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NORTHEAST FEDERAL SEEKS STOCKHOLDER APPROVAL TO CONVERT ITS $2.25 CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES A

 HARTFORD, Conn., Jan. 28 /PRNewswire/ -- Northeast Federal Corp.("the Company") (NYSE: NSB), the holding company for Northeast Savings, F.A., ("the Association") today announced that it intends to seek stockholder approval for a conversion of its $2.25 Cumulative Convertible Preferred Stock, Series A (the Convertible Preferred Stock) (NYSE: NSB PrA).
 In order to simplify and strengthen its capital structure, the Company is seeking to cause the conversion of all of the outstanding shares of the Convertible Preferred Stock into shares of Common Stock. In connection with such conversion, all accumulated and unpaid dividends and future dividend requirements on the Convertible Preferred Stock would be eliminated.
 The ratio for the conversion of each share of the Convertible Preferred Stock into shares of Common Stock will be established at a later date. It is intended that the ratio of the number of shares of Common Stock received by the Convertible Preferred Stockholders for each share of Convertible Preferred stock they hold would result in a premium based on the closing prices of both stock issues on the New York Stock Exchange on Jan. 26, 1993.
 The conversion will require the favorable vote by the holders of at least two-thirds of the outstanding shares of the Convertible Preferred Stock and a majority of the outstanding shares of the Common Stock. A notice for the meeting and a proxy statement will be sent to all stockholders at least 30 days prior to the meeting date, which has not been established at this time.
 If the conversion is completed, the Company also would distribute shares of a new series of preferred stock, the Supervisory Goodwill Litigation Dividend Preferred Stock, Series C ("the Litigation Preferred Stock"). This distribution would be made to all holders of the Company's Common Stock after the conversion.
 The Litigation Preferred Stock would provide for the payment of dividends only in the event that the Association receives a recovery as a result of the damages claim it has filed against the United States in the United States Court of Federal Claims ("the Litigation"). In the event of any such recovery, the aggregate amount of dividends payable on the Litigation Preferred Stock would be based upon the amount of such recovery, net of expenses and taxes, and subject to a maximum limitation. There is no assurance that the Association will prevail in the Litigation, or, even if it prevails, that the Association will ultimately recover any net proceeds. The Litigation alleges, among other things, that the United States Government, in violation of the U.S. Constitution, took the property of the Association without just compensation or due process of law when it disallowed the Association's use of Supervisory Goodwill for the purposes of regulatory capital. This Supervisory Goodwill was obtained by the Association in its 1982 acquisition of three troubled thrifts from the former Federal Savings and Loan Insurance Corporation.
 The Company has filed a registration statement and preliminary proxy statement relating to the conversion and the securities offered by the Company in connection with the conversion with the Securities and Exchange Commission; such registration statement and proxy statement has not become effective and is not definitive. The securities may not be sold nor may offers to buy or proxies to vote on the conversion be accepted prior to the time the registration statement becomes effective. This announcement does not constitute an offer to sell or a solicitation of an offer to buy or of a proxy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
 -0- 1/28/93
 /CONTACT: CONTACT: George P. Rutland , Chairman of the Board and Chief Executive Officer, 203-280-1100, or Kirk W. Walters, President, Chief Operating Officer and Chief Financial Officer, 203-280-1183, of Northeast Federal/
 (NSB)


CO: Northeast Savings Bank ST: Connecticut IN: FIN SU: OFR

TM -- NE002 -- 0029 01/28/93 07:56 EST
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Date:Jan 28, 1993
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