending Division volume totaled $249.6 million, including $186.1 million of purchases and $63.5 million of originations. We extended our at-the-market offering, which provides the Bank with the ability to raise capital if and as needed. For the quarter, we are reporting earnings of $1.85 per diluted common share, a return on average equity of 17.4%, and a return on average assets of 1.9%."

As of December 31, 2023, total assets were $2.97 billion, an increase of $99.0 million, or 3.5%, 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 six months ended December 31, 2023:

Loan Portfolio Changes
Three Months Ended December 31, 2023
December 31, 2023 Balance September 30, 2023 Balance Change ($) Change (%)
(Dollars in thousands)
National Lending Purchased$1,646,756 $1,516,379 $130,377 8.60%
National Lending Originated 910,213 958,232 (48,019) (5.01%)
SBA National 29,052 27,205 1,847 6.79%
Community Banking 25,038 26,394 (1,356) (5.14%)
Total$2,611,059 $2,528,210 $82,849 3.28%
Six Months Ended December 31, 2023
December 31, 2023 Balance June 30, 2023 BalanceChange ($) Change (%)
(Dollars in thousands)
National Lending Purchased$1,646,756 $1,480,119 $166,637 11.26%
National Lending Originated 910,213 987,832 (77,619) (7.86%)
SBA National 29,052 24,873 4,179 16.80%
Community Banking 25,038 27,536 (2,498) (9.07%)
Total$2,611,059 $2,520,360 $90,699 3.60%

Loans generated by the Bank's National Lending Division for the quarter ended December 31, 2023 totaled $249.6 million, which consisted of $186.1 million of purchased loans, at an average price of 89.5% of unpaid principal balance, and $63.5 million of originated loans.

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

National Lending Portfolio
Three Months Ended December 31,
2023 2022
Purchased Originated Total Purchased Originated Total
(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance$208,045 $63,485 $271,530 $1,152,957 $173,992 $1,326,949
Net investment basis 186,131 63,485 249,616 995,973 173,992 1,169,965
Loan returns during the period:
Yield 9.19% 9.81% 9.43% 8.69% 8.50% 8.59%
Total Return on Purchased Loans (1) 9.21% N/A 9.21% 8.69% N/A 8.69%
Six Months Ended December 31,
2023 2022
Purchased Originated Total Purchased Originated Total
(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance$271,741 $131,528 $403,269 $1,236,815 $355,712 $1,592,527
Net investment basis 238,477 131,528 370,005 1,073,510 355,712 1,429,222
Loan returns during the period:
Yield 9.10% 9.92% 9.41% 8.07% 8.19% 8.14%
Total Return on Purchased Loans (1) 9.13% N/A 9.13% 8.07% N/A 8.07%
Total loans as of period end:
Unpaid principal balance$1,831,183 $910,213 $2,741,396 $1,673,158 $963,775 $2,636,933
Net investment basis 1,646,756 910,213 2,556,969 1,483,567 963,775 2,447,342
(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 $192.5 million, or 9.9%, from June 30, 2023. The increase was primarily attributable to increases in time deposits of $165.2 million, or 18.0%, and savings and interest checking deposits of $84.3 million, or 14.1%, partially offset by a decrease in money market deposits of $56.7 million, or 20.4%. The significant drivers in the change in time deposits was the increase in Community Banking Division time deposits, which increased by $111.2 million, and brokered time deposits, which increased by $97.4 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 advances decreased by $115.4 million, or 20.5%, from June 30, 2023. The decrease was primarily attributable to the increase in deposits of $192.5 million partially offset by loan growth of $90.7 million, as the Bank funded loan growth primarily through time deposits and savings and interest checking deposits.

4. Shareholders' equity increased by $30.9 million, or 10.4%, from June 30, 2023, primarily due to net income of $29.2 million and stock-based compensation of $2.8 million, partially offset by the cancelation of common shares to cover tax obligations on restricted stock vests, which resulted in a $1.2 million decrease to shareholders' equity, and the cumulative effect adjustment for the adoption of ASC 326 Financial Instruments - Credit Losses (more commonly known as Current Expected Credit Losses or "CECL"), which resulted in a $870 thousand decrease to shareholders' equity on July 1, 2023.

Net income increased by $2.8 million to $14.1 million for the quarter ended December 31, 2023, compared to net income of $11.3 million for the quarter ended December 31, 2022.

1. Net interest and dividend income before provision for credit losses increased by $8.2 million to $37.0 million for the quarter ended December 31, 2023, compared to $28.8 million for the quarter ended December 31, 2022. The increase was primarily due to the following:

  • An increase in interest income earned on loans of $23.1 million, primarily due to an increase in interest income earned on the National Lending Division's purchased and originated portfolios, due to higher average balances and rates earned on both portfolios; and
  • An increase in interest income earned on short-term investments of $1.6 million, primarily due to higher rates earned and higher average balances; partially offset by,
  • An increase in deposit interest expense of $11.3 million, due to higher interest rates and higher average balances in interest-bearing deposits; and
  • An increase in FHLB borrowings interest expense of $5.2 million, 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 December 31,
2023 2022
Average Interest Average Interest
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking$25,559 $419 6.51% $30,920 $586 7.52%
SBA National 28,331 888 12.47% 27,757 610 8.72%
National Lending:
Originated 939,383 23,155 9.81% 899,562 19,274 8.50%
Purchased 1,551,038 35,849 9.19% 765,085 16,758 8.69%
Total National Lending 2,490,421 59,004 9.43% 1,664,647 36,032 8.59%
Total$2,544,311 $60,311 9.43% $1,723,324 $37,228 8.57%
Six Months Ended December 31,
2023 2022
Average Interest Average Interest
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking$26,355 $857 6.47% $31,904 $1,052 6.54%
SBA National 27,294 1,674 12.20% 29,267 1,340 9.08%
National Lending:
Originated 950,006 47,375 9.92% 857,775 35,425 8.19%
Purchased 1,520,215 69,519 9.10% 626,552 25,490 8.07%
Total National Lending 2,470,221 116,894 9.41% 1,484,327 60,915 8.14%
Total$2,523,870 $119,425 9.41% $1,545,498 $63,307 8.13%

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, 2022, transactional income decreased by $1.3 million for the quarter ended December 31, 2023, and regularly scheduled interest and accretion increased by $20.4 million primarily due to the increase in average balances. The total return on purchased loans for the quarter ended December 31, 2023 was 9.2%, an increase from 8.7% for the quarter ended December 31, 2022. The following table details the total return on purchased loans:

Total Return on Purchased Loans
Three Months Ended December 31,
2023 2022
Income Return (1) Income Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion$33,430 8.57% $13,014 6.75%
Transactional income:
Release of allowance for credit losses on purchased loans 46 0.02% - 0.00%
Accelerated accretion and loan fees 2,419 0.62% 3,744 1.94%
Total transactional income 2,465 0.64% 3,744 1.94%
Total$35,895 9.21% $16,758 8.69%
Six Months Ended December 31,
2023 2022
Income Return (1) Income Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion$64,460 8.44% $20,688 6.55%
Transactional income:
Release of allowance for credit losses on purchased loans 226 0.03% - 0.00%
Accelerated accretion and loan fees 5,059 0.66% 4,802 1.52%
Total transactional income 5,285 0.69% 4,802 1.52%
Total$69,745 9.13% $25,490 8.07%
(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 second quarter of fiscal year 2024 was reported using the CECL methodology, whereas the second quarter of fiscal year 2023 provision for credit losses was reported using the incurred loss methodology. Provision for credit losses increased by $111 thousand to a provision of $436 thousand for the quarter ended December 31, 2023, compared to a provision of $325 thousand in the quarter ended December 31, 2022.

3. Noninterest income increased by $165 thousand for the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022, principally due to the following:

  • An increase in gain on sale of Small Business Administration ("SBA") loans of $535 thousand, due to the sale of $11.5 million in SBA loans during the quarter ended December 31, 2023 as compared to the sale of $1.1 million during the quarter ended December 31, 2022; and
  • An increase in unrealized gain on equity securities of $219 thousand; partially offset by,
  • A decrease in correspondent fee income of $566 thousand from the recognition of correspondent fees and related net servicing income.

4. Noninterest expense increased by $2.0 million for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022, primarily due to the following:

  • An increase in salaries and employee benefits expense of $1.5 million, primarily due to increases in stock compensation expense, regular compensation expense, and incentive compensation expense;
  • An increase in loan expense of $190 thousand, primarily due to increased loan collection expense;
  • An increase in deposit insurance expense of $143 thousand, primarily due to the increase in average assets and decrease in Tier 1 leverage ratio, which increased the Bank's assessment rate; and
  • An increase in data processing fees of $131 thousand, primarily due to increased IT hardware hosted expense and IT software subscription expense.

5. Income tax expense increased by $3.6 million to $8.3 million, or an effective tax rate of 37.1%, for the quarter ended December 31, 2023, compared to $4.7 million, or an effective tax rate of 29.5%, for the quarter ended December 31, 2022. The increase in income tax expense is due to an increase in pre-tax income, a decrease in tax benefits arising from the exercise of stock options of $673 thousand, and a write-down of the Bank's deferred tax asset of $957 thousand related to a Massachusetts income tax law passed in the quarter ended December 31, 2023. The law changes the apportionment factors for Massachusetts income and requires entities to write-down any deferred tax assets to the enacted rate at which it expects to realize the deferred tax asset in the future. Excluding the deferred tax asset write-down, the effective tax rate for the quarter ended December 31, 2023 is 32.9%.

As of December 31, 2023, nonperforming assets totaled $30.8 million, or 1.18% 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 one loan totaling $6.4 million which was placed on non-accrual during the six months ended December 31, 2023.

As of December 31, 2023, past due loans totaled $31.9 million, or 1.22% 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 December 31, 2023, the Bank's Tier 1 leverage capital ratio was 11.3%, compared to 10.4% at June 30, 2023, and the Total risk-based capital ratio was 13.7% at December 31, 2023, compared to 12.3% at June 30, 2023. Capital ratios increased primarily due to increased earnings and the Total risk-based capital ratio 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, Jean-Pierre Lapointe, Chief Financial Officer, and Pat Dignan, Chief Operating 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 Wednesday, January 31st. 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)
December 31, 2023 June 30, 2023
Assets
Cash and due from banks$2,366 $2,515
Short-term investments 222,534 195,394
Total cash and cash equivalents 224,900 197,909
Available-for-sale debt securities, at fair value 53,230 53,403
Equity securities, at fair value 6,962 6,771
Total investment securities 60,192 60,174
Loans:
Commercial real estate 2,053,639 1,940,563
Commercial and industrial 483,240 499,815
Residential real estate 73,694 79,497
Consumer 486 485
Total loans 2,611,059 2,520,360
Less: Allowance for credit losses 27,594 7,304
Loans, net 2,583,465 2,513,056
Premises and equipment, net 27,878 27,737
Federal Home Loan Bank stock, at cost 19,665 24,644
Loan servicing rights, net 1,212 1,530
Bank-owned life insurance 18,596 18,364
Other assets 33,068 26,524
Total assets$2,968,976 $2,869,938
Liabilities and Shareholders' Equity
Deposits:
Demand$143,442 $143,738
Savings and interest checking 680,668 596,347
Money market 221,226 277,939
Time 1,084,371 919,183
Total deposits 2,129,707 1,937,207
Federal Home Loan Bank and other advances 447,191 562,615
Lease liability 21,232 21,918
Other liabilities 43,306 51,535
Total liabilities 2,641,436 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 December 31 and June 30, 2023 - -
Voting common stock, $1.00 par value, 25,000,000 shares authorized; 7,804,052 and 7,668,650 shares issued and outstanding at December 31 and June 30, 2023, respectively 7,804 7,669
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; No shares issued and outstanding at December 31 and June 30, 2023- -
Additional paid-in capital 44,888 42,840
Retained earnings 275,074 246,872
Accumulated other comprehensive loss (226) (718)
Total shareholders' equity 327,540 296,663
Total liabilities and shareholders' equity$2,968,976 $2,869,938
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,
2023 2022 2023 2022
Interest and dividend income:
Interest and fees on loans$60,311 $37,228 $119,425 $63,307
Interest on available-for-sale securities 560 270 1,043 419
Other interest and dividend income 3,261 1,703 6,361 2,339
Total interest and dividend income 64,132 39,201 126,829 66,065
Interest expense:
Deposits 21,175 9,896 40,433 12,698
Federal Home Loan Bank advances 5,701 538 11,847 933
Obligation under capital lease agreements 256 15 425 33
Total interest expense 27,132 10,449 52,705 13,664
Net interest and dividend income before provision for loan losses 37,000 28,752 74,124 52,401
Provision for credit losses 436 325 625 1,175
Net interest and dividend income after provision for loan losses 36,564 28,427 73,499 51,226
Noninterest income:
Fees for other services to customers 492 503 899 770
Gain on sales of SBA loans 570 35 822 71
Net unrealized gain (loss) on equity securities 230 11 72 (207)
Gain (loss) on real estate owned, other repossessed collateral and premises and equipment, net (9) (29) (9) 23
Correspondent fee income 52 618 143 2,000
Gain on termination of interest rate swap - - - 96
Bank-owned life insurance income 116 110 231 219
Other noninterest income 15 53 87 (12)
Total noninterest income 1,466 1,301 2,245 2,960
Noninterest expense:
Salaries and employee benefits 9,905 8,452 19,625 16,717
Occupancy and equipment expense 1,101 1,200 2,206 2,052
Professional fees 499 464 1,281 979
Data processing fees 1,347 1,216 2,447 2,320
Marketing expense 221 219 482 395
Loan acquisition and collection expense 939 749 1,589 1,390
FDIC insurance expense 287 144 644 241
Other noninterest expense 1,370 1,260 2,784 2,243
Total noninterest expense 15,669 13,704 31,058 26,337
Income before income tax expense 22,361 16,024 44,686 27,849
Income tax expense 8,307 4,726 15,460 8,264
Net income$14,054 $11,298 $29,226 $19,585
Weighted-average shares outstanding:
Basic 7,505,109 7,256,281 7,492,310 7,305,331
Diluted 7,590,913 7,323,402 7,572,450 7,379,790
Earnings per common share:
Basic$1.87 $1.56 $3.90 $2.68
Diluted 1.85 1.54 3.86 2.65
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,
2023 2022
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning assets:
Investment securities$59,797 $560 3.73% $60,402 $270 1.77%
Loans (1) (2) 2,544,311 60,311 9.43% 1,723,324 37,228 8.57%
Federal Home Loan Bank stock 21,222 468 8.77% 4,549 47 4.10%
Short-term investments (3) 206,090 2,793 5.39% 170,756 1,656 3.85%
Total interest-earning assets 2,831,420 64,132 9.01% 1,959,031 39,201 7.94%
Cash and due from banks 2,508 2,495
Other non-interest earning assets 69,245 143,481
Total assets$2,903,173 $2,105,007
Liabilities & Shareholders' Equity:
Interest-bearing liabilities:
NOW accounts$511,217 $5,636 4.39% $551,998 $3,575 2.57%
Money market accounts 229,154 2,009 3.49% 243,953 805 1.31%
Savings accounts 122,643 917 2.97% 124,990 356 1.13%
Time deposits 1,022,767 12,613 4.91% 621,248 5,160 3.30%
Total interest-bearing deposits 1,885,781 21,175 4.47% 1,542,189 9,896 2.55%
Federal Home Loan Bank advances 481,824 5,701 4.71% 83,560 538 2.55%
Lease liability 21,361 256 4.77% 16,679 15 0.36%
Total interest-bearing liabilities 2,388,966 27,132 4.52% 1,642,428 10,449 2.52%
Non-interest bearing liabilities:
Demand deposits and escrow accounts 167,358 195,907
Other liabilities 24,616 10,226
Total liabilities 2,580,940 1,848,561
Shareholders' equity 322,233 256,446
Total liabilities and shareholders' equity$2,903,173 $2,105,007
Net interest income $37,000 $28,752
Interest rate spread 4.49% 5.42%
Net interest margin (4) 5.20% 5.82%
Cost of funds (5) 4.22% 2.26%
(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)
Six Months Ended December 31,
2023 2022
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning assets:
Investment securities$59,986 $1,043 3.46% $61,064 $419 1.36%
Loans (1) (2) 2,523,870 119,425 9.41% 1,545,498 63,307 8.13%
Federal Home Loan Bank stock 21,790 881 8.04% 4,069 61 2.97%
Short-term investments (3) 203,946 5,480 5.34% 156,123 2,278 2.89%
Total interest-earning assets 2,809,592 126,829 8.98% 1,766,754 66,065 7.42%
Cash and due from banks 2,500 2,514
Other non-interest earning assets 62,753 94,831
Total assets$2,874,845 $1,864,099
Liabilities & Shareholders' Equity:
Interest-bearing liabilities:
NOW accounts$499,331 $10,781 4.29% $522,845 $5,169 1.96%
Money market accounts 243,725 4,142 3.38% 247,304 1,211 0.97%
Savings accounts 106,820 1,477 2.75% 131,191 567 0.86%
Time deposits 999,993 24,033 4.78% 387,480 5,751 2.94%
Total interest-bearing deposits 1,849,869 40,433 4.35% 1,288,820 12,698 1.95%
Federal Home Loan Bank advances 496,169 11,847 4.75% 72,949 933 2.54%
Lease liability 21,568 425 3.92% 10,429 33 0.63%
Total interest-bearing liabilities 2,367,606 52,705 4.43% 1,372,198 13,664 1.98%
Non-interest bearing liabilities:
Demand deposits and escrow accounts 168,348 228,800
Other liabilities 24,842 9,118
Total liabilities 2,560,796 1,610,116
Shareholders' equity 314,049 253,983
Total liabilities and shareholders' equity$2,874,845 $1,864,099
Net interest income $74,124 $52,401
Interest rate spread 4.55% 5.44%
Net interest margin (4) 5.25% 5.88%
Cost of funds (5) 4.13% 1.69%
(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
December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022
Net interest income$37,000 $37,124 $34,155 $32,239 $28,752
Provision for credit losses 436 190 453 676 325
Noninterest income 1,466 779 1,112 1,188 1,301
Noninterest expense 15,669 15,389 16,361 13,836 13,704
Net income 14,054 15,172 12,086 12,517 11,298
Weighted-average common shares outstanding:
Basic 7,505,109 7,479,837 7,459,074 7,352,447 7,256,281
Diluted 7,590,913 7,554,315 7,523,508 7,413,812 7,323,402
Earnings per common share:
Basic$1.87 $2.03 $1.62 $1.70 $1.56
Diluted 1.85 2.01 1.61 1.69 1.54
Dividends declared per common share$0.01 $0.01 $0.01 $0.01 $0.01
Return on average assets 1.93% 2.12% 1.70% 1.80% 2.13%
Return on average equity 17.35% 19.73% 16.67% 18.53% 17.48%
Net interest rate spread (1) 4.49% 4.61% 4.31% 4.19% 5.42%
Net interest margin (2) 5.20% 5.30% 4.91% 4.75% 5.82%
Efficiency ratio (non-GAAP) (3) 40.73% 40.60% 46.39% 41.39% 45.60%
Noninterest expense to average total assets 2.15% 2.15% 2.30% 1.99% 2.58%
Average interest-earning assets to average interest-bearing liabilities 118.52% 118.82% 117.73% 118.20% 119.28%
As of:
December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022
Nonperforming loans:
Originated portfolio:
Residential real estate$2,582 $289 $280 $379 $448
Commercial real estate 2,075 1,973 3,548 3,355 3,297
Commercial and industrial 6,950 584 520 561 631
Consumer - - - - 8
Total originated portfolio 11,607 2,846 4,348 4,295 4,384
Total purchased portfolio 19,165 14,603 11,335 10,227 8,515
Total nonperforming loans 30,772 17,449 15,683 14,522 12,899
Real estate owned and other repossessed collateral, net - - - - -
Total nonperforming assets$30,772 $17,449 $15,683 $14,522 $12,899
Past due loans to total loans 1.22% 1.01% 0.52% 0.70% 0.74%
Nonperforming loans to total loans 1.18% 0.69% 0.62% 0.58% 0.51%
Nonperforming assets to total assets 1.04% 0.61% 0.55% 0.51% 0.46%
Allowance for credit losses to total loans 1.06% 1.00% 0.29% 0.28% 0.26%
Allowance for credit losses to nonperforming loans 89.67% 145.01% 46.57% 48.84% 49.70%
Net charge-offs (recoveries)$995 $1,536 $240 $(5) $(190)
Commercial real estate loans to total capital (4) 544.34% 546.91% 595.38% 614.90% 661.48%
Net loans to deposits 121.31% 127.24% 129.73% 117.56% 113.74%
Purchased loans to total loans 63.07% 59.98% 58.73% 58.20% 59.23%
Equity to total assets 11.03% 10.83% 10.34% 9.90% 9.38%
Common equity tier 1 capital ratio 12.63% 12.45% 12.03% 11.59% 10.84%
Total risk-based capital ratio 13.71% 13.46% 12.33% 11.89% 11.11%
Tier 1 leverage capital ratio 11.28% 10.95% 10.38% 10.06% 12.53%
Total shareholders' equity$327,540 $311,569 $296,663 $283,869 $263,427
Less: Preferred stock - - - - -
Common shareholders' equity 327,540 311,569 296,663 283,869 263,427
Less: Intangible assets (5) - - - - -
Tangible common shareholders' equity (non-GAAP)$327,540 $311,569 $296,663 $283,869 $263,427
Common shares outstanding 7,804,052 7,796,691 7,668,650 7,668,650 7,511,044
Book value per common share$41.97 $39.96 $38.69 $37.02 $35.07
Tangible book value per share (non-GAAP) (6) 41.97 39.96 38.69 37.02 35.07
(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


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