NBN Northeast Bank

Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $10.6 million, or $1.36 per diluted common share, for the quarter ended March 31, 2022, compared to net income of $34.2 million, or $4.06 per diluted common share, for the quarter ended March 31, 2021. Net income for the nine months ended March 31, 2022 was $31.9 million, or $3.98 per diluted common share, compared to $50.1 million, or $6.01 per diluted common share, for the nine months ended March 31, 2021. Net income for the three and nine months ended March 31, 2021 included $33.0 million of net gains on the sale of U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans originated and sold during the quarter ended March 31, 2021, which had an after-tax earnings per diluted common share impact of $2.75 and $2.80, respectively.

The Board of Directors declared a cash dividend of $0.01 per share, payable on May 18, 2022, to shareholders of record as of May 4, 2022.

“We reported strong results in our third fiscal quarter,” said Rick Wayne, Chief Executive Officer. “Originations by our National Lending Division were particularly strong, with $152.1 million for the quarter, or $415.0 million for the fiscal year to date. This resulted in net growth in our originated portfolio of $61.3 million, or 9.9%, compared with December 31, 2021, or $157.0 million, or 30.0%, compared with June 30, 2021. We increased National Lending originated interest income by $2.5 million, or 29.6%, compared with the quarter ended March 31, 2021.” Mr. Wayne continued, “As a result of this activity, we are reporting earnings of $1.36 per diluted common share, a return on average equity of 17.6%, and a return on average assets of 2.8% for the quarter.”

As of March 31, 2022, total assets were $1.57 billion, a decrease of $608.3 million, or 28.0%, from total assets of $2.17 billion as of June 30, 2021.

1.   Cash and short-term investments decreased by $784.7 million, or 77.7%, primarily due to the timing of a large deposit account related to SBA PPP elevated loan payoff collections at June 30, 2021. Cash and short-term investments may fluctuate significantly while PPP collections, including forgiveness amounts, continue, depending on the timing of receipts and remittances of cash amounts.

2.   The following table highlights the changes in the loan portfolio for the three and nine months ended March 31, 2022:

	Loan Portfolio Changes
	Three Months Ended March 31, 2022
	March 31, 2022Balance				December 31, 2021Balance				Change ($)				Change (%)
	(Dollars in thousands)
National Lending Purchased	$	479,824			$	484,513			$	(4,689	)		(0.97	%)
National Lending Originated		680,568				619,223				61,345			9.91	%
SBA National		34,574				35,682				(1,108	)		(3.11	%)
Community Banking		37,359				41,766				(4,407	)		(10.55	%)
Total	$	1,232,325			$	1,181,184			$	51,141			4.33	%
	Nine Months Ended March 31, 2022
	March 31, 2022Balance				June 30, 2021Balance				Change ($)				Change (%)
	(Dollars in thousands)
National Lending Purchased	$	479,824			$	429,054			$	50,770			11.83	%
National Lending Originated		680,568				523,535				157,033			29.99	%
SBA National		34,574				39,549				(4,975	)		(12.58	%)
Community Banking		37,359				48,486				(11,127	)		(22.95	%)
Total	$	1,232,325			$	1,040,624			$	191,701			18.42	%

Loans generated by the Bank's National Lending Division for the quarter ended March 31, 2022 totaled $176.0 million, which consisted of $23.9 million of purchased loans, at an average price of 74.6% of unpaid principal balance, and $152.1 million of originated loans.

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

	National Lending Portfolio
	Three Months Ended March 31,
	2022												2021
	Purchased				Originated				Total				Purchased				Originated				Total
	(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance	$	32,079			$	152,105			$	184,184			$	42,547			$	69,327			$	111,874
Net investment basis		23,920				152,105				176,025				39,895				69,327				109,222
Loan returns during the period:
Yield		8.25	%			6.94	%			7.50	%			8.48	%			7.28	%			7.83	%
Total Return on Purchased Loans (1)		8.30	%			N/A				8.30	%			8.48	%			N/A				8.48	%
	Nine Months Ended March 31,
	2022												2021
	Purchased				Originated				Total				Purchased				Originated				Total
	(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance	$	162,492			$	414,989			$	577,481			$	146,135			$	194,842			$	340,977
Net investment basis		151,412				414,989				566,401				135,757				194,842				330,599
Loan returns during the period:
Yield		8.80	%			6.61	%			7.55	%			8.88	%			7.06	%			7.90	%
Total Return on Purchased Loans (1)		8.80	%			N/A				8.80	%			8.88	%			N/A				8.88	%
Total loans as of period end:
Unpaid principal balance	$	516,972			$	680,568			$	1,197,540			$	471,778			$	473,930			$	945,708
Net investment basis		479,824				680,568				1,160,392				433,497				473,930				907,427

(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-GAAP financial measure. See reconciliation in below table entitled “Total Return on Purchased Loans.”

3.   Deposits decreased by $594.3 million, or 31.9%, from June 30, 2021. The decrease was attributable to decreases in demand deposits of $590.6 million, or 60.7% and time deposits of $160.0 million, or 57.6%, partially offset by an increase in savings and interest checking deposits of $170.7 million, or 52.5%. The primary reason for the net decrease in deposits was due to timing of the receipt of short-term customer funds related to PPP payoff collections prior to June 30, 2021, which were subsequently used to pay down NEWITY’s PPP Liquidity Facility (“PPPLF”) balance during the nine months ended March 31, 2022.

4.   Shareholders’ equity increased by $15.1 million, or 6.5%, from June 30, 2021, primarily due to net income of $31.9 million, partially offset by the repurchase of 535 thousand shares of voting common stock at a weighted average price per share of $33.28, which resulted in a $17.8 million decrease to shareholders’ equity. Shareholders’ equity also increased by $1.4 million as a result of stock compensation expense recognized.

Net income decreased by $23.6 million to $10.6 million for the quarter ended March 31, 2022, compared to net income of $34.2 million for the quarter ended March 31, 2021.

1.   Net interest and dividend income before provision for loan losses increased by $2.4 million to $21.0 million for the quarter ended March 31, 2022, compared to $18.6 million for the quarter ended March 31, 2021. The increase was primarily due to the following:

• An increase in interest income earned on the National Lending Division’s purchased and originated portfolios of $3.7 million, due to higher average balances, partially offset by lower rates earned in both portfolios;
• A decrease in deposit interest expense of $887 thousand, due to lower interest rates and lower average balances;
• A decrease of $300 thousand in interest expense due to advances taken from the PPPLF to fund PPP originations during the quarter ended March 31, 2021; and
• A decrease of $282 thousand in interest expense due to the payoff of the subordinated debt; partially offset by,
• A decrease in PPP loan interest income of $2.6 million, due to the significant decrease in PPP loans during the quarter ended March 31, 2022.

The following table summarizes interest income and related yields recognized on the loan portfolios:

		Interest Income and Yield on Loans
		Three Months Ended March 31,
		2022											2021
		Average				Interest							Average				Interest
		Balance (1)				Income				Yield			Balance (1)				Income				Yield
		(Dollars in thousands)
Community Banking		$	40,144			$	550			5.56	%		$	52,852			$	658			5.05	%
SBA National			34,605				577			6.76	%			44,775				663			6.01	%
National Lending:
Originated			643,707				11,021			6.94	%			473,881				8,501			7.28	%
Purchased			477,912				9,722			8.25	%			406,979				8,513			8.48	%
Total National Lending			1,121,619				20,743			7.50	%			880,860				17,014			7.83	%
Total excluding SBA PPP		$	1,196,368			$	21,870			7.41	%		$	978,487			$	18,335			7.60	%
SBA PPP		$	462			$	3			3.05	%		$	481,853			$	2,558			2.15	%
Total including SBA PPP		$	1,196,830			$	21,873			7.41	%		$	1,460,340			$	20,893			5.80	%
		Interest Income and Yield on Loans
		Nine Months Ended March 31,
		2022											2021
		Average				Interest							Average				Interest
		Balance (1)				Income				Yield			Balance (1)				Income				Yield
		(Dollars in thousands)
Community Banking		$	42,995			$	1,692			5.24	%		$	59,272			$	2,160			4.85	%
SBA National			36,322				1,835			6.73	%			47,236				1,835			5.17	%
National Lending:
Originated			597,127				29,634			6.61	%			459,000				24,331			7.06	%
Purchased			452,603				29,883			8.80	%			392,183				26,142			8.88	%
Total National Lending			1,049,730				59,517			7.55	%			851,183				50,473			7.90	%
Total excluding SBA PPP		$	1,129,047			$	63,044			7.44	%		$	957,691			$	54,468			7.58	%
SBA PPP		$	827			$	17			2.74	%		$	164,053			$	2,638			2.14	%
Total including SBA PPP		$	1,129,874			$	63,061			7.43	%		$	1,121,744			$	57,106			6.78	%

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 March 31, 2021, transactional income increased by $888 thousand for the quarter ended March 31, 2022, and regularly scheduled interest and accretion increased by $377 thousand due to the increase in average balances. The total return on purchased loans for the quarter ended March 31, 2022 was 8.3%, a decrease from 8.5% for the quarter ended March 31, 2021. The following table details the total return on purchased loans:

	Total Return on Purchased Loans
	Three Months Ended March 31,
	2022							2021
	Income				Return (1)			Income				Return (1)
	(Dollars in thousands)
Regularly scheduled interest and accretion	$	7,166			6.08	%		$	6,789			6.77	%
Transactional income:
Gain on real estate owned		56			0.05	%			-			0.00	%
Accelerated accretion and loan fees		2,556			2.17	%			1,724			1.71	%
Total transactional income		2,612			2.22	%			1,724			1.71	%
Total	$	9,778			8.30	%		$	8,513			8.48	%
	Nine Months Ended March 31,
	2022							2021
	Income				Return (1)			Income				Return (1)
	(Dollars in thousands)
Regularly scheduled interest and accretion	$	21,379			6.29	%		$	20,466			6.95	%
Transactional income:
Gain on real estate owned		31			0.00	%			-			0.00	%
Accelerated accretion and loan fees		8,504			2.51	%			5,676			1.93	%
Total transactional income		8,535			2.51	%			5,676			1.93	%
Total	$	29,914			8.80	%		$	26,142			8.88	%

(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales and gains on real estate owned recorded during the period divided by the average invested balance, which includes purchased loans held for sale, 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.   Noninterest income decreased by $34.1 million for the quarter ended March 31, 2022, compared to the quarter ended March 31, 2021, principally due to the following:

• A decrease in gain on sale of PPP loans of $33.0 million, due to the sale of PPP loans with a total principal balance of $2.14 billion, which resulted in a net gain based on the recognition of net deferred fees in the quarter ended March 31, 2021 as compared to no sales in the quarter ended March 31, 2022; and
• A decrease in correspondent fee income of $1.0 million from the recognition of correspondent fees and net servicing income. Correspondent income for the quarters ended March 31, 2022 and 2021 is comprised of the following components:

	Three Months Ended March 31,
	2022				2021
		(In thousands)
Correspondent Fee	$	1,087			$	1,098
Amortization of Purchased Accrued Interest		1,690				922
Earned Net Servicing Interest		2,193				3,950
Total	$	4,970			$	5,970

In addition to the net servicing interest income, a summary of PPP loans purchased by Loan Source and related amounts that the Bank will earn over the expected life of the loans is as follows:

Quarter		PPP LoansPurchased byLoan Source(3)				CorrespondentFee				PurchasedAccrued Interest(1)				Total(2)
(In thousands)
Q4 FY 2020		$	1,272,900			$	2,891			$	688			$	3,579
Q1 FY 2021			2,112,100				5,348				2,804				8,152
Q2 FY 2021			1,333,500				495				3,766				4,261
Q3 FY 2021			2,141,900				-				598				598
Q4 FY 2021			4,371,000				171				2,703				2,874
Q1 FY 2022			6,300				-				1				1
Total		$	11,237,700			$	8,905			$	10,560			$	19,465
Less amounts recognized in Q3 FY 22							(1,087	)			(1,690	)			(2,777		)
Less amounts recognized in previous quarters							(6,255	)			(6,193	)			(12,448		)
Amount remaining to be recognized						$	1,563			$	2,677			$	4,240

(1) - The Bank's share(2) - Expected to be recognized into income over life of loans(3) - Loan Source’s ending PPP loan balance was $2.79 billion as of March 31, 2022

In addition to the decreases above:

• An increase in unrealized loss on equity securities of $159 thousand.

3.   Noninterest expense increased by $1.8 million for the quarter ended March 31, 2022 compared to the quarter ended March 31, 2021, primarily due to the following:

• An increase in salaries and employee benefits expense of $2.1 million, primarily due to a decrease in deferred salaries contra-expense related to PPP originations in the quarter ended March 31, 2021, partially offset by a decrease in bonus expense, due to a non-recurring increase in bonus expense in the quarter ended March 31, 2021 attributable to the high level of PPP originations and sales; and
• An increase in other noninterest expense of $175 thousand, primarily due to a $184 thousand decrease in recovery on the SBA servicing asset; partially offset by,
• A decrease in loan expense of $403 thousand, due to decreases in real estate owned (“REO”) expense and collection legal expense due to reimbursements, partially offset by an increase in other collection expense; and
• A decrease in data processing fees of $135 thousand, primarily due to decreases in IT professional implementation expenses and computer service fees, partially offset by increases in software license expense and monitoring and support expense.

4.   Income tax expense decreased by $9.8 million to $4.7 million, or an effective tax rate of 30.6%, for the quarter ended March 31, 2022, compared to $14.5 million, or an effective tax rate of 29.8%, for the quarter ended March 31, 2021. The decrease in income tax expense is due to the decrease in pre-tax income. The increase in the effective tax rate from March 31, 2021 is primarily due to changes in state tax apportionment.

As of March 31, 2022, nonperforming assets totaled $17.9 million, or 1.14% of total assets, compared to $20.4 million, or 0.94% of total assets, as of June 30, 2021. The decrease was primarily due to the sale of three REO properties totaling $1.7 million and the paydown of one nonperforming National Lending originated loan totaling $1.0 million during the nine months ended March 31, 2022.

As of March 31, 2022, past due loans totaled $13.1 million, or 1.07% of total loans, compared to past due loans totaling $11.3 million, or 1.08% of total loans, as of June 30, 2021. The increase was primarily due to two National Lending purchased loans totaling $2.6 million that became past due, partially offset by the paydown of one National Lending originated loan totaling $1.0 million during the nine months ended March 31, 2022.

As of March 31, 2022, the Bank’s Tier 1 leverage capital ratio was 16.2%, compared to 13.6% at June 30, 2021, and the Total capital ratio was 20.6% at March 31, 2022, compared to 24.3% at June 30, 2021. Capital ratios were primarily affected by increased earnings and decreased assets, while the Total capital ratio was negatively impacted by the redemption of the subordinated debt on July 1, 2021.

Investor Call InformationRick Wayne, Chief Executive Officer, Jean-Pierre Lapointe, Chief Financial Officer, and Pat Dignan, Executive Vice President and Chief Credit Officer of Northeast Bank, will host a conference call to discuss third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, April 26th. Investors can access the call by dialing 866.374.5140 and entering the following PIN: 69980912#. 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 BankNortheast Bank (NASDAQ: NBN) is a full-service bank headquartered in Portland, Maine. We offer personal and business banking services to the Maine market via eight 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 MeasuresIn 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, efficiency ratio, net interest margin excluding PPP, and net interest margin excluding PPP and collection account. 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. 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, the ongoing negative impacts and disruptions of the ongoing COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; 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 our loans; changes in customer behavior due to changing political, business and economic conditions or legislative or regulatory initiatives; turbulence in the capital and debt markets; changes in interest rates and real estate values; increases in loan defaults and charge-off rates; decreases in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; competitive pressures from other financial institutions; operational risks including, but not limited to, 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 Federal Deposit Insurance Corporation. 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)
	March 31, 2022				June 30, 2021
Assets
Cash and due from banks	$	2,319			$	2,850
Short-term investments		223,492				1,007,641
Total cash and cash equivalents		225,811				1,010,491
Available-for-sale debt securities, at fair value		55,723				59,737
Equity securities, at fair value		6,955				7,230
Total investment securities		62,678				66,967
Loans:
Commercial real estate		838,296				725,287
Commercial and industrial		337,061				257,604
Residential real estate		56,180				56,591
Consumer		788				1,142
Total loans		1,232,325				1,040,624
Less: Allowance for loan losses		5,816				7,313
Loans, net		1,226,509				1,033,311
Premises and equipment, net		9,493				11,271
Real estate owned and other repossessed collateral, net		-				1,639
Federal Home Loan Bank stock, at cost		1,282				1,209
Loan servicing rights, net		1,696				2,061
Bank-owned life insurance		17,815				17,498
Other assets		20,832				29,955
Total assets	$	1,566,116			$	2,174,402
Liabilities and Shareholders' Equity
Deposits:
Demand	$	381,866			$	972,495
Savings and interest checking		495,800				325,062
Money market		272,614				287,033
Time		117,842				277,840
Total deposits		1,268,122				1,862,430
Federal Home Loan Bank advances		15,000				15,000
Subordinated debt		-				15,050
Lease liability		4,862				6,061
Other liabilities		30,663				43,470
Total liabilities		1,318,647				1,942,011
Commitments and contingencies		-				-
Shareholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares
issued and outstanding at March 31, 2022 and June 30, 2021		-				-
Voting common stock, $1.00 par value, 25,000,000 shares authorized;
7,727,312 and 8,150,480 shares issued and outstanding at
March 31, 2022 and June 30, 2021, respectively		7,727				8,151
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;
No shares issued and outstanding at March 31, 2022 and June 30, 2021		-				-
Additional paid-in capital		48,159				64,420
Retained earnings		192,759				161,132
Accumulated other comprehensive loss		(1,176	)			(1,312	)
Total shareholders' equity		247,469				232,391
Total liabilities and shareholders' equity	$	1,566,116			$	2,174,402

NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
	Three Months Ended March 31,								Nine Months Ended March 31,
	2022				2021				2022				2021
Interest and dividend income:
Interest and fees on loans	$	21,873			$	20,893			$	63,061			$	57,106
Interest on available-for-sale securities		65				158				235				641
Other interest and dividend income		73				110				365				252
Total interest and dividend income		22,011				21,161				63,661				57,999
Interest expense:
Deposits		916				1,803				3,408				7,390
Federal Home Loan Bank advances		122				145				377				395
Paycheck Protection Program Liquidity Facility		-				300				-				302
Subordinated debt		-				282				-				845
Obligation under capital lease agreements		21				28				70				84
Total interest expense		1,059				2,558				3,855				9,016
Net interest and dividend income before provision for loan losses		20,952				18,603				59,806				48,983
Provision (credit) for loan losses		(287	)			(211	)			(1,582	)			531
Net interest and dividend income after provision for loan losses		21,239				18,814				61,388				48,452
Noninterest income:
Fees for other services to customers		476				441				1,236				1,427
Gain on sales of PPP loans		-				33,010				86				34,124
Gain on sales of residential loans held for sale		-				4				-				105
Net unrealized loss on equity securities		(258	)			(99	)			(332	)			(115	)
Gain (loss) on real estate owned, other repossessed collateral and premises and equipment, net		56				-				55				(344	)
Correspondent fee income		4,970				5,970				18,842				16,798
Bank-owned life insurance income		105				105				317				318
Other noninterest income		59				38				97				69
Total noninterest income		5,408				39,469				20,301				52,382
Noninterest expense:
Salaries and employee benefits		7,258				5,113				22,226				17,436
Occupancy and equipment expense		916				940				2,667				2,914
Professional fees		540				599				1,455				1,405
Data processing fees		1,167				1,302				3,341				3,392
Marketing expense		160				130				511				290
Loan acquisition and collection expense		452				855				2,911				2,368
FDIC insurance premiums		98				119				298				324
Other noninterest expense		810				578				2,518				1,868
Total noninterest expense		11,401				9,636				35,927				29,997
Income before income tax expense		15,246				48,647				45,762				70,837
Income tax expense		4,659				14,485				13,895				20,705
Net income	$	10,587			$	34,162			$	31,867			$	50,132
Weighted-average shares outstanding:
Basic		7,687,737				8,344,797				7,907,398				8,261,248
Diluted		7,790,963				8,421,247				7,998,221				8,347,882
Earnings per common share:
Basic	$	1.38			$	4.09			$	4.03			$	6.07
Diluted		1.36				4.06				3.98				6.01
Cash dividends declared per common share	$	0.01			$	0.01			$	0.03			$	0.03

 

NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
	Three Months Ended March 31,
	2022											2021
					Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate			Balance				Expense				Rate
Assets:
Interest-earning assets:
Investment securities	$	63,865			$	65			0.41	%		$	69,034			$	158			0.93	%
Loans (1) (2) (3)		1,196,830				21,873			7.41	%			1,460,340				20,893			5.80	%
Federal Home Loan Bank stock		1,280				6			1.90	%			2,410				6			1.01	%
Short-term investments (4)		226,820				67			0.12	%			387,198				104			0.11	%
Total interest-earning assets		1,488,795				22,011			6.00	%			1,918,982				21,161			4.47	%
Cash and due from banks		2,504											2,112
Other non-interest earning assets		46,022											62,127
Total assets	$	1,537,321										$	1,983,221
Liabilities & Shareholders’ Equity:
Interest-bearing liabilities:
NOW accounts	$	353,019			$	202			0.23	%		$	180,630			$	90			0.20	%
Money market accounts		256,074				192			0.30	%			316,116				347			0.45	%
Savings accounts		126,902				167			0.53	%			38,500				10			0.11	%
Time deposits		134,558				355			1.07	%			587,440				1,356			0.94	%
Total interest-bearing deposits		870,553				916			0.43	%			1,122,686				1,803			0.65	%
Federal Home Loan Bank advances		15,000				122			3.30	%			39,306				145			1.50	%
PPPLF advances		-				-			0.00	%			345,063				300			0.35	%
Subordinated debt		-				-			0.00	%			15,015				282			7.62	%
Capital lease obligations		5,022				21			1.70	%			6,588				28			1.72	%
Total interest-bearing liabilities		890,575				1,059			0.48	%			1,528,658				2,558			0.68	%
Non-interest bearing liabilities:
Demand deposits and escrow accounts		388,171											238,756
Other liabilities		14,220											20,850
Total liabilities		1,292,966											1,788,264
Shareholders' equity		244,355											194,957
Total liabilities and shareholders’ equity	$	1,537,321										$	1,983,221
Net interest income					$	20,952										$	18,603
Interest rate spread									5.52	%										3.79	%
Net interest margin (5)									5.71	%										3.93	%
Cost of funds (6)									0.34	%										0.59	%
(1) Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
(2) Includes loans held for sale.
(3) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4) Short-term investments include FHLB overnight deposits and other interest-bearing deposits.
(5) Net interest margin is calculated as net interest income divided by total interest-earning assets.
(6) 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)
	Nine Months Ended March 31,
	2022											2021
					Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate			Balance				Expense				Rate
Assets:
Interest-earning assets:
Investment securities	$	65,295			$	235			0.48	%		$	70,539			$	641			1.21	%
Loans (1) (2) (3)		1,129,874				63,061			7.43	%			1,121,744				57,106			6.78	%
Federal Home Loan Bank stock		1,237				19			2.05	%			1,725				51			3.94	%
Short-term investments (4)		330,722				346			0.14	%			232,237				201			0.12	%
Total interest-earning assets		1,527,128				63,661			5.55	%			1,426,245				57,999			5.42	%
Cash and due from banks		2,686											2,703
Other non-interest earning assets		50,751											47,581
Total assets	$	1,580,565										$	1,476,529
Liabilities & Shareholders’ Equity:
Interest-bearing liabilities:
NOW accounts	$	303,525			$	569			0.25	%		$	143,938			$	330			0.31	%
Money market accounts		265,639				591			0.30	%			312,797				1,259			0.54	%
Savings accounts		99,725				361			0.48	%			37,771				36			0.13	%
Time deposits		207,304				1,887			1.21	%			469,793				5,765			1.63	%
Total interest-bearing deposits		876,193				3,408			0.52	%			964,299				7,390			1.02	%
Federal Home Loan Bank advances		15,000				377			3.35	%			22,984				395			2.29	%
PPPLF advances		-				-			0.00	%			113,932				302			0.35	%
Subordinated debt		-				-			0.00	%			14,983				845			7.51	%
Capital lease obligations		5,431				70			1.72	%			5,793				84			1.93	%
Total interest-bearing liabilities		896,624				3,855			0.57	%			1,121,991				9,016			1.07	%
Non-interest bearing liabilities:
Demand deposits and escrow accounts		429,354											157,569
Other liabilities		14,596											17,527
Total liabilities		1,340,574											1,297,087
Shareholders' equity		239,991											179,442
Total liabilities and shareholders’ equity	$	1,580,565										$	1,476,529
Net interest income					$	59,806										$	48,983
Interest rate spread									4.98	%										4.35	%
Net interest margin (5)									5.22	%										4.58	%
Cost of funds (6)									0.39	%										0.94	%
(1) Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
(2) Includes loans held for sale.
(3) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4) Short-term investments include FHLB overnight deposits and other interest-bearing deposits.
(5) Net interest margin is calculated as net interest income divided by total interest-earning assets.
(6) 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
	March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Net interest income	$	20,952			$	20,055			$	18,799			$	18,102			$	18,603
Provision (credit) for loan losses		(287	)			(1,069	)			(226	)			(1,926	)			(211	)
Noninterest income		5,408				6,493				8,399				19,650				39,469
Noninterest expense		11,401				11,187				13,338				9,427				9,636
Net income		10,587				11,403				9,877				21,370				34,162
Weighted-average common shares outstanding:
Basic		7,687,737				7,952,938				8,132,131				8,318,689				8,344,797
Diluted		7,790,963				8,041,476				8,212,836				8,397,897				8,421,247
Earnings per common share:
Basic	$	1.38			$	1.43			$	1.21			$	2.57			$	4.09
Diluted		1.36				1.42				1.20				2.54				4.06
Dividends declared per common share	$	0.01			$	0.01			$	0.01			$	0.01			$	0.01
Return on average assets		2.79	%			2.86	%			2.41	%			4.55	%			6.99	%
Return on average equity		17.57	%			18.77	%			16.70	%			37.97	%			71.06	%
Net interest rate spread (1)		5.52	%			4.99	%			4.46	%			3.67	%			3.79	%
Net interest margin (2)		5.71	%			5.24	%			4.74	%			3.99	%			3.93	%
Net interest margin, excluding PPP (Non-GAAP) (3)		5.71	%			5.24	%			4.75	%			4.55	%			4.64	%
Net interest margin, excluding PPP and collection account (Non-GAAP) (4)		6.72	%			6.44	%			6.00	%			5.56	%			5.06	%
Efficiency ratio (non-GAAP) (5)		43.25	%			42.14	%			49.04	%			24.97	%			16.59	%
Noninterest expense to average total assets		3.01	%			2.80	%			3.26	%			2.01	%			1.97	%
Average interest-earning assets to average interest-bearing liabilities		167.20	%			168.71	%			174.98	%			173.30	%			125.53	%
	As of:
	March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Nonperforming loans:
Originated portfolio:
Residential real estate	$	621			$	611			$	619			$	696			$	643
Commercial real estate		6,608				7,963				6,644				5,756				4,790
Commercial and industrial		230				311				1,510				286				1,408
Consumer		12				20				39				43				23
Total originated portfolio		7,471				8,905				8,812				6,781				6,864
Total purchased portfolio		10,441				12,294				12,527				11,977				16,059
Total nonperforming loans		17,912				21,199				21,339				18,758				22,923
Real estate owned and other repossessed collateral, net		-				53				821				1,639				2,885
Total nonperforming assets	$	17,912			$	21,252			$	22,160			$	20,397			$	25,808
Past due loans to total loans		1.07	%			1.23	%			1.39	%			1.08	%			1.67	%
Nonperforming loans to total loans		1.45	%			1.79	%			1.99	%			1.80	%			2.29	%
Nonperforming assets to total assets		1.14	%			1.46	%			1.60	%			0.94	%			1.51	%
Allowance for loan losses to total loans		0.47	%			0.51	%			0.67	%			0.70	%			0.88	%
Allowance for loan losses to nonperforming loans		32.47	%			28.49	%			33.58	%			38.99	%			38.48	%
Commercial real estate loans to total capital (6)		252.90	%			260.40	%			232.10	%			215.38	%			223.09	%
Net loans to core deposits (7) (10)		97.19	%			102.53	%			98.96	%			55.71	%			76.99	%
Purchased loans to total loans, including held for sale		38.94	%			41.02	%			40.22	%			41.23	%			43.22	%
Equity to total assets		15.80	%			16.39	%			17.32	%			10.69	%			12.65	%
Common equity tier 1 capital ratio		20.13	%			20.27	%			22.03	%			22.16	%			21.07	%
Total capital ratio		20.60	%			20.79	%			22.69	%			24.29	%			23.39	%
Tier 1 leverage capital ratio		16.17	%			15.19	%			14.83	%			13.63	%			14.32	%
Total shareholders’ equity	$	247,469			$	239,237			$	239,508			$	232,391			$	216,862
Less: Preferred stock		-				-				-				-				-
Common shareholders’ equity		247,469				239,237				239,508				232,391				216,862
Less: Intangible assets (8)		(1,696	)			(1,645	)			(1,906	)			(2,061	)			(2,149	)
Tangible common shareholders' equity (non-GAAP)	$	245,773			$	237,592			$	237,602			$	230,330			$	214,713
Common shares outstanding		7,727,312				7,815,566				8,172,776				8,150,480				8,344,797
Book value per common share	$	32.03			$	30.61			$	29.31			$	28.51			$	25.99
Tangible book value per share (non-GAAP) (9)		31.81				30.40				29.07				28.26				25.73
(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) Net interest margin excluding PPP removes the effects of the following: PPP loan interest income of $3 thousand, $2 thousand, $11 thousand, $884 thousand, and $2.6 million, PPPLF interest expense of $0, $0, $0, $98 thousand, and $300 thousand, and brokered CD interest expense of $0, $0, $0, $0, and $99 thousand, as well as PPP loan average balances of $462 thousand, $628 thousand, $1.4 million, $172.8 million, and $481.9 million, for the quarters ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021, and March 31, 2021, respectively.
(4) Net interest margin excluding PPP and collection account removes the PPP impact above and removes the effects of the cash held by the Bank from the correspondent’s collection account in short-term investments, which had an average balance of $244.0 million, $287.7 million, $334.3 million, $405.9 million, and $121.7 million and earned $60 thousand, $73 thousand, $84 thousand, $100 thousand, and $29 thousand in interest income for the quarters ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021, and March 31, 2021, respectively.
(5) The efficiency ratio represents noninterest expense divided by the sum of net interest income (before the loan loss provision) plus noninterest income.
(6) 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.
(7) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held for sale.
(8) Includes the loan servicing rights asset.
(9) Tangible book value per share represents total shareholders’ equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
(10) Net loans and total loans exclude PPP loans held for sale.

For More Information:Jean-Pierre Lapointe, Chief Financial OfficerNortheast Bank, 27 Pearl Street, Portland, ME 04101 207.786.3245 ext. 3220www.northeastbank.com