Market Overview

Northeast Bank Reports First Quarter Results and Declares Dividend

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LEWISTON, Maine, Oct. 28, 2019 (GLOBE NEWSWIRE) -- Northeast Bank (the "Bank") (NASDAQ:NBN), a Maine-based full-service financial institution, today reported net income of $4.8 million, or $0.52 per diluted common share, for the quarter ended September 30, 2019, compared to net income of $4.5 million, or $0.49 per diluted common share, for the quarter ended September 30, 2018.

The Board of Directors declared a cash dividend of $0.01 per share, payable on November 22, 2019, to shareholders of record as of November 8, 2019.

"We started fiscal 2020 with a solid first quarter," said Richard Wayne, Chief Executive Officer. "For the quarter, we earned $0.52 per diluted common share, a return on equity of 12.2%, a return on assets of 1.7%, and a net interest margin of 5.7%. Our Loan Acquisition and Servicing Group produced $69.2 million of loans, including originations of $40.6 million and purchases with an investment of $28.6 million during the quarter. Additionally, we began to realize interest expense savings due to both the redemption of the Trust Preferred Securities and a reduction of deposits held in cash on the balance sheet at a negative spread."

As of September 30, 2019, total assets were $1.1 billion, a decrease of $30.8 million, or 2.7%, from total assets of $1.2 billion as of June 30, 2019. The principal components of the changes in the balance sheet follow:

1. The following table highlights the changes in the loan portfolio for the quarter ended September 30, 2019:

  September 30, 2019 Balance   June 30, 2019 Balance   Change ($)   Change (%)
               
  (Dollars in thousands)
LASG Purchased $ 332,227   $ 326,640   $ 5,587     1.71 %
LASG Originated   457,350     493,413     (36,063 )   (7.31 %)
SBA   58,270     63,053     (4,783 )   (7.59 %)
Community Banking   86,192     91,954     (5,762 )   (6.27 %)
Total $ 934,039   $ 975,060   $ (41,021 )   (4.21 %)
                         
                   

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended September 30, 2019 totaled $69.2 million, which consisted of $28.6 million of purchased loans, at an average price of 94.4% of unpaid principal balance, and $40.6 million of originated loans. This activity was offset by payoffs, paydowns and amortization in the LASG portfolios of $99.6 million. The Bank's Small Business Administration ("SBA") Division sold $2.4 million of the guaranteed portion of SBA loans in the secondary market, all of which were originated in the prior quarter. Residential loan production sold in the secondary market totaled $10.9 million for the quarter.

An overview of the Bank's LASG portfolio follows:

  LASG Portfolio
  Three Months Ended September 30,
  2019    2018 
  Purchased   Originated   Total LASG   Purchased   Originated   Total LASG
                       
  (Dollars in thousands)
Loans purchased or originated during the period:                                  
Unpaid principal balance $  30,333     $   40,537     $   70,870     $   37,077     $   71,136     $   108,213  
Net investment basis   28,622       40,537         69,159       34,803         71,136         105,939  
                                   
Loan returns during the period:                                  
Yield   9.73 %     7.57 %     8.46 %     9.46 %     7.43 %     8.31 %
Total Return on Purchased Loans (1)   9.73 %     7.57 %     8.46 %     9.46 %     7.43 %     8.31 %
 

Total loans as of period end:
                                 
Unpaid principal balance $ 365,984     $ 457,350     $   823,334     $ 336,908     $ 407,822     $   744,730  
Net investment basis   332,227       457,350        789,577       300,548       407,822         708,370  
                                   

(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-GA

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