Contact:     Michael W. Mahler
             President and Chief Executive Officer
             First Federal of Northern Michigan Bancorp, Inc.
              (989) 356-9041

                FIRST FEDERAL OF NORTHERN MICHIGAN BANCORP, INC.
                    ANNOUNCES SALE OF INSURANCE AGENCY ASSETS


     Alpena,  Michigan - (February 27, 2009); First Federal of Northern Michigan
Bancorp,  Inc.  (Nasdaq:  FFNM) (the "Company")  announced today the sale of the
health,  life,  property and casualty  insurance  operations of InsuranCenter of
Alpena,  the  Company's   insurance  affiliate  ("ICA").  As  a  result  of  the
transaction, the Company will reduce its full-time employees by 14 positions, or
13% of the  Company's  workforce.  The Company also expects the sale will reduce
its non-interest expense by approximately $1.2 million in fiscal year 2009.

     Michael W. Mahler,  President  and Chief  Executive  Officer of the Company
stated,  "The sale of these  operations  reflects our  determination to increase
operating  efficiencies and shareholder  value,  while focusing our attention on
our core  mission -  providing  outstanding  community  banking  services to our
customers."

     The Company  expects to record a nominal gain upon the closing of the sale.
ICA retains the residual  income stream  associated  with the April 2008 sale of
its wholesale Blue Cross/Blue Shield override business to the Grotenhuis Group.