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January 7, 2019

Northeast Bancorp announces corporate reorganization, plans merger with its bank subsidiary

Photo / Amber Waterman
Photo / Amber Waterman
Richard Wayne, president and CEO of Northeast Bank, announced today a reorganization plan in which Northeast Bancorp's financial services would merge with the bank, which would continue as the surviving entity, pending approval by shareholders and other regulatory bodies.

Northeast Bancorp (NASDAQ: NBN) announced today a reorganization plan to merge with its wholly owned bank subsidiary, Northeast Bank.

Under the merger plan, Northeast Bancorp's operations as a Maine-based full-service financial services company will be taken over by the bank, which will continue as the surviving entity after the merger.

If the proposed reorganization is approved by shareholders, the bank holding company will be eliminated and Northeast Bank, which is headquartered in Lewiston, will become the top-level company.

"We decided to undertake this transaction because we believe that this reorganization is in the best interest of our company," Northeast Bank President and CEO Richard Wayne said in a news release. "This transaction will further improve our efficiency by eliminating redundant corporate infrastructure and activities, and eliminating a second level of supervision and oversight that comes with being a registered bank holding company."

Wayne said the the reorganization "should allow for an increase in loan capacity in the long run, as well as a decrease in our deposit costs and the costs associated with holding excess cash."

Following the reorganization, it is expected that the surviving entity, Northeast Bank, will be a publicly traded company listed on the NASDAQ Global Market under the same ticker symbol currently used by Northeast Bancorp, NBN.

The bank will have the same board of directors as Northeast Bancorp had immediately before the reorganization, and Northeast Bancorp executive officers will hold the same positions and titles.

It is also expected that the bank's common stock will be registered under the Securities Exchange Act of 1934, which vests the Federal Deposit Insurance Corp. with the power to administer and enforce certain sections of the Exchange Act applicable to banks.

The reorganization has been approved by the boards of directors of the Northeast Bancorp and Northeast Bank.

The next steps include filing a proxy statement and other proxy materials with the SEC and convening a special meeting of shareholders to consider and vote upon the merger plan. In addition to shareholder approval, the reorganization will be subject to closing conditions, including, among others, the receipt of all required regulatory approvals, including the approval of the Maine Bureau of Financial Institutions and the FDIC.

Northeast Bancorp reported in late October its financials for the first quarter of fiscal year 2019, which ended Sept. 30, with total assets of $1.2 billion, an increase of $56 million, or 4.8%, from the total assets reported on June 30. Its loan acquisition and servicing group produced $105.9 million of loans in the first quarter, including originations of $71.1 million and purchases with a recorded investment of $34.8 million during the quarter — representing quarterly net growth in the portfolio of $20 million, or 2.9%, according to the news release.

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