FOR
      IMMEDIATE RELEASEFor
      More Information:
                Jim
      Delamater, President & CEO
                Northeast Bank, 500 Canal Street,
      Lewiston, ME 04240www.northeastbank.com
              1-800-284-5989
      ext. 3569
jdelamater@northeastbank.com
    Northeast
Bancorp Announces Year to Date Earnings and Declares Dividend
  Lewiston,
MAINE (January 21, 2009)
- Northeast Bancorp (NASDAQ: NBN), the parent company of Northeast Bank
(www.northeastbank.com), reported net income for the quarter ended December 31,
2008 of $293,575 or $.12 per diluted share, an increase of $224,459 or 424%,
over the linked quarter ended September 30, 2008 and a decrease of $108,853 or
27%, over the quarter ended December 31, 2007. Results for the six months ended
December 31, 2008 were $362,690 or $0.15 per diluted share, compared to net
income for the six months ended December 31, 2007 of $832,993 or $0.35 per
diluted share.
 
 Revenues
from operations (net interest income plus noninterest income) continue to grow,
reflecting an increase of approximately $1 million for the quarter ended
December 31, 2008 as compared to the same period last year, and an increase of
approximately $2 million year to date over the same period last year. In
addition, revenues from non-traditional banking services, such as insurance and
investments continue to keep pace, a 31% growth to date over last
year.
 
 Jim
Delamater, President and CEO of Northeast Bancorp since 1981 states, “The
economy is under tremendous pressure and I am pleased that our long-term
strategic plan remains on track to deliver a diverse array of financial products
and services to our market areas. We continue to take actions to protect the
integrity of our balance sheet in order to support the risk associated with the
present economic downturn. As such, our earnings reflect the conservative manner
in which we continue to manage our loan operations, steering clear of lending
programs without traditional underwriting standards and maintaining our
common-sense underwriting and risk-rating guidelines.”
 
 Net
interest income increased 18% for the quarter ended December 31, 2008 compared
to the quarter ended December 31, 2007, and 15% for the six months ended
December 31, 2008 compared to the six months ended December 31,
2007.  Net interest income increased primarily from a better net
interest margin, which increased 33 basis points and 34 basis points,
respectively, for the quarter and six months ended December 31,
2008.  This increase in net interest margin was attributable to a
decrease in cost of funds. Leveraging the balance sheet with investment
securities increased earning assets some $29 million, which also contributed to
increasing net interest income.
 
 The
Company reports that the decrease in net income in comparison to the same
periods during the previous fiscal year was due in part to limited growth in the
size of its loan portfolio and a build-up of loan loss reserves. Another
contributing factor was the increase in non-interest expenses related to the
previously reported expansion of Northeast Bank Insurance Group. This has been
an aggressive move, made to diversify the company’s revenue streams and has been
ongoing over the past 24 months.
 
 Compared
to the quarter ended September 30, 2008, the balances of delinquent loans and
non-performing loans and assets increased. As a result, the allowance for loan
losses was increased during the quarter ended December 31, 2008 through a
provision for loan losses of $504,000. The allowance represented 1.40% of total
loans at December 31, 2008 compared to 1.38% of total loans at September 30,
2008. Management believes that the allowance for loan losses balance of $5.7
million at December 31, 2008 is sufficient to cover losses inherent in the
loan portfolio on that date and is appropriate based on applicable accounting
standards.
 
 “There is
no credit crunch at Northeast Bank. In fact, our expanded mortgage operations
are very active and we have been able to add experienced mortgage loan
originators to support our growing demand for mortgage loans,” explains
Delamater.
 
 The
company had over $619 million in assets at December 31, 2008, with net loans
demonstrating a slight increase of $420 thousand at December 31, 2008 as
compared to December 31, 2007. Northeast Bancorp continues to grow and expand,
this quarter announcing the opening of a four-person loan production office in
Portsmouth, New Hampshire. The company now employs over 250 people and operates
in both Maine and New Hampshire.
 
 In
addition to announcing earnings, the company declared the payment of its regular
quarterly dividend of $0.09 per share, payable on February 20, 2009 to the
shareholders of record as of January 30, 2009. The company has paid a dividend
every quarter since going public in 1987.
 
 Delamater
notes, “Northeast Bancorp is well positioned for the future as we embrace a
visionary business model that delivers one-stop shopping for financial products.
We continue to generate upwards of 40% of our revenue from non-interest sources,
a level that is well above that of our peers. We will continue to forge ahead,
developing new technologies and launching new products to meet the growing needs
of our customers, while maintaining the value and diversity of the Northeast
Bancorp franchise for our shareholders.”
 
 Capital
Purchase Program (CPP)
 During
this past quarter, the company announced that it received $4,227,000 in capital
from the U.S. Treasury’s Capital Purchase Program, which was designed
specifically for healthy banks to help stimulate the economy. In return, the
company issued the U.S. Treasury shares of Northeast Bancorp preferred stock and
warrants to purchase Northeast Bancorp common stock. The $4,227,000 in capital
represents approximately 1% of Northeast’s risk-based assets, the minimum level
for participation in the program. Northeast’s risk-based capital ratio was
12.10% at December 31, 2008, well above required regulatory levels.
 
 “With the
downshift in the economy it is our responsibility to help our customers and
provide viable and affordable financing options and, when necessary, loan
work-outs and modifications, explains Delamater. “This relatively small
injection of capital received through CPP is being invested back into our
markets in the form of new loans for borrowers.”
 
 About
Northeast Bancorp
 Northeast
Bancorp (NASDAQ: NBN) is the holding company for Northeast Bank, a leader in
delivering one-stop shopping for financial services. Headquartered in Lewiston,
Maine, Northeast Bank, together with its wholly owned subsidiary Northeast Bank
Insurance Group, Inc. derives its income from a combination of traditional
banking services and non-traditional financial products and services including
insurance and investments. Northeast Bank operates eleven traditional bank
branches, fourteen insurance offices, three investment centers and a loan
production office that serve seven counties in Maine and two in New Hampshire.
Information regarding Northeast Bank can be found on its website at www.northeastbank.com
or by contacting 1-800-284-5989.
  ---------------------------------------------------------------------------------------------------------------------
  This
communication contains certain “forward-looking statements”.  Although
the Company 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.  These statements speak only as of the date of this report
and we do not undertake any obligation to update or revise any of these
forward-looking statements to reflect events or circumstances occurring after
the date of this communication or to reflect the occurrence of unanticipated
events.  For a more complete discussion of certain risks and
uncertainties affecting the Company, please see "Item 1.
Business-Forward-Looking Statements and Risk Factors" set forth in the Company's
Form 10-K for the year ended June 30, 2008.
  Customer
access to securities is provided through Commonwealth Financial Network, Member
NASD/SIPC. Important
information--Securities, annuities, and insurance products are not deposit
products, not FDIC insured, are subject to investment risk, including the
possible loss of principal, and are not an obligation of or guaranteed by the
Bank.
  NORTHEAST
      BANCORP(Dollars
      in Thousands, Except Per Share and Shares Outstanding
  Data)(Unaudited)Three
      Months Ended
                            
                            
                            
                            
                            
                            Six
      Months EndedDecember
      31,
                            
                            
                            %
                            
                            
                            December
      31,
                            
                            
                            %2008
                            
                            
                            2007
                            
                            
                            Change
                            
                            2008
                            
                            
                            2007
                            
                            
                            ChangeSelected
      financial informationIncome
      statement data:Interest
      income
                            
                            $
                            8,653
                            
                            
                            $
                            9,073
                            
                            
                            
                            -5
                            %
                            
                            $
                            17,248
                            
                            
                            $
                            18,029
                            
                            
                            
                            -4
                            %Interest
      expense
                            
                            
                            4,426
                            
                            
                            
                            5,503
                            
                            
                            
                            -20
                            %
                            
                            
                            8,980
                            
                            
                            
                            10,867
                            
                            
                            
                            -17
                            %Net
      interest income
                            
                            
                            4,227
                            
                            
                            
                            3,570
                            
                            
                            
                            18
                            %
                            
                            
                            8,268
                            
                            
                            
                            7,162
                            
                            
                            
                            15
                            %Provision
      for loan losses
                            
                            
                            504
                            
                            
                            
                            180
                            
                            
                            
                            180
                            %
                            
                            
                            1,024
                            
                            
                            
                            370
                            
                            
                            
                            177
                            %Net
      interest income afterprovision for loan losses
                            
                            
                            3,723
                            
                            
                            
                            3,390
                            
                            
                            
                            10
                            %
                            
                            
                            7,244
                            
                            
                            
                            6,792
                            
                            
                            
                            7
                            %Gain
      on sale of loans
                            
                            
                            111
                            
                            
                            
                            121
                            
                            
                            
                            -8
                            %
                            
                            
                            223
                            
                            
                            
                            274
                            
                            
                            
                            -19
                            %Gain
      (loss) on securities
                            
                            
                            26
                            
                            
                            
                            (2
                            )
                            
                            
                            -1400
                            %
                            
                            
                            (82
                            )
                            
                            
                            (8
                            )
                            
                            
                            925
                            %Investment
      brokerage income
                            
                            
                            608
                            
                            
                            
                            586
                            
                            
                            
                            4
                            %
                            
                            
                            1,028
                            
                            
                            
                            984
                            
                            
                            
                            4
                            %Insurance
      agency income
                            
                            
                            1,431
                            
                            
                            
                            1,099
                            
                            
                            
                            30
                            %
                            
                            
                            2,948
                            
                            
                            
                            1,965
                            
                            
                            
                            50
                            %Other
      noninterest income
                            
                            
                            575
                            
                            
                            
                            592
                            
                            
                            
                            -3
                            %
                            
                            
                            1,194
                            
                            
                            
                            1,171
                            
                            
                            
                            2
                            %Noninterest
      Income
                            
                            
                            2,751
                            
                            
                            
                            2,396
                            
                            
                            
                            15
                            %
                            
                            
                            5,311
                            
                            
                            
                            4,386
                            
                            
                            
                            21
                            %Noninterest
      expense
                            
                            
                            6,141
                            
                            
                            
                            5,281
                            
                            
                            
                            16
                            %
                            
                            
                            12,230
                            
                            
                            
                            10,122
                            
                            
                            
                            21
                            %Operating
      (loss) income before income tax
                            
                            
                            333
                            
                            
                            
                            505
                            
                            
                            
                            -34
                            %
                            
                            
                            325
                            
                            
                            
                            1,056
                            
                            
                            
                            -69
                            %Income
      tax (benefit) expense
                            
                            
                            39
                            
                            
                            
                            103
                            
                            
                            
                            -62
                            %
                            
                            
                            (38
                            )
                            
                            
                            223
                            
                            
                            
                            -117
                            %Net
      income
                            
                            $
                            294
                            
                            
                            $
                            402
                            
                            
                            
                            -27
                            %
                            
                            $
                            363
                            
                            
                            $
                            833
                            
                            
                            
                            -56
                            %Per
      share data:Basic
      earning per common share
                            
                            $
                            0.12
                            
                            
                            $
                            0.17
                            
                            
                            
                            -29
                            %
                            
                            $
                            0.15
                            
                            
                            $
                            0.35
                            
                            
                            
                            -57
                            %Diluted
      earnings per common share
                            
                            $
                            0.12
                            
                            
                            $
                            0.17
                            
                            
                            
                            -29
                            %
                            
                            $
                            0.15
                            
                            
                            $
                            0.35
                            
                            
                            
                            -57
                            %Weighted
      average shares outstanding:Basic
                            
                            
                            2,321,264
                            
                            
                            
                            2,357,104
                            
                            
                            
                            -2
                            %
                            
                            
                            2,318,353
                            
                            
                            
                            2,386,528
                            
                            
                            
                            -3
                            %Diluted
                            
                            
                            2,321,480
                            
                            
                            
                            2,370,853
                            
                            
                            
                            -2
                            %
                            
                            
                            2,330,163
                            
                            
                            
                            2,402,895
                            
                            
                            
                            -3
                            %Book
      value per share
                            
                            $
                            18.82
                            
                            
                            $
                            17.73
                            
                            
                            
                            
                            
                            
                            $
                            18.82
                            
                            
                            $
                            17.73Tangible
      book value per share
                            
                            $
                            13.46
                            
                            
                            $
                            11.91
                            
                            
                            
                            
                            
                            
                            $
                            13.46
                            
                            
                            $
                            11.91Net
      interest margin
                            
                            
                            2.99
                            %
                            
                            
                            2.66
                            %
                            
                            
                            
                            
                            
                            
                            2.95
                            %
                            
                            
                            2.71
                            %Net
      interest spread
                            
                            
                            2.82
                            %
                            
                            
                            2.39
                            %
                            
                            
                            
                            
                            
                            
                            2.76
                            %
                            
                            
                            2.40
                            %Return
      on average assets (annualized)
                            
                            
                            0.19
                            %
                            
                            
                            0.28
                            %
                            
                            
                            
                            
                            
                            
                            0.12
                            %
                            
                            
                            0.29
                            %Return
      on equity (annualized)
                            
                            
                            2.75
                            %
                            
                            
                            3.85
                            %
                            
                            
                            
                            
                            
                            
                            1.74
                            %
                            
                            
                            4.01
                            %Tier
      I leverage ratio (Bank)
                            
                            
                            7.62
                            %
                            
                            
                            6.89
                            %
                            
                            
                            
                            
                            
                            
                            7.62
                            %
                            
                            
                            6.89
                            %Tier
      I risk-based capital ratio (Bank)
                            
                            
                            10.85
                            %
                            
                            
                            9.61
                            %
                            
                            
                            
                            
                            
                            
                            10.85
                            %
                            
                            
                            9.61
                            %Total
      risk-based capital ratio (Bank)
                            
                            
                            12.10
                            %
                            
                            
                            10.86
                            %
                            
                            
                            
                            
                            
                            
                            12.10
                            %
                            
                            
                            10.86
                            %Efficiency
      ratio
                            
                            
                            88
                            %
                            
                            
                            89
                            %
                            
                            
                            
                            
                            
                            
                            90
                            %
                            
                            
                            88
                            %Nonperforming
      loans
                            
                            
                            7,369
                            
                            
                            
                            6,610
                            
                            
                            
                            
                            
                            
                            
                            7,369
                            
                            
                            
                            6,610Total
      nonperforming assets
                            
                            
                            8,111
                            
                            
                            
                            6,610
                            
                            
                            
                            
                            
                            
                            
                            8,111
                            
                            
                            
                            6,610Nonperforming
      loans as a % of total loans
                            
                            
                            1.81
                            %
                            
                            
                            1.62
                            %
                            
                            
                            
                            
                            
                            
                            1.81
                            %
                            
                            
                            1.62
                            %Nonperforming
      assets as a % of total assets
                            
                            
                            1.31
                            %
                            
                            
                            1.12
                            %
                            
                            
                            
                            
                            
                            
                            1.31
                            %
                            
                            
                            1.12
                            %December
      31,
                            
                            
                            %2008
                            
                            
                            2007
                            
                            
                            ChangeBalance
      sheet highlights:Available-for-sale
      securities, at fair value
                            
                            $
                            157,834
                            
                            
                            $
                            129,754
                            
                            
                            
                            22
                            %Loans
      held for sale
                            
                            
                            1,357
                            
                            
                            
                            706
                            
                            
                            
                            92
                            %Loans
                            
                            
                            408,243
                            
                            
                            
                            408,236
                            
                            
                            
                            0
                            %Allowance
      for loan losses
                            
                            
                            5,721
                            
                            
                            
                            5,756
                            
                            
                            
                            -1
                            %Goodwill
      & intangibles
                            
                            
                            12,451
                            
                            
                            
                            13,537
                            
                            
                            
                            -8
                            %Total
      assets
                            
                            
                            618,653
                            
                            
                            
                            588,398
                            
                            
                            
                            5
                            %Deposits:NOW
      and money market
                            
                            
                            71,221
                            
                            
                            
                            63,772
                            
                            
                            
                            12
                            %Savings
                            
                            
                            18,559
                            
                            
                            
                            19,674
                            
                            
                            
                            -6
                            %Certificates
      of deposits
                            
                            
                            224,943
                            
                            
                            
                            225,975
                            
                            
                            
                            0
                            %Brokered
      time deposits
                            
                            
                            17,547
                            
                            
                            
                            20,957
                            
                            
                            
                            -16
                            %Noninterest-bearing
      deposits
                            
                            
                            32,721
                            
                            
                            
                            33,271
                            
                            
                            
                            -2
                            %Total
      deposits
                            
                            
                            364,991
                            
                            
                            
                            363,649
                            
                            
                            
                            0
                            %Borrowings
                            
                            
                            203,406
                            
                            
                            
                            180,523
                            
                            
                            
                            13
                            %Shareholders'
      equity
                            
                            
                            47,914
                            
                            
                            
                            41,219
                            
                            
                            
                            16
                            %Shares
      outstanding
                            
                            
                            2,321,332
                            
                            
                            
                            2,324,182
                            
                            
                            
                            0
                            %