Northeast Bank parent raises new capital in deal


[Corrected version]Northeast Bancorp, the Maine-based parent company of Northeast Bank, which has branches in Portsmouth and Rochester in New Hampshire, has announced a merger with an investor-created entity through the sale of more than $29 million in common stock in two transactions. Northeast raised over $16.2 million in the sale of newly issued common stock to several independent, although and unnamed, investors. The transaction has handled through FHB Formation LLC, an entity created specifically for the investment, pending a merger between the bank and the new enterprise, according to a press release by the bank. Northeast said the investors also would purchase some 40 percent of outstanding common shares – equivalent to $12.9 million – from other shareholders – making the total transaction worth approximately $29.1 million. For each transaction, the purchase price was set at $13.93 per share. Immediately following the closing of the merger, the existing Northeast shareholders will collectively own approximately 40 percent of the outstanding shares of Northeast, with the new investors collectively owning 60 percent of the outstanding shares and each of the independent investors owning no more than 9.9 percent of Northeast’s common shares. Under the terms of the agreement, the bank said, existing shareholders of Northeast will be given the opportunity to elect, subject to proration procedures, to either exchange their Northeast shares for cash, or to retain their investment in Northeast common stock or a combination thereof. Richard Wayne, a co-founder of the entity, has been named president and chief executive of FHB Formation. Previously, Wayne co-founded Capital Crossing Bank of Boston. The existing management team of Northeast will continue with the company, the bank said. In its fourth-quarter filings, Northeast Bancorp had net income of $649,313, or 25 cents per share. Total assets at the end of the fourth quarter were $612 million. Total deposits were $374 million. According to SEC filings, the bank reported net income of $1.1 million, 44 cents per diluted share, for the six months ended Dec. 31, 2009, compared to $362,690, or 15 cents per diluted share, for the six months ended Dec. 31, 2008. "This level of capital represents a real investment in Northeast’s future that we believe will provide greater opportunities for our customers, our employees, our shareholders and our region in the years ahead," said Jim Delamater, president and chief executive of Northeast Bancorp. – CINDY KIBBE/NEW HAMPSHIRE BUSINESS REVIEW
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