NORTHEAST BANCORP /ME/ - FORM 8-K/A - EX-99.1 - EXHIBIT 99.1

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8-K/A - MARCH 2011 8K/A - NORTHEAST BANCORP /ME/	mar118ka.htm

FOR IMMEDIATE RELEASE For More Information:
Claire S. Bean, Chief Financial Officer & C.O.O. Northeast Bank, 500 Canal Street, Lewiston, ME 04240 207-786-3245ext. 6202 www.northeastbank.com Or Chris Delamater, VP Marketing Director Northeast Bank, 500 Canal Street, Lewiston, ME 04240 207-786-3245 ext. 3548 www.northeastbank.com

Northeast Bancorp Reports Third Quarter Results, Declares Dividend

Lewiston, MAINE (May 5, 2011) -- Northeast Bancorp (“Northeast” or the “Company”) (NASDAQ: NBN), a Maine-based full-service financial services company and parent of Northeast Bank (www.northeastbank.com), today reported net income of $156,000 or $0.02 per common share for the quarter ended March 31, 2011. For the 93-day period ended March 31, 2011, the Company earned $11.9 million or $3.33 per common share, results that included a $15.2 million bargain purchase gain and $3.2 million of transaction costs related to the merger of Northeast and FHB Formation LLC (“FHB”), which was consummated on December 29, 2010, and contributed approximately $16.2 million of new capital to the Company.

The Board of Directors has declared a cash dividend of $0.09 per share, payable on May 31, 2011 to shareholders of record as of May 17, 2011.

“Over the past three months, we’ve invested in positioning Northeast for future growth by substantially growing core deposits in our markets, while reducing loans outstanding and short-term borrowed funds,” said Richard Wayne, President and Chief Executive Officer of Northeast Bancorp. “Building upon Northeast’s solid community banking franchise, these investments will enable us to develop a Loan Acquisition and Servicing Group and an Online Deposit Program, both of which will create jobs and contribute to our success in the months ahead.”

Total assets as of March 31, 2011 were $607.4 million, a decrease of approximately 2.4%, or $15.2 million, compared to total assets of $622.6 million as of June 30, 2010. The principal components of the change in the balance sheet over that 9-month period were as follows:

A $69.3 million, or 17.7%, reduction in loans outstanding, approximately half of which is attributable to loan sales, principally from the Company’s indirect consumer loan portfolio. The remainder of the reduction is the result of net amortization and pay-offs of residential and commercial loans and a $5.9 million decrease in loans held for sale.

2.	A $32.9 million, or 71.4%, reduction in short-term borrowed funds;

3.	A $17.2 million, or 4.5%, net increase in deposits, of which $21.0 million occurred in the current quarter;

4.	A $52.4 million, or 28.4%, increase in cash and securities, the net result of changes in loans and funding sources, and the infusion of new capital in conjunction with the merger.

As a result of the merger with FHB, coupled with the reduction in balance sheet size, the Company’s capital ratios have increased: the tier 1 leverage ratio increased to 10.15% compared to 8.4% at June 30, 2010 and the total risk-based capital ratio increased to 18.5% from 14.1% at June 30, 2010.

Earnings for the quarter ended March 31, 2011 included the effect of a number of non-recurring items, as follows:

1.	A $296,000 positive adjustment to the bargain purchase gain recorded in connection with the accounting for the merger, resulting from final valuations for the Company’s identifiable intangible assets for its insurance division, its fixed assets and its Series A preferred stock and related warrants;

2.	In accordance with the merger agreement, $450,000 of compensation expense, representing retention payments owed to certain Community Bank division employees;

3.	A net loss on the sale of loans (principally indirect consumer loans) of $179,000; and

4.	Merger-related expenses of $132,000.

Non-performing loans (exclusive of the fair value adjustment associated with acquisition accounting) declined 6.1% over the fiscal year to $9.3 million at March 31, 2011 from $9.8 million at March 31, 2010. The quarterly provision for loan losses declined to $49,000 in the current quarter from $628,000 for the quarter ended March 31, 2010, reflecting both the reduction in loan balances outstanding and the fair value adjustments recorded in conjunction with the merger transaction.

About Northeast Bancorp

Northeast Bancorp (NASDAQ: NBN) is the holding company for Northeast Bank, a full service community bank headquartered in Lewiston, Maine. Northeast Bank, together with its wholly owned subsidiary Northeast Bank Insurance Group, Inc., derives its income from a combination of traditional banking services and non-traditional financial products and services, including insurance and investments. Northeast Bank operates ten traditional bank branches, ten insurance offices, three investment centers and a loan production office that serve seven counties in Maine and two in New Hampshire. Information regarding Northeast Bank can be found on its website at www.northeastbank.com or by contacting 1-800-284-5989.

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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 Northeast 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 Company's control. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates; competitive pressures from other financial institutions; the effects of a continuing deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers' ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; increasing government regulation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the risk that goodwill and intangibles recorded in the Company'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 Company's Annual Report on Form 10-K and updated by the Company's Quarterly Reports on Form 10-Q; and other filings submitted to the Securities and Exchange Commission. These statements speak only as of the date of this release and we do 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.

IMPORTANT NOTE: Securities and Advisory Services offered through Commonwealth Financial Network, Member FINRA, SIPC, and a Registered Investment Advisor. Securities are not FDIC insured, not bank obligations or otherwise bank guaranteed and may lose value. Northeast Financial is located at 202 Rte. 1, Suite 206, Falmouth, ME 04105

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
	Successor			Predecessor
	Company (1)			Company (2)
	March 31,			June 30,
	2011			2010
	(Unaudited)			(Audited)
Assets
Cash and due from banks	$	3,283		$	7,019
Interest-bearing deposits		106,472			13,416
Total cash and cash equivalents		109,755			20,435

Available-for-sale securities, at fair value		127,227			164,188
Loans held-for-sale		8,378			14,254

Loans receivable
Residential real estate		143,172			155,613
Commercial real estate		117,562			121,175
Construction		2,941			5,525
Commercial business		25,490			30,214
Consumer		23,891			69,782
Total loans, gross		313,056			382,309
Less allowance for loan losses		14			5,806
Loans, net		313,042			376,503

Premises and equipment, net		8,079			7,997
Acquired assets, net		753			1,292
Accrued interest receivable		1,375			2,081
Federal Home Loan Bank stock, at cost		4,889			4,889
Federal Reserve Bank stock, at cost		597			597
Intangible assets		13,344			11,371
Bank owned life insurance		13,667			13,286
Other assets		6,268			5,714
Total assets	$	607,374		$	622,607

Liabilities and Stockholders' Equity
Liabilities:
Deposits
Demand	$	45,254		$	35,266
Savings and interest checking		90,379			89,024
Money market		52,226			55,556
Brokered time deposits		4,934			4,883
Certificates of deposit		208,571			199,468
Total deposits		401,364			384,197

Federal Home Loan Bank advances		43,974			50,500
Structured repurchase agreements		68,434			65,000
Short-term borrowings		13,226			46,168
Junior subordinated debentures issued to affiliated trusts		7,922			16,496
Capital lease obligation		2,114			2,231
Other borrowings		2,134			2,630
Other liabilities		3,317			4,479
Total liabilities		542,485			571,701

Commitments and contingent liabilities

Stockholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; 4,227 shares issued and outstanding
at March 31, 2011 and June 30, 2010 liquidation preference of $1,000 per share		4			4
Voting common stock, at stated value, 13,500,000 shares authorized; 3,310,173 and 2,332,832 shares
issued and outstanding at March 31, 2011 and June 30, 2010, respectively		3,310			2,324
Non-voting common stock, at stated value, 1,500,000 shares authorized; 195,351 and 0 shares
issued and outstanding at March 31, 2011 and June 30, 2010, respectively		195			-
Warrants		406			133
Additional paid-in capital		49,535			6,761
Unearned restricted stock award		(172	)		-
Retained earnings		11,579			37,338
Accumulated other comprehensive income		32			4,346
Total stockholders' equity		64,889			50,906

Total liabilities and stockholders' equity	$	607,374		$	622,607

(1)	"Successor Company" means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.

(2)	"Predecessor Company" means Northeast Bancorp and its subsidiary before the closing of the merger with FHB Formation LLC on December 29, 2010.

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)

	Successor						Predecessor
	Company (1)						Company (2)
	Three Months			93 Days			181 Days		Three Months			Nine Months
	Ended			Ended			Ended		Ended			Ended
	March 31,			March 31,			December 28,		March 31,			March 31,
	2011			2011			2010		2010			2010
Interest and dividend income:
Interest on loans	$	5,649		$	5,845		$	11,210	$	5,960		$	18,034
Taxable interest on available-for-sale securities		832			872			2,854		1,733			5,171
Tax-exempt interest on available-for-sale securities		71			75			231		121			356
Dividends on available-for-sale securities		7			7			26		19			46
Dividends on Federal Home Loan Bank and Federal Reserve Bank stock		12			13			18		9			27
Other interest and dividend income		33			34			39		2			10
Total interest and dividend income		6,604			6,846			14,378		7,844			23,644

Interest expense:
Deposits		774			816			2,796		1,682			5,507
Federal Home Loan Bank advances		284			299			918		457			1,336
Structured repurchase agreements		249			272			1,392		692			2,172
Short-term borrowings		60			67			376		165			486
Junior subordinated debentures issued to affiliated trusts		174			180			340		182			587
Obligation under capital lease agreements		26			28			55		28			88
Other borrowings		35			35			75		43			156
Total interest expense		1,602			1,697			5,952		3,249			10,332

Net interest and dividend income before provision for loan losses		5,002			5,149			8,426		4,595			13,312

Provision for loan losses		49			49			912		628			1,504
Net interest and dividend income after provision for loan losses		4,953			5,100			7,514		3,967			11,808

Noninterest income:
Fees for other services to customers		310			323			698		350			1,116
Net securities gains		47			47			17		(63	)		(20	)
Gain on sales of loans		295			344			1,867		141			708
Investment commissions		709			734			1,174		467			1,455
Insurance commissions		1,458			1,495			2,661		1,741			4,705
BOLI income		126			131			250		125			376
Bargain purchase gain		296			15,216			-		-			-
Other income		148			156			330		292			510
Total noninterest income		3,389			18,446			6,997		3,053			8,850

Noninterest expense:
Salaries and employee benefits		4,824			4,991			6,670		3,469			10,392
Occupancy and equipment expense		903			930			1,556		907			2,566
Professional fees		378			387			527		211			797
Data processing fees		326			337			618		300			927
Intangible assets amortization		439			444			344		177			549
Merger expense		132			3,182			94		157			157
Other		1,337			1,455			2,138		1,051			3,052
Total noninterest expense		8,339			11,726			11,947		6,272			18,440

Income before income tax expense		3			11,820			2,564		748			2,218
Income tax (benefit) expense		(153	)		(171	)		768		217			542

Net income	$	156		$	11,991		$	1,796	$	531		$	1,676

Net income available to common stockholders	$	58		$	11,891		$	1,677	$	470		$	1,493


Weighted-average shares outstanding
Basic		3,492,498			3,492,498			2,330,197		2,322,332			2,321,726
Diluted		3,559,873			3,560,278			2,354,385		2,342,153			2,331,227
Earnings per common share:
Basic	$	0.02		$	3.39		$	0.72	$	0.20		$	0.64
Diluted	$	0.02		$	3.33		$	0.71	$	0.20		$	0.64

(1)	"Successor Company" means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.

(2)	"Predecessor Company" means Northeast Bancorp and its subsidiary before the closing of the merger with FHB Formation LLC on December 29, 2010.

NORTHEAST BANCORP AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)

	Successor						Predecessor
	Company (1)						Company (2)
	Three Months			93 Days			181 Days			Three Months			Nine Months
	Ended			Ended			Ended			Ended			Ended
	March 31,			March 31,			December 28,			March 31,			March 31,
	2011			2011			2010			2010			2010
Financial Highlights:
Net interest income	$	5,002		$	5,149		$	8,426		$	4,595		$	13,312
Net income	$	156		$	11,991		$	1,796		$	531		$	1,676
Weighted average shares outstanding:
Basic		3,492,498			3,492,498			2,330,197			2,322,332			2,321,726
Diluted		3,559,873			3,560,278			2,354,385			2,342,153			2,331,227
Earnings per share:
Basic	$	0.02		$	3.39		$	0.72		$	0.20		$	0.64
Diluted	$	0.02		$	3.33		$	0.71		$	0.20		$	0.64
Stockholders' equity - end of period	$	64,889								$	50,096
Book value per share - end of period	$	17.33								$	19.74
Tangible book value per share - end of period	$	13.52								$	14.60

Ratios and Other Information:
Return on average assets		0.10	%		7.67	%		0.57	%		0.35	%		0.37	%
Return on average equity		0.98	%		72.56	%		6.94	%		4.32	%		4.54	%
Net interest rate spread (3)		3.48	%		3.46	%		2.69	%		3.11	%		2.94	%
Net interest margin (4)		3.61	%		3.60	%		2.91	%		3.30	%		3.15	%
Efficiency ratio (5)		99.38	%		50	%		77	%		82	%		83	%
Non-interest expense to average total assets		5.52	%		7.50	%		3.83	%		4.15	%		4.03	%
Average interest-earning assets to average interest-bearing liabilities		111.70	%		111.65	%		110.66	%		108.54	%		108.82	%

At period end:
Non-performing assets to total assets		1.17	%								1.92	%
Non-performing loans to total loans		2.03	%								2.55	%
Allowance for loan losses to total loans		0.00	%								1.52	%

Equity to total assets		10.68	%								8.19	%
Tier 1 leverage capital ratio		10.15	%								8.39	%
Total risk-based capital ratio		18.51	%								13.90	%

Number of full service branches		10									11
Number of insurance agency offices		10									11
Number of investment and mortgage loan origination offices		6									5

1)	"Successor Company" means Northeast Bancorp and its subsidiary after the closing of the merger with FHB Formation LLC on December 29, 2010.

(2)	"Predecessor Company" means Northeast Bancorp and its subsidiary before the closing of the merger with FHB Formation LLC on December 29, 2010.

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCES AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
	Three months ended March 31,
	2011							2010

					Average							Average
	Average				Yield/			Average				Yield/
	Balance		Q-T-D Inc.		Rate (1)			Balance		Q-T-D Inc.		Rate
Assets:

Interest earning-assets:
Securities	$	143,482	$	910		2.67	%	$	166,707	$	1,873		4.70	%
Loans (2)(3)		357,376		5,649		6.41	%		390,503		5,960		6.19	%
Bank Regulatory Stock		5,486		12		0.89	%		5,486		9		0.67	%
Short-term investments (4)		58,683		33		0.23	%		8,760		2		0.09	%
Total interest-earning assets		565,027		6,604		4.76	%		571,456		7,844		5.61	%

Total non-interest earning assets		47,471							41,737

Total assets	$	612,498						$	613,193


Liabilities & Net Worth:

Interest-bearing liabilities:
Now	$	55,994	$	79		0.57	%	$	48,185	$	95		0.80	%
Money Market		54,041		70		0.53	%		43,930		133		1.23	%
Savings		35,638		34		0.39	%		31,204		53		0.69	%
Time		198,172		591		1.21	%		222,694		1,401		2.55	%
Total interest-bearing deposits		343,845		774		0.91	%		346,013		1,682		1.97	%
Short-term borrowings (5)		34,822		60		0.70	%		43,530		165		1.54	%
Borrowed funds		119,286		594		2.02	%		120,451		1,220		4.11	%
Junior Subordinated Debentures		7,902		174		8.93	%		16,496		182		4.47	%
Total interest-earning liabilities		505,855		1,602		1.28	%		526,490		3,249		2.50	%

Total non-interest bearing liabilities:
Demand deposits and escrow accounts		37,379							33,529
Other liabilities		4,447							3,406

Total liabilities		547,681							563,425

Stockholders' equity		64,817							49,768
Total liabilities and stockholders' equity	$	612,498						$	613,193

Net interest income			$	5,002						$	4,595

Interest rate spread						3.48	%						3.11	%
Net yield on interest earning assets (6)						3.61	%						3.30	%

(1)	Yields are stated on a fully tax-equivalent basis using a 30.84% tax rate.
(2)	Non-accruing loans are included in the computation of average balances, but unpaid interest on nonperforming loans has not been included for purposes of determining interest income.
(3)	Includes Loans Held-for-Sale.
(4)	Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(5)	Short-term borrowings include securities sold under repurchase agreements and sweep accounts.
(6)	The net yield on interest-earning assets is net interest income divided by total interest-earning assets.

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCES AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
	Nine months ended March 31,
	2011							2010

					Average							Average
	Average				Yield/			Average				Yield/
	Balance		Y-T-D Inc.		Rate (1)			Balance		Y-T-D Inc.		Rate
Assets:

Interest earning-assets:
Securities	$	155,761	$	4,065		3.59	%	$	162,345	$	5,573		4.70	%
Loans (2)(3)		375,951		17,055		6.04	%		393,138		18,034		6.11	%
Bank Regulatory Stock		5,486		31		0.75	%		5,486		27		0.66	%
Short-term investments (4)		45,930		73		0.21	%		8,312		10		0.16	%
Total interest-earning assets		583,128		21,224		4.88	%		569,281		23,644		5.57	%

Total non-interest earning assets		41,166							40,795

Total assets	$	624,294						$	610,076


Liabilities & Net Worth:

Interest-bearing liabilities:
Now	$	54,549	$	265		0.65	%	$	47,491	$	276		0.77	%
Money Market		55,331		285		0.69	%		42,099		391		1.24	%
Savings		37,413		135		0.48	%		26,886		115		0.57	%
Time		196,867		2,927		1.98	%		229,401		4,725		2.74	%
Total interest-bearing deposits		344,160		3,612		1.40	%		345,877		5,507		2.12	%
Short-term borrowings (5)		47,711		443		1.24	%		42,232		486		1.53	%
Borrowed funds		119,924		3,074		3.41	%		118,529		3,752		4.22	%
Junior Subordinated Debentures		13,579		520		5.10	%		16,496		587		4.74	%
Total interest-earning liabilities		525,374		7,649		1.94	%		523,134		10,332		2.63	%

Total non-interest bearing liabilities:
Demand deposits and escrow accounts		37,758					34,513
Other liabilities		5,092					3,296

Total liabilities		568,224					560,943

Stockholders' equity		56,070					49,133
Total liabilities and stockholders' equity	$	624,294				$	610,076

Net interest income			$	13,575				$	13,312

Interest rate spread					2.94%					2.94%
Net yield on interest earning assets (5)					3.13%					3.15%

(1)	Yields are stated on a fully tax-equivalent basis using a 30.84% tax rate.
(2)	Non-accruing loans are included in the computation of average balances, but unpaid interest on nonperforming loans has not been included for purposes of determining interest income.
(3)	Includes Loans Held-for-Sale.
(4)	Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(5)	Short-term borrowings include securities sold under repurchase agreements and sweep accounts.
(6)	The net yield on interest-earning assets is net interest income divided by total interest-earning assets.

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