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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):	January 30, 2017

Commission File No. 1-14588

NORTHEAST BANCORP

(Exact name of registrant as specified in its charter)

Maine	01-0425066
(State or other jurisdiction of incorporation)	(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

Former name or former address, if changed since last Report: N/A

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

| | Written communications pursuant to Rule 425 under the Securities Act

| | Soliciting material pursuant to Rule 14a-12 under the Exchange Act

| | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

| | Pre-commencement to communications pursuant to Rule 13e-4(c) under the Exchange Act

Item 2.02

Results of Operations and Financial Condition

On January 30, 2017, Northeast Bancorp, a Maine corporation (the "Company"), issued a press release announcing its earnings for the second quarter of fiscal 2017 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 dated January 30, 2017

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 hereunder duly authorized.


NORTHEAST BANCORP


By: /s/ Brian Shaughnessy
Name:	Brian Shaughnessy
Title:	Chief Financial Officer and Treasurer

Date: January 30, 2017

EXHIBIT INDEX

Exhibit No.	Description

99.1	Press Release dated January 30, 2017

ex99-1.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

For More Information:

Brian Shaughnessy, CFO

Northeast Bank, 500 Canal Street, Lewiston, ME 04240

207.786.3245 ext. 3220

www.northeastbank.com

Northeast Bancorp Reports Record Quarterly Results, Surpasses

$1 Billion in Assets and Declares Dividend

Lewiston, ME (January 30, 2017) ‒ Northeast Bancorp (“Northeast” or the “Company”) (NASDAQ: NBN), a Maine-based full-service financial services company and parent of Northeast Bank (the “Bank”), today reported net income of $3.1 million, or $0.35 per diluted common share, for the quarter ended December 31, 2016, compared to net income of $1.7 million, or $0.18 per diluted common share, for the quarter ended December 31, 2015. Net income for the six months ended December 31, 2016 was $4.9 million, or $0.54 per diluted common share, compared to $3.6 million, or $0.38 per diluted common share, for the six months ended December 31, 2015.

The Board of Directors has also declared a cash dividend of $0.01 per share, payable on February 28, 2017 to shareholders of record as of February 15, 2017.

“I am very pleased with the progress we made this quarter,” said Richard Wayne, President and Chief Executive Officer. “We reached a great milestone for the Company by surpassing $1 billion in assets and we also achieved record earnings of 35 cents per share. In addition, we had solid loan volume, purchased loan transactional income and SBA gains. Our Loan Acquisition and Servicing Group produced $91.7 million of loans, our SBA Division closed $25.3 million of loans, the purchased loan portfolio yielded 13%, and the SBA gain on sale was $1.7 million. This balance sheet growth and solid income from the Loan Acquisition and Servicing Group and the SBA Division helped drive our efficiency ratio to 61.7%.”

As of December 31, 2016, total assets were $1.0 billion, an increase of $26.5 million, or 2.7%, from total assets of $986.2 million as of June 30, 2016. The principal components of the change in the balance sheet follow:

The loan portfolio – excluding loans held for sale – has grown by $74.5 million, or 10.8%, compared to June 30, 2016, principally on the strength of $70.7 million of net growth in commercial loans purchased or originated by the Bank’s Loan Acquisition and Servicing Group (“LASG”) and net growth of $13.2 million in originations by the Bank’s Small Business Administration and United States Department of Agriculture (“SBA”) Division. This net growth was offset by a $9.4 million decrease in the Bank’s Community Banking Division loan portfolio.

Loans generated by the LASG totaled $91.7 million for the quarter ended December 31, 2016. The growth in LASG loans consisted of $46.0 million of purchased loans, at an average price of 90.1% of unpaid principal balance, and $45.7 million of originated loans. SBA loans closed during the quarter totaled $25.3 million, of which $24.7 million were fully funded in the quarter. In addition, the Company sold $17.5 million of the guaranteed portion of SBA loans in the secondary market, of which $9.3 million were originated in the current quarter and $8.2 million were originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $17.7 million for the quarter.

As previously discussed in the Company’s SEC filings, the Company made certain commitments to the Board of Governors of the Federal Reserve System in connection with the merger of FHB Formation LLC with and into the Company in December 2010. The Company’s loan purchase and commercial real estate loan availability under these conditions follow:

Basis for Regulatory Condition	Condition	Availability at December 31, 2016
		(Dollars in millions)
Total Loans	Purchased loans may not exceed 40% of total loans	$	91.5
Regulatory Capital	Non-owner occupied commercial real estate loans may not exceed 300% of total capital	$	146.2

An overview of the Bank’s LASG portfolio follows:

	LASG Portfolio
	Three Months Ended December 31,
	2016												2015
	Purchased (1)			Originated			Secured Loans to Broker-Dealers			Total LASG			Purchased			Originated			Secured Loans to Broker-Dealers			Total LASG
	(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance	$	51,112		$	45,647		$	-		$	96,759		$	40,145		$	39,512		$	-		$	79,657
Net investment basis		46,033			45,647			-			91,680			35,855			39,512			-			75,367

Loan returns during the period:
Yield		13.01	%		5.89	%		0.99	%		8.76	%		12.74	%		5.69	%		0.50	%		8.55	%
Total Return (2)		13.01	%		5.89	%		0.99	%		8.76	%		12.74	%		5.69	%		0.50	%		8.55	%

	Six Months Ended December 31,
	2016												2015
	Purchased (1)			Originated			Secured Loans to Broker-Dealers			Total LASG			Purchased			Originated			Secured Loans to Broker-Dealers			Total LASG
	(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance	$	67,903		$	88,025		$	-		$	155,928		$	63,728		$	50,907		$	-		$	114,635
Net investment basis		59,886			88,025			-			147,911			59,311			50,907			-			110,218

Loan returns during the period:
Yield		11.71	%		5.88	%		0.74	%		8.19	%		12.41	%		5.68	%		0.50	%		8.40	%
Total Return (2)		11.73	%		5.88	%		0.74	%		8.19	%		12.43	%		5.68	%		0.50	%		8.41	%


Total loans as of period end:
Unpaid principal balance	$	288,455		$	231,278		$	48,000		$	567,733		$	258,049		$	155,728		$	60,000		$	473,777
Net investment basis		255,048			231,278			48,000			534,326			226,014			155,728			60,000			441,742

(1) Purchased loan balances include loans held for sale of $975 thousand.

(2) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, and other noninterest income recorded during the period divided by the average invested balance, which includes loans held for sale, on an annualized basis. The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter.

Deposits increased by $34.2 million, or 4.2% for the quarter, attributable primarily to growth in non-maturity (demand, savings and interest checking, and money market) accounts, which increased by $20.3 million, or 4.2%, as well as an increase in time deposits of $13.8 million, or 4.3%. For the six months ended December 31, 2016, deposits increased $39.1 million, or 4.9%, due to growth in non-maturity accounts of $54.7 million, or 12.2%, offset by a decrease in time deposits of $15.6 million, or 4.4%.

Shareholders’ equity decreased by $1.6 million from June 30, 2016, primarily due to the $6.9 million in share repurchases (representing 645,238 shares), offset by earnings of $4.9 million. Additionally, there was stock-based compensation of $483 thousand, a decrease in accumulated other comprehensive loss of $141 thousand and $181 thousand in dividends paid on common stock.

Net income increased by $1.4 million to $3.1 million for the quarter ended December 31, 2016, compared to $1.7 million for the quarter ended December 31, 2015.

Net interest and dividend income before provision for loan losses increased by $1.7 million for the quarter ended December 31, 2016, compared to the quarter ended December 31, 2015. The increase is primarily due to higher average balances in the total loan portfolio and higher transactional income on purchased loans. This increase was partially offset by higher rates and volume in our deposit portfolio and the effect of the issuance of subordinated debt.

The various components of transactional income are set forth in the table below entitled “Total Return on Purchased Loans.” When compared to the three and six months ended December 31, 2015, transactional income increased by $331 thousand and decreased by $552 thousand, respectively. The following table summarizes interest income and related yields recognized on the loan portfolios:

	Interest Income and Yield on Loans
	Three Months Ended December 31,
	2016							2015
	Average		Interest					Average		Interest
	Balance (1)		Income		Yield			Balance (1)		Income		Yield
	(Dollars in thousands)
Community Banking	$	203,963	$	2,350		4.57	%	$	217,470	$	2,604		4.75	%
SBA		41,038		574		5.55	%		23,037		328		5.65	%
LASG:
Originated		216,353		3,210		5.89	%		137,959		1,978		5.69	%
Purchased		233,502		7,659		13.01	%		209,605		6,734		12.74	%
Secured Loans to Broker-Dealers		48,000		120		0.99	%		60,004		75		0.50	%
Total LASG		497,855		10,989		8.76	%		407,568		8,787		8.55	%
Total	$	742,856	$	13,913		7.43	%	$	648,075	$	11,719		7.17	%

	Six Months Ended December 31,
	2016							2015
	Average		Interest					Average		Interest
	Balance (1)		Income		Yield			Balance (1)		Income		Yield
	(Dollars in thousands)
Community Banking	$	204,864	$	4,754		4.60	%	$	221,400	$	5,312		4.76	%
SBA		36,093		1,093		6.01	%		18,289		545		5.91	%
LASG:
Originated		200,731		5,949		5.88	%		128,267		3,673		5.68	%
Purchased		232,751		13,740		11.71	%		204,995		12,829		12.41	%
Secured Loans to Broker-Dealers		48,000		180		0.74	%		60,006		150		0.50	%
Total LASG		481,482		19,869		8.19	%		393,268		16,652		8.40	%
Total	$	722,439	$	25,716		7.06	%	$	632,957	$	22,509		7.05	%

(1) Includes loans held for sale.

The yield on purchased loans for the quarter ended December 31, 2016 was 13.0% as compared to 12.7% in the quarter ended December 31, 2015, primarily due to higher transactional income in the quarter. The following table details the total return on purchased loans:

	Total Return on Purchased Loans
	Three Months Ended December 31,
	2016					2015
	Income		Return (1)			Income		Return (1)
	(Dollars in thousands)
Regularly scheduled interest and accretion	$	4,716		8.01	%	$	4,122		7.80	%
Transactional income:
Gain on loan sales		-		0.00	%		-		0.00	%
Gain on sale of real estate owned		-		0.00	%		-		0.00	%
Other noninterest income		-		0.00	%		-		0.00	%
Accelerated accretion and loan fees		2,943		5.00	%		2,612		4.94	%
Total transactional income		2,943		5.00	%		2,612		4.94	%
Total	$	7,659		13.01	%	$	6,734		12.74	%

	Total Return on Purchased Loans
	Six Months Ended December 31,
	2016					2015
	Income		Return (1)			Income			Return (1)
	(Dollars in thousands)
Regularly scheduled interest and accretion	$	9,470		8.07	%	$	8,009			7.75	%
Transactional income:
Gain on loan sales		-		0.00	%		-			0.00	%
Gain on sale of real estate owned		19		0.02	%		22			0.02	%
Other noninterest income		-		0.00	%		(1	)		0.00	%
Accelerated accretion and loan fees		4,270		3.64	%		4,820			4.66	%
Total transactional income		4,289		3.66	%		4,841			4.68	%
Total	$	13,759		11.73	%	$	12,850			12.43	%

(1)

The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, gains on real estate owned and other noninterest income recorded during the period divided by the average invested balance, which includes loans held for sale, on an annualized basis. The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter. Total return is considered a non-GAAP financial measure.

Noninterest income increased by $1.1 million for the quarter ended December 31, 2016, compared to the quarter ended December 31, 2015, principally due to an increase in gains realized on sale of SBA loans of $1.1 million.

Noninterest expense increased by $760 thousand for the quarter ended December 31, 2016, compared to the quarter ended December 31, 2015, primarily due to the following:

●

An increase in loan expense of $328 thousand, largely driven by the expense related to loan collection in the period;

●

An increase in salaries and employee benefits of $307 thousand, primarily due to increased incentive compensation and severance in the three months ended December 31, 2016, offset by higher deferred salaries due to an increase in loan originations;

●

An increase in professional fees of $135 thousand, largely attributable to increased consulting costs, increased audit costs relating to the Company’s transition to accelerated filer status and core system projects; and

●

An increase in other noninterest expense of $99 thousand, largely attributable to $220 thousand of expense related to the quarterly valuation of SBA servicing rights.

●

The increases in noninterest expense were partially offset by a decrease in FDIC deposit insurance premiums of $94 thousand, resulting from changes in the reserve ratio requirements.

As of December 31, 2016, nonperforming assets totaled $13.3 million, or 1.32% of total assets, as compared to $9.5 million, or 0.96% of total assets, as of June 30, 2016. The increase primarily relates to one loan placed on non-accrual in the quarter ended December 31, 2016, as well as one loan added to other real estate owned in the quarter ended September 30, 2016.

As of December 31, 2016, past due loans totaled $21.9 million, or 2.85% of total loans, compared to $6.9 million, or 1.00% of total loans as of June 30, 2016. The increase is primarily due to the following:

●

$6.0 million of loans purchased in December that were delinquent at month end, of which $4.5 million have been paid current in January; and

●

$6.0 million of loans that were 30 days past due as of December 31, 2016, of which $4.1 million have been paid current in January.

As of December 31, 2016, the Company’s Tier 1 Leverage Ratio was 12.6%, compared to 13.3% at June 30, 2016, and the Total Capital Ratio was 18.3%, a decrease from 20.4% at June 30, 2016. The decrease resulted primarily from loan growth and the effect of purchases under the Company’s share repurchase program.

Investor Call Information

Richard Wayne, Chief Executive Officer of Northeast Bancorp, and Brian Shaughnessy, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss second quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, January 31^st. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 49922895. The call will be available via live webcast, which can be viewed by accessing the Company’s website at www.northeastbank.com and clicking on the About Us - Investor Relations section. To listen to the webcast, attendees are encouraged to visit the website at least fifteen minutes early to register, download and install any necessary audio software. Please note there will also be a slide presentation that will accompany the webcast. For those who cannot listen to the live broadcast, a replay will be available online for one year at www.northeastbank.com.

About Northeast Bancorp

Northeast Bancorp (NASDAQ: NBN) is the holding company for Northeast Bank, a full-service bank headquartered in Lewiston, Maine. We offer traditional banking services through the Community Banking Division, which operates ten full-service branches that serve customers located in western, central, and southern Maine. From our Maine and Boston locations, we also lend throughout the New England area. Our Loan Acquisition and Servicing Group (“LASG”) purchases and originates commercial loans on a nationwide basis. In addition, our SBA Division supports the needs of growing businesses nationally. ableBanking, a division of Northeast Bank, offers savings products to consumers online. Information regarding Northeast Bank can be found on its website at www.northeastbank.com.

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures, including tangible common shareholders’ equity, tangible book value per share, and total return. Northeast’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

Forward-Looking Statements

Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Northeast believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates and real estate values; competitive pressures from other financial institutions; the effects of weakness 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; changing government regulation; the risk that the Company may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Company’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K and updated by the Company’s Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. These statements speak only as of the date of this release and the Company does 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.

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share and per share data)

	December 31, 2016			June 30, 2016
Assets
Cash and due from banks	$	2,586		$	2,459
Short-term investments		109,610			148,698
Total cash and cash equivalents		112,196			151,157

Available-for-sale securities, at fair value		90,533			100,572

Residential real estate loans held for sale		5,217			6,449
SBA loans held for sale		3,762			1,070
Total loans held for sale		8,979			7,519


Loans
Commercial real estate		503,448			426,568
Residential real estate		106,949			113,962
Commercial and industrial		151,228			145,956
Consumer		5,313			5,950
Total loans		766,938			692,436
Less: Allowance for loan losses		3,107			2,350
Loans, net		763,831			690,086


Premises and equipment, net		7,179			7,801
Real estate owned and other repossessed collateral, net		3,145			1,652
Federal Home Loan Bank stock, at cost		1,938			2,408
Intangible assets, net		1,514			1,732
Bank owned life insurance		15,953			15,725
Other assets		7,391			7,501
Total assets	$	1,012,659		$	986,153

Liabilities and Shareholders' Equity
Deposits
Demand	$	76,721		$	66,686
Savings and interest checking		107,386			107,218
Money market		319,933			275,437
Time		335,531			351,091
Total deposits		839,571			800,432

Federal Home Loan Bank advances		20,024			30,075
Subordinated debt		23,469			23,331
Capital lease obligation		1,003			1,128
Other liabilities		13,650			14,596
Total liabilities		897,717			869,562

Commitments and contingencies		-			-


Shareholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at December 31, 2016 and June 30, 2016		-			-
Voting common stock, $1.00 par value, 25,000,000 shares authorized; 7,487,552 and 8,089,790 shares issued and outstanding at December 31, 2016 and June 30, 2016, respectively		7,487			8,089
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 1,343,683 and 1,227,683 shares issued and outstanding at December 31, 2016 and June 30, 2016, respectively		1,344			1,228
Additional paid-in capital		77,046			83,020
Retained earnings		30,830			26,160
Accumulated other comprehensive loss		(1,765	)		(1,906	)
Total shareholders' equity		114,942			116,591
Total liabilities and shareholders' equity	$	1,012,659		$	986,153

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except share and per share data)

	Three Months Ended December 31,					Six Months Ended December 31,
	2016		2015			2016			2015
Interest and dividend income:
Interest and fees on loans	$	13,913	$	11,719		$	25,716		$	22,509
Interest on available-for-sale securities		247		236			486			464
Other interest and dividend income		172		80			387			176
Total interest and dividend income		14,332		12,035			26,589			23,149

Interest expense:
Deposits		1,798		1,425			3,553			2,789
Federal Home Loan Bank advances		220		259			475			519
Wholesale repurchase agreements		-		-			-			67
Short-term borrowings		-		5			-			13
Subordinated debt		468		158			927			312
Obligation under capital lease agreements		13		16			27			33
Total interest expense		2,499		1,863			4,982			3,733

Net interest and dividend income before provision for loan losses		11,833		10,172			21,607			19,416
Provision for loan losses		628		896			820			1,065
Net interest and dividend income after provision for loan losses		11,205		9,276			20,787			18,351

Noninterest income:
Fees for other services to customers		481		428			889			836
Gain on sales of residential loans held for sale		337		398			878			957
Gain on sales of SBA loans		1,734		679			2,476			1,354
Gain (loss) recognized on real estate owned and other repossessed collateral, net		3		(14	)		(11	)		(74	)
Bank-owned life insurance income		114		112			228			224
Other noninterest income		21		21			38			29
Total noninterest income		2,690		1,624			4,498			3,326

Noninterest expense:
Salaries and employee benefits		5,161		4,854			10,475			9,110
Occupancy and equipment expense		1,252		1,320			2,481			2,610
Professional fees		399		264			895			694
Data processing fees		410		366			832			714
Marketing expense		97		66			184			136
Loan acquisition and collection expense		547		219			774			663
FDIC insurance premiums		22		116			146			229
Intangible asset amortization		109		131			218			262
Other noninterest expense		959		860			1,577			1,589
Total noninterest expense		8,956		8,196			17,582			16,007

Income before income tax expense		4,939		2,704			7,703			5,670
Income tax expense		1,839		960			2,852			2,059
Net income		3,100		1,744			4,851			3,611


Weighted-average shares outstanding:
Basic		8,831,235		9,559,369			8,968,690			9,560,913
Diluted		8,864,618		9,569,585			8,999,062			9,567,138

Earnings per common share:

Basic	$	0.35	$	0.18		$	0.54		$	0.38
Diluted		0.35		0.18			0.54			0.38

Cash dividends declared per common share	$	0.01	$	0.01		$	0.02		$	0.02

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

	Three Months Ended December 31,
	2016							2015
			Interest		Average					Interest		Average
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Rate			Balance		Expense		Rate
Assets:
Interest-earning assets:
Investment securities	$	92,750	$	247		1.06	%	$	105,502	$	236		0.89	%
Loans (1) (2) (3)		742,856		13,931		7.44	%		648,075		11,737		7.19	%
Federal Home Loan Bank stock		2,398		23		3.81	%		2,588		34		5.21	%
Short-term investments (4)		114,276		149		0.52	%		72,299		46		0.25	%
Total interest-earning assets		952,280		14,350		5.98	%		828,464		12,053		5.77	%
Cash and due from banks		2,764							3,353
Other non-interest earning assets		35,213							35,558
Total assets	$	990,257						$	867,375

Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts	$	71,795	$	52		0.29	%	$	65,617	$	42		0.25	%
Money market accounts		312,911		753		0.95	%		199,766		429		0.85	%
Savings accounts		35,206		12		0.14	%		35,269		11		0.12	%
Time deposits		317,318		981		1.23	%		334,925		943		1.12	%
Total interest-bearing deposits		737,230		1,798		0.97	%		635,577		1,425		0.89	%
Short-term borrowings		-		-		0.00	%		2,002		5		0.99	%
Borrowed funds		27,099		220		3.22	%		30,145		259		3.41	%
Subordinated debt		23,430		468		7.92	%		8,699		158		7.21	%
Capital lease obligations		1,024		13		5.04	%		1,272		16		4.99	%
Total interest-bearing liabilities		788,783		2,499		1.26	%		677,695		1,863		1.09	%

Non-interest bearing liabilities:
Demand deposits and escrow accounts		80,538							69,464
Other liabilities		8,299							6,302
Total liabilities		877,620							753,461
Stockholders' equity		112,637							113,914
Total liabilities and stockholders' equity	$	990,257						$	867,375

Net interest income (5)			$	11,851						$	10,190

Interest rate spread						4.72	%						4.68	%
Net interest margin (6)						4.94	%						4.88	%

(1) Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate.
(2) Includes loans held for sale.
(3) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4) Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(5) Includes tax exempt interest income of $18 thousand for the three months ended December 31, 2016 and December 31, 2015.
(6) Net interest margin is calculated as net interest income divided by total interest-earning assets.

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

	Six Months Ended December 31,
	2016							2015
			Interest		Average					Interest		Average
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Rate			Balance		Expense		Rate
Assets:
Interest-earning assets:
Investment securities	$	93,825	$	486		1.03	%	$	103,872	$	464		0.89	%
Loans (1) (2) (3)		722,439		25,752		7.07	%		632,957		22,545		7.07	%
Federal Home Loan Bank stock		2,403		46		3.80	%		3,345		68		4.03	%
Short-term investments (4)		134,334		341		0.50	%		85,974		108		0.25	%
Total interest-earning assets		953,001		26,625		5.54	%		826,148		23,185		5.57	%
Cash and due from banks		2,852							3,190
Other non-interest earning assets		33,012							35,986
Total assets	$	988,865						$	865,324

Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts	$	71,323	$	103		0.29	%	$	67,617	$	88		0.26	%
Money market accounts		302,323		1,435		0.94	%		185,166		782		0.84	%
Savings accounts		35,488		25		0.14	%		35,816		23		0.13	%
Time deposits		326,794		1,990		1.21	%		342,896		1,896		1.10	%
Total interest-bearing deposits		735,928		3,553		0.96	%		631,495		2,789		0.88	%
Short-term borrowings		-		-		0.00	%		1,976		13		1.31	%
Borrowed funds		28,580		475		3.30	%		34,734		586		3.35	%
Subordinated debt		23,395		927		7.86	%		8,674		312		7.14	%
Capital lease obligations		1,056		27		5.07	%		1,302		33		5.03	%
Total interest-bearing liabilities		788,959		4,982		1.25	%		678,181		3,733		1.09	%

Non-interest bearing liabilities:
Demand deposits and escrow accounts		78,104							66,736
Other liabilities		8,255							6,868
Total liabilities		875,318							751,785
Stockholders' equity		113,547							113,539
Total liabilities and stockholders' equity	$	988,865						$	865,324

Net interest income (5)			$	21,643						$	19,452

Interest rate spread						4.29	%						4.48	%
Net interest margin (6)						4.51	%						4.67	%

(1) Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate.

(2) Includes loans held for sale.

(3) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.

(4) Short term investments include FHLB overnight deposits and other interest-bearing deposits.

(5) Includes tax exempt interest income of $36 thousand for the six months ended December 31, 2016 and December 31, 2015.

(6) Net interest margin is calculated as 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)

	Three Months Ended:
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
Net interest income	$	11,833		$	9,775		$	10,713		$	9,254		$	10,172
Provision for loan losses		628			193			317			236			896
Noninterest income		2,690			1,808			2,411			2,035			1,624
Noninterest expense		8,956			8,626			9,396			8,412			8,196
Net income		3,100			1,751			2,199			1,809			1,744

Weighted average common shares outstanding:
Basic		8,831,235			9,106,144			9,319,522			9,456,198			9,559,369
Diluted		8,864,618			9,133,383			9,342,439			9,459,611			9,569,585
Earnings per common share:
Basic	$	0.35		$	0.19		$	0.24		$	0.19		$	0.18
Diluted		0.35			0.19			0.24			0.19			0.18
Dividends per common share		0.01			0.01			0.01			0.01			0.01

Return on average assets		1.24	%		0.70	%		0.93	%		0.80	%		0.80	%
Return on average equity		10.92	%		6.07	%		7.67	%		6.33	%		6.07	%
Net interest rate spread (1)		4.72	%		3.86	%		4.55	%		4.06	%		4.67	%
Net interest margin (2)		4.94	%		4.07	%		4.73	%		4.25	%		4.87	%
Efficiency ratio (3)		61.67	%		74.47	%		71.59	%		74.52	%		69.48	%
Noninterest expense to average total assets		3.59	%		3.47	%		3.97	%		3.70	%		3.75	%
Average interest-earning assets to average interest-bearing liabilities		120.73	%		120.86	%		119.99	%		120.62	%		122.48	%

	As of:
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
Nonperforming loans:
Originated portfolio:
Residential real estate	$	2,827		$	3,273		$	2,613		$	3,566		$	3,263
Commercial real estate		396			361			474			602			399
Home equity		48			48			48			-			11
Commercial and industrial		2,659			347			17			2			2
Consumer		48			121			163			216			204
Total originated portfolio		5,978			4,150			3,315			4,386			3,879
Total purchased portfolio		4,219			4,773			4,512			4,364			2,221
Total nonperforming loans		10,197			8,923			7,827			8,750			6,100
Real estate owned and other possessed collateral, net		3,145			3,774			1,652			690			1,238
Total nonperforming assets	$	13,342		$	12,697		$	9,479		$	9,440		$	7,338

Past due loans to total loans		2.85	%		1.36	%		1.00	%		2.52	%		2.48	%
Nonperforming loans to total loans		1.33	%		1.24	%		1.13	%		1.25	%		0.90	%
Nonperforming assets to total assets		1.32	%		1.29	%		0.96	%		1.02	%		0.82	%
Allowance for loan losses to total loans		0.41	%		0.35	%		0.34	%		0.32	%		0.31	%
Allowance for loan losses to nonperforming loans		30.47	%		28.08	%		30.02	%		25.41	%		34.90	%

Commercial real estate loans to risk-based capital (4)		197.11	%		179.96	%		174.12	%		217.09	%		204.91	%
Net loans to core deposits (5)		92.04	%		90.22	%		87.15	%		93.48	%		94.37	%
Purchased loans to total loans, including held for sale		32.91	%		32.54	%		34.25	%		33.17	%		32.90	%
Equity to total assets		11.35	%		11.32	%		11.82	%		12.41	%		12.82	%
Common equity tier 1 capital ratio		14.94	%		15.34	%		17.97	%		17.46	%		18.11	%
Total capital ratio		18.31	%		18.81	%		20.39	%		17.78	%		18.43	%
Tier 1 leverage capital ratio		12.60	%		12.25	%		13.27	%		13.57	%		14.31	%

Total shareholders' equity	$	114,942		$	111,553		$	116,591		$	114,526		$	114,613
Less: Preferred stock		-			-			-			-			-
Common shareholders' equity		114,942			111,553			116,591			114,526			114,613
Less: Intangible assets (6)		(3,856	)		(3,797	)		(3,503	)		(3,469	)		(3,336	)
Tangible common shareholders' equity (non-GAAP)	$	111,086		$	107,756		$	113,088		$	111,057		$	111,277

Common shares outstanding		8,831,235			8,831,235			9,317,473			9,330,873			9,519,729
Book value per common share	$	13.02		$	12.63		$	12.51		$	12.27		$	12.04
Tangible book value per share (non-GAAP) (7)		12.58			12.20			12.14			11.90			11.69

(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.
(4) For purposes of calculating this ratio, commercial real estate includes all non-owner occupied commercial real estate loans defined as such by regulatory guidance, including all land development and construction loans.
(5) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held-for-sale.
(6) Includes the core deposit intangible asset, as well as the servicing rights asset which is included in other assets in the consolidated balance sheets.
(7) Tangible book value per share represents total shareholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.