 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 common share, for the quarter ended June 30, 2020, compared to a net loss of 603 thousand, or 0.07 per diluted common 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 common share, for the year ended June 30, 2019. Earnings were positively impacted in the quarter ended June 30, 2020 by the sale of 457.6 million in Paycheck Protection Program PPP loans to The Loan Source, Inc. Loan Source which resulted in a pre-tax net gain of 9.7 million, or approximately 6.7 million net of tax. The quarter and year ended June 30, 2019 included 6.0 million and 6.4 million of non-recurring expenses after tax related to the Banks corporate reorganization, respectively. Excluding these non-recurring expenses, the Bank recorded net operating earnings of 5.4 million, or 0.59 per diluted common share, for the quarter ended June 30, 2019 and 20.3 million, or 2.20 per diluted common share, for the year ended June 30, 2019. We refer to results excluding these non-recurring items as net operating earnings.The Board of Directors declared a cash dividend of 0.01 per share, payable on August 28, 2020, to shareholders of record as of August 14, 2020.Discussing results, Rick Wayne, Chief Executive Officer, said We achieved record quarterly results, including diluted earnings per share of 1.33, a return on average equity of 28.4, a return on average assets of 3.1, and an efficiency ratio of 37.4. Additionally, we achieved a quarterly net interest margin, excluding the effects of PPP, of 5.3. We are proud of our participation in the Paycheck Protection Program, providing PPP loans to over 4,300 small businesses with tens of thousands of related jobs. We are excited for our correspondent banking relationship with Loan Source, in which we earn a correspondent fee when Loan Source purchases PPP loans and we subsequently share in net servicing income on such purchased PPP loans. Mr. Wayne continued, During the quarter, Loan Source purchased 1.3 billion of PPP loans, including 457.6 million of PPP loans from the Bank and approximately 815.3 million of PPP loans from lenders other than the Bank, which generated a correspondent fee for the Bank of 2.9 million. Subsequent to the quarter, Loan Source purchased an additional 1.6 billion of PPP loans, which generated an additional correspondent fee for the Bank of 5.6 million which will be recognized over the expected life of the loans. We will also receive one half of the net servicing income on the 2.9 billion PPP portfolio owned by Loan Source. To the extent Loan Source purchases additional PPP loans, the Bank will generate additional correspondent banking fees and receive its share of additional net servicing income.As of June 30, 2020, total assets were 1.26 billion, an increase of 103.8 million, or 9.0, from total assets of 1.15 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 three months and year ended June 30, 2020: Loan Portfolio Changes Three Months Ended June 30, 2020 June 30, 2020 Balance March 31, 2020 Balance Change Change Dollars in thousands LASG Purchased386,624 395,944 9,320 2.35 LASG Originated 467,612 512,964 45,352 8.84 SBA 47,095 48,306 1,211 2.51 Community Banking 70,271 76,706 6,435 8.39 Total971,602 1,033,920 62,318 6.03 Year Ended June 30, 2020 June 30, 2020 Balance June 30, 2019 Balance Change Change Dollars in thousands LASG Purchased386,624 326,640 59,984 18.36 LASG Originated 467,612 493,413 25,801 5.23 SBA 47,095 63,053 15,958 25.31 Community Banking 70,271 91,954 21,683 23.58 Total971,602 975,060 3,458 0.35 Loans generated by the Banks Loan Acquisition and Servicing Group LASG for the quarter ended June 30, 2020 totaled 46.3 million, which consisted of 12.7 million of purchased loans, at an average price of 87.2 of unpaid principal balance, and 33.6 million of originated loans. Residential loan production sold in the secondary market totaled 2.1 million for the quarter.Additionally, the Bank originated 487.5 million of loans in connection with the PPP. The Bank subsequently sold PPP loans with a total principal balance of 457.6 million during the quarter ended June 30, 2020, recording a net gain of 9.7 million on the sale primarily resulting from the recognition of net deferred fees, offset by purchase price discounts. The remaining 29.9 million of PPP loans are classified as held for sale at June 30, 2020, offset by a valuation adjustment to reflect the fair value of the loans and unamortized net deferred fees.An overview of the Banks LASG portfolio follows: LASG Portfolio Three Months Ended June 30, 2020 2019 Purchased Originated Total LASG Purchased Originated Total LASG Dollars in thousands Loans purchased or originated during the period: Unpaid principal balance 14,611 33,612 48,223 49,948 51,830 101,778 Net investment basis 12,744 33,612 46,356 47,107 51,830 98,937 Loan returns during the period: Yield 9.89 7.13 8.34 12.27 7.75 9.53 Total Return on Purchased Loans 1 9.89 7.13 8.34 12.27 7.75 9.53 Year Ended June 30, 2020 2019 Purchased Originated Total LASG Purchased Originated Total LASG Dollars in thousands Loans purchased or originated during the period: Unpaid principal balance 182,588 221,484 404,072 144,372 271,179 415,551 Net investment basis 171,262 221,484 392,746 135,848 271,179 407,027 Loan returns during the period: Yield 9.86 7.43 8.47 10.38 7.67 8.80 Total Return on Purchased Loans 1 9.97 7.43 8.51 10.57 7.67 8.88 Total loans as of period end: Unpaid principal balance421,659 467,612 889,271 360,472 493,413 853,885 Net investment basis 386,624 467,612 854,236 326,640 493,413 820,053 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. 1. Short-term investments increased by 86.4 million, or 158.8, from June 30, 2019, primarily due to a 70.0 million increase in deposits. 2. Deposits increased by 70.0 million, or 7.4, from June 30, 2019, attributable to increases 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 demand deposits of 26.0 million, or 37.8, partially offset by a decrease in time deposits of 24.3 million, or 4.8. 3. Shareholders equity increased by 11.2 million, or 7.3, from June 30, 2019, primarily due to net income of 22.7 million, partially offset by the repurchase of 853,098 shares at a weighted average price per share of 13.45, which resulted in an 11.5 million reduction in shareholders equity.Net income 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 earnings increased by 5.8 million to 11.2 million for the quarter ended June 30, 2020, compared to net operating earnings of 5.4 million for the quarter ended June 30, 2019. 1. Net interest and dividend income before provision 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 primarily due to lower deposit rates, higher average loan balances, and decreased interest expense on subordinated debt from the redemption of trust preferred securities in May 2019, partially offset by increased interest expense in connection with the Banks participation in the Paycheck Protection Program Liquidity Facility PPPLF used to fund PPP originations during the quarter, and lower rates earned on loans and short-term investments.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, 2020 2019 Average Interest Average Interest Balance 1 Income Yield Balance 1 Income Yield Dollars in thousands Community Banking74,059 975 5.30 99,007 1,272 5.15 SBA National 48,191 642 5.36 66,126 1,194 7.24 SBA PPP 223,804 1,561 2.81 - - 0.00 LASG: Originated 492,612 8,738 7.13 482,213 9,317 7.75 Purchased 386,212 9,495 9.89 313,515 9,588 12.27 Total LASG 878,824 18,233 8.34 795,728 18,905 9.53 Total 1,224,878 21,411 7.03 960,861 21,371 8. 