Northeast Bank Reports Record 4th Quarter Outcomes and States Dividend – GlobeNewswire

29July 2020

PORTLAND, Maine, July 29, 2020 (GLOBE NEWSWIRE)– Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $11.2 million, or $1.33 per diluted typical share, for the quarter ended June 30, 2020, compared to a net loss of $603 thousand, or ($0.07) per diluted typical share, for the quarter ended June 30, 2019. Net income for the year ended June 30, 2020 was $22.7 million, or $2.53 per diluted common share, compared to $13.9 million, or $1.52 per diluted typical share, for the year ended June 30, 2019. Profits were positively impacted in the quarter ended June 30, 2020 by the sale of $457.6 million in Income Security Program (“PPP”) loans to The Loan Source, Inc. (“Loan Source”) which led to a pre-tax net gain of $9.7 million, or approximately $6.7 million internet of tax.The quarter and year ended June 30, 2019 included$6.0 million and$6.4 million of non-recurring expenditures (after tax) associated to the Bank’s business reorganization, respectively. Excluding these non-recurring expenses, the Bank taped net operating earnings of$5.4 million, or$0.59 per watered down common share, for the quarter ended June 30, 2019 and $20.3 million, or $2.20 per watered down common share, for the year ended June 30, 2019. We describe results omitting these non-recurring products as “net operating incomes. “The Board of Directors declared a cash dividend of$0.01 per share, payable onAugust 28, 2020, to shareholders of record as of August 14, 2020. Discussing results, Rick Wayne, Ceo, said”We attained record quarterly outcomes, consisting of diluted incomes per share of$1.33, a return on average equity of 28.4%, a return typically properties of 3.1 %, and an effectiveness ratio of 37.4%. In addition, we accomplished a quarterly net interest margin, excluding the effects of PPP, of 5.3 %. We are proud of our involvement in the Income Security Program, providing PPP loans to over 4,300 small businesses with tens of thousands of related tasks. We are delighted for our reporter banking relationship with Loan Source, in which we make a correspondent fee when Loan Source purchases PPP loans and we consequently share in net maintenance earnings on such bought PPP loans.”Mr. Wayne continued,”During the quarter, Loan Source acquired$1.3 billion of PPP loans, including $457.6 millionof PPP loans from the Bank and approximately $815.3 million of PPP loans from loan providers other than the Bank, which created a reporter cost for the Bank of $2.9 million. Subsequent to the quarter, Loan Source acquired an additional$1.6 billion of PPP loans, which created an additional reporter fee for the Bank of $5.6 million which will be recognized over the anticipated life of the loans. We will likewise receive one half of the net servicing income on the$ 2.9 billion PPP portfolio owned by Loan Source. To the level Loan Source purchases additional PPP loans, the Bank will generate extra reporter banking charges and receive its share of additional net maintenance earnings.”As of June 30, 2020, overall assets were$1.26 billion, an increase of $103.8 million, or 9.0%, from overall assets of$1.15 billion since June 30, 2019. The principal parts of the modifications in the balance sheet follow: The following table highlights the changes in the loan portfolio for the three months and year ended June 30, 2020: Loans generated by the Bank’s Loan Acquisition and Maintenance Group(“LASG”)for the quarter ended June 30, 2020 totaled$46.3 million, which included$ 12.7 million of acquired loans, at a typical cost of 87.2% of overdue primary balance, and $33.6 million of come from loans. Residential loan production sold in the secondary market totaled $2.1 million for the quarter.Additionally, the Bank came from $487.5 countless loans in connection with the PPP. The Bank consequently sold PPP loans with a totalprincipal balance of $457.6 million during the quarter ended June 30, 2020, tape-recording a net gain of$9.7 million on the sale mostly resulting from the recognition of net deferred fees, offset by purchase cost discount rates. The remaining $29.9 countless PPP loans are categorized as held for sale at June 30, 2020, balanced out by an evaluation change to reflect the reasonable value of the loans and unamortized net postponed fees.A summary of the Bank’s LASG portfolio follows:(1)The overall return on acquired loans represents scheduled accretion, sped upaccretion, gains on property sales, gains on property owned and other noninterest income tape-recorded during the period divided bythe average invested balance, which includes purchased loans held for sale, on an annualized basis. The overall return on bought loans does not include the effect of acquired loan charge-offs or recoveries throughout the period. Total return on purchased loans is considered a non-GAAP financial measure. See reconciliation in below table entitled”Overall Return on Purchased Loans.”Short-term investments increased by$86.4 million, or 158.8%, from June 30, 2019, primarily due to a$70.0 million boost in deposits. Deposits increased by $70.0 million, or 7.4%, from June 30, 2019, attributable to boosts in savings and interest-bearing checking accounts of$36.8 million, or 36.4%, money market accounts of $31.5 million, or 11.6%, and need deposits of $26.0 million, or 37.8%, partially offset by a decline in time deposits of$24.3 million, or 4.8%. Shareholders’ equity increased by$ 11.2 million, or 7.3%, from June 30, 2019, primarily due to net income of $22.7 million, partly balanced out by the repurchase of 853,098 shares at a weighted average rate per share of$13.45, which led to an$11.5 million decrease in investors’equity.Net earnings increased by $11.8 million to $11.2 million for the quarter ended June 30, 2020, compared to a net loss of$603 thousand for the quarter ended June 30, 2019. Net operating incomes increased by $5.8 million to$11.2 million for the quarter ended June 30, 2020, compared to net operating incomes of $5.4 million for the quarter ended June 30, 2019. Net interest and dividend income prior to arrangement for loan losses increased by$ 96 thousand to$17.4 million for the quarter ended June 30, 2020, compared to$17.3 million for the quarter ended June 30, 2019. The increase was mainly due to lower deposit rates, greater average loan balances, and reduced interest expense on subordinated debt from the redemption of trust favored securities in Might 2019, partially offset by increased interest cost in connection with the Bank’s involvement in theIncome Protection Program Liquidity Facility(“PPPLF “)utilized to fund PPP originations throughout the quarter, and lower rates made on loans and short-term investments.The following table summarizes interest income and associated yields recognized on the loan portfolios: The elements of overall earnings on bought loans are set forth in the table below entitled”Overall Return on Purchased Loans.”When compared to the quarter ended June 30, 2019, transactional income for the quarter ended June 30, 2020 reduced by$986 thousand due to thinning discount rates, while frequently scheduled interest and accretion increased by$ 893 thousand due to the boost in average balances. The total return on purchased loans for the quarter ended June 30, 2020 was 9.9 %, a reduction from 12.3%forthe quarter ended June 30, 2019. The following table information the overall return on purchased loans:-LRB- 1)The overall return on purchased loans represents arranged accretion, sped up accretion, gains on asset sales and gains on real estate owned taped during the period divided by the average invested balance, that includes purchased loans held for sale, on an annualized basis. The overall return does not consist of the result of bought loan charge-offs or healings in the periods shown. Overall return is considered a non-GAAP monetary measure.Provision for loan losses increased by$ 643 thousand for the quarter ended June 30, 2020, compared to the quarter ended June 30, 2019, primarily due to a$477 thousand boost in particular reserves as compared to a$231 thousand reduction in particular reserves in the quarter ended June 30, 2019. Noninterest earnings increased by$8.7 million for the quarter ended June 30, 2020, compared to the
quarter ended June 30, 2019, mainly due to the following: An increase in gain on sale of PPP loans of$9.7 million, due to the sale of PPP loans with a total primary balance of $457.6 million, which resulted in a net gain based on the acknowledgment of net deferred fees, offset by purchase price discounts in the quarter ended June 30, 2020; partly offset by, A$337 thousand loss on properties held for sale, representing the fair worth adjustment for PPP loans held for sale at June 30, 2020; A$227 thousand decline in gain on Small company Administration(“SBA”)loan sales, as no section loans(SBA loans besides PPP loans )were offered during the current quarter; A$ 223 thousand boost in loss on real estate owned(“REO” ), due to a write-down on an existing REO home throughout the quarter, as compared to two smaller write-downs on REO homes throughout the quarter ended June 30, 2019; and A$188 thousand decline in gain on sale of domestic loans held for sale, due to decrease volumeoffered as compared to the quarter ended June 30, 2019. Noninterest expense reduced by $ 8.3 million for the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019, primarily due to the following: A decrease in reorganization expenditure of$8.3 million, as the previous year quarter included costs related to the Might2019 business reorganization; and A reduction in other noninterest expense of$ 495 thousand, primarily due to a$ 190 thousand recoveryon SBA servicing assets, as compared to an $85 thousand problems charge in the quarter ended June 30, 2019, and decreased travel cost; partially offset by, A boost in incomes and staff member advantagesof $371 thousand, mainly due to boosts in incentive payment and routine settlement, partially balanced out by a boost in deferred wages and a reduction in stock-based settlement; and A boost in expert charges of$ 371 thousand, mainly due to increased legal fees connected with the correspondent relationship with Loan Source, along with increased accounting and internal audit expense.Income tax expense increased by $4.6 million to $4.8 million, or an efficient tax rate of 30.4%, for the quarter ended June 30, 2020, compared to$276 thousand, or an efficient tax rate of( 84.4%), for the quarter ended June 30, 2019. The increase was mainly due to higher pre-tax income, which increased by$16.5 million throughout the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019. Income tax cost and the effective tax rate for the quarter ended June 30, 2019 were affected by
an earnings tax benefit of $2.3 million recorded in connection with the redemption of the trust favored securities and the loss associated with the termination of related rate of interest swaps and caps, in connection with the corporate reorganization in May 2019. Leaving out the effects of the corporate reorganization, the reliable tax rate for the quarter ended June 30, 2019 was 32.5%, as compared to 30.4%for the quarter ended June 30, 2020. The reduction was mostly associated with a smaller year-end true-up modification related to state tax apportionment in the quarter ended June 30, 2020. As of June 30, 2020, nonperforming assets amounted to$24.4 million, or 1.94%of total assets, as compared to$16.7 million, or 1.45% of overall properties, since June 30, 2019. The boost was mainly due to 2 LASG acquired loans totaling $1.9 million, one LASG came from loan amounting to$2.7 million, and one SBA loan amounting to$1.5 million that were placed on nonaccrual, and a$1.3 million increase in real estate owned, due to 4 properties transferred in, partly offset by two properties offered and write-downs during the year ended June 30, 2020. As of June 30, 2020, past due loans totaled$ 16.4 million, or 1.69 %of overall loans, as compared to past due loans amounting to$14.6 million, or 1.50 %of overall loans since June 30, 2019. The boost was primarily due to one LASG originated loan totaling$

2.7 million and one SBA loan amounting to$1.5 million ending up being past due throughout the year ended June 30, 2020, partly balanced out by one LASG originated loan amounting to$ 1.3 million and one Neighborhood Bank loan totaling $1.1 million that settled throughout the year ended June 30, 2020. As of June 30, 2020, the Bank’s Tier 1 leverage capital ratio was 13.4 %, compared to 12.9%at June 30, 2019,

and the Total capital ratio was 19.6 %at June 30, 2020, compared to 18.0%at June 30, 2019. Capital ratios were mainly affected by increased earnings.Investor Call Information Rick Wayne, Ceo, Jean-Pierre Lapointe, Chief Financial Officer, and Pat Dignan, Executive Vice President and Chief Credit Officer, will host a teleconference to talk about fourth quarter incomes and business outlook at 10:00 a.m. Eastern Time on Thursday, July 30 th. Financiers can access the call by calling 877.878.2762 and going into the following passcode: 2496196. The call will be available via live webcast, which can be seen by accessing the Bank’s site at www.northeastbank.com and clicking the About United States-Financier Relations section. To listen to the webcast, participants are encouraged to go to the site a minimum of fifteen minutes early to register, download and install any required audio software. Please note there will also be a slide discussion that will accompany the webcast. For those who can not 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 organisation banking services to the Maine market by means of nine branches. Our Loan Acquisition and Maintenance Group purchases and originates industrial loans on a nationwide basis. ableBanking, a department of Northeast Bank, uses online cost savings items to customers across the country. Info relating to Northeast Bank can be found at www.northeastbank.com.Non-GAAP Financial Measures In addition to outcomes provided in accordance with generally accepted accounting concepts( “GAAP”), this press release consists of certain non-GAAP monetary measures, including net operating earnings, operating incomes per typical share, operating return on average assets, operating return usually equity, operating effectiveness ratio, operating noninterest expense
to average total possessions, tangible typical shareholders’ equity, tangible book value per share, total return on bought loans, effectiveness ratio, and net interest margin excluding PPP. The Bank’s management thinks that the extra non-GAAP info is used by regulators and market experts to examine a business’s monetary condition and for that reason, such information is useful to investors. These disclosures should not be viewed as a substitute for monetary results identified in accordance with GAAP, nor are they necessarily comparable to non-GAAP efficiency procedures that might exist by other companies. Due to the fact that non-GAAP financial procedures are not standardized, it may not be possible to compare these monetary steps with other companies’non-GAAP financial steps having the exact same or similar names.Forward-Looking Declarations Statements in this press release that are not historic realities are positive statements within the meaning of Area 27A of the Securities Act of 1933, as changed, and Section 21E of the Securities Exchange Act of 1934, as modified, and are meant to be covered by the safe harbor
arrangements of the Personal Securities Lawsuits Reform Act of 1995. Although the Bank believes that these forward-looking statements are based upon reasonable quotes and presumptions, they are not warranties of future performance and undergo known and unidentified risks, unpredictabilities, and other factors. You ought to not put excessive dependence on our forward-looking declarations. You must exercise care in interpreting and relying on forward-looking declarations because they are subject to significant dangers,unpredictabilitiesand other elements which are, in
some cases, beyond the Bank’s control. The Bank’s real outcomes might differ materially from those projected in the positive declarations as an outcome of, to name a few elements, the unfavorable effects and disruptions of the COVID-19 pandemic and steps required to contain its spread on our staff members, consumers, service 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 wear and tear in work levels, general business and financial conditions on a nationwide basis and in the regional markets in which the Bank operates, consisting of modifications which adversely affect customers’capability to service and repay our loans; changes in client behavior due to changing political, service and financial conditions or legal or regulative efforts; turbulence in the capital and financial obligation markets; changes in rates of interest and property values; increases in loan defaults and charge-off rates; reductions in the value of securities and other possessions, adequacy of loan loss reserves, or deposit levels requiring increased borrowing to fund loans and financial investments; altering government guideline; competitive pressures from other banks; operational dangers consisting of, but not restricted to, cybersecurity occurrences, scams, natural disasters and future pandemics; the danger that the Bank might not achieve success in the execution of its business technique; the risk that intangibles recorded in the Bank’s financial statements will become impaired; modifications in presumptions utilized in making such positive declarations; and the other dangers and uncertainties detailed in the Bank’s Yearly Report on Form 10-K and upgraded by our Quarterly Reports on Form 10-Q and other filings sent to the Federal Deposit Insurance Coverage Corporation. These declarations speak only since the date of this release and the Bank does not carry out any commitment to update or revise any of these positive declarations to reflect events or circumstances occurring after the date of this interaction or to show the occurrence of unexpected events.NBN-F NORTHEAST BANK SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA (Unaudited)(Dollars in thousands, except share and per share data )Source: globenewswire.com

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