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dec20108k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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): February 2, 2011

NORTHEAST BANCORP

(Exact Name of Registrant as Specified in its Charter)

Maine	1-14588	01-0425066
(State or Other Jurisdiction Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

500 Canal Street, Lewiston, Maine	04240
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code:

(207) 786-3245

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.

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

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

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

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. Rule 13e-4(c)).

Item 2.02 Results of Information and Financial Condition.

On February 2, 2011, Northeast Bancorp, a Maine corporation (the "Company"), issued a press release announcing its earnings for the second quarter ended December 31, 2010 and declaring the payment of a dividend. The full text of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information contained herein, including the exhibit attached hereto, is furnished pursuant to Item 2.02 of this Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, the information in this report (including the exhibits hereto) are not to be incorporated by reference into any of the Company's filings with the Securities and Exchange Commission, whether filed prior to or after the furnishing of these certificates, regardless of any general or specific incorporation language in such filing.

Item 9.01	Financial Statements and Exhibits.
(c)	Exhibits.

Exhibit No.	Description
99.1	Press Release of the Company, dated February 2, 2011

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 hereunto duly authorized.

		NORTHEAST BANCORP
Date: February 2, 2011	By:	/s/ Richard Wayne
		Richard Wayne
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of the Company, dated February 2, 2011

ex99dec2010.htm

FOR IMMEDIATE RELEASE For More Information:
Claire S. Bean, Chief Financial Officer & C.O.O. Northeast Bank, 500 Canal Street, Lewiston, ME 04240 207-786-3245 www.northeastbank.com

Northeast Bancorp Reports Second Quarter Results

Announces completion of Merger, investment of New Capital, and Dividend Payment

Lewiston, MAINE (February 2, 2011) -- Northeast Bancorp (NASDAQ: NBN), a Maine-based full-service financial services company and parent of Northeast Bank (www.northeastbank.com), today reported operating results for its fiscal second quarter ended December 31, 2010. Results include the effect of the accounting treatment for the merger of Northeast Bancorp (“Northeast” or the “Company”) and FHB Formation LLC (“FHB”), which was consummated on December 29, 2010. This transaction, in which FHB was merged with and into Northeast, contributed approximately $16.2 million of new capital to the Company.

“With the successful completion of the merger and integration with management between Northeast and FHB, we look forward to building upon Northeast’s solid community banking franchise,” said Richard Wayne, President and Chief Executive Officer of Northeast Bancorp. “In the coming months, we plan to introduce two new business lines: a Loan Acquisition and Servicing Group and an Affinity Deposit Program, which will create new jobs in Maine and offer new savings products for customers.”

The Board of Directors has declared a cash dividend of $0.09 per share, payable on February 28, 2011 to shareholders of record as of February 14, 2011.

FY 2011 Second Quarter Results

Accounting Treatment

We have applied the acquisition method of accounting, as described in ASC 805 “Business Combinations” (previously SFAS 141R), to the merger of FHB with and into Northeast, a transaction that represents an acquisition by FHB of Northeast, with Northeast as the surviving company. As such, our consolidated financial statements prior to the closing of the merger reflect the historical accounting basis in our assets and liabilities and are labeled “Predecessor Company,” while our records after the merger are labeled “Successor Company” and reflect the new fair values of our assets and liabilities in our financial statements, in accordance with acquisition accounting. This is presented in our consolidated financial statements by a vertical black line that appears between the columns entitled Predecessor Compa ny and Successor Company on the statements and relevant notes. The black line indicates that the amounts shown for the periods before and after the merger are not comparable.

Management, however, continues to measure the Company’s performance against comparable prior periods. In making this comparison of our FY 2011 results to prior periods, we have presented our FY 2011 results as the addition of the Predecessor Company and Successor Company periods. We have also excluded the effect of significant one-time items associated with the merger (a bargain purchase gain of $14.9 million and transaction costs totaling $3.1 million). We believe that this presentation provides the most meaningful information about our results of operations. This approach is not consistent with GAAP, may yield results that are not strictly comparable on a period-to-period basis, and may not reflect the actual results we would have achieved.

The application of acquisition accounting involves the comparison of the purchase price to the fair value of the net assets of the acquiree. In the case of the merger of FHB with and into Northeast, the estimated fair values of the net assets are greater than the purchase price. This produces a bargain purchase gain, which is reported by the Company in income. The bargain purchase gain reflected in these financial statements represents an estimate. While some of the asset and liability fair valuations as of the acquisition date are complete, others are based on our best estimates, and are subject to change once final valuations are determined.

Three Months Ended December 31, 2010

For the quarter ended December 31, 2010, excluding the effect of non-recurring merger-related items, the Company earned net income of $823,000, and net income available to common shareholders of $762,000, or $0.32 per diluted share, an increase of 29% compared to earned net income of $649,000 and net income available to common shareholders of $589,000, or $0.25 per diluted share, for the same period in FY 2010.

The principal factors contributing to the change in quarterly net income between the two periods are:

1.	A $589,000, or 19.4%, increase in non-interest income:

a.	Gains earned on sales of residential mortgage loans increased by $610,000 to $968,000, compared to $358,000 in the same period of FY 2010. Increased revenues resulted from growth in residential lending capacity over the last twelve months and a surge in mortgage refinance activity.

b.	The Company realized a $105,000 gain in the second quarter of FY 2011 as a result of the sale of a small insurance agency in Jackman, Maine.

A $241,000, or 5.4%, decrease in net interest income. Although average earning assets increased by 4.1% compared to the same period in FY 2010, the mix is more heavily weighted toward lower-yielding short-term investments, which have increased by $42.4 million on average. Average loan balances for the FY 2011 second quarter declined by $14.2 million compared to the same period in FY 2010, primarily as a result of pay-downs in the Company’s portfolio of indirect consumer loans. This change in asset mix, and the effect of loan yields tightening relative to funding costs, led to a narrowing of the Company’s net interest margin, which declined by 29 basis points to 2.86%, when compared to the second quarter of FY 2010.

Non-performing loans (exclusive of any fair value adjustment associated with acquisition accounting) declined 11.3% over the past twelve months to $8.7 million at December 31, 2010 from $9.8 million at December 31, 2009. The quarterly provision for loan losses remained unchanged, at $453,000, when compared to the quarter ended December 31, 2009.

Total assets as of December 31, 2010 were $644.8 million, an increase of approximately 3.6%, or $22.2 million, compared to total assets of $622.6 million at the close of FY 2010. As a result of the merger with FHB, the Company’s capital ratios have increased: the tier 1 leverage ratio increased to 9.6% compared to 8.4% at the close of FY 2010 and the total risk-based capital ratio increased to 15.6% from 14.1% at the close of FY 2010.

In the next several months, the Company intends to make investments in its two new business lines, the Loan Acquisition and Servicing Group and the Affinity Deposit Program, and expects that operating expenses associated with those efforts will decrease Company earnings.

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 three 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.

---------------------------------------------------------------------------------------------------------------------

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 stateme nts 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 w ill 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		Company
	December 31,		June 30,
	2010		2010
	(Unaudited)		(Audited)
Assets
Cash and due from banks	$	3,398	$	7,019
Interest-bearing deposits		68,784		13,416
Total cash and cash equivalents		72,182		20,435

Available-for-sale securities, at fair value		153,521		164,188
Loans held-for-sale		8,195		14,254

Loans receivable
Residential real estate		152,730		155,613
Commercial real estate		116,796		121,175
Construction		9,254		5,525
Commercial business		25,324		30,214
Consumer		57,129		69,782
Total loans, gross		361,233		382,309
Less allowance for loan losses		-		5,806
Loans, net		361,233		376,503

Premises and equipment, net		8,013		7,997
Acquired assets, net		965		1,292
Accrued interest receivable		1,878		2,081
Federal Home Loan Bank stock, at cost		4,889		4,889
Federal Reserve Bank stock, at cost		597		597
Intangible assets		13,739		11,371
Bank owned life insurance		13,540		13,286
Other assets		6,068		5,714
Total assets	$	644,820	$	622,607

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Continued)

		Successor			Predecessor
		Company			Company
		December 31,			June 30,
		2010			2010
		(Unaudited)			(Audited)


Liabilities and Stockholders' Equity
Liabilities:
Deposits
Demand	$	37,849		$	35,266
Savings and interest checking		94,702			89,024
Money market		56,795			55,556
Brokered time deposits		4,890			4,883
Certificates of deposit		186,130			199,468
Total deposits		380,366			384,197

Federal Home Loan Bank advances		52,244			50,500
Structured repurchase agreements		68,877			65,000
Short-term borrowings		62,034			46,168
Junior subordinated debentures issued to affiliated trusts		7,889			16,496
Capital lease obligation		2,154			2,231
Other liabilities		4,147			4,479
Total liabilities		579,845			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 December 31, 2010 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 December 31, 2010 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 December 31, 2010 and June 30, 2010, respectively		195			-
Warrants		313			133
Additional paid-in capital		49,311			6,761
Unearned restricted stock award		(181	)		-
Retained earnings		11,835			37,338
Accumulated other comprehensive income		188			4,346
Total stockholders' equity		64,975			50,906
Total liabilities and stockholders' equity	$	644,820		$	622,607

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

	Successor		Predecessor
	Company		Company
	3 Days		89 Days		181 Days		Three Months		Six Months
	Ended		Ended		Ended		Ended		Ended
	December 31,		December 28,		December 28,		December 31,		December 31,
	2010		2010		2010		2009		2009
Interest and dividend income:
Interest on loans	$	196	$	5,468	$	11,210	$	6,033	$	12,075
Taxable interest on available-for-sale securities		41		1,310		2,854		1,725		3,437
Tax-exempt interest on available-for-sale securities		4		113		231		119		235
Dividends on available-for-sale securities		-		16		26		20		27
Dividends on Federal Home Loan Bank and Federal Reserve Bank stock		-		9		18		9		18
Other interest and dividend income		1		28		39		2		8
Total interest and dividend income		242		6,944		14,378		7,908		15,800

Interest expense:
Deposits		42		1,273		2,796		1,771		3,825
Federal Home Loan Bank advances		15		451		918		476		880
Structured repurchase agreements		23		685		1,392		708		321
Short-term borrowings		6		205		376		178		405
Junior subordinated debentures issued to affiliated trusts		6		167		340		200		1,479
Obligation under capital lease agreements		1		27		55		29		60
Other borrowings		1		36		75		57		113
Total interest expense		94		2,844		5,952		3,419		7,083

Net interest and dividend income before provision for loan losses		148		4,100		8,426		4,489		8,717

Provision for loan losses		-		453		912		453		876
Net interest and dividend income after provision for loan losses		148		3,647		7,514		4,036		7,841

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
(Continued)
	Successor			Predecessor
	Company			Company
	3 Days			89 Days		181 Days		Three Months		Six Months
	Ended			Ended		Ended		Ended		Ended
	December 31,			December 28,		December 28,		December 31,		December 31,
	2010			2010		2010		2009		2009

Noninterest income:
Fees for other services to customers		14			331		698		401		766
Net securities gains		-			5		17		15		43
Gain on sales of loans		49			919		1,867		358		567
Investment commissions		25			625		1,174		535		988
Insurance commissions		37			1,221		2,661		1,379		2,964
BOLI income		4			123		250		126		251
Bargain purchase gain		14,921			-		-		-		-
Other income		7			258		330		215		218
Total noninterest income		15,057			3,482		6,997		3,029		5,797

Noninterest expense:
Salaries and employee benefits		167			3,319		6,670		3,523		6,924
Occupancy and equipment expense		28			774		1,556		869		1,659
Professional fees		10			248		527		237		585
Data processing fees		10			322		618		306		627
Intangible assets amortization		6			168		344		186		372
Other		117			1,100		2,138		1,122		2,001
Total noninterest expense		3,388			5,954		11,947		6,243		12,168

Income before income tax expense		11,817			1,175		2,564		822		1,470
Income tax expense		(18	)		339		768		173		325

Net income	$	11,835		$	836	$	1,796	$	649	$	1,145

Net income available to common stockholders	$	11,833		$	777	$	1,677	$	589	$	1,023


Weighted-average shares outstanding
Basic		3,492,498			2,331,332		2,330,197		2,321,528		2,321,430
Diluted		3,588,756			2,358,647		2,354,385		2,324,073		2,324,024
Earnings per common share:
Basic	$	3.38		$	0.33	$	0.72	$	0.25	$	0.44
Diluted	$	3.29		$	0.33	$	0.71	$	0.25	$	0.44

Reconciliation table - non-GAAP Financial Information
Net income available to common stockholders	$	11,833		$	777	$	1,677	$	589	$	1,023
Non-interest income components
Less - bargain purchase gain		(14,921	)		-		-		-		-
Non-interest expense components
Add - merger expense		3,050			23		94		-		-
Net operating results	$	(38	)	$	800	$	1,771	$	589	$	1,023

NORTHEAST BANCORP AND SUBSIDIARY

COMBINED INCOME STATEMENTS

(Unaudited)

(Dollars in thousands)

The Combined Income Statement is a non-GAAP financial measure. For purposes of presenting a comparison of our FY 2010 results to prior periods, we have presented our FY 2010 results as the mathematical addition of the predecessor company and successor company periods in the accompanying financial tables. We believe that this presentation provides the most meaningful information about our results of operations. This approach is not consistent with GAAP, may yield results that are not strictly comparable on a period-to-period basis, and may not reflect the actual results we would have achieved.


	GAA-Based Operating Results:					Non-GAAP Financial
	Successor			Predecessor		Measure:
	Company			Company		Combined Total
	For the Period			For the Period		For the three			For the three
	December 29, 2010 to			October 1, 2010 to		months ended			months ended
	Dec. 31, 2010			Dec. 28, 2010		Dec. 31, 2010			Dec. 31, 2009

Interest income	$	242		$	6,944	$	7,186		$	7,908
Interest expense		94			2,844		2,938			3,419
Net interest income		148			4,100		4,248			4,489
Provision for loan losses		-			453		453			453
Net interest income after provision for loan losses		148			3,647		3,795			4,036

Net securities gains		-			5		5			15
Bargain purchase gain		14,921			-		14,921			-
Other noninterest income		136			3,477		3,613			3,014
Total noninterest income		15,057			3,482		18,539			3,029

Salaries and employee benefits		167			3,319		3,486			3,523
Intangible assets amortization		6			168		174			186
Merger Expense		3,050			23		3,073			-
Other noninterest expense		165			2,444		2,609			2,534
Total noninterest expense		3,388			5,954		9,342			6,243

Income before income tax expense		11,817			1,175		12,992			822
Income tax expense		(18	)		339		321			173
Net income	$	11,835		$	836	$	12,671		$	649

Net income available to common stockholders	$	11,833		$	777	$	12,610		$	589

Net income		11,835			836		12,671			649
Less - bargain purchase gain		(14,921	)		-		(14,921	)		-
Add - merger expense		3,050			23		3,073			-
Net income excluding bargain purchase gain and merger expense	$	(36	)	$	859	$	823		$	649

NORTHEAST BANCORP AND SUBSIDIARY

COMBINED INCOME STATEMENTS

(Unaudited)

(Dollars in thousands)

(Continued)


	GAAP-Based Operating Results:					Non-GAAP Financial
	Successor			Predecessor		Measure:
	Company			Company		Combined Total
	For the Period			For the Period		For the six			For the six
	December 29, 2010 to			July 1, 2010 to		months ended			months ended
	Dec. 31, 2010			Dec. 28, 2010		Dec. 31, 2010			Dec. 31, 2009

Interest income	$	242		$	14,378	$	14,620		$	15,800
Interest expense		94			5,952		6,046			7,083
Net interest income		148			8,426		8,574			8,717
Provision for loan losses		-			912		912			876
Net interest income after provision for loan losses		148			7,514		7,662			7,841

Net securities gains		-			17		17			43
Bargain purchase gain		14,921			-		14,921			-
Other noninterest income		136			6,980		7,116			5,754
Total noninterest income		15,057			6,997		22,054			5,797

Salaries and employee benefits		167			6,670		6,837			6,924
Intangible assets amortization		6			344		350			372
Merger expense		3,050			94		3,144			-
Other noninterest expense		165			4,839		5,004			4,872
Total noninterest expense		3,388			11,947		15,335			12,168

Income before income tax expense		11,817			2,564		14,381			1,470
Income tax expense		(18	)		768		750			325
Net income	$	11,835		$	1,796	$	13,631		$	1,145

Net income available to common stockholders	$	11,833		$	1,677	$	13,510		$	1,023

Net income		11,835			1,796		13,631			1,145
Less - bargain purchase gain		(14,921	)		-		(14,921	)		-
Add - merger expense		3,050			94		3,144			-
Net income excluding bargain purchase gain and merger expense	$	(36	)	$	1,890	$	1,854		$	1,145

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCES AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
	Three months ended December 31,
	2010							2009

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

Interest earning-assets:
Securities (1)	$	160,128	$	1,484		3.81	%	$	164,584	$	1,864		4.62	%
Loans (2)(3)		380,733		5,664		5.90	%		394,976		6,033		6.06	%
Bank Regulatory Stock		5,486		9		0.66	%		5,486		9		0.66	%
Short-term investments (4)		50,030		29		0.23	%		7,619		2		0.11	%
Total interest-earning assets		596,377		7,186		4.82	%		572,665		7,908		5.52	%

Total non-interest earning assets		37,461							40,483

Total assets	$	633,838						$	613,148


Liabilities & Net Worth:

Interest-bearing liabilities:
Now	$	55,226	$	88		0.63	%	$	48,396	$	96		0.79	%
Money Market		55,669		91		0.65	%		42,820		134		1.24	%
Savings		38,192		43		0.45	%		28,554		43		0.60	%
Time		190,656		1,093		2.27	%		221,082		1,498		2.69	%
Total interest-bearing deposits		339,743		1,315		1.54	%		340,852		1,771		2.06	%
Short-term borrowings (5)		61,403		211		1.36	%		45,706		178		1.54	%
Borrowed funds		120,135		1,238		4.09	%		122,438		1,270		4.12	%
Junior Subordinated Debentures		16,277		173		4.21	%		16,496		200		4.81	%
Total interest-earning liabilities		537,558		2,937		2.17	%		525,492		3,419		2.58	%

Total non-interest bearing liabilities:
Demand deposits and escrow accounts		39,214							35,039
Other liabilities		5,010							2,920
Total liabilities		581,782							563,451

Stockholders' equity		52,056							49,697
Total liabilities and stockholders' equity	$	633,838						$	613,148

Net interest income			$	4,249						$	4,489

Interest rate spread						2.65	%						2.94	%
Net yield on interest earning assets (6)						2.86	%						3.15	%

(1)	The yield/rate information does not give effect to the fair value adjustments recorded on December 29, 2010.
	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)
	Six months ended December 31,
	2010							2009

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

Interest earning-assets:
Securities (1)	$	161,767	$	3,156		4.00	%	$	160,212	$	3,699		4.71	%
Loans (2)(3)		385,047		11,406		5.88	%		394,427		12,075		6.07	%
Bank Regulatory Stock		5,486		18		0.66	%		5,486		18		0.66	%
Short-term investments (4)		39,692		40		0.20	%		8,096		8		0.20	%
Total interest-earning assets		591,992		14,620		4.93	%		568,221		15,800		5.55	%

Total non-interest earning assets		38,229							40,330

Total assets	$	630,221						$	608,551


Liabilities & Net Worth:

Interest-bearing liabilities:
Now	$	53,842	$	187		0.69	%	$	47,152	$	180		0.76	%
Money Market		55,962		215		0.76	%		41,203		259		1.25	%
Savings		38,281		100		0.52	%		24,774		62		0.50	%
Time		196,228		2,336		2.36	%		232,681		3,324		2.83	%
Total interest-bearing deposits		344,313		2,838		1.63	%		345,810		3,825		2.19	%
Short-term borrowings (5)		54,015		382		1.40	%		47,161		321		1.35	%
Borrowed funds		120,237		2,480		4.09	%		112,024		2,878		5.10	%
Junior Subordinated Debentures		16,356		346		4.19	%		16,496		59		0.71	%
Total interest-earning liabilities		534,921		6,046		2.24	%		521,491		7,083		2.69	%

Total non-interest bearing liabilities:
Demand deposits and escrow accounts		37,944							34,995
Other liabilities		5,559							3,243

Total liabilities		578,424							559,729

Stockholders' equity		51,797							48,822
Total liabilities and stockholders' equity	$	630,221						$	608,551

Net interest income			$	8,574						$	8,717

Interest rate spread						2.69	%						2.86	%
Net yield on interest earning assets (5)						2.91	%						3.08	%

(1)	The yield/rate information does not give effect to the fair value adjustments recorded on December 29, 2010.
	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
SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)

	Successor			Predecessor
	Company			Company
	3 Days			89 Days			181 Days			Three Months			Six Months
	Ended			Ended			Ended			Ended			Ended
	December 31,			December 28,			December 28,			December 31,			December 31,
	2010			2010			2010			2009			2009
Financial Highlights:
Net interest income	$	148		$	4,100		$	8,426		$	4,489		$	8,717
Net income	$	11,835		$	836		$	1,796		$	649		$	1,145
Weighted average shares outstanding:
Basic		3,492,498			2,331,332			2,330,197			2,321,528			2,321,430
Diluted		3,588,756			2,358,647			2,354,385			2,324,073			2,324,024
Earnings per share:
Basic	$	3.38		$	0.33		$	0.72		$	0.25		$	0.44
Diluted	$	3.29		$	0.33		$	0.71		$	0.25		$	0.44
Stockholders' equity - end of period	$	64,975		$	50,327					$	49,951
Book value per share - end of period	$	17.27		$	19.76					$	19.47
Tangible book value per share - end of period	$	13.35		$	15.05					$	14.18

Ratios and Other Information:
Return on average assets		230.60	%		0.53	%		0.57	%		0.42	%		0.37	%
Return on average equity		2256.00	%		6.48	%		6.94	%		5.18	%		4.65	%
Net interest rate spread (1)					2.65	%		2.69	%		2.93	%		2.86	%
Net interest margin (2)					2.86	%		2.91	%		3.14	%		3.08	%
Efficiency ratio (3)		22	%		79	%		77	%		83	%		84	%
Non-interest expense to average total assets		63.90	%		3.87	%		3.83	%		4.04	%		3.97	%
Average interest-earning assets to average interest-bearing liabilities		110.45	%		110.93	%		110.66	%		108.98	%		108.96	%

At period end:
Non-performing assets to total assets					1.53	%					2.15	%
Non-performing loans to total loans					2.36	%					3.14	%
Allowance for loan losses to total loans					1.62	%					1.50	%

Equity to total assets		10.08	%		8.01	%					8.08	%
Tier 1 leverage capital ratio		9.57	%								8.28	%
Total risk-based capital ratio		15.62	%								13.51	%

Number of full service branches		10									11
Number of insurance agency offices		10									13
Number of investment and mortgage loan origination offices		6									5

(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)	The efficiency ratio represents non-interest expense divided by the sum of net interest income (before the loan loss provision) plus non-interest income.