Northeast Bancorp (NBN, Financial) filed Quarterly Report for the period ended 2008-12-31.
NORTHEAST BANCORP (ME)is a savings and loan holding company whose primary assets is its subsidiary Northeast Bank F.S.B. the bank. The Bank's primary business consists of attracting savings deposits from the general public and applying those funds primarily to the origination and retention of first mortgage loans on residential real estate. Of the Bank's loan portfolio at June 30 1996 83% was invested in real estate loans(including residential construction and commercial mortgage loans) 8% incommercial loans and 9% in consumer loans. Northeast Bancorp has a market cap of $16.01 million; its shares were traded at around $8.73 with a P/E ratio of 13.5 and P/S ratio of 0.35. The dividend yield of Northeast Bancorp stocks is 5.22%. Northeast Bancorp had an annual average earning growth of 0.9% over the past 10 years.
The provision for loan losses for the three months ended December 31, 2008 was $503,561, an increase of $323,908, or 180%, from $179,653 for the three months ended December 31, 2007. For the six months ended December 31, 2008 and 2007, the provision for loans losses was $1,024,285 and $369,935, respectively, an increase of $654,350, or 177%. The provision was increased due to the increase in net charge-offs, $438,561, for the three months ended December 31, 2008 compared to $179,563 for the same period in 2007 and $959,285 for the six months ended December 31, 2008 compared to $369,935 for the same period in 2007 and increasing the allowance for loan losses compared to its June 30, 2008 balance to reflect increasing credit risk in the loan portfolio. Our internal analysis of the adequacy of the allowance for loan losses considered: an increase in loan delinquency to 4.08% at December 31, 2008 compared to 3.03% at June 30, 2008 and 4.10% at December 31, 2007 due to the amount of loan balances past due; a slight decrease of $334,000 in non-performing loans (more than 90 days past due) at December 31, 2008 compared to June 30, 2008; and an increase in internally classified and criticized loans at December 31, 2008 compared to June 30, 2008. Management deemed the allowance for loan losses adequate for the risk in the loan portfolio. See Financial Condition for a discussion of the Allowance for Loan Losses and the factors impacting the provision for loan losses. The allowance as a percentage of outstanding loans increased to 1.40% at December 31, 2008 compared to 1.38% at June 30, 2008 and virtually flat to 1.41% at December 31, 2007.
Total noninterest income was $2,750,927 for the three months ended December 31, 2008, an increase of $354,042, or 15%, from $2,396,885 for the three months ended December 31, 2007. This increase reflected the combined impact of a $27,859 increase in gains on securities sales, a $21,140 increase in investment brokerage revenue due to a commission from the sale of a corporate owned life insurance policy, a $331,791, or 30%, increase in insurance agency commissions from the insurance agencies acquired in fiscal 2008, and an increase of $17,173 in BOLI revenue offset by a $10,076 decrease in gains on sale of loans due to lower volume and a $42,021 decrease in other noninterest income due to a partial write-down of our mortgage servicing asset and a $12,705 decrease in trust income.
For the six months ended December 31, 2008 and 2007, total noninterest income was $5,311,575 and $4,386,258, respectively, an increase of $925,317, or 21%. This increase was primarily due to insurance agency commissions which increased $983,195, or 50%. We also had increases of $45,835 in fees for other services to customers from better management of overdraft fees, $43,831 in investment brokerage commissions, and $28,608 from BOLI revenue reflecting the full year impact of the purchase of a BOLI policy in December 2007. These increases were partially offset by $74,331 in incremental losses from trust preferred and preferred stock sales in the quarter ended September 30, 2008, a decrease of $51,706 in gains on sales of loans due to lower sales volume of the residential real estate loans, a decrease of $50,115 in other revenue from a partial write-down of our servicing assets and a decrease in trust fee revenue of $20,259.
Total noninterest expense for the three months ended December 31, 2008 was $6,141,321, an increase of $860,471, or 16%, from $5,280,850 for the three months ended December 31, 2007. Of this increase, $336,326 was from the insurance operations reflecting the full year impact of Spence & Matthews and Hyler agencies acquired in quarter ended December 31, 2007. The $524,145 balance of the $860,471 increase was due to the bank operations other than insurance. Of the $524,145 increase, salaries and employee benefits accounted for $194,653 due to increased medical benefits plan claims and accrued expenses of the employee bank-wide incentive plan. Occupancy and equipment expense were increases of $14,668 and $2,967, respectively. Other noninterest expense increased $311,857 from increases in professional fees expense, FDIC insurance expense due to the loss of one-time assessment credits, loan collection expense, postage, and investment security impairment expense of $26,291.
For the six months ended December 31, 2008 and 2007, total noninterest expense was $12,230,164 and $10,122,454, respectively, an increase of $2,107,710, or 21%. The full year impact of the three insurance agencies acquired in the six months ended December 31, 2007 accounted for $951,058 of this increase, which was comprised of $714,051 in salaries and employee benefits, $17,954 in net occupancy, $12,102 in equipment expense, $134,523 of intangible asset amortization, and $72,428 in other noninterest expense. The $1,156,652 balance of the $2,107,710 increase was related to bank operations other than insurance. Of this $1,156,652 increase, salaries and employee benefits expense increased $345,061 from increased claims in our self-insurance medical benefits plan and the employee bank-wide incentive plan. Occupancy expense increased $22,635 from increases in building depreciation, rent expense, and ground maintenance. Equipment expense increased $33,881 due to increases in depreciation expense and software licensing fees. Other noninterest expense increased $755,075 which included $68,651 of increased professional fees related to the conversion to new Internet banking software and marketing of repossessed collateral, $127,775 of increased FDIC insurance due to the loss of one-time assessment credits, $112,923 of increased loan collections expense, increased postage expense, and $294,266 of investment security impairment expense.
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NORTHEAST BANCORP (ME)is a savings and loan holding company whose primary assets is its subsidiary Northeast Bank F.S.B. the bank. The Bank's primary business consists of attracting savings deposits from the general public and applying those funds primarily to the origination and retention of first mortgage loans on residential real estate. Of the Bank's loan portfolio at June 30 1996 83% was invested in real estate loans(including residential construction and commercial mortgage loans) 8% incommercial loans and 9% in consumer loans. Northeast Bancorp has a market cap of $16.01 million; its shares were traded at around $8.73 with a P/E ratio of 13.5 and P/S ratio of 0.35. The dividend yield of Northeast Bancorp stocks is 5.22%. Northeast Bancorp had an annual average earning growth of 0.9% over the past 10 years.
Highlight of Business Operations:
The Company reported consolidated net income of $293,575, or $0.12 per diluted share, for the three months ended December 31, 2008 compared to $403,428, or $0.17 per diluted share, for the three months ended December 31, 2007, a decrease of $108,853, or 27%. Net interest and dividend income increased $657,351, or 18%, as a result of a net interest margin increase combined with increased earning assets. The provision for loan losses increased $323,908, or 180%, due to higher net credit losses. Noninterest income increased $354,042, or 15%, primarily from increased insurance commissions. Noninterest expense increased $860,471, or 16%, primarily due to increased salaries and employee benefits and other noninterest expenses related to insurance agency acquisitions.The provision for loan losses for the three months ended December 31, 2008 was $503,561, an increase of $323,908, or 180%, from $179,653 for the three months ended December 31, 2007. For the six months ended December 31, 2008 and 2007, the provision for loans losses was $1,024,285 and $369,935, respectively, an increase of $654,350, or 177%. The provision was increased due to the increase in net charge-offs, $438,561, for the three months ended December 31, 2008 compared to $179,563 for the same period in 2007 and $959,285 for the six months ended December 31, 2008 compared to $369,935 for the same period in 2007 and increasing the allowance for loan losses compared to its June 30, 2008 balance to reflect increasing credit risk in the loan portfolio. Our internal analysis of the adequacy of the allowance for loan losses considered: an increase in loan delinquency to 4.08% at December 31, 2008 compared to 3.03% at June 30, 2008 and 4.10% at December 31, 2007 due to the amount of loan balances past due; a slight decrease of $334,000 in non-performing loans (more than 90 days past due) at December 31, 2008 compared to June 30, 2008; and an increase in internally classified and criticized loans at December 31, 2008 compared to June 30, 2008. Management deemed the allowance for loan losses adequate for the risk in the loan portfolio. See Financial Condition for a discussion of the Allowance for Loan Losses and the factors impacting the provision for loan losses. The allowance as a percentage of outstanding loans increased to 1.40% at December 31, 2008 compared to 1.38% at June 30, 2008 and virtually flat to 1.41% at December 31, 2007.
Total noninterest income was $2,750,927 for the three months ended December 31, 2008, an increase of $354,042, or 15%, from $2,396,885 for the three months ended December 31, 2007. This increase reflected the combined impact of a $27,859 increase in gains on securities sales, a $21,140 increase in investment brokerage revenue due to a commission from the sale of a corporate owned life insurance policy, a $331,791, or 30%, increase in insurance agency commissions from the insurance agencies acquired in fiscal 2008, and an increase of $17,173 in BOLI revenue offset by a $10,076 decrease in gains on sale of loans due to lower volume and a $42,021 decrease in other noninterest income due to a partial write-down of our mortgage servicing asset and a $12,705 decrease in trust income.
For the six months ended December 31, 2008 and 2007, total noninterest income was $5,311,575 and $4,386,258, respectively, an increase of $925,317, or 21%. This increase was primarily due to insurance agency commissions which increased $983,195, or 50%. We also had increases of $45,835 in fees for other services to customers from better management of overdraft fees, $43,831 in investment brokerage commissions, and $28,608 from BOLI revenue reflecting the full year impact of the purchase of a BOLI policy in December 2007. These increases were partially offset by $74,331 in incremental losses from trust preferred and preferred stock sales in the quarter ended September 30, 2008, a decrease of $51,706 in gains on sales of loans due to lower sales volume of the residential real estate loans, a decrease of $50,115 in other revenue from a partial write-down of our servicing assets and a decrease in trust fee revenue of $20,259.
Total noninterest expense for the three months ended December 31, 2008 was $6,141,321, an increase of $860,471, or 16%, from $5,280,850 for the three months ended December 31, 2007. Of this increase, $336,326 was from the insurance operations reflecting the full year impact of Spence & Matthews and Hyler agencies acquired in quarter ended December 31, 2007. The $524,145 balance of the $860,471 increase was due to the bank operations other than insurance. Of the $524,145 increase, salaries and employee benefits accounted for $194,653 due to increased medical benefits plan claims and accrued expenses of the employee bank-wide incentive plan. Occupancy and equipment expense were increases of $14,668 and $2,967, respectively. Other noninterest expense increased $311,857 from increases in professional fees expense, FDIC insurance expense due to the loss of one-time assessment credits, loan collection expense, postage, and investment security impairment expense of $26,291.
For the six months ended December 31, 2008 and 2007, total noninterest expense was $12,230,164 and $10,122,454, respectively, an increase of $2,107,710, or 21%. The full year impact of the three insurance agencies acquired in the six months ended December 31, 2007 accounted for $951,058 of this increase, which was comprised of $714,051 in salaries and employee benefits, $17,954 in net occupancy, $12,102 in equipment expense, $134,523 of intangible asset amortization, and $72,428 in other noninterest expense. The $1,156,652 balance of the $2,107,710 increase was related to bank operations other than insurance. Of this $1,156,652 increase, salaries and employee benefits expense increased $345,061 from increased claims in our self-insurance medical benefits plan and the employee bank-wide incentive plan. Occupancy expense increased $22,635 from increases in building depreciation, rent expense, and ground maintenance. Equipment expense increased $33,881 due to increases in depreciation expense and software licensing fees. Other noninterest expense increased $755,075 which included $68,651 of increased professional fees related to the conversion to new Internet banking software and marketing of repossessed collateral, $127,775 of increased FDIC insurance due to the loss of one-time assessment credits, $112,923 of increased loan collections expense, increased postage expense, and $294,266 of investment security impairment expense.
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