Eastern Light Capital

May 8, 2009

Dear Shareholders:
Although the alternative/non-conforming residential mortgage situation continues to deteriorate, I will continue to regularly correspond with you to review the significant developments that affect your investment in Eastern Light Capital (“ELC”) and to keep you informed of our efforts to maintain shareholder value in an increasingly challenging environment.

2008’s economic turmoil resulted in the bankruptcy and conservatorship of both Fannie Mae and Freddie Mac, bank bailouts, volatile stock markets, declining real estate values, increasing mortgage delinquencies, record residential foreclosure rates, restricted credit and uncertain capital markets.  While we are all aware of these events, the resulting declines in wealth and the abruptness of the upheaval remain unsettling.

In contrast to the economic turmoil of 2008, Eastern Light Capital’s (“ELC”) common stock appreciated 12%, from $3.93 to $4.40 per share.  Furthermore, as of May 8, 2009, ELC’s common stock has appreciated an additional 7%, reaching $4.74 per share.

ELC’s ability to outperform all the major market indices and mortgage industry standards is the result of the management decision in 2006 to suspend residential mortgage investments and to focus in 2007 and 2008 on asset management and debt repayment.  During this period, however, ELC’s mortgage investment values and operating results have not escaped the dramatic plunge in home prices. Management’s goal of restoring profitability in 2008 was not achieved due to increased mortgage loss reserves for 2009’s expected home price declines.  Although we are diligently working to restore profitability and wish to increase shareholder value every year, recent market realities have continued to work against these efforts. 

Our fundamental goal is to manage the company’s resources in a manner that in the short term retains shareholder value, and in the long-term builds shareholder value.   Prudent investment decisions and a capital structure that facilitates access to capital can and will restore profitability and provide for regular, reliable dividends.

We need to comprehensively address the structure of ELC’s shareholders’ equity in order to prepare for tomorrow’s opportunities. During 2009, a special shareholder meeting will be held to address converting the preferred shares into common shares.  A single class of equity, common stock, will provide all shareholders with immediate liquidity, simplify our capital structure and enhance our ability to seize investment opportunities with flexibility and foresight.

We remain strongly committed to enhancing ELC’s value and we greatly appreciate your continued support.

Richard J. Wrensen
Chairman and Chief Executive Officer