It will be at least two months more before a transaction expected to provide Lewiston-based Northeast Bank with a $16 million capital infusion gets the regulatory approvals needed to move forward.

Maine banking regulators have granted a 60-day extension to the time frame outlined in FHB Formation’s application to purchase a $29 million stake in Northeast Bank.

FHB – the Delaware corporation formed in March 2009 to buy $16 million in new Northeast shares and $13 million in existing ones – requested the extension to allow more time for a Federal Reserve review of the transaction, said Jim Delamater, Northeast’s chief executive officer.

“It’s a process,” Delamater said. “There are no issues. They’re just going through the paperwork.”

The transaction with FHB received shareholder approval in July, but it’s still subject to approval from the Federal Reserve and the Maine Bureau of Financial Institutions.

The Federal Reserve regulates Northeast’s holding company, Northeast Bancorp. The Maine Bureau of Financial Institutions is the regulator for Northeast’s banking business.

Bureau of Financial Institutions personnel will also take advantage of the 60-day extension, said Lloyd LaFountain, the bureau’s superintendent.

“It gives an opportunity for the Federal Reserve and for us to review the application submitted and any supporting documentation submitted,” he said.

The extension notice is dated Aug. 18.

As part of the transaction, FHB and its investors will gain 60 percent of Northeast stock and Northeast’s existing holding company will absorb FHB.

At that point, FHB Formation CEO Richard Wayne will become Northeast Bank’s CEO and Delamater will lead Northeast’s community banking division.

The $29 million transaction includes investments from at least three New York private equity firms, Arlon Capital Partners, BlackRock and East Rock Capital; and one from Boston, Highfields Capital Management, that manage billions of dollars worldwide.

With the $16 million in new capital, Northeast plans to branch out into the loan acquisition business, in which Northeast will buy discounted loans from across the country and service them.

The capital infusion will also put Northeast in a position to repay a $4.2 million loan it received in December 2008 through the Troubled Asset Relief Program – the federal bank bailout program rolled out under the Bush administration during the financial crisis.

While Delamater estimated in July that the FHB transaction would be finished by the end of the year, he said Monday he “wouldn’t venture a guess” on a completion date after the application extension.

“We knew it was a process,” he said. “It would take whatever time it took.”

Northeast Bank reported $620 million in assets in its June 30 regulatory filings.


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