West
Peabody, Massachusetts
|
/s/
SHATSWELL, MacLEOD & COMPANY, P.C.
SHATSWELL, MacLEOD & COMPANY, P.C. |
June
26, 2007
|
Portland,
Maine
|
/s/
Baker Newman & Noyes
Baker Newman & Noyes
|
June
20, 2006
|
Limited Liability Company
|
ASSETS
|
||||||||
2006
|
2005
|
|||||||
Investments,
at fair value (note 5):
|
$ |
5,541,356
|
$ |
4,787,384
|
||||
Pooled
separate accounts
|
||||||||
Northeast
Bancorp Stock Fund (includes $9,765 and $37,268 of
cash equivalents at December 31, 2006
and 2005, respectively) |
242,269
|
328,579
|
||||||
Participant
loans (note 4)
|
282,675
|
181,433
|
||||||
|
||||||||
Total
investments
|
6,066,300
|
5,297,396
|
||||||
|
||||||||
Receivables:
|
||||||||
Employer's
contribution
|
3,804
|
3,769
|
||||||
Employees'
contribution
|
10,866
|
10,135
|
||||||
|
||||||||
Total
receivables
|
14,670
|
13,904
|
||||||
|
||||||||
Net assets available for benefits | $6,080,970 | $5,311,300 | ||||||
|
||||||||
See
accompanying notes.
|
Additions
to net assets attributed to:
|
||||
Investment
income (note 5):
|
||||
Net
appreciation in fair
value of investments
|
$ |
520,738
|
||
Dividends
and
interest
|
23,288
|
|||
|
||||
544,026
|
||||
|
||||
Contributions:
|
||||
Employer's
|
209,155
|
|||
Employees'
|
575,191
|
|||
Rollovers
|
271,823
|
|||
|
||||
1,056,169
|
||||
|
||||
Total
additions
|
1,600,195
|
|||
|
||||
Deductions
from net
assets attributed to:
|
||||
Benefits
paid to
participants
|
772,751
|
|||
Other
deductions
|
16,929
|
|||
Administrative
expenses
|
40,845
|
|||
|
||||
Total
deductions
|
830,525
|
|||
|
||||
Net
increase
|
769,670
|
|||
|
||||
Net
assets available for benefits:
|
||||
Beginning
of
year
|
5,311,300
|
|||
|
||||
End of year | $6,080,970 | |||
See
accompanying notes.
|
1.
|
Description
of Plan
|
|||
The
following description of the Northeast Bancorp 401(k) Savings and
Retirement Plan (the Plan), provides only general
information. Participants should refer to the Plan document for
a more complete description of the Plan's provisions.
|
||||
General
|
||||
The
Plan is a 401(k) plan sponsored by Northeast Bancorp (the
Company). It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
|
||||
Eligibility
and Participation
|
||||
Employees
are eligible for participation in the Plan after they have completed
90
days of service and attained age 18. Attainment of age 18
became effective on August 2, 2006; prior to that date the age
requirement
was 21. A participant can enter the Plan on the first day of
the next quarter after becoming eligible.
|
||||
Contributions
|
||||
A
participant may elect to contribute pre-tax dollars to the Plan
from their
compensation up to the Internal Revenue Service
limitation.
|
||||
On
behalf of each participant who elects to contribute to the Plan,
and is a
participant on the last day of each quarter, the Company will make
a
matching contribution in the amount of 50% of the first 6% of compensation
that a participant contributes to the Plan. The Company may
also make a discretionary contribution. A participant must
complete 1,000 hours to be eligible for the discretionary
contribution. For the twelve months ended December 31,
2006 and 2005 , there were no discretionary
contributions.
|
||||
At
the participant's option, contributions may be invested in any
of the
available investment options. As of December 31, 2006, the
options consisted of numerous pooled separate accounts offered
through
Transamerica Life Insurance and Annuity Company (Transamerica) and
the Northeast Bancorp Stock Fund. The Northeast Bancorp Stock
Fund invests primarily in common stock of Northeast Bancorp. It
also contains a small balance of cash equivalents (Prime Fund Capital
Reserve Class) for any uninvested funds. Effective March 1, 2007,
contributions to and purchases of Northeast Bancorp stock from
the
Northeast Bancorp Stock Funds are no longer permitted.
|
||||
Participant
Accounts
|
||||
Each
participant's account is credited with the participant's contribution,
the
Company's contributions on their behalf, an allocation of Plan
earnings,
an allocation of forfeitures, and is charged with an allocation
of administrative expenses. Allocations are based on
account balances.
|
||||
Benefits
|
||||
Upon
death, retirement or disability, the full amount credited to the
participant's accounts shall become fully vested. In the event
of termination of employment for any other reason, the participant
will
receive the vested amount of his or her accounts.
|
||||
Vesting
|
||||
Participants
are immediately vested in their contributions. Participants
vest in the Company matching and discretionary contributions as
follows:
|
||||
Years
of Service
|
Vesting
%
|
|||
Less
than 2
|
0%
|
|||
2
but less than 3
|
20
|
|||
3
but less than 4
|
40
|
|||
4
but less than 5
|
60
|
|||
5
or more
|
100
|
|||
Forfeitures
are reallocated to participants. Unallocated forfeitures were
$18,616 at December 31, 2006 and $7,982 at December 31,
2005.
|
||||
Plan
Termination
|
||||
Although
it has not expressed any intent to do so, the Company has the right
under
the Plan to discontinue its contributions at any time and to terminate
or
amend the Plan subject to the provisions of ERISA. In the event
of Plan termination, participants will become 100% vested in their
accounts.
|
||||
Investment
Management
|
||||
Transamerica
is the custodian of the Plan's investments, except for the Northeast
Bancorp Stock Fund. Certain plan investments are shares of
pooled separate accounts managed by Transamerica, and therefore,
transactions with Transamerica qualify as
party-in-interest. Administrative expenses paid to Transamerica
totaled $40,845 for the year ended December 31,
2006.
|
||||
2.
|
Summary
of Significant Accounting Policies
|
|||
Basis
of Accounting
|
||||
The
accompanying financial statements have been prepared on an accrual
basis.
|
||||
Administrative
Expenses
|
||||
Custodial
fees are paid by the Plan. Administrative expenses are paid by
the Plan sponsor.
|
||||
Valuation
of Investments
|
||||
Investments
in pooled separate accounts are valued at fair value as calculated
by the
custodian based on the market value of the underlying
investments. Investments in the common stock of Northeast
Bancorp are valued at fair value based upon quoted market
prices. Participant loans are valued at cost, which
approximates fair value.
|
||||
Purchases
and sales of investments are recorded on a trade-date
basis. Interest income is recorded on the accrual
basis. Dividends are recorded on the ex-dividend
date.
|
||||
Use
of Estimates
|
||||
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the
plan administrator to make estimates and assumptions that affect
the
reported amounts of net assets available for benefits at the date
of the
financial statements and the reported amounts of changes in net
assets
available for benefits during the reporting period. Actual
results could differ from those estimates.
|
||||
Benefits
|
||||
Benefits
are reflected as reduction to net assets when paid.
|
||||
3.
|
TTax
Status
|
|||
A
qualifying plan is one for which the employer may currently deduct
contributions on its income tax return, the employee is not currently
taxed on the contribution, and the plan income is not
taxable.
|
||||
Effective
July 1, 2000, the Plan was amended to adopt the provisions of the
Transamerica Tax-Favored Savings and Discretionary Contribution
Plan and
Trust Agreement. This is a volume submitter profit sharing
401(k) plan which received a favorable volume submitter program
letter
from the Internal Revenue Service (IRS) dated April 17,
2002. The Plan has not requested a separate tax determination
letter. However, in the opinion of the administrator, the Plan
has been operated within the applicable sections of the Internal
Revenue
Code and is qualified under the Code and applicable
regulations.
|
||||
4.
|
Participant
Loans
|
|||
The
Plan allows participants to borrow against their accounts. Such
loans shall not exceed the lesser of $50,000 or 50% of the participants'
vested interest in their account.
|
||||
5.
|
Investments
|
|||
The
following investments are greater than or equal to 5% of net assets
available for benefits as of December 31, 2006 and
2005:
|
2006
|
2005
|
|||||||
Transamerica
Balanced Fund
|
$ |
390,395
|
$ |
359,011
|
||||
Transamerica
Cash Management Fund
|
364,704
|
386,226
|
||||||
Transamerica
AIM International Growth
|
327,759
|
-
|
||||||
Transamerica
Core Equity Fund
|
453,084
|
468,270
|
||||||
Transamerica
Equity Index Fund
|
330,367
|
304,315
|
||||||
Transamerica
Mutual Qualified Fund
|
722,470
|
448,139
|
||||||
Transamerica
Oppenheimer Global Fund
|
644,341
|
532,193
|
||||||
Transamerica
Franklin Balance Sheet Investment Fund
|
457,378
|
392,841
|
||||||
Northeast
Bancorp Common Stock
|
-
|
291,311
|
||||||
The
components of the net appreciation (depreciation) in the fair
value of
investments are as follows for the year ended December 31,
2006:
|
Pooled separate accounts | $ | 579,595 | ||||||
Northeast Bancorp Common Stock | (58,857 | ) | ||||||
|
|
$ |
520,738
|
6.
|
Reconciliation
of the Financial Statements to Form 5500
|
The
following is a reconciliation of the financial statements to
Form 5500 as
of December 31, 2006, and for the year then
ended:
|
Net
assets available for benefits - per financial statements
|
$ |
6,080,970
|
||
Other
|
(1 | ) | ||
Net
assets - per Form 5500
|
$ |
6,080,969
|
||
Net
increase in net assets - per financial statements
|
$ |
769,670
|
||
December 31,
2005 receivables - per financial statements
|
13,904
|
|||
Other
|
(28 | ) | ||
Net
income - per Form 5500
|
$ |
783,546
|
||
The
following is a reconciliation of the financial statements to Form
5500 as
of December 31, 2005 and for the year then ended:
|
||||
Net
assets available for benefits - per financial statements
|
$ |
5,311,300
|
||
Receivables
-
per financial statements
|
(13,904 | ) | ||
Other
|
27
|
|||
Net
assets - per Form 5500
|
$ |
5,297,423
|
(a)
|
(b)
Identity of Issue,
Borrower,
Lessor
or
Similar Party
|
(c)
Description of Investment
Including
Maturity Date,
Rate
of Interest, Collateral, Par
or
Maturity Value
|
(d)
Cost**
|
(e)
Current
Value
|
|||||||
|
Pooled Separate Accounts | ||||||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Equity
Fund
|
$ |
--
|
$ |
267,188
|
|||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Equity
Index Fund
|
--
|
330,367
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Balanced
Fund
|
--
|
390,395
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Bond
Fund
|
--
|
146,141
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Cash
Management Fund
|
--
|
364,704
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
High
Yield Bond Fund
|
--
|
178,066
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Aggressive
Growth Fund
|
--
|
222,972
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Growth
Opportunity Fund
|
--
|
228,362
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Core
Equity Fund
|
--
|
453,084
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
AIM
International Growth
|
--
|
327,759
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Franklin
Small Mid Cap Growth
|
--
|
240,068
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
SSgA
Small Cap Index
|
--
|
7,389
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Mutual
Qualified Fund
|
--
|
722,470
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Oppenheimer
Global Fund
|
--
|
644,341
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Columbia
Mid-Cap Value Fund
|
--
|
217,402
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Columbia
Intermediate Bond Fund
|
--
|
265,099
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Franklin
Balance Sheet Investment Fund
|
--
|
457,378
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Vanguard
Targeted Retirement 2035
|
--
|
1,917
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Vanguard
Targeted Retirement 2045
|
--
|
16,835
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Vanguard
Targeted Retirement 2005
|
--
|
1,663
|
|||||||
*
|
Transamerica
Life Insurance and Annuity Company
|
Vanguard
Targeted Retirement 2015
|
--
|
41,889
|
|||||||
* |
Transamerica
Life Insurance and Annuity Company
|
Vanguard
Targeted Retirement 2025
|
--
|
15,867
|
|||||||
Other
|
|||||||||||
*
|
Northeast
Bancorp
|
Northeast
Bancorp Common Stock 12,173 shares
|
$ |
--
|
232,504
|
||||||
Prime
Funds
|
Prime
Fund Capital Reserve
|
--
|
9,765
|
||||||||
|
Participant
Loans
|
5.25%
- 10.25%
|
--
|
282,675
|
*
|
Denotes
party-in-interest.
|
**
|
Not
required as Plan is participant
directed.
|
Northeast
Bancorp 401(k) Savings and Retirement Plan
|
|
Date:
June 28, 2007
|
By:
/s/ James D. Delamater
James
D. Delamater
President
and CEO
|
West
Peabody, Massachusets
|
/s/
SHATSWELL, MacLEOD & COMPANY, P.C.
SHATSWELL,
MacLEOD
& COMPANY, P.C.
|
June
26, 2007
|
|
Portland,
Maine
|
/s/
Baker Newman & Noyes
Baker Newman & Noyes
|
June
28, 2007
|
Limited Liability Company
|