SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 Q
_X_ Quarterly report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarter ended December 31, 2000
_________________
Or
___ Transition report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to ______________
Commission File Number 1-14588
_______
Northeast Bancorp
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Maine 01-0425066
________________________________________ ______________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
232 Center Street, Auburn, Maine 04210
________________________________________ ______________________________________
(Address of Principal executive offices) (Zip Code)
(207) 777-6411
_______________________________________________________________________________
Registrant's telephone number, including area code
Not Applicable
_______________________________________________________________________________
Former name, former address and former fiscal year,if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subjected to
such filing requirements for the past 90 days. Yes_X_ No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Shares outstanding as of
January 31, 2001, 2,661,270 of common stock, $1.00 par value per share.
Part I. Financial Information
_____________________
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
December 31, 2000 and June 30, 2000
Consolidated Statements of Income
Three Months ended December 31, 2000 and 1999
Consolidated Statements of Income
Six Months ended December 31, 2000 and 1999
Consolidated Statements of Changes in Shareholders' Equity
Six Months ended December 31, 2000 and 1999
Consolidated Statements of Cash Flows
Six Months ended December 31, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation
Item 3. Quantitative and Qualitative disclosure about
Market Risk
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
December 31, June 30,
2000 2000
_______________ _______________
Assets
Cash and due from banks $ 7,561,177 $ 7,996,321
Interest bearing deposits 600,332 488,622
Federal Home Loan Bank overnight deposits 4,233,000 4,293,000
Available for sale securities 23,001,022 23,159,039
Federal Home Loan Bank stock 6,644,500 6,644,500
Loans held for sale 90,488 81,890
Loans 388,831,989 381,824,101
Less allowance for loan losses 3,611,000 3,498,000
_______________ _______________
Net loans 385,220,989 378,326,101
Bank premises and equipment, net 4,317,934 4,397,768
Assets acquired 453,024 278,010
Goodwill, net of accumulated amortization
of $2,073,975 at 12/31/00 and $1,936,846
at 6/30/00 1,050,958 1,188,088
Other assets 6,906,036 6,999,107
_______________ _______________
Total Assets $ 440,079,460 $ 433,852,446
=============== ===============
Liabilities and Shareholders' Equity
Liabilities:
Deposits $ 266,961,957 $ 259,981,812
Securities Sold Under Repurchase Agreements 16,108,810 13,110,165
Advances from the Federal Home Loan Bank 117,205,938 122,627,805
Other Liabilities 2,683,877 2,833,188
_______________ _______________
Total Liabilities 402,960,582 398,552,970
Guaranteed Preferred Beneficial Interest in
the Company's Junior Subordinated Debentures 7,172,998 7,172,998
Shareholders' Equity
Preferred stock, cumulative, $1.00 par value,
1,000,000 shares authorized and none issued
and outstanding - -
Common stock, $1.00 par value, 15,000,000
shares authorized; 2,786,095 and 2,786,095
shares issued and 2,666,988 and 2,682,527
shares outstanding at 12/31/00 and 6/30/00,
respectively 2,786,095 2,786,095
Additional paid in capital 10,266,073 10,265,909
Retained earnings 18,179,956 16,722,474
Accumulated other comprehensive income (loss) (288,909) (776,174)
_______________ _______________
30,943,215 28,998,304
_______________ _______________
Treasury Stock at cost, 119,107 and 103,568
shares at 12/31/00 and 6/30/00, respectively. (997,335) (871,826)
_______________ _______________
Total Shareholders' Equity 29,945,880 28,126,478
_______________ _______________
Total Liabilities and Shareholders' Equity $ 440,079,460 $ 433,852,446
=============== ===============
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Three Months Ended
December 31,
2000 1999
_______________ _______________
Interest and Dividend Income
Interest on FHLB overnight deposits $ 81,977 $ 57,873
Interest on loans & Loans held for sale 8,603,316 7,444,148
Interest on available for sale securities 406,644 347,267
Dividends on Federal Home Loan Bank stock 133,616 101,140
Other Interest Income 6,952 3,741
_______________ _______________
Total Interest and Dividend Income 9,232,505 7,954,169
Interest Expense
Deposits 3,336,040 2,550,342
Repurchase agreements 154,607 168,791
Trust preferred securities 176,520 73,932
Other borrowings 1,998,747 1,658,679
_______________ ______________
Total Interest Expense 5,665,914 4,451,744
_______________ ______________
Net Interest Income 3,566,591 3,502,425
Provision for loan losses 195,542 195,885
_______________ ______________
Net interest income after Provision
for Loan Losses 3,371,049 3,306,540
Other Income
Service charges 267,950 325,051
Net securities gains 34,964 20,697
Net gain on trading activities 7,710 -
Other 339,647 267,960
_______________ _______________
Total Other Income 650,271 613,708
Other Expenses
Salaries and employee benefits 1,399,649 1,287,104
Net occupancy expense 199,943 221,494
Equipment expense 219,299 227,410
Goodwill amortization 68,565 68,564
Other 735,285 813,136
_______________ _______________
Total Other Expenses 2,622,741 2,617,708
_______________ _______________
Income Before Income Taxes 1,398,579 1,302,540
Income tax expense 490,005 465,796
_______________ _______________
Net Income $ 908,574 $ 836,744
=============== ===============
Earnings Per Common Share
Basic $ 0.34 $ 0.30
Diluted $ 0.34 $ 0.30
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Six Months Ended
December 31,
2000 1999
_______________ _______________
Interest and Dividend Income
Interest on FHLB overnight deposits $ 158,599 $ 122,664
Interest on loans & Loans held for sale 17,118,765 14,455,123
Interest on available for sale securities 805,650 640,390
Dividends on Federal Home Loan Bank stock 267,232 195,410
Other Interest Income 13,557 9,352
_______________ _______________
Total Interest and Dividend Income 18,363,803 15,422,939
Interest Expense
Deposits 6,613,842 4,886,065
Repurchase agreements 283,209 294,998
Trust preferred securities 353,041 73,932
Other borrowings 3,971,188 3,175,027
_______________ _______________
Total Interest Expense 11,221,280 8,430,022
_______________ _______________
Net Interest Income 7,142,523 6,992,917
Provision for loan losses 391,053 491,114
_______________ _______________
Net interest income after Provision
for Loan Losses 6,751,470 6,501,803
Other Income
Service charges 566,709 590,232
Net securities gains 53,612 25,861
Net gain on trading activities 9,966 -
Other 665,047 624,939
_______________ _______________
Total Other Income 1,295,334 1,241,032
Other Expenses
Salaries and employee benefits 2,803,636 2,590,896
Net occupancy expense 408,535 448,943
Equipment expense 422,772 460,588
Goodwill amortization 137,129 137,129
Other 1,517,058 1,567,698
_______________ _______________
Total Other Expenses 5,289,130 5,205,254
_______________ _______________
Income Before Income Taxes 2,757,674 2,537,581
Income tax expense 965,827 899,116
_______________ _______________
Net Income $ 1,791,847 $ 1,638,465
=============== ===============
Earnings Per Common Share
Basic $ 0.67 $ 0.59
Diluted $ 0.67 $ 0.59
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
Six Months Ended December 31, 2000 and 1999
Accumulated
Other
Common Additional Comprehensive
Preferred Stock at Paid in Retained Income Treasury
Stock $1.00 Par Capital Earnings (Loss) Stock Total
_____________ ___________ ____________ __________________________ ____________ _____________
Balance at June 30, 1999 $ - $2,768,624 $10,208,299 $ 14,145,720 $ (439,528) $ - $ 26,683,115
Net income for six months
ended 12/31/99 - - - 1,638,465 - - 1,638,465
Other comprehensive income,
net of tax:
Adjustment of valuation
reserve for Securities
available for sale - - - - (387,924) - (387,924)
_____________
Total comprehensive income - - - - - - 1,250,541
Treasury stock purchased - - - - - (195,123) (195,123)
Dividends on common stock - - - (293,691) - - (293,691)
Common stock issued in
connection with employee
benefit and stock option
plans - 17,191 55,435 - - 5,446 78,072
_____________ ___________ ____________ __________________________ ____________ _____________
Balance at December 31,
1999 $ - $2,785,815 $10,263,734 $ 15,490,494 $ (827,452) $ (189,677) $ 27,522,914
============= =========== ============ ========================== ============ =============
Balance at June 30, 2000 $ - $2,786,095 $10,265,909 $ 16,722,474 $ (776,174) $ (871,826) $ 28,126,478
Net income for six months
ended 12/31/00 - - - 1,791,847 - - 1,791,847
Other comprehensive income,
net of tax:
Adjustment of valuation
reserve for Securities
available for sale - - - - 487,265 - 487,265
_____________
Total comprehensive income - - - - - - 2,279,112
Treasury stock purchased - - - - - (127,477) (127,477)
Dividends on common stock - - - (334,365) - - (334,365)
Common stock issued in
connection with employee
benefit and stock option
plans - - 164 - - 1,968 2,132
_____________ ___________ ____________ __________________________ ____________ _____________
Balance at December 31,
2000 $ - $2,786,095 $10,266,073 $ 18,179,956 $ (288,909) $ (997,335) $ 29,945,880
============= =========== ============ ========================== ============= =============
NORTHEAST BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flow
(Unaudited)
Six Months Ended
December 31,
2000 1999
_______________ _______________
Cash provided by operating activities $ 1,926,489 $ 1,990,699
Cash flows from investing activities:
FHLB stock purchased - (503,500)
Available for sale securities purchased (1,111,719) (8,172,527)
Available for sale securities matured 1,812,199 1,483,317
Available for sale securities sold 192,030 93,056
New loans, net of repayments & charge offs (7,316,223) (44,304,671)
Net capital expenditures (237,315) (144,084)
Proceeds from Sale of Assets Acquired 242,478 276,324
Real estate held for investment sold 11,414 14,967
_______________ _______________
Net cash used in investing activities (6,407,136) (51,257,118)
Cash flows from financing activities:
Net change in deposits 6,980,145 19,363,626
Net change in repurchase agreements 2,998,645 4,210,205
Dividends paid (334,365) (293,691)
Proceeds from stock issuance 2,132 78,072
Treasury Stock purchased (127,477) (195,123)
Net (decrease) increase in advances from
Federal Home Loan Bank of Boston (5,421,867) 19,797,241
Proceeds from issuance of guaranteed
preferred beneficial interests in the
Company's junior subordinated debentures - 7,172,998
Payments for debt issuance cost - (448,315)
Net change in notes payable - (687,500)
_______________ _______________
Net cash provided by financing activities 4,097,213 48,997,513
_______________ _______________
Net decrease in cash and cash equivalents (383,434) (268,906)
Cash and cash equivalents, beginning of period 12,777,943 12,093,570
_______________ _______________
Cash and cash equivalents, end of period $ 12,394,509 $ 11,824,664
=============== ===============
Cash and cash equivalents include cash on
hand, amounts due from banks and interest
bearing deposits.
Supplemental schedule of noncash activities:
Net change in valuation for unrealized market
value adjustments on available for sale
securities 487,265 (387,924)
Net transfer from Loans to Other Assets Aquired 486,319 201,300
Supplemental disclosure of cash paid during
the period for:
Income taxes paid, net of refunds 1,009,000 844,000
Interest paid 11,078,915 8,228,312
NORTHEAST BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000
1. Basis of Presentation
_____________________
The accompanying unaudited condensed and consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six-month period ended December 31, 2000 are not
necessarily indicative of the results that may be expected for the fiscal
year ending June 30, 2001. For further information, refer to the audited
consolidated financial statements and footnotes thereto for the fiscal year
ended June 30, 2000 included in the Company's Annual Report on Form 10-K.
2. Guaranteed Preferred Beneficial Interests in the Company' Junior
Subordinated Debentures
________________________________________________________________
NBN Capital Trust ("NBNCT") a Delaware statutory trust, was created in
October of 1999. The NBNCT exists for the exclusive purpose of (i) issuing
and selling Common Securities and Preferred Securities to the public
together the ("Trust Securities"), (ii) using the proceeds of the sale of
Trust Securities to acquire 9.60% Junior Subordinated Deferrable Interest
Debentures ("Junior Subordinated Debentures") issued by the Company, and
(iii) engaging only in those other activities necessary, convenient, or
incidental thereto (such as registering the transfer of the Trust
Securities). Accordingly the Junior Subordinated Debentures are the sole
assets of the NBNCT. The Preferred Securities accrue and pay distributions
quarterly at an annual rate of 9.60% of the stated liquidation amount of
$7.00 per Preferred Security. The Company has fully and unconditionally
guaranteed all of the obligations of NBNCT. The guaranty covers the
quarterly distributions and payments on liquidation or redemption of the
Preferred Securities, but only to the extent of funds held by NBNCT. In
the second quarter of fiscal 2000, the NBNCT sold $7,172,998 of its trust
preferred securities to the public and $221,851 of its Common Securities to
the Company. The Preferred Securities are mandatorily redeemable upon the
maturity of the Junior Subordinated Debentures on December 31, 2029 or upon
earlier redemption as provided in the Indenture. The Company has the right
to redeem the Junior Subordinated Debentures, in whole or in part on or
after December 31, 2004 at a redemption price specified in the Indenture
plus any accrued but unpaid interest to the redemption date. The Company
owns all of the Common Securities of NBNCT, the only voting security, and
as a result it is a subsidiary of the Company.
3. Loans
_____
The following is a summary of the composition of loans at:
December 31, 2000 June 30, 2000
___________________ ___________________
Residential Mortgages $ 197,653,175 $ 194,287,520
Commercial Real Estate 68,204,257 61,924,339
Construction 4,414,257 7,405,861
Commercial 41,965,109 41,518,623
Consumer & Other 73,757,220 74,027,771
___________________ ___________________
Total 385,994,018 379,164,114
Net Deferred Costs 2,837,971 2,659,987
___________________ ___________________
Net Loans $ 388,831,989 $ 381,824,101
=================== ===================
4. Securities
__________
Securities available for sale at cost and approximate market values are
summarized below.
December 31, 2000 June 30, 2000
_________________________ _________________________
Market Market
Cost Value Cost Value
____________ ____________ ____________ ____________
Debt securities issued by
the U.S. Treasury and
other U.S. Government
corporations and agencies $ 592,558 $ 592,449 $ 347,573 $ 345,792
Corporate bonds 200,353 199,548 200,876 193,587
Mortgage-backed securities 21,287,888 21,159,158 22,350,606 21,445,918
Equity securities 1,357,964 1,049,867 1,436,005 1,173,742
____________ ____________ ____________ ____________
$23,438,763 $23,001,022 $24,335,060 $23,159,039
============ ============ ============ ============
December 31, 2000 June 30, 2000
_________________________ _________________________
Market Market
Cost Value Cost Value
____________ ____________ ____________ ____________
Due in one year or less $ 543,051 $ 543,231 $ 298,613 $ 298,777
Due after one year through
five years 249,860 248,766 249,836 240,602
Mortgate-backed securities
(including securities with
interest rates ranging from
5.15% to 9.0% maturing
September 2003 to November
2029) 21,287,888 21,159,158 22,350,606 21,445,918
Equity securities 1,357,964 1,049,867 1,436,005 1,173,742
____________ ____________ ____________ ____________
$23,438,763 $23,001,022 $24,335,060 $23,159,039
============ ============ ============ ============
5. Allowances for Loan Losses
__________________________
The following is an analysis of transactions in the allowance for loan losses:
Six Months Ended
December 31,
2000 1999
____________ ____________
Balance at beginning of year $ 3,498,000 $ 2,924,000
Add provision charged to operations 391,053 491,114
Recoveries on loans previously charged off 100,767 103,484
____________ ____________
3,989,820 3,518,598
Less loans charged off 378,820 351,598
____________ ____________
Balance at end of period $ 3,611,000 $ 3,167,000
============ ============
6. Advances from Federal Home Loan Bank
____________________________________
A summary of borrowings from the Federal Home Loan Bank is as follows:
December 31, 2000
___________________________________________
Principal Interest Maturity
Amounts Rates Dates
______________ _______________ __________
$ 61,834,970 5.38% - 7.05% 2001
5,468,119 5.97% - 6.30% 2002
13,480,160 5.89% - 6.67% 2003
1,422,689 5.55% 2004
27,000,000 6.65% - 6.79% 2005
8,000,000 5.59% - 5.68% 2008
______________
$ 117,205,938
==============
June 30, 2000
___________________________________________
Principal Interest Maturity
Amounts Rates Dates
______________ _______________ __________
$ 91,579,611 4.98% - 6.98% 2001
11,471,802 5.38% - 7.05% 2002
6,832,792 5.97% - 6.64% 2003
2,743,600 5.55% - 6.47% 2004
2,000,000 6.65% 2005
8,000,000 5.59% - 5.68% 2008
______________
$ 122,627,805
==============
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
_______________________________________________________________
Description of Operations
_________________________
Northeast Bancorp (the "Company") is a unitary savings and loan holding
company registered with the Office of Thrift Supervision ("OTS") its
primary regulator. The Company's principal asset is its wholly-owned
banking subsidiary, Northeast Bank, FSB (the "Bank"), which has branches
located in Auburn, Augusta, Bethel, Harrison, South Paris, Buckfield,
Mechanic Falls, Brunswick, Richmond, Lewiston, and Lisbon Falls, Maine. The
Bank also maintains a facility on Fundy Road in Falmouth, Maine, from which
loan applications are accepted and investment, insurance and financial
planning products and services are offered. The Bank's deposits are
primarily BIF-insured. Deposits at the Brunswick branch are SAIF-insured
and represent approximately 20% of the Bank's total deposits at December
31, 2000.
Northeast Bancorp through its subsidiary, Northeast Bank and the Bank's
subsidiary Northeast Financial Services, Inc., provide a broad range of
financial services to individuals and companies in western, midcoast and
south-central Maine. Although historically the Bank has been primarily a
residential mortgage lender, during the past few years the Bank has
expanded its commercial loan business, increased its line of financial
products and services, and expanded its market area. Management believes
that this strategy will increase core earnings in the long term by
providing stronger interest margins, additional non-interest income, and
increased loan volume. Substantially all of the Bank's current income and
services are derived from banking products and services in Maine.
This Management's Discussion and Analysis of Financial Condition and
Results of Operations presents a review of the financial condition of the
Company at June 30, 2000 and December 31, 2000, and the results of
operations for the three and six months ended December 31, 2000 and 1999.
This discussion and analysis is intended to assist in understanding the
financial condition and results of operations of the Company and the Bank.
Accordingly, this section should be read in conjunction with the
consolidated financial statements and the related notes and other
statistical information contained herein.
Certain statements contained herein are not based on historical facts and
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, such as statements relating to
financial condition and future prospects, loan loss reserve adequacy,
simulation of changes in interest rates, prospective results of operations,
capital spending and financing sources, and revenue sources. These
statements relate to expectations concerning matters that are not
historical facts. Forward-looking statements, which are based on various
assumptions (some of which are beyond the Company's control), may be
identified by reference to a future period or periods, or by the use of
forward-looking terminology such as "believe", "expect", "estimate",
"anticipate", "continue", "plan", "approximately", "intend", or other
similar terms or variations on those terms, or the future or conditional
verbs such as "will", "may", "should", "could", and "would". Such forward-
looking statements reflect the current view of management and are based on
information currently available to them, and upon current expectations,
estimates, and projections regarding the Company and its industry,
management's belief with respect there to, and certain assumptions made by
management. These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and other factors.
Accordingly, actual results could differ materially from those set forth in
forward-looking statements due to a variety of factors, including, but not
limited to, those related to the economic environment, particularly in the
market areas in which the Company operates, competitive products and
pricing, fiscal and monetary policies of the U.S. Government, changes in
government regulations affecting financial institutions, including
regulatory fees and capital requirements, changes in prevailing interest
rates, acquisitions and the integration of acquired businesses, credit risk
management, asset/liability management, changes in technology, changes in
the securities markets, and the availability of and the costs associated
with sources of liquidity. A more detailed description of potential risks,
uncertainties, and other factors which could cause the Company's financial
performance or results of operations to differ materially from current
expectations or such forward-looking statements is set forth in Part 1,
Item 1 of the Company's Form 10-K for the fiscal year ended June 30, 2000
under the heading "Forward Looking Statements" and is incorporated herein
by reference.
Financial Condition
___________________
Total consolidated assets of the Company were $440,079,460 as of December
31, 2000, which represents an increase of $6,227,014 from June 30, 2000.
The increase in assets is primarily due to loan growth. Loan volume during
the quarter increased due to the growth in residential and commercial real
estate loans. The increase in loans has been funded with increased deposits
and securities sold under repurchase agreements. In this regard, total net
loans increased by $7,007,888 from June 30, 2000 to December 31, 2000,
while cash equivalents and securities decreased by $383,434 and $157,088,
respectively during the same period. Total deposits and repurchase
agreements increased by $9,978,790 from June 30, 2000 to December 31, 2000,
while Federal Home Loan Bank (`FHLB') borrowings decreased by $5,421,867
during the same period.
As of December 31, 2000 and June 30, 2000, the Company's investment
portfolio totaled $23,001,022 and $23,159,039, respectively. The investment
portfolio consists of federal agency securities, mortgage-backed
securities, bonds, and equity securities. Funds retained by the Bank as a
result of increases in deposits or decreases in loans, which are not
immediately used by the Bank, are invested in securities held in its
investment portfolio. The investment portfolio is used as a source of
liquidity for the Bank. The investment portfolio is structured so that it
provides for an ongoing source of funds for meeting loan and deposit
demands and for reinvestment opportunities to take advantage of changes in
the interest rate environment.
The Company's investment portfolio is classified as available for sale at
December 31, 2000 and June 30, 2000. Equity securities, and debt
securities, which may be sold prior to maturity, are classified as
available for sale and are carried at market value. Changes in market
value, net of applicable income taxes, are reported as a separate component
of shareholders' equity. Gains and losses on the sale of securities are
recognized at the time of the sale using the specific identification
method. The amortized cost and market value of available for sale
securities at December 31, 2000 was $23,438,763 and $23,001,022,
respectively. The difference between the carrying value and the cost of the
securities of $437,741 was primarily attributable to the decline in the
market value of mortgage-backed securities and equity securities. The net
unrealized loss on mortgage-backed securities was $128,730 at December 31,
2000. Substantially all of the mortgage-backed securities are high-grade
government backed securities. As in any long term earning asset in which
the earning rate is fixed, the market value of mortgage-backed securities
will fluctuate based on changes in market interest rates from the time of
purchase. Since the U.S. Government backs these mortgage-backed securities,
there is virtually no risk of loss of principal. Management believes that
the yields currently received on this portfolio are satisfactory and
intends to hold these securities for the foreseeable future. Management
attributes the reduction of $308,097 in the market value of equity
securities was primarily due to the decline in the market value of the
Company's investments in preferred equity securities. Management reviews
the portfolio of investments on an ongoing basis to determine if there has
been an other-than-temporary decline in value. Some of the considerations
management makes in the determination are market valuations of particular
securities and economic analysis of the securities' sustainable market
values based on the underlying company's profitability. Based on
management's assessment of the securities portfolio there were other than
temporary declines in values of individual equity securities during the
first quarter of fiscal 2001 in the amount of $54,480. Such securities
were written down through an adjustment against earnings and are included
in other expenses in the statement of income for the six months ended
December 31, 2000.
The Bank's loan portfolio had a balance of $388,831,989 as of December 31,
2000, which represents an increase of $7,007,888 compared to June 30, 2000.
From June 30, 2000 to December 31, 2000, the loan portfolio increased by
$6,803,341 in real estate mortgage loans and $438,322 in commercial loans,
while consumer and other loans decreased by $233,774. The loan portfolio
contains elements of credit and interest rate risk. The Bank primarily
lends within its local market areas, which management believes helps them
to better evaluate credit risk. The Bank's loan portfolio mix as of
December 31, 2000 has remained relatively unchanged when compared to June
30, 2000. The Bank's local market, as well as the secondary market,
continues to be very competitive for loan volume. The local competitive
environment and customer response to favorable secondary market rates will
have an adverse affect on the Bank's ability to increase the loan
portfolio. In an effort to increase loan volume, the Bank's interest rates
for its loan products have been reduced to compete in the various markets.
The Bank has experienced margin compression due to the competitive loan and
deposit environment. The Bank anticipates that the margin compression will
continue for the foreseeable future until the rates on its cost of funds
decrease in the current declining interest rate environment.
At December 31, 2000, residential real estate mortgages consisting of owner-
occupied residential loans made up 52% of the total loan portfolio, of
which 35% of the residential loans are variable rate products. At December
31, 1999, residential real estate mortgages consisting of owner-occupied
residential loans made up 53% of the total loan portfolio, of which 38% of
the residential loans are variable rate products. Variable rate residential
loans have decreased during the December 2000 quarter, when compared to the
December 1999 quarter, due to the increased market demand for fixed rate
loans. Management will continue to pursue its strategy of increasing the
percentage of variable rate loans as a percentage of the total loan
portfolio to help manage interest rate risk.
At December 31, 2000, 18% of the Bank's total loan portfolio consists of
commercial real estate mortgages. Commercial real estate loans have minimal
interest rate risk as 88% of the portfolio consists of variable rate
products. At December 31, 1999, commercial real estate mortgages made up
16% of the total loan portfolio, of which 86% of the commercial real estate
loans were variable rate products. The Bank tries to mitigate credit risk
by lending in its local market area as well as maintaining a well-
collateralized position in real estate.
Commercial loans made up 11% of the total loan portfolio, of which 46% are
variable rate instruments at December 31, 2000. At December 31, 1999
commercial loans made up 11% of the total loan portfolio, of which 44% were
variable rate instruments. The repayment ability of commercial loans is
highly dependent on the cash flow of the customer's business. The Bank
mitigates losses by strictly adhering to the Company's underwriting and
credit policies.
Consumer and other loans made up 19% of the loan portfolio as of December
31, 2000, which compares to 20% at December 31, 1999. Since these loans
are primarily fixed rate products, they have interest rate risk when market
rates increase. These loans also have credit risk. Consumer loans have
generally increased over the past year and this was primarily due to
increased volume in indirect automobile loans and mobile home loans, which
together comprise approximately 87% of the total consumer loans. The
consumer loan department underwrites all the indirect automobile loans and
mobile home loans to mitigate credit risk. The Bank typically pays a
nominal one-time origination fee on the loans. The fees are deferred and
amortized over the life of the loans as a yield adjustment. Management
attempts to mitigate credit and interest rate risk by keeping the products
offered short-term, receiving a rate of return commensurate with the risk,
and lending to individuals in the Bank's known market areas.
The Bank's allowance for loan losses was $3,611,000 as of December 30, 2000
as compared to $3,498,00 as of June 30, 2000, representing 0.93% and 0.92%
of total loans, respectively. The Bank had non-performing loans totaling
$2,607,000 and $1,178,000 at December 31, 2000 and June 30, 2000,
respectively, which was 0.68% and 0.31% of total loans, respectively. The
increase in 1-4 family and commercial mortgage non-performing loan balances
were due to an increase of four additional loans in 1-4 family mortgages
and one additional loan in commercial mortgages. The additional non-
performing commercial mortgage amounts to approximately $1,300,000 and has
a government guarantee on 90% of its balance. The Bank participated the 90%
portion to another institution, but subsequently has purchased it back to
initiate the foreclosure process. Due to the government guarantee, the
Bank's risk will be 10% of any potential losses on this loan. The
institution of foreclosure proceedings on the non-performing commercial
mortgage is a recent event. Any losses incurred will be covered by the
Bank's general allowance for loan losses. The Bank's allowance for loan
losses was equal to 139% and 297% of the total non-performing loans at
December 31, 2000 and June 30, 2000, respectively. The following table
represents the Bank's non-performing loans as of December 31, 2000 and June
30, 2000, respectively:
Description December 31, 2000 June 30, 2000
_________________________ ___________________ ___________________
1-4 Family Mortgages $ 510,000 $ 191,000
Commercial Mortgages 1,713,000 650,000
Commercial Loans 158,000 152,000
Consumer and Other 226,000 185,000
___________________ ___________________
Total non-performing $ 2,607,000 $ 1,178,000
=================== ===================
At December 31, 2000, the Bank had approximately $1,098,000 of loans
classified substandard, exclusive of the non-performing loans stated above,
that could potentially become non-performing due to delinquencies or
marginal cash flows. These substandard loans decreased by $1,328,000 when
compared to the $2,426,000 at June 30, 2000. The decrease was primarily due
to the payoff of a downgraded commercial real estate loan with an
outstanding principal balance of approximately $1,500,000 at June 30, 2000.
The commercial real estate loan was well collaterallized and the Bank did
not incur any financial loss on this loan. The Bank's delinquent loans, as
a percentage of total loans, increased moderately during the December 31,
2000 quarter and was primarily due to the large non-performing commercial
mortgage discussed above. In an effort to control the amount of such loans
management continues to allocate substantial resources to the collection
area. Although delinquent and non-performing loans have trended upward the
past two quarters, management considers the percentages to be low and in
control and does not consider this to be a material trend at this time.
The following table reflects the quarterly trend of total delinquencies 30
days or more past due, including non-performing loans, for the Bank as a
percentage of total loans:
12-31-00 09-30-00 06-30-00 03-31-00
____________ ____________ ____________ ____________
1.34% 0.95% 0.85% 1.08%
At December 31, 2000, loans classified as non-performing included
approximately $142,000 of loan balances that are current and paying as
agreed, but which the Bank maintains as non-performing until the borrower
has demonstrated a sustainable period of performance. Excluding these
loans, the Bank's total delinquencies 30 days or more past due, as a
percentage of total loans, would be 1.31% as of December 31, 2000.
The level of the allowance for loan losses, as a percentage of total loans,
remained essentially the same at December 31, 2000 compared to June 30,
2000, while the level of the allowance for loan losses as a percentage of
total non-performing loans decreased as total non-performing loans
increased from June 30, 2000 to December 31, 2000. The Company has
experienced good growth in the real estate mortgage loan portfolio during
the December 31, 2000 quarter and these types of loans are traditionally
well collateralized. The allowance for loan losses as a percentage of total
loans was supported by management's ongoing analysis of the adequacy of the
allowance for loan losses. Classified loans are also considered in
management's analysis of the adequacy of the allowance for loan losses.
Based on reviewing the credit risk and collateral of classified loans,
management has considered the risks of the classified portfolio and
believes the allowance for loan losses is adequate. Net charge-offs for the
Bank were $278,052 and $248,114 for the six-month periods ended December
2000 and 1999, respectively.
On a regular and ongoing basis, management actively monitors the Bank's
loan quality to evaluate the adequacy of the allowance for loan losses and,
when appropriate, to charge-off loans against the allowance for loan
losses, provide specific loss allowances when necessary, and change the
level of loan loss allowance. The process of evaluating the allowance
involves a high degree of management judgment. The methods employed to
evaluate the allowance for loan losses are quantitative in nature and
consider such factors as the loan mix, the level of non-performing loans,
delinquency trends, past charge-off history, loan reviews and
classifications, collateral, and the current economic climate.
Management believes that the allowance for loan losses is adequate
considering the level of risk in the loan portfolio. While management
believes that it uses the best information available to make its
determinations with respect to the allowance, there can be no assurance
that the Company will not have to increase its provision for loan losses in
the future as a result of changing economic conditions, adverse markets for
real estate or other factors. In addition, various regulatory agencies, as
an integral part of their examination process, periodically review the
Bank's allowance for loan losses. Such agencies may require the Bank to
recognize additions to the allowance for loan losses based on their
judgments about information available to them at the time of their
examination. The Bank's most recent examination by the Office of Thrift
Supervision was on March 7, 2000. At the time of the exam the regulators
proposed no adjustments to the allowance for loan losses.
Assets acquired increased by $175,014 from June 30, 2000 to December 31,
2000. The increase was primarily due to additional mobile home and indirect
auto loans that were repossessed.
Capital Resources and Liquidity
_______________________________
The Bank continues to attract new local deposit relationships. The Bank
utilizes, as alternative sources of funds, brokered certificate of deposits
("CDs") when national deposit interest rates are less than the interest
rates on local market deposits. Brokered CDs are also used to supplement
the growth in earning assets. Brokered CDs carry the same risk as local
deposit CDs, in that both are interest rate sensitive with respect to the
Bank's ability to retain the funds. The Bank also utilizes FHLB advances,
as alternative sources of funds, when the interest rates of the advances
are less than market deposit interest rates. FHLB advances are also used to
fund short-term liquidity demands.
Total deposits were $266,961,957 and securities sold under repurchase
agreements were $16,108,810 as of December 31, 2000. These amounts
represent an increase of $6,980,145 and $2,998,645, respectively, compared
to June 30, 2000. The increase in deposits was primarily due to the
increase in time and demand deposits. The increase in time deposits was
attributable to various special rate offerings as well as normal growth
from the branch market areas. The Bank has devoted additional staffing to
increase its balances in repurchase agreements. Repurchase agreements
enhance the Bank's ability to attain additional municipal and commercial
deposits, improving its overall liquidity position in a cost-effective
manner. Brokered CD's represented $32,550,953 of the total deposits at
December 31, 2000, which decreased by $4,954,188 compared to the
$37,505,141 balance as of June 30, 2000. Cross selling strategies are
employed by the Bank to enhance deposit growth. Even though deposit
interest rates have remained competitive, the rates of return are
potentially higher with other financial instruments such as mutual funds
and annuities. Like other companies in the banking industry, the Bank will
be challenged to maintain or increase its core deposits.
Total advances from the FHLB were $117,205,938 as of December 31, 2000; a
decrease of $5,421,867 compared to June 30, 2000. The cash received from
the growth in deposits and securities sold under repurchase agreements
allowed the Bank to decrease its advances in FHLB advances. The Bank has
unused borrowing capacity from the FHLB through its advances program. The
Bank's current advance availability, subject to the satisfaction of certain
conditions, is approximately $30,000,000 over and above the December 31,
2000 advances. Mortgages, free of liens, pledges and encumbrances are
required to be pledged to secure FHLB advances. The Bank's ability to
access principal sources of funds is immediate and with the borrowing
capacity at the Federal Home Loan Bank, the normal growth in bank deposits
and repurchase agreements and the immediate availability of the Bank's cash
equivalents as well as securities available for sale, management believes
that the Company's available liquidity resources are sufficient to support
the Company's needs.
In December 1999, the Board of Directors of Northeast Bancorp approved a
plan to repurchase up to $2,000,000 of its common stock. Under the common
stock repurchase plan, Northeast Bancorp may purchase shares of its common
stock from time to time in the open market at prevailing prices.
Repurchased shares will be held in treasury and may be used in connection
with employee benefits and other general corporate purposes. The Company
does not believe that the current market price for its common stock
adequately reflects full value and believes that the purchase of its common
stock from time to time in the market is a good investment and use of its
funds. As of December 31, 2000, the Company has repurchased $997,335 of its
common stock and management believes that the purchase will not have a
significant effect on the Company's liquidity and earnings per share.
Total equity of the Company was $29,945,880 as of December 31, 2000 as
compared to $28,126,478 at June 30, 2000. Book value per common share was
$11.23 as of December 31, 2000 as compared to $10.49 at June 30, 2000. The
total equity to total assets ratio of the Company was 6.80% as of December
31, 2000 and 6.48% at June 30, 2000.
The Company's net cash provided by operating activities was $1,926,653
during December 31, 2000, which was a $64,046 decrease when compared to
December 31, 1999. Cash used by investing activities decreased the
Company's net cash during December 31, 2000 due to the increase in the
Company's net loans. The decrease in net cash, used by the Company's
operating and investing activities, was offset by the cash provided by
financing activities due to the increase in deposits and repurchase
agreements. Overall, the Company's cash position decreased by $383,434 in
the six months ended December 31, 2000.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), contains various provisions intended to capitalize the Bank
Insurance Fund ("BIF") and also affects a number of regulatory reforms that
impact all insured depository institutions, regardless of the insurance
fund in which they participate. Among other things, FDICIA grants the OTS
broader regulatory authority to take prompt corrective action against
insured institutions that do not meet capital requirements, including
placing undercapitalized institutions into conservatorship or receivership.
FDICIA also grants the OTS broader regulatory authority to take corrective
action against insured institutions that are otherwise operating in an
unsafe and unsound manner.
FDICIA defines specific capital categories based on an institution's
capital ratios. Although no capital requirements are imposed on the
Company, the Bank is subject to such requirements established by the OTS.
The OTS has issued regulations requiring a savings institution to maintain
a minimum regulatory tangible capital equal to 1.5% of adjusted total
assets, core capital of 3.0%, leverage capital of 4.0% and a risk-based
capital standard of 8.0%. The prompt corrective action regulations define
specific capital categories based on an institution's capital ratios. The
capital categories, in declining order, are "well capitalized", "adequately
capitalized", "undercapitalized", "significantly undercapitalized", and
"critically undercapitalized". As of December 31, 2000, the Bank met the
definition of a well-capitalized institution. There are no conditions or
events since that notification that management believes has changed the
institution's category.
At December 31, 2000, the Bank's regulatory capital was in compliance with
regulatory capital requirements as follows:
To Be "Well
Capitalized" Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
________ ________ ________ ________ _________ ________
(Dollars in Thousands)
As of December 31,
2000:
Tier 1 (Core) capital
(to risk weighted
assets) $ 34,487 10.79% $ 12,786 4.00% $ 19,179 6.00%
Tier 1 (Core) capital
(to total assets) $ 34,487 7.87% $ 17,536 4.00% $ 21,920 5.00%
Total Capital (to risk
weighted assets) $ 36,965 11.56% $ 25,571 8.00% $ 31,964 10.00%
Management believes that there are adequate funding sources to meet its
future liquidity needs for the foreseeable future. Primary among these
funding sources are the repayment of principal and interest on loans, the
renewal of time deposits, and the growth in the deposit base. Management
does not believe that the terms and conditions that will be present at the
renewal of these funding sources will significantly impact the Company's
operations, due to its management of the maturities of its assets and
liabilities.
Results of Operations
_____________________
Net income for the quarter ended December 31, 2000 was $908,574 or basic
and diluted earnings per share of $0.34, respectively. This compares to
earnings of $836,744 or basic and diluted earnings per share of $0.30 for
the quarter ended December 31, 1999. Net income for the six months ended
December 31, 2000 was $1,791,847 versus $1,638,465 for the period ended
December 31, 1999. Basic and diluted earnings per share were $.67,
respectively, for the six months ended December 31, 2000 versus basic and
diluted earnings per share of $.59, respectively, for the six months ended
December 31, 1999.
The Company's net interest income was $7,142,523 for the six months ended
December 31, 2000, as compared to $6,992,917 for the six months ended
December 31, 1999, an increase of $149,606. Total interest income
increased $2,940,864 during the six months ended December 31, 2000 compared
to the six months ended December 31, 1999. The increase in interest income
was due primarily from increased volume and rates on loans. The increase in
total interest expense of $2,791,258 for the six months ended December 31,
2000 was due primarily from increased volume and rates on deposits and
borrowings.
The changes in net interest income are presented in the schedule below.
Northeast Bancorp
Rate/Volume Analysis for the six months ended
December 31, 2000 versus December 31, 1999
Difference Due to
Volume Rate Total
______________ ______________ ______________
Investments $ 149,933 $ 87,149 $ 237,082
Loans, net 1,963,207 700,435 2,663,642
FHLB & Other Deposits 6,426 33,714 40,140
______________ ______________ ______________
Total Interest Earning Assets 2,119,566 821,298 2,940,864
Deposits 998,619 729,158 1,727,777
Repurchase Agreements (16,342) 4,553 (11,789)
Borrowings 381,798 693,472 1,075,270
______________ ______________ ______________
Total Interest-Bearing
Liabilities 1,364,075 1,427,183 2,791,258
______________ ______________ ______________
Net Interest Income $ 755,491 $ (605,885) $ 149,606
============== ============== ==============
Rate/Volume amounts spread proportionately between volume and rate. Borrowings
in the table include trust preferred securities and FHLB borrowings.
The Company's business primarily consists of deposits, borrowings and loan
activities of the Bank. Accordingly, the success of the Company is largely
dependent on its ability to manage interest rate risk. This is the risk
that represents the potential changes in interest rates and those changes
in interest rates may adversely affect net interest income. Generally,
interest rate risk results from differences in repricing intervals or
maturities between interest-earning assets and interest-bearing
liabilities, the components of which comprise the interest rate spread.
When such differences exist, a change in the level of interest rates will
most likely result in an increase or decrease in net interest income. The
Bank has shifted to a slightly liability sensitive position based on its
own internal analysis which categorizes its core deposits as long term
liabilities which are then matched to long term assets. As a result, the
Bank will generally experience a contraction in its net interest margins
during a period of increasing rates. Management is currently addressing the
asset/liability mix to reposition the Bank to a slightly asset sensitive
position.
Approximately 21% of the Bank's loan portfolio are comprised of floating
rate loans based on a prime rate index. Interest income on these existing
loans will decrease as the prime rate decreases, as well as on
approximately 18% of other loans in the Bank's portfolio that are based on
short-term rate indices such as the one-year treasury bill. A decrease in
short-term interest rates will also decrease deposit and FHLB advance
rates, decreasing the Company's interest expense. Although the Bank has
experienced some net interest margin compression, the impact on net
interest income will depend on, among other things, actual rates charged on
the Bank's loan portfolio, deposit and advance rates paid by the Bank and
loan volume.
The provision for loan losses for the six months ended December 31, 2000
was $391,053 as compared to $491,114 for the six months ended December 31,
1999, which was a decrease of $100,061. The increase in the Bank's loan
volume during the six months ended December 30, 2000 was significantly less
when compared to the six months ended December 31, 1999. The reduction in
loan volume in the six months ended December 31, 2000, when compared to
December 31, 1999, was primarily the result of a decrease in the loan
amounts in the commercial and consumer loan portfolios. The Bank had
experienced strong loan growth during the six months ended December 31,
1999 particularly in the commercial and consumer loan portfolios. However,
these types of loans have additional credit risk as compared to real estate
mortgage loans. Due to the increase in these types of loans, the Bank
increased its provision for loan losses during fiscal 1999 to maintain its
allowance for loan losses as a percentage of total loans and to consider
the added risk of these loans.
Total non-interest income was $650,271 and $1,295,334 for the three and six
months ended December 31, 2000 versus $613,708 and $1,241,032 for the three
and six months ended December 31, 1999. Service fee income was $267,950 and
$566,709 for the three and six months ended December 31, 2000 versus
$325,051 and $590,232 for the three and six months ended December 31, 1999.
The $57,101 and $23,523 service fee decrease for the three and six months
ended December 31, 2000, respectively, was primarily due to a decrease in
loan servicing and other loan fee income. Gains from available for sale
securities were $34,964 and $53,612 for the three and six months ended
December 31, 2000 versus $20,697 and $25,861 for the three and six months
ended December 31, 1999. The Company sold a larger volume of its securities
during the six-month period ended December 31, 2000, taking advantage of
the fluctuation in market prices. The $71,687 and $40,108 increase in other
income for three and six months ended December 31, 2000, respectively, was
primarily due to an increase in investment services income.
Total non-interest expense for the Company was $2,622,741 and $5,289,130
for the three and six months ended December 31, 2000, which was an increase
of $5,033 and $83,876, respectively, when compared to total non-interest
expense of $2,617,708 and $5,205,254 for the three and six months ended
December 31, 1999. The increase in non-interest expense for the three and
six months ended December 31, 2000 as compared to the three and six months
ended December 31, 1999 was due, in part, to the increase in compensation
expense of $112,545 and $212,740, respectively. The increase in
compensation expense was primarily due to the increased commission paid to
brokers in the investment sales division due to growth in sales revenue and
increased costs associated with the Company's general increases in
compensation, health insurance and benefit plans. This increase was offset,
in part, by the decrease in occupancy expense of $21,551 and $40,408,
respectively, due to the closure of a branch at the end of the prior fiscal
year and by the decrease in equipment expense of $8,111 and $37,816,
respectively, due to the expenses associated with the closure of the
branch. Other expenses decreased by $77,851 and $50,640 for the three and
six months ended December 31, 2000 compared to the three and six months
ended December 31, 1999. The decrease was primarily due to a decrease in
professional fees, loan and deposit expenses, telephone expense, and
training.
The Company's income tax expense increased by $24,209 and $66,711 for the
three and six months ended December 31, 2000, when compared to the three
and six months ended December 31, 1999. The increase in income tax expense
is due to increased earnings before tax.
Recent Accounting Developments
______________________________
In September of 2000, the FASB issued Statement of Financial Accounting
Standards No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities", a replacement of FASB Statement
No. 125 (Statement 140). Statement 140 provides accounting and reporting
standards for transfers and servicing of financial assets and
extinguishments of liabilities. Those standards are based on consistent
application of a financial components approach that focuses on control.
Under that approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the
liabilities it has incurred, de-recognizes financial assets when control
has been surrendered, and de-recognizes liabilities when extinguished.
Statement 140 provides consistent standards for distinguishing transfers of
financial assets that are sales from transfers that are secured borrowings.
Statement 140 is effective for transfers and servicing assets and
extinguishments of liabilities occurring after March 31, 2001. This
statement is effective for recognition and reclassification of collateral
and for disclosures relating to securitization transactions and collateral
for fiscal years ending after December 15, 2000. Management of the Company
does not expect this statement to have a significant effect on the
Company's financial position or results of operations based on the
Company's current activities.
Impact of Inflation
___________________
The consolidated financial statements and related notes herein have been
presented in terms of historic dollars without considering changes in the
relative purchasing power of money over time due to inflation. Unlike
industrial companies, substantially all of the assets and virtually all of
the liabilities of the Company are monetary in nature. As a result,
interest rates have a more significant impact on the Company's performance
than the general level of inflation. Over short periods of time, interest
rates may not necessarily move in the same direction or in the same
magnitude as inflation.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
_________________________________________________________
There have been no material changes in the Company's market risk from June
30, 2000. For information regarding the Company=s market risk, refer to
the Company's Annual Report on Form 10-K dated as of June 30, 2000.
Part II - Other Information
Item 1. Legal Proceedings
_________________
None.
Item 2. Changes in Securities
_____________________
None.
Item 3. Defaults Upon Senior Securities
_______________________________
None.
Item 4. Submission of Matters to a Vote of Security Holders
____________________________________________________
SUMMARY OF VOTING AT 11/14/2000 ANNUAL SHAREHOLDERS' MEETING
________________________________________________________________
At the Annual Meeting of Shareholders held in Auburn, Maine on
November 14, 2000, the following matters were submitted to a vote of,
and approved by, the Company's shareholders, each such proposal
receiving the vote of the Company's outstanding common shares, as
follows:
Proposal 1 - Election of Directors:
Votes For Votes Withheld
_________________ __________________
John W. Trinward, D.M.D. 2,041,422 66,053
John B. Bouchard 2,041,422 66,053
A. William Cannan 2,041,458 66,017
James D. Delamater 2,041,458 66,017
Ronald J. Goguen 2,035,372 72,103
Judith W. Hayes 2,040,458 67,017
Philip Jackson 2,041,458 66,017
Roland C. Kendall 2,041,225 66,250
John Rosmarin 2,040,458 67,017
John Schiavi 2,037,433 70,042
Stephen W. Wight 2,037,158 69,317
Dennis A. Wilson 2,041,225 66,250
Proposal 2 - Ratification of Appointment of Auditors. Proposal to
ratify the appointment of Baker, Newman & Noyes, Limited Liability
Company, as the Company's auditors for the 2001 fiscal year.
Votes For Votes Against Votes Abstain
___________ _______________ _______________
2,104,780 2,210 485
Item 5. Other Information
_________________
None.
Item 6. Exhibits and Reports on Form 8-K
________________________________
(a) Exhibits
________
11 Statement regarding computation of per share earnings.
(b) Reports on Form 8-K
___________________
No reports on Form 8-K have been filed during the quarter ended
December 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: February 12, 2001 NORTHEAST BANCORP
By: James D. Delamater
________________________
James D. Delamater
President and CEO
By: Richard Wyman
________________________
Richard Wyman
Chief Financial Officer
NORTHEAST BANCORP
Index to Exhibits
EXHIBIT NUMBER DESCRIPTION
11 Statement regarding computation of per share earnings
NORTHEAST BANCORP
Exhibit 11. Statement Regarding Computation of Per Share Earnings
Three Months Ended Three Months Ended
December 31, 2000 December 31, 1999
__________________ __________________
EQUIVALENT SHARES:
Weighted Average Shares Outstanding 2,672,650 2,774,885
Total Diluted Shares 2,677,625 2,788,188
Net Income $ 908,574 $ 836,744
Basic Earnings Per Share $ 0.34 $ 0.30
Diluted Earnings Per Share $ 0.34 $ 0.30
Six Months Ended Six Months Ended
December 31, 2000 December 31, 1999
__________________ __________________
EQUIVALENT SHARES:
Weighted Average Shares Outstanding 2,676,111 2,772,662
Total Diluted Shares 2,684,346 2,792,661
Net Income $ 1,791,847 $ 1,638,465
Basic Earnings Per Share $ 0.67 $ 0.59
Diluted Earnings Per Share $ 0.67 $ 0.59
