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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): July 22, 2022

 

NORTHEAST COMMUNITY BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland 001-40589 86-3173858
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)

 

325 Hamilton Avenue, White Plains, New York 10601

(Address of principal executive offices) (Zip Code)

 

(914) 684-2500

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share NECB The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

Item 2.02Results of Operations and Financial Condition.

 

On July 22, 2022, NorthEast Community Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the three and six months ended June 30, 2022. A copy of the Company’s press release is attached as Exhibit 99.1 and is furnished herewith.

 

The information contained in this Item 2.02 and in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific references in such a filing.

 

Item 8.01Other Events.

 

On July 27, 2022, the Company issued a press release announcing that its Board of Directors has authorized a stock repurchase program to acquire up to 1,637,794 shares, or 10%, of the Company's currently issued and outstanding common stock commencing on August 1, 2022. A copy of the Company’s press release is attached as Exhibit 99.2 and is incorporated by reference herein.

 

Item 9.01Financial Statements and Other Exhibits.

 

(d)Exhibits

 

NumberDescription
   
99.1Press Release dated July 22, 2022
   
99.2Press Release dated July 27, 2022
   
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    NORTHEAST COMMUNITY BANCORP, INC.
     
Date: July 28, 2022 By: /s/ Kenneth A. Martinek
    Kenneth A. Martinek
    Chairman and Chief Executive Officer

 

 

 

 

Exhibit 99.1

 

NORTHEAST COMMUNITY BANCORP, INC. REPORTS RESULTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022

 

White Plains, New York, July 22, 2022 – NorthEast Community Bancorp, Inc. (Nasdaq: NECB) (the “Company”), the parent holding company of NorthEast Community Bank (the “Bank”), reported net income of $5.4 million and $9.0 million, or $0.35 and $0.58 per basic and diluted common share, for the three months and six months ended June 30, 2022 compared to net income of $3.7 million and $7.0 million, or $0.23 and $0.43 per basic and diluted common share, for the three months and six months ended June 30, 2021.

 

Kenneth A. Martinek, NorthEast Community Bancorp’s Chairman of the Board and Chief Executive Officer, stated “We are pleased to report another quarter of strong earnings due to the strong performance of our loan portfolio. Despite the continuing COVID-19 pandemic and the recent increase in interest rates, loan demand remained strong with originations and outstanding commitments increasing quarter over quarter. Our commitments, loans-in-process, and standby letters of credit outstanding totaled $879.0 million at June 30, 2022 compared to $749.0 million at December 31, 2021. The performance of our loan portfolio remains strong with only two non-residential loans secured by the same property to one borrower that are on non-accrual and in foreclosure due to a maturity default at June 30, 2022. At this time, we have no loans on deferral as a result of the COVID-19 pandemic. As has been in the past, construction lending for affordable housing units in high demand high absorption areas continues to be our focus.”

 

Highlights for the three months and six months ended June 30, 2022 are as follows:

 

·Net income increased by $1.7 million and $2.0 million, or 44.9% and 29.7%, for the three months and six months ended June 30, 2022 compared to the same periods in the prior year.

 

·Net interest income increased by $3.2 million and $4.7 million, or 30.5% and 22.8%, for the three months and six months ended June 30, 2022 compared to the same periods in 2021.

 

·Asset quality metrics continued to remain strong with non-performing assets to total assets of 0.23% and 0.16% at June 30, 2022 and at December 31, 2021. Our allowance for loan losses totaled $5.5 million, or 0.53% of total loans at June 30, 2022 compared to $5.2 million, or 0.54% of total loans at December 31, 2021.

 

·In accordance with the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), since March 2020, we granted pandemic-related loan payment deferrals to 196 loans totaling $190.9 million at the time payment deferral was requested. At June 30, 2022, we had no loans in deferral status.

 

Balance Sheet Summary

 

Total assets decreased by $3.5 million, or 0.3%, to $1.2 billion at June 30, 2022, from $1.2 billion at December 31, 2021. The decrease in assets was primarily due to decreases in cash and cash equivalents of $66.0 million and equity securities of $1.1 million, partially offset by increases in net loans of $50.6 million, securities held-to-maturity of $9.3 million, and premises and equipment of $2.3 million.

 

Cash and cash equivalents decreased by $66.0 million, or 43.4%, to $86.2 million at June 30, 2022 from $152.3 million at December 31, 2021. The decrease in cash and cash equivalents was a result of cash being deployed to fund an increase in net loans of $50.6 million, an increase in securities held-to-maturity of $9.3 million, an increase in property and equipment of $2.3 million due primarily to the purchase of property and equipment for a new branch office, and a reduction in FHLB advances of $7.0 million.

 

Equity securities decreased by $1.1 million, or 5.3%, to $18.9 million at June 30, 2022 from $19.9 million at December 31, 2021. The decrease in equity securities was primarily attributable to market depreciation of $1.1 million as market interest rates increased during the six months ended June 30, 2022.

 

Securities held-to-maturity increased by $9.3 million, or 52.1%, to $27.2 million at June 30, 2022 from $17.9 million at December 31, 2021 due primarily to the purchases of securities, partially offset by maturities and pay-downs.

 

 

 

 

Loans, net of the allowance for loan losses, increased by $50.6 million, or 5.2%, to $1.0 billion at June 30, 2022 from $968.1 million at December 31, 2021. The increase in loans, net of the allowance for loan losses, was primarily due to loan originations of $307.4 million during the six months ended June 30, 2022, consisting primarily of $266.3 million in construction loans with respect to which approximately 32.1% of the funds were disbursed at loan closings, with the remaining funds to be disbursed over the terms of the construction loans.

 

Loan originations resulted in a net increase of $97.0 million in construction loans. The increase in our loan portfolio was partially offset by decreases in non-residential loans of $23.4 million, commercial and industrial loans of $15.8 million, mixed-use loans of $5.2 million, residential loans of $1.4 million, and multi-family loans of $560,000, coupled with normal pay-downs and principal reductions.

 

Premises and equipment increased by $2.3 million, or 9.7%, to $26.2 million at June 30, 2022 from $23.9 million at December 31, 2021 due to the acquisition of property and equipment for a new branch site located in Bloomingburg, New York.

 

Investments in restricted stock decreased by $331,000, or 21.1%, to $1.2 million at June 30, 2022 from $1.6 million at December 31, 2021 due primarily to a reduction in mandatory Federal Home Loan Bank stock in connection with the maturity/pay-off of $7.0 million in advances during the quarter ended June 30, 2022.

 

Accrued interest receivable increased by $949,000, or 22.2%, to $5.2 million at June 30, 2022 from $4.3 million at December 31, 2021 due to an increase in the loan portfolio.

 

Foreclosed real estate was $2.0 million at June 30, 2022 and December 31, 2021.

 

Right of use assets — operating decreased by $268,000, or 10.5%, to $2.3 million at June 30, 2022 from $2.6 million at December 31, 2021, primarily due to amortization.

 

Other assets increased by $793,000, or 16.9%, to $5.5 million at June 30, 2022 from $4.7 million at December 31, 2021 due to increases in suspense accounts of $406,000, tax assets of $326,000, and prepaid expenses of $84,000.

 

Total deposits increased by $1.4 million, or 0.2%, to $928.6 million at June 30, 2022 from $927.2 million at December 31, 2021. The increase was primarily due to an increase in non-interest bearing demand deposits of $31.6 million, or 9.6% and an increase in savings account balances of $24.5 million, or 13.3%. These increases were partially offset by a decrease in certificates of deposit of $48.7 million, or 16.6% and a decrease in NOW/money market accounts of $6.1 million, or 5.1%, from December 31, 2021 to June 30, 2022.

 

Federal Home Loan Bank advances decreased by $7.0 million, or 25.0%, to $21.0 million at June 30, 2022 from $28.0 million at December 31, 2021.

 

Advance payments by borrowers for taxes and insurance decreased by $147,000, or 7.8%, to $1.7 million at June 30, 2022 from $1.9 million at December 31, 2021 due primarily to the payment of taxes for borrowers, partially offset by the accumulation of tax payments from borrowers.

 

Lease liability – operating decreased by $260,000, or 10.0%, to $2.3 million at June 30, 2022 from $2.6 million at December 31, 2021, primarily due to amortization.

 

Accounts payable and accrued expenses decreased by $2.5 million, or 18.1%, to $11.1 million at June 30, 2022 from $13.5 million at December 31, 2021 due primarily to a decrease in suspense accounts for loan closings of $1.6 million and a decrease in accrued expenses of $1.2 million.

 

Stockholders’ equity increased by $4.9 million, or 2.0% to $256.3 million at June 30, 2022, from $251.4 million at December 31, 2021. The increase in stockholders’ equity was due to net income of $9.0 million for the six months ended June 30, 2022, a reduction of $504,000 in unearned employee stock ownership plan shares, and $41,000 in other comprehensive income, partially offset by dividends paid and declared of $4.7 million.

 

Net Interest Income

 

Net interest income totaled $13.5 million for the three months ended June 30, 2022, as compared to $10.4 million for the three months ended June 30, 2021. The increase in net interest income of $3.2 million, or 30.5%, was primarily due to an increase in interest income combined with a decrease in interest expense.

 

 

 

 

The increase in interest income is attributable to increases in loans, investment securities, equity securities, and interest-bearing deposits as we continued to deploy the proceeds raised in our July 2021 second-step conversion. The increase in interest income is also attributable to an increase in interest rates during the three months ended June 30, 2022.

 

The decrease in interest expense is attributable to a decrease in the balances and cost of funds on our certificates of deposits and on our borrowed money, partially offset by increases in the balances and cost of funds in our interest-bearing demand deposits and our savings and club accounts.

 

In this regard, total interest income increased by $3.2 million, or 27.1%, to $14.8 million for the three months ended June 30, 2022 from $11.7 million for the three months ended June 30, 2021 due to an increase in the average balance of interest earning assets of $257.0 million, or 27.8%, to $1.2 billion for the three months ended June 30, 2022 from $924.9 million for the three months ended June 30, 2021, partially offset by a decrease in the yield on interest earning assets by 3 basis points from 5.05% for the three months ended June 30, 2021 to 5.02% for the three months ended June 30, 2022.

 

Interest expense decreased by $2,000, or 0.2%, to $1.3 million for the three months ended June 30, 2022 from $1.3 million for the three months ended June 30, 2021 due to a decrease in the cost of interest bearing liabilities by 7 basis points from 0.91% for the three months ended June 30, 2021 to 0.84% for the three months ended June 30, 2022, partially offset by an increase in average interest bearing liabilities of  $45.4 million, or 8.0%, to $613.6 million for the three months ended June 30, 2022 from $568.3 million for the three months ended June 30, 2021.

 

Net interest margin increased by 9 basis points, or 2.1%, during the three months ended June 30, 2022 to 4.58% compared to 4.49% during the three months ended June 30, 2021.

 

Net interest income totaled $25.5 million for the six months ended June 30, 2022, as compared to $20.7 million for the six months ended June 30, 2021. The increase in net interest income of $4.7 million, or 22.8%, was primarily due to an increase in interest income combined with a decrease in interest expense.

 

The increase in interest income is attributable to increases in loans, investment securities, equity securities, and interest-bearing deposits as we continued to deploy the proceeds raised in our July 2021 second-step conversion. The increase in interest income is also attributable to an increase in interest rates during the six months ended June 30, 2022.

 

The decrease in interest expense is attributable to a decrease in the balances and cost of funds on our certificates of deposits and on our borrowed money, partially offset by increases in the balances and cost of funds in our interest-bearing demand deposits and our savings and club accounts.

 

In this regard, interest income increased by $4.6 million, or 19.6%, to $28.1 million for the six months ended June 30, 2022 from $23.5 million for the six months ended June 30, 2021 due to an increase in the average balance of interest earning assets of $262.5 million, or 28.7%, to $1.2 billion for the six months ended June 30, 2022 from $913.5 million for the six months ended June 30, 2021, partially offset by a decrease in the yield on interest earning assets by 36 basis points from 5.14% for the six months ended June 30, 2021 to 4.78% for the six months ended June 30, 2022.

 

Interest expense decreased by $119,000, or 4.3%, to $2.6 million for the six months ended June 30, 2022 from $2.8 million for the six months ended June 30, 2021 due to a decrease in the cost of interest bearing liabilities by 12 basis points from 0.97% for the six months ended June 30, 2021 to 0.85% for the six months ended June 30, 2022, partially offset by an increase in average interest bearing liabilities of  $52.6 million, or 9.2%, to $624.4 million for the six months ended June 30, 2022 from $571.8 million for the six months ended June 30, 2021.

 

Net interest margin decreased by 21 basis points, or 4.6%, during the six months ended June 30, 2022 to 4.33% compared to 4.54% during the six months ended June 30, 2021.

 

Provision for Loan Losses

 

The Company recorded no loan loss provision for the three months ended June 30, 2022 and June 30, 2021. We charged-off $7,000 and $9,000 during the three months ended June 30, 2022 and June 30, 2021, respectively, against various unpaid overdrafts in our demand deposit accounts. We recorded recoveries of $146,000 and $1,000 during the three months ended June 30, 2022 and June 30, 2021, respectively.

 

The Company recorded no loan loss provision for the six months ended June 30, 2022 compared to a loan loss provision of $17,000 for the six months ended June 30, 2021. We charged-off $17,000 and $20,000 during the six months ended June 30, 2022 and June 30, 2021, respectively, against various unpaid overdrafts in our demand deposit accounts. We recorded recoveries of $242,000 and $9,000 during the six months ended June 30, 2022 and June 30, 2021, respectively. The recoveries of $242,000 during the six months ended June 30, 2022 comprised of recoveries of $146,000 regarding a previously charged-off multi-family property, $53,000 regarding a previously charged-off non-residential property, and $43,000 regarding a previously charged-off mixed-use property.

 

 

 

 

Non-Interest Income

 

Non-interest income for the three months ended June 30, 2022 was $536,000 compared to non-interest income of $778,000 for the three months ended June 30, 2021. The decrease in total non-interest income was primarily due to an unrealized loss of $430,000 on equity securities during the three months ended June 30, 2022 compared to an unrealized gain of $93,000 on equity securities during the three months ended June 30, 2021. The unrealized loss of $430,000 on equity securities was primarily due to a rising interest rate environment and the Federal Reserve’s interest rate increases during the June 30, 2022 quarter.

 

The decrease in total non-interest income was partially offset by an increase of $234,000 in other loan fees and service charges, an increase of $39,000 on gain from the sale of fixed assets, an increase of $10,000 in other non-interest income, an increase of $2,000 in bank-owned life insurance income, and a decrease of $4,000 in investment advisory fees.

 

Non-interest income for the six months ended June 30, 2022 was $594,000 compared to non-interest income of $1.2 million for the six months ended June 30, 2021. The decrease in total non-interest income was primarily due to an unrealized loss of $1.1 million on equity securities during the six months ended June 30, 2022 compared to an unrealized loss of $62,000 on equity securities during the six months ended June 30, 2021. The unrealized loss of $1.1 million on equity securities was primarily due to a rising interest rate environment and the Federal Reserve’s interest rate increases during the six months ended June 30, 2022.

 

The decrease in total non-interest income was partially offset by an increase of $303,000 in other loan fees and service charges, an increase of $39,000 on gain from the sale of fixed assets, an increase of $15,000 in investment advisory fees, an increase of $16,000 in other non-interest income, and an increase of $2,000 in bank-owned life insurance income.

 

Non-Interest Expense

 

Non-interest expense increased by $698,000, or 11.0%, to $7.0 million for the three months ended June 30, 2022 from $6.3 million for the three months ended June 30, 2021. The increase resulted primarily from increases of $305,000 in other operating expense, $142,000 in outside data processing expense, $101,000 in salaries and employee benefits, $90,000 in occupancy expense, $38,000 in equipment expense, and $27,000 in advertising expense, partially offset by a decrease of $5,000 in real estate owned expense.

 

Non-interest expense increased by $1.4 million, or 10.6%, to $14.2 million for the six months ended June 30, 2022 from $12.9 million for the six months ended June 30, 2021. The increase resulted primarily from increases of $759,000 in other operating expense, $272,000 in salaries and employee benefits, $121,000 in occupancy expense, $91,000 in outside data processing expense, $78,000 in equipment expense, and $58,000 in advertising expense, partially offset by a decrease of $16,000 in real estate owned expense.

 

Income Taxes

 

We recorded income tax expense of $1.7 million and $1.1 million for the three months ended June 30, 2022 and 2021, respectively. For the three months ended June 30, 2022, we had approximately $185,000 in tax exempt income, compared to approximately $174,000 in tax exempt income for the three months ended June 30, 2021. Our effective income tax rates were 23.7% and 23.2% for the three months ended June 30, 2022 and 2021, respectively.

 

We recorded income tax expense of $2.8 million and $2.1 million for the six months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022, we had approximately $370,000 in tax exempt income, compared to approximately $336,000 in tax exempt income for the six months ended June 30, 2021. Our effective income tax rates were 23.6% and 23.2% for the six months ended June 30, 2022 and 2021, respectively.

 

Asset Quality

 

Non-performing assets totaled $2.8 million at June 30, 2022 compared to $2.0 million at December 31, 2021. We had two non-performing non-residential loans secured by the same property to one borrower that are on non-accrual and in foreclosure due to a maturity default at June 30, 2022 compared to no non-performing loans at December 31, 2021. Our ratio of non-performing assets to total assets remained low at 0.23% at June 30, 2022 and at 0.16% at December 31, 2021.

 

 

 

 

Based on a review of the loans that were in the loan portfolio at June 30, 2022, management believes that the allowance for loan losses is maintained at a level that represents its best estimate of inherent losses in the loan portfolio that were both probable and reasonably estimable.

 

The Company’s allowance for loan losses totaled $5.5 million, or 0.53% of total loans as of June 30, 2022, compared to $5.2 million, or 0.54% of total loans as of December 31, 2021.

 

Capital

 

The Company’s total stockholder’s equity to assets was 20.98% as of June 30, 2022. At June 30, 2022, the Company had the ability to borrow $24.1 million from the Federal Home Loan Bank of New York.

 

The Bank’s capital position remains strong relative to current regulatory requirements and the Bank is considered a well-capitalized institution under the Prompt Corrective Action framework. As of June 30, 2022, the Bank had a tier 1 leverage capital ratio of 16.25% and a total risk-based capital ratio of 14.52%.

 

About NorthEast Community Bancorp

 

NorthEast Community Bancorp, headquartered at 325 Hamilton Avenue, White Plains, New York 10601, is the holding company for NorthEast Community Bank, which conducts business through its eleven branch offices located in Bronx, New York, Orange, and Rockland Counties in New York and Essex, Middlesex, and Norfolk Counties in Massachusetts and three loan production offices located in New City, New York, White Plains, New York, and Danvers, Massachusetts. For more information about NorthEast Community Bancorp and NorthEast Community Bank, please visit www.necb.com.

 

Forward Looking Statement

 

This press release contains certain forward-looking statements. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include, but are not limited to, changes in market interest rates, regional and national economic conditions (including higher inflation and its impact on regional and national economic conditions), the effect of the COVID-19 pandemic (including its impact on NorthEast Community Bank’s business operations and credit quality, on our customers and their ability to repay their loan obligations and on general economic and financial market conditions), legislative and regulatory changes, monetary and fiscal policies of the United States government, including policies of the United States Treasury and the Federal Reserve Board, the quality and composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in NorthEast Community Bank’s market area, changes in the real estate market values in NorthEast Community Bank’s market area and changes in relevant accounting principles and guidelines. Additionally, other risks and uncertainties may be described in our annual and quarterly reports filed with the U.S. Securities and Exchange Commission (the “SEC”), which are available through the SEC’s website located at www.sec.gov. These risks and uncertainties should be considered in evaluating any forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

 

CONTACT:Kenneth A. Martinek

Chairman and Chief Executive Officer

 

PHONE:(914) 684-2500

 

 

 

 

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

 

   June 30,   December 31, 
   2022   2021 
   (In thousands, except share 
   and per share amounts) 
ASSETS          
Cash and amounts due from depository institutions  $14,302   $8,344 
Interest-bearing deposits   71,925    143,925 
Total Cash and cash equivalents   86,227    152,269 
Certificates of deposit   100    100 
Equity securities   18,879    19,943 
Securities available-for-sale, at fair value   1    1 
Securities held-to-maturity (fair value of  $24,385 and $17,620, respectively)   27,189    17,880 
Loans receivable   1,023,622    972,851 
Deferred loan costs, net   527    484 
Allowance for loan losses   (5,467)   (5,242)
Net loans   1,018,682    968,093 
Premises and equipment, net   26,215    23,907 
Investments in restricted stock, at cost   1,238    1,569 
Bank owned life insurance   25,588    25,291 
Accrued interest receivable   5,232    4,283 
Goodwill   651    651 
Real estate owned   1,996    1,996 
Property held for investment   1,463    1,481 
Right of Use Assets – Operating   2,296    2,564 
Right of Use Assets – Financing   357    359 
Other assets   5,476    4,683 
Total assets  $1,221,590   $1,225,070 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Deposits:          
Non-interest bearing  $362,484   $330,853 
Interest bearing   566,116    596,311 
Total deposits   928,600    927,164 
Advance payments by borrowers for taxes and insurance   1,737    1,884 
Federal Home Loan Bank advances   21,000    28,000 
Lease Liability – Operating   2,344    2,604 
Lease Liability – Financing   514    496 
Accounts payable and accrued expenses   11,083    13,540 
Total liabilities   965,278    973,688 
           
Stockholders’ equity:          
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding        
Common stock, $0.01 par value; 75,000,000 shares authorized; 16,377,936 shares issued;and 16,377,936 shares outstanding  $164   $164 
Additional paid-in capital   145,404    145,335 
Unearned Employee Stock Ownership Plan (“ESOP”) shares   (7,866)   (8,301)
Retained earnings   118,708    114,323 
Accumulated other comprehensive loss   (98)   (139)
Total stockholders’ equity   256,312    251,382 
Total liabilities and stockholders’ equity  $1,221,590   $1,225,070 

 

 

 

 

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2022   2021   2022   2021 
   (In thousands, except per share amounts) 
INTEREST INCOME:                    
Loans  $14,412   $11,575   $27,473   $23,302 
Interest-earning deposits   249    11    304    21 
Securities   177    90    335    173 
Total Interest Income   14,838    11,676    28,112    23,496 
INTEREST EXPENSE:                    
Deposits   1,160    1,113    2,337    2,395 
Borrowings   127    176    288    350 
Financing lease   9    9    19    18 
Total Interest Expense   1,296    1,298    2,644    2,763 
Net Interest Income   13,542    10,378    25,468    20,733 
Provision for loan loss               17 
Net Interest Income after Provision for Loan Losses   13,542    10,378    25,468    20,716 
NON-INTEREST INCOME:                    
Other loan fees and service charges   627    393    1,018    715 
Gain (loss) on disposition of equipment   46    7    46    7 
Earnings on bank owned life insurance   150    148    297    295 
Investment advisory fees   120    124    257    242 
Unrealized loss on equity securities   (430)   93    (1,064)   (62)
Other   23    13    40    24 
Total Non-Interest Income   536    778    594    1,221 
NON-INTEREST EXPENSES:                    
Salaries and employee benefits   3,613    3,512    7,441    7,169 
Occupancy expense   562    472    1,166    1,045 
Equipment   277    239    566    488 
Outside data processing   479    337    915    824 
Advertising   51    24    105    47 
Real estate owned expense   21    26    52    68 
Other   2,004    1,699    3,982    3,223 
Total Non-Interest Expenses   7,007    6,309    14,227    12,864 
INCOME BEFORE PROVISION FOR INCOME TAXES   7,071    4,847    11,835    9,073 
PROVISION FOR INCOME TAXES   1,678    1,126    2,797    2,107 
NET INCOME  $5,393   $3,721   $9,038   $6,966 

 

 

 

 

NORTHEAST COMMUNITY BANCORP, INC.

SELECTED CONSOLIDATED FINANCIAL DATA

(Unaudited)

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2022   2021   2022   2021 
   (In thousands, except per share amounts)   (In thousands, except per share amounts) 
Per share data:                    
Earnings per share - basic and diluted¹  $0.35   $0.23   $0.58   $0.43 
Weighted average shares outstanding - basic and diluted¹   15,544    16,181    15,534    16,176 
Performance ratios/data:                    
Return on average total assets   1.72%   1.50%   1.45%   1.42%
Return on average shareholders' equity   8.42%   9.32%   7.09%   8.83%
Net interest income  $13,542   $10,378   $25,468   $20,733 
Net interest margin   4.58%   4.49%   4.33%   4.54%
Efficiency ratio   49.77%   56.56%   54.59%   58.60%
Net charge-off ratio   (0.01)%   0.00%   (0.02)%   0.00%

 

Loan portfolio composition:  June 30, 2022   December 31, 2021 
One-to-four family  $5,758   $7,189 
Multi-family   83,866    84,425 
Mixed-use   23,495    28,744 
Total residential real estate   113,119    120,358 
Non-residential real estate   26,633    50,016 
Construction   780,858    683,830 
Commercial and industrial   102,594    118,378 
Consumer   418    269 
Gross loans   1,023,622    972,851 
Deferred loan (fees) costs, net   527    484 
Total loans  $1,024,149   $973,335 
Asset quality data:          
Loans past due over 90 days and still accruing  $-   $- 
Non-accrual loans   769    - 
OREO property   1,996    1,996 
Total non-performing assets  $2,765   $1,996 
           
Allowance for loan losses to total loans   0.53%   0.54%
Allowance for loan losses to non-performing loans   710.92%   NA 
Non-performing loans to total loans   0.08%   0.00%
Non-performing assets to total assets   0.23%   0.16%
           
Bank's Regulatory Capital ratios:          
Common equity tier 1 capital to risk-weighted assets   14.52%   15.28%
Total capital to risk-weighted assets   14.14%   14.87%
Tier 1 capital to risk-weighted assets   14.14%   14.87%
Tier 1 leverage ratio   16.25%   16.79%

 

¹Shares amounts related to periods prior to the July 12, 2021 closing of the conversion offering have been restated to give retroactive recognition to the 1.3400 exchange ratio applied in the conversion offering.

 

 

 

 

NORTHEAST COMMUNITY BANCORP, INC.

NET INTEREST MARGIN ANALYSIS

(Unaudited)

 

   Three Months Ended June 30, 2022   Three Months Ended June 30, 2021 
   Average   Interest   Average   Average   Interest   Average 
   Balance   and dividend   Yield   Balance   and dividend   Yield 
   (In thousands, except yield/cost information)   (In thousands, except yield/cost information) 
Loan receivable Gross  $997,983   $14,412    5.78%  $833,973   $11,575    5.55%
Securities (1)   43,880    177    1.61%   21,513    90    1.67%
Other interest-earning assets   139,978    249    0.71%   69,368    11    0.06%
Total interest-earning assets   1,181,841    14,838    5.02%   924,854    11,676    5.05%
Allowance for loan losses   (5,333)             (5,103)          
Non-interest-earning assets   77,693              72,615           
Total assets  $1,254,201             $992,366           
                               
Interest-bearing demand deposit  $115,097   $190    0.66%  $114,675   $164    0.57%
Savings and club accounts   214,840    354    0.66%   101,162    48    0.19%
Certificates of deposit   262,703    616    0.94%   324,420    901    1.11%
Total interest-bearing deposits   592,640    1,160    0.78%   540,257    1,113    0.82%
Borrowed money   21,000    136    2.59%   28,000    185    2.64%
Total interest-bearing liabilities   613,640    1,296    0.84%   568,257    1,298    0.91%
Non-interest-bearing demand deposit   368,359              239,996           
Other non-interest-bearing liabilities   16,108              24,429           
Total liabilities   998,107              832,682           
Equity   256,094              159,684           
Total liabilities and equity  $1,254,201             $992,366           
                               
Net interest income / interest spread       $13,542    4.18%       $10,378    4.14%
Net interest rate margin             4.58%             4.49%
Net interest earning assets  $568,201             $356,597           
Average interest-earning assets to interest-bearing liabilities   192.60%             162.75%          

 

 

(1)     Includes Federal Home Loan Bank of New York stock.

 

 

 

 

NORTHEAST COMMUNITY BANCORP, INC.

NET INTEREST MARGIN ANALYSIS

(Unaudited)

 

   Six Months Ended June 30, 2022   Six Months Ended June 30, 2021 
   Average   Interest   Average   Average   Interest   Average 
   Balance   and dividend   Yield   Balance   and dividend   Yield 
   (In thousands, except yield/cost information)   (In thousands, except yield/cost information) 
Loan receivable Gross  $993,879   $27,473    5.53%  $834,219   $23,302    5.59%
Securities (1)   41,489    335    1.61%   20,312    173    1.70%
Other interest-earning assets   140,582    304    0.43%   58,942    21    0.07%
Total interest-earning assets   1,175,950    28,112    4.78%   913,473    23,496    5.14%
Allowance for loan losses   (5,308)             (5,096)          
Non-interest-earning assets   76,927              70,157           
Total assets  $1,247,569             $978,534           
                               
Interest-bearing demand deposit  $116,228   $359    0.62%  $111,357   $320    0.57%
Savings and club accounts   209,080    681    0.65%   101,893    127    0.25%
Certificates of deposit   275,612    1,297    0.94%   330,546    1,948    1.18%
Total interest-bearing deposits   600,920    2,337    0.78%   543,796    2,395    0.88%
Borrowed money   23,514    307    2.61%   28,000    368    2.63%
Total interest-bearing liabilities   624,434    2,644    0.85%   571,796    2,763    0.97%
Non-interest-bearing demand deposit   352,689              229,854           
Other non-interest-bearing liabilities   15,352              19,020           
Total liabilities   992,475              820,670           
Equity   255,094              157,864           
Total liabilities and equity  $1,247,569             $978,534           
                               
Net interest income / interest spread       $25,468    3.93%       $20,733    4.18%
Net interest rate margin             4.33%             4.54%
Net interest earning assets  $551,516             $341,677           
Average interest-earning assets to interest-bearing liabilities   188.32%             159.76%          

 

 

(1)     Includes Federal Home Loan Bank of New York stock.

 

 

 

 

Exhibit 99.2

 

FOR IMMEDIATE RELEASE

 

NORTHEAST COMMUNITY BANCORP, INC.

ANNOUNCES STOCK REPURCHASE PROGRAM

 

White Plains, New York, July 27, 2022 — NorthEast Community Bancorp, Inc. (Nasdaq: NECB) (the “Company”), the holding company for NorthEast Community Bank, today announced that the Company’s Board of Directors has authorized a stock repurchase program to acquire up to 1,637,794 shares, or 10%, of the Company's currently issued and outstanding common stock commencing on August 1, 2022. This is the Company’s first repurchase program since completing its second-step conversion and related stock offering in July 2021.

 

The repurchase program permits shares to be repurchased in open market transactions or privately negotiated transactions, and pursuant to a trading plan in accordance with Rule 10b5-1 of the Securities and Exchange Commission. In this regard, the Board also authorized management to enter into a trading plan with Piper Sandler & Co. in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”), to facilitate repurchases of its common stock pursuant to the above-mentioned stock repurchase program (the "Rule 10b5-1 plan"). The Rule 10b5-1 plan allows the Company to repurchase shares at times when they might otherwise be prevented from doing so by securities laws or because of self-imposed trading blackout periods. Under the Rule 10b5-1 plan, Piper Sandler & Co. will have the authority, subject to the prices, terms and limitations set forth in the Rule 10b5-1 plan, including compliance with Rule 10b-18 of the Exchange Act, to repurchase shares on the Company's behalf.

 

The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The repurchase program does not obligate the Company to purchase any particular number of shares and it may be extended, modified or discontinued at any time.

 

About NorthEast Community Bancorp

 

NorthEast Community Bancorp, headquartered at 325 Hamilton Avenue, White Plains, New York 10601, is the holding company for NorthEast Community Bank, which conducts business through its ten branch offices located in Bronx, New York, Orange, and Rockland Counties in New York and Essex, Middlesex, and Norfolk Counties in Massachusetts and three loan production offices located in New City, New York, White Plains, New York, and Danvers, Massachusetts. For more information about NorthEast Community Bancorp and NorthEast Community Bank, please visit www.necb.com.

 

 

 

 

Forward Looking Statement

 

This press release contains certain forward-looking statements. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include, but are not limited to, changes in market interest rates, regional and national economic conditions (including higher inflation and its impact on regional and national economic conditions), the effect of the COVID-19 pandemic (including its impact on NorthEast Community Bank’s business operations and credit quality, on our customers and their ability to repay their loan obligations and on general economic and financial market conditions), legislative and regulatory changes, monetary and fiscal policies of the United States government, including policies of the United States Treasury and the Federal Reserve Board, the quality and composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in NorthEast Community Bank’s market area, changes in the real estate market values in NorthEast Community Bank’s market area and changes in relevant accounting principles and guidelines. Additionally, other risks and uncertainties may be described in our annual and quarterly reports filed with the U.S. Securities and Exchange Commission (the “SEC”), which are available through the SEC’s website located at www.sec.gov. These risks and uncertainties should be considered in evaluating any forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

 

CONTACT:Kenneth A. Martinek

Chairman and Chief Executive Officer

 

PHONE:(914) 684-2500