<PAGE> 1
Pursuant to Rule 424(b)(1)
Registration No. 333-53313
PROSPECTUS
350,000 SHARES
NORTHEAST BANCORP
COMMON STOCK
---------------------
This prospectus relates to 350,000 shares ("Shares") of common stock, par
value $1.00 per share (the "Common Stock"), of Northeast Bancorp ("Northeast
Bancorp" or the "Company"), which may be offered from time to time by the
selling shareholder named herein (the "Selling Stockholder"). The Company will
receive no part of the proceeds from sales of Shares offered hereby. See
"Selling Stockholder".
The Common Stock is listed on the American Stock Exchange ("AMEX") under
the symbol "NBN". On June 12, 1998, the closing price of the Common Stock on the
AMEX was $15.875 per share. See "Price Range of Common Stock and Dividends".
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===============================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) SELLING STOCKHOLDER(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $15.00 $1.00 $14.00
- ---------------------------------------------------------------------------------------------------------------
Total............................ $5,250,000 $350,000 $4,900,000
===============================================================================================================
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting offering expenses payable by the Selling Stockholder
estimated at $90,000.
---------------------
The Shares are offered by the Underwriter named herein, subject to prior
sale, when, as, and if delivered to and accepted by the Underwriter. The
Underwriter reserves the right to withdraw, cancel, or modify this offering
without notice and to reject any order in whole or in part. It is expected that
delivery of certificates representing the Shares will be made against payment
therefor on or about June 19, 1998 at the offices of Advest, Inc., New York, New
York.
---------------------
ADVEST, INC.
THE DATE OF THIS PROSPECTUS IS JUNE 15, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
OFFERED HEREBY, INCLUDING STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING
TRANSACTIONS AND PENALTY BIDS. SUCH TRANSACTIONS MAY BE EFFECTED THROUGH THE
AMERICAN STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING".
---------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
---------------------
AVAILABLE INFORMATION
Northeast Bancorp is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith files reports, proxy statements, and other information with
the Securities and Exchange Commission (the "Commission" or the "SEC"). Such
reports, proxy statements, and other information filed by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at Seven World Trade
Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can be obtained at prescribed rates from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains an Internet Web site that contains reports, proxy
statements, and other information filed electronically by the Company with the
Commission which can be accessed at http://www.sec.gov. The Common Stock is
traded on the AMEX and, as a result, reports, proxy statements, and other
information concerning the Company also can be inspected at the offices of the
American Stock Exchange, 86 Trinity Place, New York, New York 10006.
In addition, Northeast Bancorp has filed with the Commission a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Common Stock
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement and the exhibits and schedules filed as part
thereof, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the Common Stock, reference is hereby made to the Registration
Statement, including the exhibits and schedules filed as part thereof.
Statements contained in this Prospectus as to the contents of any document
referred to herein are not necessarily complete and, in each instance, reference
is made to the copy of such document filed with the Commission as an exhibit to
the Registration Statement or otherwise, and each such statement is qualified in
all respects by such reference. The Registration Statement, including exhibits
and schedules filed as a part thereof, may be inspected without charge at the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies thereof may be obtained from the
Commission at prescribed rates.
2
<PAGE> 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by the Company
(File No. 1-14588) are hereby incorporated in this Prospectus by reference:
(i) Annual Report on Form 10-K for the fiscal year ended June 30,
1997;
(ii) Quarterly Reports on Form 10-Q for the quarters ended September
30, 1997, December 31, 1997, and March 31, 1998;
(iii) Proxy Statement dated October 9, 1997 relating to the Annual
Meeting of Stockholders held on November 12, 1997, filed pursuant to
Section 14 of the Exchange Act;
(iv) Current Reports on Form 8-K, as filed with the Commission on
December 15, 1997, January 14, 1998, and May 14, 1998; and
(v) The description of Northeast Bancorp's Common Stock contained in
Item 1 of the Company's Registration Statement on Form 8-A filed with the
Commission on August 12, 1987 and the Company's Registration Statement on
Form 8-A filed with the Commission on February 21, 1997 pursuant to Section
12(b) of the Exchange Act, including all reports updating such description.
All documents filed by Northeast Bancorp pursuant to Sections 13(a), 13(c),
14, or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering made by this Prospectus, shall be
deemed to be incorporated herein by reference and to be part hereof from the
date of filing such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such prior
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Subject to the foregoing, all information appearing in this Prospectus is
qualified in its entirety by the information appearing in the documents
incorporated by reference herein.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of any such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated by reference in this Prospectus, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into the information that the Prospectus incorporates). Requests for copies of
such documents should be directed to Ariel Gill, Northeast Bancorp, 232 Center
Street, Auburn, Maine, 04210 (telephone: (207) 777-6411).
3
<PAGE> 4
PROSPECTUS SUMMARY
The following is a brief description of Northeast Bancorp and is qualified
in its entirety by, and should be read together with, the detailed information
and financial statements incorporated by reference in this Prospectus. See
"Incorporation of Certain Documents by Reference". Prospective investors are
encouraged to refer to such incorporated documents for a more complete
description of Northeast Bancorp.
This Prospectus and the documents incorporated or deemed incorporated
herein by reference contain certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, such as
statements relating to the financial condition and prospects, loan loss reserve
adequacy, year 2000 readiness, simulation of changes in interest rates, results
of operations, plans for future business development activities, capital
spending and financing sources, capital structure, the effects of regulation and
competition, litigation results, and the business of Northeast Bancorp. Where
used in this Prospectus, the words "anticipate", "believe", "estimate",
"expect", "intend", and similar words and expressions, as they relate to the
Company or the management of the Company, identify forward-looking statements.
Such forward-looking statements reflect the current views of the Company and are
based on information currently available to the management of the Company and
upon current expectations, estimates, and projections about the Company and its
industry, managements' beliefs with respect thereto, 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
which could cause actual results to differ materially from those expressed or
implied by such forward-looking statements as a result of various factors.
Potential risks and uncertainties include, but are not limited to: (i)
competitive pressure in the banking, broker-dealer, or financial services
industries increasing significantly; (ii) changes in the interest rate
environment which reduce margins; (iii) changes in political conditions or
changes occurring in the legislative or regulatory environment; (iv) general
economic conditions, either nationally or regionally, becoming less favorable
than expected resulting in, among other things, a deterioration in credit
quality; (v) changes occurring in business conditions and inflation; (vi)
acquisitions and integration of acquired businesses or assets; (vii) changes in
technology; (viii) changes in monetary and tax policies, (ix) changes occurring
in the securities markets; and (x) other risks and uncertainties detailed from
time to time in the filings of the Company with the Commission.
THE COMPANY
THE COMPANY
Northeast Bancorp, a Maine corporation chartered in April 1987, is a
unitary savings and loan holding company whose primary subsidiary and principal
asset is Northeast Bank, F.S.B. (the "Bank"). The Company, through its ownership
of the Bank, is engaged principally in the business of originating and
purchasing residential and commercial real estate loans in the State of Maine
and its primary source of earnings is derived from the income generated by the
Bank. Although historically the Bank has been primarily a residential real
estate lender, it also generates other loans and provides other services and
products traditionally furnished to customers by full service banks. The overall
strategy of the Company is to increase the core earnings of the Bank by
developing strong interest margins, non-interest fee income, and increasing
volume by expanding its market area. As of March 31, 1998, the Company, on a
consolidated basis, had total assets of approximately $311 million, total
deposits of approximately $174 million, and stockholders' equity of
approximately $24 million. Unless the context otherwise requires, references
herein to the Company include the Company and the Bank on a consolidated basis.
THE BANK
The Bank (which was formerly known as Bethel Savings Bank F.S.B.
("Bethel")) is a federally-chartered savings bank which was originally organized
in 1872 as a Maine-chartered mutual savings bank. In 1987, Bethel converted to a
stock form of ownership and in subsequent years has engaged in a strategy of
both geographic and product expansion. In 1990, the Company purchased Brunswick
Federal Savings, F.A., which had its headquarters, in Brunswick, Maine, a
mid-coastal community, and in 1994, the Company purchased four branch offices
from Key Corp. In 1996, the Company merged its two wholly-owned subsidiaries,
Bethel
4
<PAGE> 5
and Brunswick Savings, F.A. and, pursuant to the merger, Bethel, the surviving
savings bank, changed its name to Northeast Bank, F.S.B. Most recently, in
October 1997, the Company completed its merger of Cushnoc Bank & Trust, a
commercial bank located in Augusta, Maine ("Cushnoc"), with and into the Bank.
As a result of the merger, the Bank added two branches which have expanded its
market area to include Maine's capital city and surrounding communities, an area
that management believes offers significant growth opportunities. With the
addition of the two Augusta area branches, the Bank now has a total of eleven
banking branches.
From its eleven retail banking branches located throughout western,
central, and the mid-coastal regions of the State of Maine, and through the
Bank's subsidiaries and other affiliations, the Bank offers its customers access
to a broad range of real estate, commercial, and consumer financial products,
including, but not limited to loans, deposit and investment services, trust
services, credit cards, ATM access, debit cards, electronic transfer services,
leasing, and other services. The Bank believes that the local character of its
business and its "community bank" management philosophy allows it to compete
effectively in its market area. The Bank has branch locations in Auburn,
Augusta, Bethel, Brunswick, Buckfield, Harrison, Lisbon Falls, Richmond, and
South Paris, Maine.
In connection with its conversion into a federal savings bank in 1984, the
Bank retained its then-authorized powers as a Maine-chartered mutual savings
bank. Under applicable regulations, except as otherwise determined by the Office
of Thrift Supervision ("OTS"), the Bank retains the authority that it was
permitted to exercise as a mutual savings bank under the state law existing at
the time of the conversion. Historically, Maine-chartered savings banks have had
certain lending, investment, and other powers that have only recently been
granted to federal savings institutions, including commercial lending authority
and the ability to offer personal checking and negotiable order of withdrawal
("NOW") accounts. Accordingly, the Bank has had broad powers to engage in
non-residential lending activities. In addition, the unitary savings and loan
holding company charter is widely recognized for the broad range of powers that
is provided thereunder.
The Bank's corporate philosophy is to offer a wide array of financial
products and services with an emphasis on a high level of personalized service,
thereby enhancing its ability to generate significant income diversity. In the
past, the Bank has been primarily a residential mortgage lender. As a result,
the Bank's business has historically consisted of attracting deposits from the
general public through its retail banking offices and applying those funds
primarily to the origination, retention, servicing, investing in, and selling
first mortgage loans on single and multi-family residential real estate. During
the past few years, the Bank has placed additional emphasis on consumer lending
and small business, home equity, and commercial loans. The Bank also lends funds
to retail banking customers by means of home equity and installment loans, and
originates loans secured by commercial property and multi-family dwellings. The
Bank also has developed the ability to generate indirect dealer consumer loans
used for the purchase of mobile homes and automobiles. Management's community
banking strategy emphasizes the development of full banking relationships with
the Bank's customers by providing consistent, high quality service. With the
goal of providing a full range of banking services to its customers and in an
effort to develop strong primary banking relationships with businesses and
individuals, the Bank has expanded its commercial banking operations by
selectively making commercial loans to small and medium sized companies. In this
regard, the Bank's business development efforts have been directed towards full
service credit packages and financial services, as well as competitively priced
mortgage packages. At March 31, 1998, the Bank's loan portfolio consisted of 65%
residential real estate mortgages, 18% commercial real estate mortgages, 9%
commercial loans, and 8% consumer loans. At March 31, 1998, the Bank's lending
limit was approximately $3.5 million. In addition, the Bank invests in certain
U.S. government and agency obligations and other investments permitted by
applicable law and regulations.
Consistent with its goal of providing a full range of banking services, the
Bank also offers to its customers financial planning, trust, and employee
benefit services, and, through its subsidiary, Northeast Financial Services
Corporation, it offers investment services and access to any and all lines of
insurance products. Northeast Financial Services Corporation, which is located
at the Company's headquarters in Auburn, Maine, offers the Bank's customers
access to investment and annuity products. In order to make these services
5
<PAGE> 6
available, Northeast Financial Services Corporation has affiliated with
Commonwealth Equity Services, Inc., a fully licensed New York securities firm,
which licenses the brokers who sell such products and services.
Trust services and products are provided to Bank customers through
Northeast Trust, a division of the Bank. First New England Benefits, which is a
part of the Bank's trust division, designs and administers qualified retirement
plans, such as profit sharing, pension, and 401(k) plans. Northeast Trust,
working with its First New England Benefits division, has made a significant
investment in the development of a "turn key" employee benefit product which is
designed to provide a high level of service and education to its participants at
a competitive price. In view of the nationwide popularity of employment
retirement programs, management anticipates growth in the revenues generated
from this product.
The Bank is subject to examination and comprehensive regulation by the OTS
and its deposits are insured by the Federal Deposit Insurance Corporation (the
"FDIC") to the extent permitted by law. The Bank also is a member of the Federal
Home Loan Bank of Boston. For a more detailed description of the business of the
Company and the Bank, see the description set forth in the Company's Form 10-K
for the fiscal year ended June 30, 1997, which is incorporated herein by
reference.
The principal executive offices of Northeast Bancorp and the Bank are
located at 232 Center Street, Auburn, Maine, 04210, and their telephone number
is (207) 777-6411.
RECENT DEVELOPMENTS
On October 24, 1997, in accordance with the terms of an Agreement and Plan
of Merger, dated as of May 9, 1997, by and among the Company, the Bank, and
Cushnoc, the Company consummated its acquisition of Cushnoc and merged it with
and into the Bank. Pursuant to the merger, stockholders of Cushnoc received
2.089 shares of the Company's Common Stock in exchange for each share of Cushnoc
common stock held by them. In lieu of the issuance of fractional Common Stock,
cash was paid for each such fraction. As a result of the merger, 187,940 shares
of Common Stock were issued to former Cushnoc stockholders. The merger was
accounted for under the pooling-of-interests method of accounting.
On December 15, 1997, the Company paid a 50% stock dividend on all
outstanding shares of Common Stock held of record as of November 26, 1997. As a
result of the stock dividend, the number of shares of outstanding Common Stock
increased from 1,481,734 shares to 2,222,541 shares. In addition, the conversion
rate at which Series A and Series B Preferred Stock may be converted into Common
Stock and all outstanding options and warrants pursuant to which Common Stock
may be purchased upon their exercise, also were automatically adjusted in
accordance with their terms to eliminate any dilutive effects of the stock
dividend.
On April 21, 1998, the Selling Stockholder converted all 71,428 shares of
Series B Preferred Stock outstanding into shares of Common Stock on a
three-for-one basis and exercised warrants to purchase 10,000 shares of Common
Stock.
6
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SELECTED FINANCIAL INFORMATION
The following table presents selected financial information for the
Company. The selected financial information is based on, derived from, and
should be read in conjunction with, the consolidated financial statements of the
Company and the related notes incorporated herein by reference. The consolidated
selected financial data have been restated to include the accounts and
operations of Cushnoc for all periods. The selected financial information
provided for the nine months ended March 31, 1998 and 1997 has been derived from
unaudited interim financial statements of the Company, which include all
adjustments, consisting of the restatement for the Cushnoc merger transaction,
and other normal recurring accruals, which the Company and the Bank consider
necessary for a fair presentation of the financial position and results of
operations for those periods. Results for the nine months ended March 31, 1998
are not necessarily indicative of results that can be expected for any other
interim period or for the entire fiscal year ending June 30, 1998.
<TABLE>
<CAPTION>
AT AND FOR THE
NINE MONTHS AT OR FOR THE YEAR
ENDED MARCH 31, ENDED JUNE 30
------------------- ----------------------------------------------------
NORTHEAST BANCORP 1998 1997 1997 1996 1995 1994 1993
----------------- -------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATIONS DATA:
Interest income............................... $ 17,639 $ 16,167 $ 21,936 $ 20,105 $ 18,953 $ 15,668 $ 15,843
Interest expense.............................. 9,266 8,267 11,291 10,087 8,841 7,124 7,751
-------- -------- -------- -------- -------- -------- --------
Net interest income........................... 8,373 7,900 10,645 10,018 10,112 8,544 8,092
Provision for loan losses..................... 546 461 614 639 691 1,045 924
Other operating income(1)..................... 1,645 1,397 1,827 1,909 1,760 2,209 1,412
Net securities gains.......................... 247 200 259 279 419 347 108
Other operating expenses(2)................... 7,167 7,222 9,608 9,442 9,093 8,053 6,582
Write downs on equity and debt securities..... 0 0 110 94 0 84 61
-------- -------- -------- -------- -------- -------- --------
Income before income taxes.................... 2,552 1,814 2,399 2,031 2,507 1,918 2,045
Income tax expense............................ 893 692 909 738 878 697 788
Cumulative effect of change in accounting
principles.................................. 0 0 0 0 0 260 0
-------- -------- -------- -------- -------- -------- --------
Net Income.................................... $ 1,659 $ 1,122 $ 1,490 $ 1,293 $ 1,629 $ 1,481 $ 1,257
======== ======== ======== ======== ======== ======== ========
CONSOLIDATED PER SHARE DATA(3):
Net income:
Basic....................................... $ 0.70 $ 0.48 $ 0.63 $ 0.56 $ 0.77 $ 0.76 $ 0.65
Diluted..................................... $ 0.62 $ 0.44 $ 0.58 $ 0.52 $ 0.67 $ 0.68 $ 0.64
======== ======== ======== ======== ======== ======== ========
Cash dividends................................ $ 0.21 $ 0.16 $ 0.21 $ 0.21 $ 0.11 $ 0.11 $ 0.11
======== ======== ======== ======== ======== ======== ========
Common dividend payout ratio.................. 34.35% 36.36% 36.20% 40.38% 16.41% 16.17% 17.18%
======== ======== ======== ======== ======== ======== ========
SELECTED BALANCE SHEET DATA:
Total assets.................................. $310,623 $268,376 $284,077 $244,782 $231,856 $212,072 $198,237
Total loans................................... 270,526 214,873 222,682 187,210 187,777 175,687 164,587
Total deposits................................ 173,971 172,270 172,921 164,855 168,682 142,972 139,009
Total borrowings.............................. 106,183 68,139 81,793 54,140 38,274 49,051 41,183
Total stockholders' equity.................... 23,745 21,369 22,096 20,364 19,388 17,730 15,982
SELECTED FINANCIAL RATIOS AND OTHER DATA:
Return on average assets(4)................... 0.79% 0.58% 0.57% 0.55% 0.71% 0.73% 0.67%
Return on average equity(4)................... 9.65% 7.15% 7.05% 6.31% 8.81% 8.73% 8.11%
Average equity/average assets................. 8.14% 8.16% 8.09% 8.67% 8.10% 8.34% 8.28%
</TABLE>
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(1) Includes fees for services to customers and gain on sales of loans.
(2) Includes salaries, employee benefits, and occupancy expenses.
(3) Per share data for the years prior to 1996 have been retroactively restated
as a result of the 100% stock dividend in December 1995. Per share data for
the years 1993 through 1997 also have been restated as a result of the 50%
stock dividend in December 1997. The per share calculations for 1993-1997
have been restated to comply with FASB No. 128 "Earnings Per Share" and the
dividend payout ratios have been revised to correspond with the changes
resulting from adoption of FASB No. 128.
(4) Information for the interim periods ended March 31 have been annualized.
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RISK FACTORS
A prospective investor should review and consider carefully the following
factors, together with the other information contained, or incorporated by
reference, in this Prospectus, in evaluating an investment in the Common Stock
offered hereby. Any one or more of such factors may cause the Company's actual
results for various financial reporting periods to differ materially from those
expressed in any forward-looking statements made by or on behalf of the Company.
CONCENTRATION IN REAL ESTATE LOANS
At March 31, 1998, approximately 83% of the Company's loans were secured by
real estate. Therefore, the Company's ability to conduct its mortgage lending
business and the value of the Company's real estate collateral could be
adversely affected by adverse changes in the real estate markets in which the
Company conducts its business. At March 31, 1998, approximately 88% of the
principal amount of the Company's real estate loans were secured by properties
located in the State of Maine. A decline in real estate values in Maine would
increase the risk that losses would be incurred should borrowers default on
their loans.
At March 31, 1998, approximately 18% of the principal amount of the
Company's loans was secured by commercial real estate. Commercial real estate
loans generally present a higher level of risk than loans secured by one-to-four
family residences due to the concentration of principal in a limited number of
loans and borrowers, the effects of general economic conditions on commercial
properties, and the increased difficulty of evaluating and monitoring these
types of loans. In addition, the repayment of loans secured by commercial real
estate is typically dependent on the successful operation of the related
business activities.
EXPOSURE TO LOCAL ECONOMIC CONDITIONS
The success of the Company and the Bank are dependent to a large extent
upon general economic conditions in the geographic markets served by the Bank.
Since the Bank's lending activities are conducted primarily with borrowers
located in south central and western Maine, the economic conditions in Maine and
in the Bank's specific market area therein will have a significant impact on the
repayment of credit extended by the Bank. The Bank's market area is
characterized by a diverse economy and a strong emphasis on the tourist
industry. The banking industry in Maine is affected by general economic
conditions such as inflation, recession, unemployment, and other factors beyond
the Company's control. Economic recession over a prolonged period of time in the
State of Maine has in the recent past and could in the future cause significant
increases in nonperforming assets, thereby causing operating losses, impairing
liquidity, and eroding capital. There can be no assurance that future adverse
changes in the local economy would not have a material adverse effect on the
Company's consolidated financial condition, results of operations, or cash flow.
ADEQUACY OF ALLOWANCE FOR LOSSES ON LOANS
In originating loans, there is a substantial likelihood that credit losses
will be experienced. The risk of loss will vary with, among other things,
general economic conditions, the type of loan being made, the creditworthiness
of the borrower over the term of the loan and, in the case of a collateralized
loan, the quality of the collateral for the loan. The Company maintains an
allowance for losses on loans at a level considered adequate by management to
cover losses that are currently anticipated based on, among other things,
management's experience, past loan loss experience, an evaluation of general
economic conditions, information about specific loan relationships, including
financial position and collateral values, regular reviews of delinquencies and
loan portfolio quality, and other factors and estimates that are subject to
change over time. Based upon such factors, management makes various assumptions
and judgements about the ultimate collectability of the loan portfolio and
provides an allowance for potential loan losses based on a percentage of
outstanding loan balances and for specific loans when their ultimate
collectability is considered questionable. Since certain lending activities
involve greater risks, the percentage applied to specific loan types may vary.
The amount of future losses is susceptible to changes in economic, operating,
and other conditions beyond the Company's control, and such losses may exceed
the Company's current allowance for loan losses.
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<PAGE> 9
At March 31, 1998, the Company had total non-performing loans of
approximately $2,926,000, which represented approximately 1.08% of total loans.
As of that same date, the Company's allowance for losses on loans was
$3,038,000, or approximately 1.12% of total loans and approximately 104% of
total non-performing loans. The Bank actively manages its past due and
non-performing loans in an effort to minimize credit losses and monitors its
asset quality to maintain an adequate allowance for losses on loans. Although
management believes that its allowance for losses on loans is adequate, there
can be no assurance that the allowance will be adequate to cover actual losses.
Furthermore, although management uses the best information available to make
determinations with respect to the allowance for losses on loans, future
adjustments may be necessary if economic conditions differ substantially from
the assumptions used or adverse developments arise with respect to the Bank's
non-performing or performing loans. Material additions to the Bank's allowance
for losses on loans would result in a decrease of the Bank's net income and
capital of the Company and the Bank, and could result in the inability to pay
dividends, among other adverse consequences.
COMPETITION
The banking business is highly competitive and the profitability of the
Company depends principally upon its ability to compete in its market area in
the State of Maine. The Company competes with other savings banks, commercial
banks, credit unions, finance companies, mutual funds, insurance companies,
brokerage and investment banking firms, asset-based nonbank lenders, and
governmental organizations that may offer subsidized financing at lower rates
than those offered by the Company. Many of those competitors have significantly
greater resources (financial and other) and higher lending limits than the
Company. Although the Company has been able to compete effectively in the past,
no assurance can be given that the Company will be able to compete effectively
in the future. Various legislative acts and regulatory rules and interpretations
in recent years have led to increased competition among financial institutions.
There can be no assurance that the United States Congress will not enact
legislation that may further increase competitive pressures on the Company.
Competition from both financial and non-financial institutions is expected to
continue.
INTEREST RATE RISK
The consolidated net income of the Company depends to a substantial extent
on its net interest income, which reflects the difference between the interest
income the Bank receives from interest earning assets (such as loans and
securities) and the interest expense on interest bearing liabilities (such as
deposits, borrowings, and other sources of funds). Accordingly, like most
financial institutions, the operations and profitability of the Bank are largely
impacted by changes in interest rates and management's ability to control
interest rate sensitivity of the Bank's assets and liabilities and manage its
interest rate risk. Although the Bank manages other risks in the normal course
of business, such as credit and liquidity risks, management considers interest
rate risk to be its most significant market risk and which could potentially
have the largest material effect on the Bank's financial condition and results
of operations. Interest rates are highly sensitive to many factors which are
beyond the Bank's control, including, general economic conditions and the
policies of various governmental regulatory authorities. Interest rate risk
arises from mismatches (i.e., interest rate sensitivity gap) between the dollar
amount of repricing or maturing assets and liabilities, and is measured in terms
of interest rate sensitivity gap to total assets. More assets repricing or
maturing than liabilities over a given time frame is considered asset-sensitive
and is reflected as a positive gap, and more liabilities repricing or maturing
than assets over a given time frame is considered liability-sensitive and is
reflected as a negative gap. An asset-sensitive position (i.e., positive gap)
will generally enhance earnings in a rising interest rate environment and will
negatively impact earnings in a falling interest rate environment, while a
liability-sensitive position (i.e., negative gap) will generally enhance
earnings in a falling interest rate environment and negatively impact earnings
in a rising interest rate environment. Fluctuations in interest rates are not
predictable or controllable. The Company has attempted to structure its asset
and liability strategies to mitigate the impact on net income of changes in
market interest rates. To accomplish this, management has increased the Bank's
variable rate loans to 63% of the total loan portfolio. The Bank's
adjustable-rate loans are primarily tied to published indices, such as The Wall
Street Journal prime rate and one year U.S. Treasury Bills. In this regard, over
the past few years, the Bank's interest rate sensitive assets and liabilities
have been closely matched with respect to its one-year gap position and the Bank
has only a slightly positive two-year gap position which suggests that
9
<PAGE> 10
the Bank's net yield on interest-earning assets may decline during periods of
declining interest rates. Management believes that the maintenance of a slight
asset-sensitive position is appropriate since historically interest rates tend
to rise faster than they decline. An increase in short-term interest rates will
also increase deposit and other funding advance rates, increasing the Bank's
interest expense. However, the actual impact on net interest income will depend
on, among other things, market conditions, actual rates charged on the Bank's
loan portfolio, deposit, and advance rates paid by the Bank, and loan volume,
and customer reaction to interest rate volatility.
SUPERVISION AND REGULATION; PAYMENT OF DIVIDENDS
Savings and loan holding companies and banking associations operate in a
highly regulated environment and are subject to the supervision of federal and
state regulatory agencies. As a savings and loan holding company, the Company is
subject to regulation, examination, and supervision by the OTS and by agencies
of the State of Maine. The Bank is subject to regulation and examination by the
OTS and the FDIC. These laws and regulations govern matters ranging from the
regulation of certain debt obligations, changes of control and mergers, and the
maintenance of adequate capital to the general business operations and financial
condition of the Bank, including permissible types, amounts, and terms of loans
and investments, the amount of reserves against deposits, restrictions on
dividends, establishment of branch offices, and subsidiary investments and
activities. These regulations are intended primarily for the protection of
depositors, rather than the benefit of investors, and they restrict the manner
by which the Company and the Bank may conduct their business and obtain
financing. The Company and the Bank are subject to changes in federal and state
law, as well as regulation and governmental policies, income tax laws, and
accounting principles. The effects of any potential changes cannot be predicted
but could adversely affect the business and operations of the Company and the
Bank in the future.
The Company's principal source of funds is cash dividends from the Bank.
The payment of dividends by the Bank to the Company is subject to restrictions
imposed by federal banking laws, regulations, and authorities. The OTS's capital
distribution regulations limit the Bank's ability to pay dividends to the
Company based on the Bank's capital level and supervisory condition. Under the
regulations, a savings institution that meets the OTS capital requirements is
generally permitted to make capital distributions during a year up to the
greater of (i) 100% of its net income during that year, plus the amount that
would reduce by one-half its "surplus capital ratio" at the beginning of the
calendar year (the excess capital over its capital requirements), or (ii) 75% of
its net income over the most recent four-quarter period. In addition, an insured
depository institution is prohibited from declaring any dividend, making any
other capital distribution, or paying a management fee to its holding company
if, following the distribution or payment, the institution would be classified
as "undercapitalized" or lower. As of March 31, 1998, the Bank met the OTS
requirements as a "well capitalized" institution. There can be no assurance that
the Bank will continue to meet its capital requirements or that its net income
and surplus capital in the future will be sufficient to permit the payment of
dividends by the Bank to the Company. In the event that the capital of the Bank
falls below its capital requirements or the OTS notifies the Bank that it is in
need of more than normal supervision, the ability of the Bank to pay dividends
could be further restricted or even eliminated.
DEPENDENCE ON KEY PERSONNEL
The Company and the Bank are dependent on the leadership and performance of
James D. Delamater, their President and CEO, and certain other executive
officers. If the services of Mr. Delamater or any of such executive officers
should become unavailable for any reason, a failure to replace them promptly
could have a material adverse effect on the Company. Although the Company has
obtained a key man life insurance policy on Mr. Delamater in the amount of $1.0
million with the Company named as a beneficiary, none of the key members of
management has a written employment agreement.
CERTAIN ARTICLES OF INCORPORATION AND BYLAW PROVISIONS
The Company's Articles of Incorporation and Bylaws contain certain
provisions that could discourage potential acquisition proposals, or delay or
prevent an attempted acquisition or change of control of the
10
<PAGE> 11
Company. Among other things, these provisions (i) establish certain
supermajority voting requirements for certain business combinations not approved
by at least two-thirds of the directors who are not affiliated with, or
stockholders of, the acquiring party and certain fair price provisions to be
satisfied in connection with a business combination, (ii) establish a
supermajority voting requirement as a condition to stockholder action to make
certain amendments to the Company's Articles of Incorporation or Bylaws, (iii)
establish certain advance notice procedures for nomination of candidates for
election as directors and for stockholder proposals to be considered at an
annual meeting of stockholders, (iv) restrict the ability of stockholders to act
by less than unanimous written consent in lieu of a meeting, and (v) establish a
supermajority voting requirement to remove a director without cause. The
Company's Articles of Incorporation authorize the Board of Directors of the
Company to issue shares of preferred stock without stockholder approval and upon
such terms as the Board of Directors may determine. The issuance of preferred
stock, while providing desirable flexibility in connection with possible
acquisitions, financings, and other corporate purposes, could also have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a controlling interest in the
Company.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of Shares
offered hereby by the Selling Stockholder. See "Selling Stockholder".
11
<PAGE> 12
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The shares of Common Stock of Northeast Bancorp have been listed and
principally traded on the AMEX under the trading symbol "NBN" since April 4,
1997 and prior thereto on the Nasdaq National Market ("Nasdaq-NNM"). The
following table sets forth the high and low closing sales price for the Common
Stock as reported on the Nasdaq-NNM through April 3, 1997, and thereafter on the
AMEX. All information set forth in the table below has been revised to reflect a
50% stock dividend paid on December 15, 1997.
<TABLE>
<CAPTION>
CASH DIVIDENDS
HIGH LOW PAID PER SHARE
------ ------ --------------
<S> <C> <C> <C>
FISCAL YEAR ENDED JUNE 30, 1996:
First Quarter............................................. $ 7.59* $ 7.17* $0.027*
Second Quarter............................................ 8.00* 7.17* 0.027*
Third Quarter............................................. 8.83 7.33 0.053
Fourth Quarter............................................ 8.83 8.33 0.053
FISCAL YEAR ENDED JUNE 30, 1997:
First Quarter............................................. $ 9.00 $ 8.33 $0.053
Second Quarter............................................ 9.33 8.67 0.053
Third Quarter............................................. 9.50 8.83 0.053
Fourth Quarter............................................ 9.83 9.17 0.053
YEAR ENDED JUNE 30, 1998:
First Quarter............................................. $13.33 $ 9.66 $0.053
Second Quarter............................................ 18.66 18.50 0.053
Third Quarter............................................. 19.50 17.00 0.053
Fourth Quarter (through June 12, 1998).................... 18.00 15.375 0.053
</TABLE>
- ---------------
* Further adjusted to reflect a 100% stock dividend paid on December 15, 1995.
On June 12, 1998, the last sales price reported for the Common Stock on the
AMEX was $15.875 per share. Prospective purchasers are urged to obtain current
quotations for the market price of the Common Stock. As of close of business on
June 12, 1998, there were approximately 2,461,119 shares of Common Stock
outstanding held by approximately 445 stockholders of record.
The amount and timing of future dividends payable on the Common Stock will
depend on, among other things, future earnings, the financial condition of the
Company, regulatory considerations, and other factors, including the ability of
the Bank to pay dividends to the Company, the amount of cash on hand at the
Company, and its obligations to pay dividends to holders of its preferred stock.
Northeast Bancorp has 45,454 shares of Series A Preferred Stock
outstanding. The Series A Preferred Stock is convertible into Common Stock on a
three-for-one basis and carries a dividend rate of two percent below the prime
rate of the First National Bank of Boston, but in no event shall such rate be
less than 7% per annum. There is only one holder of the Series A Preferred
Stock, the Selling Stockholder, and there is no trading market for the Series A
Preferred Stock. Although convertible into three shares of Common Stock, each
share of Series A Preferred Stock is entitled only to one vote on all matters
submitted to a vote of the Company's stockholders.
12
<PAGE> 13
SELLING STOCKHOLDER
The following table sets forth the name of the Selling Stockholder, the
number of shares of Common Stock beneficially owned as of the date of this
Prospectus, the number of shares of Common Stock being offered hereby by the
Selling Stockholder, and the number of shares of Common Stock to be beneficially
owned by the Selling Stockholder after the consummation of the offering. All
information with respect to beneficial ownership has been furnished by the
Selling Stockholder.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
AT JUNE 12, 1998 AFTER THE OFFERING
----------------------- TOTAL NUMBER OF -----------------------
NAME OF NUMBER OF PERCENTAGE SHARES TO BE SOLD NUMBER OF PERCENTAGE
SELLING STOCKHOLDER SHARES(1) OF CLASS(2) IN THE OFFERING SHARES(1) OF CLASS(2)
------------------- --------- ----------- ----------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Square Lake Holding
Corporation(3)........ 693,813(4) 25.2% 350,000 343,813(5) 12.5%
</TABLE>
- ---------------
(1) In accordance with Rule 13d-3 promulgated pursuant to the Securities
Exchange Act of 1934, a person is deemed to be the beneficial owner of a
security for purposes of the rule if he or she has or shares voting power or
dispositive power with respect to such security or has the right to acquire
such ownership within sixty days. As used herein, "voting power" is the
power to vote or direct the voting of shares, and "dispositive power" is the
power to dispose or direct the disposition of shares, irrespective of any
economic interest therein. Accordingly, since the Series A Preferred Stock
held by Square Lake (defined below) are presently convertible into Common
Stock and its warrants are currently exercisable, the number of shares of
Common Stock disclosed hereunder include those shares of Common Stock that
Square Lake may acquire upon conversion of the Series A Preferred Stock and
upon exercise of its warrants.
(2) In calculating the percentage ownership for a given individual or group, the
number of shares of Common Stock outstanding includes unissued shares
subject to options, warrants, rights or conversion privileges exercisable
within sixty days held by such individual or group, but are not deemed
outstanding for any other person or group. Accordingly, these percentages
assume the conversion of the Series A Preferred Stock by Square Lake and the
exercise of its warrants. Prior to conversion of the Series A Preferred
Stock each share of Series A Preferred Stock has only one vote (regardless
of the applicable conversion rate) on each matter presented to a vote of the
Company's stockholders.
(3) Square Lake Holding Corporation ("Square Lake"), a Maine corporation, is a
wholly-owned subsidiary of a New Brunswick corporation which, in turn, is
wholly-owned by Ronald J. Goguen. Mr. Goguen has been a director of
Northeast Bancorp since 1990.
(4) Represents the beneficial ownership of Mr. Goguen. Includes Square Lake's
beneficial ownership of (i) 401,980 shares of Common Stock, (ii) 136,362
shares of Common Stock issuable upon conversion of 45,454 shares of Series A
Preferred Stock, and (iii) 153,146 shares of Common Stock issuable upon the
exercise of warrants to purchase shares at a price of $4.667 per share; and
2,325 shares of Common Stock held by Blue Chip Investments, Inc., a New
Brunswick corporation ("Blue Chip"), of which Mr. Goguen holds 100% of its
voting securities. Shares of the Series A Preferred Stock are convertible
into shares of Common Stock without further consideration at a ratio of
three-for-one.
(5) Consisting of Square Lake's beneficial ownership of (i) 51,980 shares of
Common Stock, (ii) 136,362 shares of Common Stock issuable upon conversion
of 45,454 shares of Series A Preferred Stock, and (iii) 153,146 shares of
Common Stock issuable upon exercise of warrants; and 2,325 shares of Common
Stock held by Blue Chip.
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<PAGE> 14
UNDERWRITING
Under the terms and conditions set forth in the purchase agreement (the
"Underwriting Agreement") among the Company, the Selling Stockholder, and the
Underwriter named below (the "Underwriter"), the Underwriter has agreed to
purchase from the Selling Stockholder, and the Selling Stockholder has agreed to
sell to the Underwriter, the number of shares of Common Stock set forth below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Advest, Inc................................................. 350,000
-------
Total............................................. 350,000
=======
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriter
are subject to approval of certain matters by its counsel and to various other
conditions. The Underwriter is committed to purchase and pay for all such shares
of Common Stock being sold pursuant to the Underwriting Agreement, if any shares
of Common Stock are purchased.
The Underwriter has advised the Company and the Selling Stockholder that
the Underwriter proposes to offer the shares of Common Stock directly to the
public initially at the offering price set forth on the cover page of this
Prospectus and to certain selected dealers at such price less a concession not
to exceed $0.50 per share. The Underwriter may allow, and such selected dealers
may reallow, a concession not in excess of $0.10 per share to certain other
dealers. After the public offering of the shares, the public offering price,
concession and reallowance to dealers may be changed by the Underwriter. The
Common Stock is offered and subject to receipt and acceptance by the
Underwriter, and to certain other conditions, including the right to reject
orders in whole or in part.
The Selling Stockholder, the Company, and the executive officers and
directors of the Company and the Bank have agreed that they will not publicly
sell, contract to publicly sell, or otherwise publicly dispose of, any shares of
Common Stock for a period of 40 days from the date of this Prospectus, without
the written consent of the Underwriter; provided, however, that the Company may
issue and sell Common Stock pursuant to any employee stock option plan, stock
ownership plan, or dividend reinvestment plan of the Company in effect on the
date the Underwriting Agreement is executed, and the Company may issue Common
Stock upon the conversion of securities or the exercise of warrants outstanding
on the date the Underwriting Agreement is executed.
Subject to certain limitations, the Company, the Selling Stockholder, and
the Underwriter have agreed to indemnify each other against certain liabilities
including liabilities under the Securities Act, or to contribute to payments
that the Company, the Selling Stockholder, or the Underwriter may be required to
make in respect thereof.
The foregoing is a summary of the principal terms of the Purchase Agreement
and does not purport to be complete. Reference is made to a copy of the
Underwriting Agreement which is on file as an exhibit to the Registration
Statement.
The Underwriter has been engaged in the ordinary course of business, and
may in the future be engaged, to perform investment banking and other
advisory-related services to the Company, its affiliates, and certain
stockholders of the Company. The Underwriter is currently under retainer with
the Company to provide such services.
In connection with the offering of the Common Stock, the Underwriter and
any selling group members and their respective affiliates may engage in
transactions effected in accordance with Rule 104 of the Securities and Exchange
Commission's Regulation M that are intended to stabilize, maintain, or otherwise
affect the market price of the Common Stock. Such transactions may include
stabilizing transactions in which they bid for, and purchase, shares of the
Common Stock at a level above that which might otherwise prevail in the open
market for the purpose of preventing or retarding a decline in the market price
of the Common Stock. The Underwriter also may bid for, and purchase, shares of
Common Stock to reduce a short position
14
<PAGE> 15
incurred by the Underwriter to reclaim any selling concessions otherwise
accruing or allowed to a selling group member in connection with the offering if
the Common Stock originally sold by such selling group member is repurchased by
the Underwriter and therefore has not been effectively placed by such selling
group member. Any of the foregoing transactions may result in the maintenance of
a price for the Common Stock at a level above that which might otherwise prevail
in the open market. Neither the Company nor the Underwriter makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Common Stock. The
Underwriter is not required to engage in any of the foregoing transactions and,
if commenced, such transactions may be discontinued at any time without notice.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been passed
upon for Northeast Bancorp by Carlton, Fields, Ward, Emmanuel, Smith & Cutler,
P.A., Tampa, Florida. Certain legal matters in connection with the Shares will
be passed upon for the Underwriter by Tyler Cooper & Alcorn, LLP, Hartford,
Connecticut. Certain legal matters will be passed upon for the Selling
Stockholder by Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tampa,
Florida.
EXPERTS
The consolidated financial statements of the Company and its subsidiary as
of June 30, 1997 and 1996, and for each of the years ended June 30, 1997, 1996,
and 1995 which appear in the Company's Form 10-K for the fiscal year ended June
30, 1997 and the supplemental consolidated financial statements of the Company
and its subsidiary as of June 30, 1997 and 1996, and for each of the years ended
June 30, 1997, 1996, and 1995 which appear in the Company's Form 8-K filed on
May 14, 1998, have been audited by Baker Newman & Noyes, Limited Liability
Company, independent auditors, as set forth in their reports thereon
incorporated by reference elsewhere herein and in the Registration Statement
which, with respect to the supplemental consolidated financial statements is
based in part on the reports of Schatz Fletcher & Associates, Augusta, Maine,
independent auditors. The financial statements referred to above are included in
reliance upon such reports given upon the authority of said firms as experts in
accounting and auditing.
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<PAGE> 16
======================================================
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY SECURITIES OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION TO ANY PERSON IN ANY
JURISDICTION OR UNDER ANY CIRCUMSTANCES IN WHICH SUCH OFFERING WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 3
Prospectus Summary.................... 4
Risk Factors.......................... 8
Use of Proceeds....................... 11
Price Range of Common Stock and
Dividends........................... 12
Selling Stockholder................... 13
Underwriting.......................... 14
Legal Matters......................... 15
Experts............................... 15
</TABLE>
======================================================
======================================================
350,000 SHARES
NORTHEAST BANCORP
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
ADVEST, INC.
June 15, 1998
======================================================
