PORTLAND, Maine, July 24, 2023 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) ( NBN), a Maine-based full-service bank, today reported net income of $12.1 million, or $1.61 per diluted common share, for the quarter ended June 30, 2023, compared to net income of $10.3 million, or $1.35 per diluted common share, for the quarter ended June 30, 2022. Net income for the year ended June 30, 2023 was $44.2 million, or $5.96 per diluted common share, compared to $42.2 million, or $5.34 per diluted common share, for the year ended June 30, 2022.
The Board of Directors declared a cash dividend of $0.01 per share, payable on August 23, 2023, to shareholders of record as of August 9, 2023.
Discussing results, Rick Wayne, Chief Executive Officer, said, “We closed our fiscal year with yet another strong quarter. The historic loan growth in our second fiscal quarter continued to prove beneficial, as National Lending Division interest income increased by $29.8 million to $53.3 million over the quarter ended June 30, 2022. Our National Lending Division finished the fiscal year with record purchases with $1.14 billion, including $48.8 million for the quarter. This resulted in net growth in our purchased portfolio of $1.00 billion, or 209.9%, compared with June 30, 2022. In addition to the growth in loan balances, our National Lending Division’s combined yield increased to 8.7% for the quarter ended June 30, 2023, as compared to 7.9% for the quarter ended June 30, 2022. Asset quality remains strong, with non-performing assets of 0.55% of total assets, as compared to 0.82% of total assets at June 30, 2022.” Mr. Wayne continued, “As a result of the increase in the average balances of our loan portfolio, we are reporting earnings of $1.61 per diluted common share, a return on average equity of 16.7%, and a return on average assets of 1.7% for the quarter.”
As of June 30, 2023, total assets were $2.87 billion, an increase of $1.29 billion, or 81.3%, from total assets of $1.58 billion as of June 30, 2022.
- The following table highlights the changes in the loan portfolio for the three months and year ended June 30, 2023:
| Loan Portfolio Changes | ||||||||||||||||||
| June 30, 2023 Balance | March 31, 2023 Balance | Change ($) | Change (%) | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||
| National Lending Purchased | $ | 1,480,119 | $ | 1,460,598 | $ | 19,521 | 1.34 | % | ||||||||||
| National Lending Originated | 987,832 | 994,707 | (6,875 | ) | (0.69 | %) | ||||||||||||
| SBA National | 24,873 | 25,537 | (664 | ) | (2.60 | %) | ||||||||||||
| Community Banking | 27,536 | 28,953 | (1,417 | ) | (4.89 | %) | ||||||||||||
| Total | $ | 2,520,360 | $ | 2,509,795 | $ | 10,565 | 0.42 | % | ||||||||||
| June 30, 2023 Balance | June 30, 2022 Balance | Change ($) | Change (%) | ||||||||||||
| (Dollars in thousands) | |||||||||||||||
| National Lending Purchased | $ | 1,480,119 | $ | 477,682 | $ | 1,002,437 | 209.85 | % | |||||||
| National Lending Originated | 987,832 | 759,229 | 228,603 | 30.11 | % | ||||||||||
| SBA National | 24,873 | 33,046 | (8,173 | ) | (24.73 | %) | |||||||||
| Community Banking | 27,536 | 34,909 | (7,373 | ) | (21.12 | %) | |||||||||
| Total | $ | 2,520,360 | $ | 1,304,866 | $ | 1,215,494 | 93.15 | % | |||||||
Loans generated by the Bank's National Lending Division for the quarter ended June 30, 2023 totaled $133.0 million, which consisted of $48.8 million of purchased loans, at an average price of 89.9% of unpaid principal balance, and $84.2 million of originated loans.
An overview of the Bank’s National Lending Division portfolio follows:
| National Lending Portfolio | |||||||||||||||||||||||
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Purchased | Originated | Total | Purchased | Originated | Total | ||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Loans purchased or originated during the period: | |||||||||||||||||||||||
| Unpaid principal balance | $ | 54,253 | $ | 84,171 | $ | 138,424 | $ | 37,032 | $ | 172,851 | $ | 209,883 | |||||||||||
| Net investment basis | 48,783 | 84,171 | 132,954 | 36,502 | 172,851 | 209,353 | |||||||||||||||||
| Loan returns during the period: | |||||||||||||||||||||||
| Yield | 8.12 | % | 9.58 | % | 8.71 | % | 9.25 | % | 7.03 | % | 7.91 | % | |||||||||||
| Total Return on Purchased Loans (1) | 8.12 | % | N/A | 8.12 | % | 9.25 | % | N/A | 9.25 | % | |||||||||||||
| Year Ended June 30, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Purchased | Originated | Total | Purchased | Originated | Total | ||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Loans purchased or originated during the period: | |||||||||||||||||||||||
| Unpaid principal balance | $ | 1,314,783 | $ | 556,991 | $ | 1,871,774 | $ | 199,523 | $ | 587,840 | $ | 787,363 | |||||||||||
| Net investment basis | 1,143,786 | 556,991 | 1,700,777 | 187,914 | 587,840 | 775,754 | |||||||||||||||||
| Loan returns during the period: | |||||||||||||||||||||||
| Yield | 7.93 | % | 8.84 | % | 8.36 | % | 8.91 | % | 6.73 | % | 7.65 | % | |||||||||||
| Total Return on Purchased Loans (1) | 7.93 | % | N/A | 7.93 | % | 8.92 | % | N/A | 8.92 | % | |||||||||||||
| Total loans as of period end: | |||||||||||||||||||||||
| Unpaid principal balance | $ | 1,667,947 | $ | 987,832 | $ | 2,655,779 | $ | 512,006 | $ | 759,229 | $ | 1,271,235 | |||||||||||
| Net investment basis | 1,480,119 | 987,832 | 2,467,951 | 477,682 | 759,229 | 1,236,911 | |||||||||||||||||
(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on real estate owned and other noninterest income recorded during the period divided by the average invested balance, which includes purchased loans held for sale, on an annualized basis. The total return on purchased loans does not include the effect of purchased loan charge-offs or recoveries during the period. Total return on purchased loans is considered a non-GAAP financial measure. See reconciliation in below table entitled “Total Return on Purchased Loans.”
- Deposits increased by $649.5 million, or 50.4%, from June 30, 2022. The increase was attributable to increases in time deposits of $791.9 million, or 622.0%, and money market deposits of $31.8 million, or 12.9%, partially offset by a decrease in demand deposits of $185.3 million, or 56.3%. The primary reason for the net increase in deposits was due to the increase in brokered time deposits, which increased by $600.4 million compared to June 30, 2022. The use of brokered time deposits is part of the Bank’s strategy to fund the loan purchases. The decrease in demand deposits was primarily due to a decrease in the Paycheck Protection Program (“PPP”) Liquidity Facility balance during the year ended June 30, 2023 as the balance of PPP loans purchased by The Loan Source, Inc. that remain outstanding decreased significantly during this period.
- Shareholders’ equity increased by $48.3 million, or 19.5%, from June 30, 2022, primarily due to net income of $44.2 million, the issuance of 194 thousand shares of voting common stock, adding $8.0 million to shareholders’ equity, and stock-based compensation of $3.4 million, partially offset by the repurchase of 136 thousand shares of voting common stock at a weighted average price per share of $37.99, which resulted in a $5.2 million decrease to shareholders’ equity.
Net income increased by $1.8 million to $12.1 million for the quarter ended June 30, 2023, compared to net income of $10.3 million for the quarter ended June 30, 2022.
1. Net interest and dividend income before provision for loan losses increased by $10.6 million to $34.2 million for the quarter ended June 30, 2023, compared to $23.6 million for the quarter ended June 30, 2022. The increase was primarily due to the following:
- An increase in interest income earned on loans of $29.9 million, primarily due to an increase in interest income earned on the National Lending Division’s originated and purchased portfolios, due to higher average balances in both portfolios and higher rates earned on the originated portfolio, partially offset by lower rates earned on the purchased portfolio; and
- An increase in interest income earned on short-term investments of $2.6 million, primarily due to higher rates earned; partially offset by,
- An increase in deposit interest expense of $17.0 million, due to higher interest rates and higher average balances in interest-bearing deposits; and
- An increase in FHLB borrowings interest expense of $5.3 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 June 30, | |||||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| Average | Interest | Average | Interest | ||||||||||||||
| Balance | Income | Yield | Balance | Income | Yield | ||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Community Banking | $ | 28,071 | $ | 427 | 6.10 | % | $ | 35,028 | $ | 451 | 5.16 | % | |||||
| SBA National | 25,706 | 705 | 11.00 | % | 33,788 | 522 | 6.20 | % | |||||||||
| National Lending: | |||||||||||||||||
| Originated | 994,616 | 23,762 | 9.58 | % | 720,101 | 12,622 | 7.03 | % | |||||||||
| Purchased | 1,461,164 | 29,584 | 8.12 | % | 474,393 | 10,937 | 9.25 | % | |||||||||
| Total National Lending | 2,455,780 | 53,346 | 8.71 | % | 1,194,494 | 23,559 | 7.91 | % | |||||||||
| Total | $ | 2,509,557 | $ | 54,478 | 8.71 | % | $ | 1,263,310 | $ | 24,532 | 7.79 | % | |||||
| Year Ended June 30, | |||||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| Average | Interest | Average | Interest | ||||||||||||||
| Balance | Income | Yield | Balance | Income | Yield | ||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Community Banking | $ | 30,271 | $ | 1,915 | 6.33 | % | $ | 41,009 | $ | ||||||||
