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U.S. Securities and Exchange CommissionWashington, D.C. 20549

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FORM 10-QSB

|(X)                                              |  | QUARTERLY REPORT UNDER SECTION 13 OF 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
|------------------------------------------------ |  | ----------------------------------------------------------------------------------
|For the quarterly period ended December 31, 2000
|OR                                              
|( )                                              |  | TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT       

For the transition period from  to .

Commission File No. 000-25231

Northern Star Financial, Inc.(Exact name of registrant as specified in its charter)

|Minnesota                | 41-1912467         
|------------------------ | -------------------
|(State of Incorporation) | (IRS Employer ID #)

1650 Madison Avenue
Mankato, MN 56001(Address of Principal Executive Offices)

507-388-4855(Issuer's Telephone Number, Including Area Code)

Check
whether the issuer (1) filed all reports required to be filed by Sections 13 or 15(d) of the Exchange Act during the past 12 months (or such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
X    .

State
the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date.

Class: Common Stock, par value $.01 per share
Outstanding shares at December 31, 2000: 427,600

Northern Star Financial, Inc. and Subsidiary

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Northern Star Financial, Inc.  Index to Form 10-QSB  December 31, 2000

|PART I.  FINANCIAL INFORMATION |  |        
|------------------------------ |  | -------
|                               |  | Item 1.
|                               |  |        
|                               |  |        
|                               |  |        
|                               |  |        
|                               |  | Item 2.
|PART II.  OTHER INFORMATION    |  |        
|                               |  | Item 1.
|                               |  | Item 2.
|                               |  | Item 3.
|                               |  | Item 4.
|                               |  | Item 5.
|                               |  | Item 6.
|SIGNATURES                     |  | 20     

2

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Northern Star Financial Summary Financial Data

The following table summarizes certain historical financial data of Northern Star Financial, Inc. and its subsidiary on a consolidated basis as of and for the
three months and six months ended December 31, 2000 and 1999. You should read this table in conjunction with our financial statements and related notes appearing elsewhere in this document.

|                                         |  | For The Three Months
Ended December 31, |         | For The Six Months
Ended December 31, |  
|---------------------------------------- |  | --------------------------------------- | ------- | ------------------------------------- | -
|
|
|Statement of Income:                     |  |                                         |         |                                       |  
|Interest income                          |  | $                                       | 627,533 |                                       | $
|Interest expense                         |  |                                         | 408,813 |                                       |  
|                                         |  |                                         |         |                                       |  
|Net interest income                      |  |                                         | 218,720 |                                       |  
|Provision for loan losses                |  |                                         | 20,050  |                                       |  
|Other non-interest income                |  |                                         | 29,961  |                                       |  
|Non-interest expense                     |  |                                         | 281,465 |                                       |  
|                                         |  |                                         |         |                                       |  
|Income (loss) before income tax expense  |  |                                         | (52,834 | )                                     |  
|Income tax expense (benefit)             |  |                                         |        |                                       |  
|                                         |  |                                         |         |                                       |  
|Net income (loss)                        |  | $                                       | (52,834 | )                                     | $
|                                         |  |                                         |         |                                       |  
|Balance Sheet:                           |  |                                         |         |                                       |  
|Assets                                   |  |                                         |         |                                       |  
|Allowance for loan losses                |  |                                         |         |                                       |  
|Deposits                                 |  |                                         |         |                                       |  
|Stockholders' equity                     |  |                                         |         |                                       |  
|Per Share Data:                          |  |                                         |         |                                       |  
|Net income (loss)basic                  |  | $                                       | (0.12   | )                                     | $
|Net income (loss)diluted                |  | $                                       | (0.12   | )                                     | $
|Book value                               |  |                                         |         |                                       |  
|Other Data                               |  |                                         |         |                                       |  
|Average shares outstandingbasic         |  |                                         | 427,600 |                                       |  
|Average shares outstandingdiluted       |  |                                         | 427,600 |                                       |  
|Financial Ratios:                        |  |                                         |         |                                       |  
|Equity to assets                         |  |                                         |         |                                       |  
|Return on average assets                 |  |                                         |         |                                       |  
|Return on average stockholders' equity   |  |                                         |         |                                       |  
|Net interest margin                      |  |                                         |         |                                       |  
|Tier 1 leverage ratio                    |  |                                         |         |                                       |  
|Tier 1 capital to risk-weighted assets   |  |                                         |         |                                       |  
|Total capital to risk-weighted assets    |  |                                         |         |                                       |  
|Asset Quality Ratios:                    |  |                                         |         |                                       |  
|Nonperforming assets to total assets     |  |                                         |         |                                       |  
|Nonperforming assets to total loans and  |  |                                         |         |                                       |  
|and other real estated owned             |  |                                         |         |                                       |  
|Allowance for loan losses to total loans |  |                                         |         |                                       |  

3

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Northern Star Financial, Inc. and SubsidiaryConsolidated Statements of Financial Condition

|                                                                                                  |                         | December 31, 2000                        |            | June 30, 2000 |           
|------------------------------------------------------------------------------------------------- | ----------------------- | ---------------------------------------- | ---------- | ------------- | ----------
|
|ASSETS                                                                                            |                        
|Cash and cash equivalents:                                                                        |                         |                                          |            |               |           
|                                                                                                  | Cash and due from banks |                                          | $          | 851,126       |           
|                                                                                                  | Federal funds sold      |                                          |            | 4,572,176     |           
|                                                                                                  |                         |                                          |            |               |           
|                                                                                                  |                         | Total cash and cash equivalents          |            |               | 5,423,302 
|Securities available for sale at fair value                                                       |                         |                                          | 4,844,271  |               |           
|FHLB stock, at cost                                                                               |                         |                                          | 138,800    |               |           
|Loans held for sale                                                                               |                         |                                          | 39,345     |               |           
|Loans receivable, net of allowance for loan and lease losses of $221,900 and $181,500             |                         |                                          | 22,073,885 |               |           
|Accrued interest receivable                                                                       |                         |                                          | 385,282    |               |           
|Property and equipment, net of depreciation                                                       |                         |                                          | 399,079    |               |           
|Other assets                                                                                      |                         |                                          | 235,145    |               |           
|                                                                                                  |                         |                                          |            |               |           
|                                                                                                  |                         | Total Assets                             |            | $             | 33,539,109
|                                                                                                  |                         |                                          |            |               |           
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                              |                        
|Liabilites:                                                                                       |                         |                                          |            |               |           
|Demand deposits                                                                                   |                         | $                                        | 3,100,949  |               | $         
|Savings deposits                                                                                  |                         |                                          | 6,129,218  |               |           
|Time deposits                                                                                     |                         |                                          | 18,722,529 |               |           
|                                                                                                  |                         |                                          |            |               |           
|                                                                                                  |                         | Total deposits                           |            |               | 27,952,696
|Advances from FHLB                                                                                |                         |                                          | 2,775,000  |               |           
|Advances from borrowers for taxes and insurance                                                   |                         |                                          | 15,241     |               |           
|Other liabilities                                                                                 |                         |                                          | 55,173     |               |           
|                                                                                                  |                         |                                          |            |               |           
|                                                                                                  |                         | Total Liabilities                        |            |               | 30,798,110
|                                                                                                  |                         |                                          |            |               |           
|Shareholders Equity:                                                                              |                         |                                          |            |               |           
|Common Stock, $.01 par value, 15,000,000 shares authorized; 427,600 shares issued and outstanding |                         |                                          | 4,276      |               |           
|Undesignated stock, par value $.01per share; 5,000,000 shares authorized, no shares issued        |                         |                                          |           |               |           
|Paid in capital                                                                                   |                         |                                          | 3,939,557  |               |           
|Accumulated deficit                                                                               |                         |                                          | (1,199,715 | )             |           
|Unearned stock compensation                                                                       |                         |                                          | (17,998    | )             |           
|Accumulated comprehensive income (loss)                                                           |                         |                                          | 14,879     |               |           
|                                                                                                  |                         |                                          |            |               |           
|                                                                                                  |                         | Total Shareholders' Equity               |            |               | 2,740,999 
|                                                                                                  |                         |                                          |            |               |           
|                                                                                                  |                         | Total Liabilites and Shareholders Equity |            | $             | 33,539,109
|                                                                                                  |                         |                                          |            |               |           

See
Notes to Consolidated Financial Statements

4

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Northern Star Financial, Inc. and SubsidiaryUnaudited Consolidated Statements of Operations

|                                |                                                   | For the Three Months
Ended December 31, |         | For the Six Months
Ended December 31, |        
|------------------------------- | ------------------------------------------------- | --------------------------------------- | ------- | ------------------------------------- | -------
|
|Interest income                 |                                                   |                                         |         |                                       |        
|                                | Loans receivable                                  |                                         | $       | 507,995                               |        
|                                | Securities available for sale                     |                                         |         | 75,312                                |        
|                                | Federal funds sold                                |                                         |         | 44,226                                |        
|                                |                                                   |                                         |         |                                       |        
|                                |                                                   | Total interest income                   |         |                                       | 627,533
|Interest expense                |                                                   |                                         |         |                                       |        
|                                | Deposits                                          |                                         |         | 361,771                               |        
|                                | Borrowed funds                                    |                                         |         | 47,042                                |        
|                                |                                                   |                                         |         |                                       |        
|                                |                                                   | Total interest expense                  |         |                                       | 408,813
|                                | Net interest income                               |                                         |         | 218,720                               |        
|                                | Provision for loan losses                         |                                         |         | 20,050                                |        
|                                |                                                   |                                         |         |                                       |        
|                                | Net interest income after provision for loan loss |                                         |         | 198,670                               |        
|                                |                                                   |                                         |         |                                       |        
|Noninterest income:             |                                                   |                                         |         |                                       |        
|                                | Other fees and service charges                    |                                         |         | 18,027                                |        
|                                | Gain on sale of loans                             |                                         |         | 11,934                                |        
|                                |                                                   |                                         |         |                                       |        
|                                |                                                   | Total noninterest income                |         |                                       | 29,961 
|                                |                                                   |                                         |         |                                       |        
|Noninterest expense             |                                                   |                                         |         |                                       |        
|                                | Compensation and employee benefits                |                                         |         | 109,798                               |        
|                                | Board fees                                        |                                         |         | 28,000                                |        
|                                | Occupancy                                         |                                         |         | 22,811                                |        
|                                | Legal and accounting                              |                                         |         | 24,500                                |        
|                                | Printing & supplies                               |                                         |         | 6,484                                 |        
|                                | Property and equipment depreciation               |                                         |         | 16,855                                |        
|                                | Data processing                                   |                                         |         | 23,435                                |        
|                                | Other                                             |                                         |         | 49,582                                |        
|                                |                                                   |                                         |         |                                       |        
|                                |                                                   | Total noninterest expense               |         |                                       | 281,465
|                                |                                                   |                                         |         |                                       |        
|Loss Before income Tax Benefit  |                                                   |                                         |         |                                       |        
|Discontinued Operations         |                                                   |                                         | (52,834 | )                                     |        
|                                | Income Tax Benefit                                |                                         |         |                                      |        
|                                |                                                   |                                         |         |                                       |        
|Loss from Continuing Operations |                                                   |                                         | (52,834 | )                                     |        
|                                | Loss from Discontinued Operations                 |                                         |         |                                      |        
|                                |                                                   |                                         |         |                                       |        
|Net Loss                        |                                                   | $                                       | (52,834 | )                                     | $      
|                                |                                                   |                                         |         |                                       |        
|Net Loss per Common Share       |                                                   |                                         |         |                                       |        
|                                | Basic from Continuing Operations                  |                                         | $       | (0.12                                 | )      
|                                | Basic from Discontinued Operations                |                                         |         | (0.00                                 | )      
|                                |                                                   |                                         |         |                                       |        
|                                | Basic (loss) per share of common stock            |                                         | $       | (0.12                                 | )      
|                                |                                                   |                                         |         |                                       |        

See
Notes to Consolidated Financial Statements

5

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Northern Star Financial, Inc. and SubsidiaryUnaudited Consolidated Statements of Cash Flows

|                                                     |                                                                                     | For the Three Months
Ended December 31,             |           | For the Six Months
Ended December 31, |           
|---------------------------------------------------- | ----------------------------------------------------------------------------------- | --------------------------------------------------- | --------- | ------------------------------------- | ----------
|
|Cash flows from operating activities:                |                                                                                     |                                                     |           |                                       |           
|                                                     | Interest received on loans and investments                                          |                                                     | $         | 573,087                               |           
|                                                     | Interest paid                                                                       |                                                     |           | (276,913                              | )         
|                                                     | Other fees, commissions, and income received                                        |                                                     |           | 64,526                                |           
|                                                     | Cash paid to suppliers, employees and others                                        |                                                     |           | (174,505                              | )         
|                                                     | Contributions to charities                                                          |                                                     |           | (425                                  | )         
|                                                     | Loans originated for sale                                                           |                                                     |           | (771,811                              | )         
|                                                     | Proceeds from sale of loans                                                         |                                                     |           | 862,849                               |           
|                                                     |                                                                                     |                                                     |           |                                       |           
|                                                     |                                                                                     | Net cash provided by (used in) operating activities |           |                                       | 276,808   
|                                                     |                                                                                     |                                                     |           |                                       |           
|Cash flows from investing activities:                |                                                                                     |                                                     |           |                                       |           
|                                                     | Purchases of available-for-sale securities                                          |                                                     |           | (1,827,462                            | )         
|                                                     | Proceeds from maturities of available-for-sale                                      |                                                     |           | 1,250,626                             |           
|                                                     | Purchases of FHLB stock                                                             |                                                     |           | (3,800                                | )         
|                                                     | Investment in joint venture                                                         |                                                     |           | (67,352                               | )         
|                                                     | Loan originations and principal payments on loans, net                              |                                                     |           | (2,045,032                            | )         
|                                                     | Purchase of property and equipment                                                  |                                                     |           |                                      |           
|                                                     |                                                                                     |                                                     |           |                                       |           
|                                                     |                                                                                     | Net cash used in investing activities               |           |                                       | (2,693,020
|Cash flows from financing activities:                |                                                                                     |                                                     |           |                                       |           
|                                                     | Net increase (decrease) in non-interest bearing demand and savings deposit accounts |                                                     |           | 1,729,909                             |           
|                                                     | Net (decrease) increase in time deposits                                            |                                                     |           | 3,346,907                             |           
|                                                     | Net (decrease) increase in mortgage escrow funds                                    |                                                     |           | (6,126                                | )         
|                                                     | Proceeds from FHLB advances                                                         |                                                     |           | 500,000                               |           
|                                                     | Repayment of FHLB advances                                                          |                                                     |           | (425,000                              | )         
|                                                     |                                                                                     |                                                     |           |                                       |           
|                                                     |                                                                                     | Net cash provided by financing activities           |           |                                       | 5,145,690 
|                                                     |                                                                                     |                                                     |           |                                       |           
|Net increase (decrease) in cash and cash equivalents |                                                                                     |                                                     | 2,729,478 |                                       |           
|Cash and cash equivalents beginning                  |                                                                                     |                                                     | 2,693,824 |                                       |           
|                                                     |                                                                                     |                                                     |           |                                       |           
|Cash and cash equivalents ending                     |                                                                                     | $                                                   | 5,423,302 |                                       | $         
|                                                     |                                                                                     |                                                     |           |                                       |           

See
Notes to Consolidated Financial Statements

6

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Northern Star Financial, Inc. and SubsidiaryUnaudited Consolidated Statements of Cash Flows (Continued)

|                                                                         |              | For the Three Months
Ended December 31,   |                             | For the Six Months
Ended December 31, |        
|------------------------------------------------------------------------ | ------------ | ----------------------------------------- | --------------------------- | ------------------------------------- | -------
|
|RECONCILATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES |              |                                           |                             |                                       |        
|                                                                         | Net loss     |                                           | $                           | (52,834                               | )      
|                                                                         | Adjustments: |                                           |                             |                                       |        
|                                                                         |              | Depreciation                              |                             |                                       | 16,854 
|                                                                         |              | Joint venture loss                        |                             |                                       |       
|                                                                         |              | Loss on disposition of joint venture      |                             |                                       |       
|                                                                         |              | Provision for loan losses                 |                             |                                       | 20,050 
|                                                                         |              | Premiums accretion on investments         |                             |                                       | (3,089 
|                                                                         |              | Discount amortization on investments      |                             |                                       | 6      
|                                                                         |              | Deferred loan fees/cost, net              |                             |                                       | 49,498 
|                                                                         |              | Earned stock compensation                 |                             |                                       | 999    
|                                                                         |              | (Increase) decrease in:                   |                             |                                       |        
|                                                                         |              |                                           | Loans held for sale         |                                       |        
|                                                                         |              |                                           | Accrued interest receivable |                                       |        
|                                                                         |              |                                           | Other assets                |                                       |        
|                                                                         |              | Increase (decrease) in:                   |                             |                                       |        
|                                                                         |              |                                           | Accrued interest payable    |                                       |        
|                                                                         |              |                                           | Other liabilities           |                                       |        
|                                                                         |              |                                           |                             |                                       |        
|                                                                         |              | Net cash provided by operating activities |                             | $                                     | 276,808
|                                                                         |              |                                           |                             |                                       |        

See
Notes to Consolidated Financial Statements

7

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  December 31, 2000 (Unaudited)

Note 1:  PRINCIPLES OF CONSOLIDATION

The unaudited consolidated financial statements as of and for the six month periods ended December 31, 2000 and 1999, include the accounts of Northern
Star Financial, Inc. (the "Company") and its wholly owned subsidiary Northern Star Bank (the "Bank"). All significant inter-company accounts and transactions have been eliminated in
consolidation.

Note 2:  BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all information and disclosures required by generally accepted accounting principles for complete financial statements. The accompanying
consolidated financial statements do not purport to contain all the necessary financial disclosures required by generally accepted accounting principles that might otherwise be necessary in the
circumstances and should be read with the fiscal 2000 consolidated financial statements and notes of Northern Star Financial, Inc. and Subsidiary included in their annual report for the year
ended June 30, 2000.

In
the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentations have been included. The results of operations for
the three and six month periods ended December 31, 2000 and 1999, are not necessarily indicative of the results that my be expected for the entire fiscal year or any other interim period.

Note 3:  EARNINGS PER SHARE

The earnings per share amounts were computed using the weighted average number of shares outstanding during the periods presented. For the three and six month
periods ended December 31, 2000 and 1999 the weighted average number of shares outstanding for basic and diluted earnings per share computation were 427,600 and 425,600 respectively. There were
104,600 common stock shares from stock options that were not included in the calculation of diluted earnings per share because they were anti-dilutive.

Note 4:  NEW FINANCIAL ACCOUNTING STANDARDS

Statements of Financial Accounting Standards (SFAS) No. 140 was issued September 29, 2000 as a replacement to SFAS No. 125 "Accounting for
Transfer and Servicing of Financial Assets and Extinguishments of Liabilities". Statement 140 is effective for transfers after March 31, 2001. It is effective for disclosures about security
actions and collateral, and for recognition and reclassification of collateral for fiscal year ending June 30, 2001. Adoption will not have a material effect on the financial statement.

8

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Note 5:  COMPREHENSIVE (LOSS)

|                                                               |                                   | For the Three Months
Ended December 31, |   | For the Six Months
Ended December 31, |  
|-------------------------------------------------------------- | --------------------------------- | --------------------------------------- | - | ------------------------------------- | -
|
|Accumulated comprehensive (loss) is composed of the following: |                                   |                                         |   |                                       |  
|Unrealized Gains (Losses) on Securities                        |                                   |                                         |   |                                       |  
|                                                               | Beginning Balance                 |                                         | $ | (12,745                               | )
|                                                               | Current-period change next of tax |                                         |   | 27,624                                |  
|                                                               |                                   |                                         |   |                                       |  
|                                                               | Ending Balance                    |                                         | $ | 14,879                                |  
|                                                               |                                   |                                         |   |                                       |  
|Comprehensive (Loss) consists of the following:                |                                   |                                         |   |                                       |  
|                                                               | Net loss                          |                                         | $ | (52,834                               | )
|                                                               | Other comprehensive (loss) income |                                         |   | 27,624                                |  
|                                                               |                                   |                                         |   |                                       |  
|                                                               | Comprehensive (loss)              |                                         | $ | (25,210                               | )
|                                                               |                                   |                                         |   |                                       |  

Note 6:  JOINT VENTURE/DISCONTINUED OPERATIONS

In July 1999, the Company acquired a 49 percent joint venture interest in Homeland Mortgage Company, LLC (Homeland Mortgage), a limited liability
company, in exchange for a total cash consideration of $196,000. The investment in Homeland Mortgage was accounted for using the equity method. Homeland Mortgage's primary business is originating
residential real estate loans that are secured by first and second mortgages and sold into the secondary mortgage market. During the quarter ended September 30, 2000, the board of directors
voted to sell its 49 percent joint venture interest for $67,352. The Company did not retain any interest in the assets or liabilities of Homeland Mortgage. The Company remains contingently
liable for the lease of office real estate, which expires July 1, 2002. The property has been sub-let and management does not expect a default on the part of the tenant occupying
the property.

Note 7:  SECONDARY STOCK OFFERING INITIATED

The Company filed a Registration Statement on Form SB-2 with the Securities and Exchange Commission to register the sale of 50,000 shares at a
minimum to a maximum of 300,000 shares of its common stock. The Registration Statement and Prospectus went effective September 18, 2000 and will result in net proceeds of approximately $488,250
to $2,929,500 upon completing the sale of the minimum to maximum number of shares, respectively. The offering will expire on March 18, 2001, unless extended by the company and underwriter.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS

Northern Star Financial, Inc. is the bank holding company of Northern Star Bank (the "Bank"). Since the principal business of the Company is the Bank,
the following discussion pertains mainly to the Bank.

This
report contains "forward-looking statements" as defined in section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of
1934, as amended, which includes statements such as projections, plans and objectives and assumptions about the future, and such forward looking statements are subject to the safe harbor created by
these sections. Many factors could cause the actual results, amounts or events to differ materially from those the Company expects to achieve or occur, such as changes in competition, market interest
rates, economic conditions and regulations. Although the Company has based its plans and projections on certain assumptions, there can be no assurances that its assumptions will be correct, or that
its plans and projections can be achieved.

9

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FINANCIAL CONDITION

Assets

Total assets of Northern Star Financial at December 31, 2000 were $33.5 million compared to $22.9 million in June 30, 2000 an
increase of $10.6 million. Net loans increased $5.5 million during the first six months of the fiscal year ending June 30, 2001. Real estate loans increased $.7 million to
$8.5 million at December 31, 2000 while business and consumer loans increased $4.5 million. Loans held for sale decreased $345 thousand during the period when compared to
the same period of the fiscal year ending June 30, 2000. Investment securities increased $631 thousand, from $4.2 million at June 30, 2000 to $4.8 million at
December 31, 2000. Federal funds sold increased $4.2 million to $4.5 million at December 31, 2000. Total earning assets increased $10.1 million, or 47%, during the
six month period ending December 31, 2000.

Liabilities

Total liabilities at December 31, 2000 were $30.7 million compared to $20.1 million at June 30, 2000, a $10.6 million
increase. Deposits at December 31, 2000 were $27.9 million compared to $18.1 million at June 30, 2000, an increase of 53.6% or $9.8 million. During the first six
months of 2000, non-interest bearing deposits increased $900 thousand to $2.3 million, while interest bearing deposits increased $8.7 million to $25.2 million.
Funds borrowed from the Federal Home Loan Bank increased $825 thousand to $2.7 million as of December 31, 2000.

Non-performing Assets

Non-performing assets of Northern Star Financial as of December 31, 2000 consisted of non-accrual loans.
Non-performing assets totaled $36.8 thousand on December 31, 2000 compared to $7.37 thousand on September 30, 2000. Northern Star Financial's allowance for loan
losses of $222 thousand was 1% of total loans on December 31, 2000 compared with $202 thousand, or 1% of total loans, on September 30, 2000.

Loans
past due 90 days or more and still accruing were $133 thousand at December 31, 2000. On September 30, 2000 the bank had no loans past due
90 days or more.

The
allowance for loan losses is maintained by Northern Star Financial at what management considers to be a realistic level consistent with the level and type of loans, and taking
into consideration the non-accrual and past due loans detailed above.

RESULTS OF OPERATIONS

Net Operating Results

As a result of the Company's decision to sell our joint venture interest in Homeland Mortgage, LLC., ("HLMC"), results of operations are presented on the basis
of continuing and discontinued operations in accordance with generally accepted accounting principles. Historical presentation of continuing operations reflects the Company's results of operations as
if the disposition of HLMC had occurred for all periods presented. Discontinued operations represents our portion of HLMC's operating losses for the periods presented.

Continuing Operations

For the quarter ended December 31, 2000, Northern Star Financial's net loss from continuing operations was $52 thousand compared to a net loss of
$155 thousand during the quarter ended December 31, 1999. Basic loss per share from continuing operations in the second quarter of fiscal year 2001decreased to $0.12 compared to a loss
of $0.36 during the second quarter of fiscal year 2000. The

10

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improvement in net operations was attributable to increases in net interest income and non-interest income.

For
the six months ended December 31, 2000, net loss from continuing operations was $83 thousand compared to $282 thousand for the same period of 1999. Basic loss
per share from continuing operations decreased to $(0.36) in the first six months of 2000 from a loss of $(0.66) in 1999. The decrease in net loss was attributable to increases in net interest income
and non-interest income and a decrease in the provision for loan losses.

Discontinued Operations

The Company did not report any losses from discontinued operations for the three months ended December 31, 2000.

Losses
from discontinued operations for the six months ended December 31, 2000 were $15 thousand. Losses from discontinued operations during the six months ended
December 31, 1999 were $87 thousand.

Net Interest Income

Net interest income during the first six months of fiscal year 2001 increased $166 thousand to $431 thousand, up 63% from $265 thousand in
the same period of fiscal year 2000.

During
the first half of fiscal year 2001 interest income on securities available for sale was $153 thousand or 137% increase from $64 thousand reported in the first
half of fiscal year 2000. Interest expense on deposits increased 322% from $153 thousand in the first six months of fiscal year 2000 compared to $646 million during the first six months
of fiscal year 2001. For the six months ended December 31, 2001, interest expense on short-term borrowings increased $89 thousand over the comparable period in 2000. The net
interest margin was 3.24% in the first half of fiscal year 2001 compared to 5.01% in the first half of fiscal year 2000.

Provision for Loan Losses

The provision for loan losses made during the first six months of fiscal year 2001 was $40 thousand. This was a decrease of $27 thousand or 40%
from the provisions made during the respective period in fiscal year 2000. The reduction in the loan loss provision during the first half of 2001 when compared
to the loan loss provision made during the first half of fiscal year 2000 was attributable to fewer loans being made during the period.

Non-Interest Income

For the three months ended December 31, 2000, non-interest income was $30 thousand, which was an increase of $4 thousand, or
16.32%, compared to the respective period ended December 31, 1999. This increase was attributable primarily to a $13 thousand increase in fees and service charges. Gain on sale of loans
decreased 17% to $22 thousand in the first half of fiscal year 2001, a decrease of $3 thousand from the comparable period in fiscal year 2000.

For
the six months ended December 31, 2000, non-interest income was $60 thousand for a 49% increase when compared to the same period of the prior fiscal
year. The increase was attributable to an increase in fees and service charges.

Non-Interest Expense

Non-interest expense during the second quarter of fiscal year 2001 decreased $5 thousand, or 1.7%, to $281 thousand compared with
$286 thousand in the comparable quarter in fiscal year 2000.

11

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Non-interest expense during the first six months of fiscal year 2001 increased $15 thousand, or 2.9%, to $534 thousand compared with the same period of
fiscal year 2000.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity represents an institution's ability to meet present and future financial obligations through either the sale or maturity of existing assets or the
acquisition of additional funds through liability management. Liquid assets include cash, interest bearing deposits with banks, federal funds sold, investments, and loans maturing within one year. As
a result of Northern Star Financial's management of liquid assets and the ability to generate liquidity through liability funding, management believes that
Northern Star Financial maintains overall liquidity sufficient to satisfy its depositors' requirements and meet its customers' credit needs.

At
December 31, 2000, Northern Star Financial had $3.2 million in loan commitments pending disbursement and expects to have sufficient funds available to meet current
loan origination commitments. Funding is expected to be in the normal course of business primarily through loan repayments, prepayments, and deposit growth. As additional funding, Northern Star
Financial holds $4.8 million in investment securities. The entire investment portfolio is classified as available for sale. $298 thousand of the investment securities portfolio will
mature in less than one year, with an additional $2.5 million maturing between 1 and 5 years.

Northern
Star Financial has established an unsecured $100,000 revolving line of credit from a correspondent bank in Minneapolis, Minnesota. The interest rate to be paid under the
terms of the line of credit is equal to the prime rate of interest plus one-quarter of one percent (1/4%) per annum. As of December 31, 2000, no funds had been
advanced on the line.

Capital Resources

Total shareholders' equity amounted to $2.74 million at December 31, 2000 compared to $2.79 million at June 30, 2000. At
December 31, 2000, Northern Star Financial's leverage ratio was 8.50%, with a tier 1 risk-based capital ratio of 10.57% and a total risk-based capital ratio of 11.49%.
Each of these ratios is above the level required in order to be classified for regulatory purposes as "well capitalized".

Quantitative and Qualitative Disclosures about Market Risk

Northern Star Financial's primary market risk is exposure to interest rate risk. Fluctuations in interest rates will impact both the level of interest income
and interest expense and the market value of Northern Star Financial's interest-earning assets and interest-bearing liabilities. There were no material changes in Northern Star Financial's market risk
management strategy during the six months ended December 31, 2000. Northern Star Financial is monitoring its interest rate risk in view of decreases in both short and long-term
interest rates. Based on current assessments and the level of changes in interest rates, the effects are not expected to be material.

INCOME TAXES

The effective income tax rate for the Company and the Bank was 0% for the three and six-month period ending December 31, 2000. The expected
future tax benefit of the net operating loss amounting to approximately $21.1 and $39.5 thousand respectively is reduced by a deferred tax asset valuation allowance in accordance with generally
accepted accounting principles.

PUBLIC OFFERING OF COMMON STOCK

We have entered into an agreement with Berthel Fisher & Company Financial Services, Inc. who agreed to sell, on a "best efforts basis," a minimum
of 50,000 shares and a maximum of 300,000 shares to

12

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the public. The offering expires on March 18, 2001. We intend to use the proceeds from the offering as working capital to provide our bank with additional capital to make loans and grow its
business.

JOINT VENTURE IN HOMELAND MORTGAGE, LLC.

In July 1999, we entered into a joint venture with First Federal Savings Bank by acquiring a 49 percent joint interest in Homeland Mortgage
Company, LLC, in exchange for a total cash consideration of $196,000. The investment in Homeland is being accounted for using the equity method. Homeland's primary business is originating residential
real estate loans that are secured by first and second mortgages and sold into the secondary mortgage market.

On
August 25, 1999, the Federal Reserve Board initiated a policy of increasing interest rates in an effort to reduce the rate of inflation in the economy. The action of the
Federal Reserve Board resulted in a slow down in activity associated with the purchase and refinancing of residential properties thereby affecting the ability of Homeland to generate new loans and the
related income. On September 1, 2000, we sold our minority interest in Homeland to First Federal Savings Bank for approximately $68,000.

13

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AVERAGE BALANCES, YIELDS AND RATES

The following table sets forth, for the thee months and six months ended December 31, 2000 and 1999, the weighted average yields earned, the weighted
average rates paid, the interest rate spread and the net yield on earning assets and interest-bearing liabilities, on an annualized basis.

|                                                                                 |                                            | For The Three Months Ended         |          
|-------------------------------------------------------------------------------- | ------------------------------------------ | ---------------------------------- | ---------
|
|
|Assets                                                                           |                                            |                                    |          
|                                                                                 | Loans receivable                           |                                    | $        
|                                                                                 | Investment securities                      |                                    |          
|                                                                                 | Federal funds sold                         |                                    |          
|                                                                                 |                                            |                                    |          
|                                                                                 |                                            | Total interest-earning assets      |          
|                                                                                 | Non-interest-earning assets                |                                    |          
|                                                                                 |                                            |                                    |          
|                                                                                 |                                            | Total assets                       |          
|                                                                                 |                                            |                                    |          
|Liabilities and Stockholders' Equity                                             |                                            |                                    |          
|                                                                                 | Interest Bearing Deposits                  |                                    | $        
|                                                                                 | Other liabilities                          |                                    |          
|                                                                                 |                                            |                                    |          
|                                                                                 |                                            | Total interest-bearing liabilities |          
|                                                                                 |                                            |                                    |          
|                                                                                 | Non-interest-bearing liabilities           |                                    |          
|                                                                                 |                                            |                                    |          
|                                                                                 | Total liabilities                          |                                    |          
|Stockholders' Equity                                                             |                                            |                                    | 2,594,501
|                                                                                 | Total liabilities and stockholders' equity |                                    | $        
|                                                                                 |                                            |                                    |          
|Net Interest Spread                                                              |                                            |                                    |          
|Net Interest Income/Margin                                                       |                                            |                                    |          
|                                                                                 |                                            |                                    |          
|Ratio of average interest-earning assets to average interest-bearing liabilities |                                            |                                    | 1.12     

14

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|                                                                                 |                                            | For the Six Months Ended           |          
|-------------------------------------------------------------------------------- | ------------------------------------------ | ---------------------------------- | ---------
|
|
|Assets                                                                           |                                            |                                    |          
|                                                                                 | Loans receivable                           |                                    | $        
|                                                                                 | Investment securities                      |                                    |          
|                                                                                 | Federal funds sold                         |                                    |          
|                                                                                 |                                            |                                    |          
|                                                                                 |                                            | Total interest-earning assets      |          
|                                                                                 | Non-interest-earning assets                |                                    |          
|                                                                                 |                                            |                                    |          
|                                                                                 | Total assets                               |                                    | $        
|                                                                                 |                                            |                                    |          
|Liabilities and Stockholders' Equity                                             |                                            |                                    |          
|                                                                                 | Interest Bearing Deposits                  |                                    | $        
|                                                                                 | Other liabilities                          |                                    |          
|                                                                                 |                                            |                                    |          
|                                                                                 |                                            | Total interest-bearing liabilities |          
|                                                                                 |                                            |                                    |          
|                                                                                 | Non-interest-bearing liabilities           |                                    |          
|                                                                                 |                                            |                                    |          
|                                                                                 | Total liabilities                          |                                    |          
|Stockholders' Equity                                                             |                                            |                                    | 2,684,636
|                                                                                 | Total liabilities and stockholders' equity |                                    | $        
|                                                                                 |                                            |                                    |          
|Net Interest Spread                                                              |                                            |                                    |          
|Net Interest Income/Margin                                                       |                                            |                                    |          
|                                                                                 |                                            |                                    |          
|Ratio of average interest-earning assets to average interest-bearing liabilities |                                            |                                    | 1.13     

LOAN PORTFOLIO

Total gross loans outstanding at December 31, 2000, including loans held for sale, was $22,229,597.

The
following table summarizes the composition of the loan portfolio as of December 31, 2000 and June 30, 2000:

|                                |  | December 31, 2000 |            | June 30, 2000 |       
|------------------------------- |  | ----------------- | ---------- | ------------- | ------
|
|Commercial & Agricultural       |  | $                 | 3,996,046  |               | 17.98 
|Real Estateindividual          |  |                   | 6,552,909  |               | 29.48 
|Real Estateother               |  |                   | 1,963,258  |               | 8.83  
|Consumer Loans                  |  |                   | 9,189,547  |               | 41.34 
|Lease Financing                 |  |                   | 527,837    |               | 2.37  
|                                |  |                   |            |               |       
|Total loans                     |  | $                 | 22,229,597 |               | 100.00
|                                |  |                   |            |               |       
|Net Deferred Loans fees/(costs) |  |                   | 105,533    |               |       
|Less: Allowance for Loan Loss   |  |                   | (221,900   | )             |       
|                                |  |                   |            |               |       
|Total Net Loans                 |  | $                 | 22,113,230 |               |       
|                                |  |                   |            |               |       

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MATURITIES AND SENSITIVITY OF LOANS TO CHANGES IN INTEREST RATES

The information in the following table is based on the contractual maturities of individual loans, including loans which, may be subject to renewal at their
contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon their maturity. Actual repayments of loans may differ from maturities
reflected below because borrowers have the right to repay obligations with or without prepayment penalties. The following table summarizes loan maturities, by type at December 31, 2000 and
June 30, 2000.

|                                   |                         | As of December 31, 2000
|---------------------------------- | ----------------------- | -----------------------
|
|Commercial & Agricultural          |                         | $                      
|Real Estateindividual             |                         |                        
|Real Estateother                  |                         |                        
|Consumer Loans                     |                         |                        
|Lease Financing                    |                         |                        
|                                   |                         |                        
|Total                              |                         | $                      
|                                   |                         |                        
|Loans maturing after one year with |                         |                        
|                                   | Fixed Interest Rate     |                        
|                                   | Floating Interest Rates |                        

|                                   |                         | As of June 30, 2000
|---------------------------------- | ----------------------- | -------------------
|
|Commercial Agricultural            |                         | $                  
|Real Estateindividual             |                         |                    
|Real Estateother                  |                         |                    
|Consumer loans                     |                         |                    
|Lease Financing                    |                         |                    
|                                   |                         |                    
|Total                              |                         | $                  
|                                   |                         |                    
|Loans maturing after one year with |                         |                    
|                                   | Fixed Interest Rate     |                    
|                                   | Floating Interest Rates |                    

16

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PROVISION AND ALLOWANCE FOR LOAN LOSSES

The Company has developed policies and procedures for evaluating the overall quality of its credit portfolio and the timely identification of potential credit
problems. Additions to the allowance for loan losses will be made periodically to maintain the allowance at an appropriate level based on management's analysis of the potential risk in the loan
portfolio.

At
December 31, 2000, the allowance for loan losses was $221,900 or 1% of $22,190,252 in loan receivables (net of loans held for sale). The bank has not charged off any loans
since commencing operations. The provision for loan losses was made primarily as a result of management's assessment of general loan loss risk as the Bank's loan portfolio increased.

Six Months Ended
December 31, 2000

Year Ended
June 30,2000Balance at Beginning of Period

$
181,500

$
56,250Charge-offs





Recoveries





Net Charge Offs





Additions charged to operations

$
40,400


125,250Balance at End of Period

$
221,900

$
181,500Ration of net charge-offs during the period to average loans outstanding during the period


0
%

0
%


At
December 31, 2000 and June 30, 2000 the allowance was allocated as follows:

|                          |  | For the Three Months Ended
December 31, 2000 |         | For the Year Ended
June 30, 2000 |       
|------------------------- |  | -------------------------------------------- | ------- | -------------------------------- | ------
|
|Commercial & Agricultural |  | $                                            | 18,855  |                                  | 17.98 
|Real Estateindividual    |  |                                              | 42,428  |                                  | 29.48 
|Real Estateother         |  |                                              | 10,194  |                                  | 8.83  
|Consumer loans            |  |                                              | 51,231  |                                  | 41.34 
|Lease Financing           |  |                                              | 15,681  |                                  | 2.37  
|Unallocated               |  |                                              | 83,511  |                                  |      
|                          |  |                                              |         |                                  |       
|Total                     |  | $                                            | 221,900 |                                  | 100.00
|                          |  |                                              |         |                                  |       

17

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DEPOSITS

The following is a table of deposits by category at December 31, 2000 and June 30, 2000.

|                                  |  | As of December 31, 2000 |           
|--------------------------------- |  | ----------------------- | ----------
|
|Demand Deposit                    |  | $                       | 2,306,002 
|Now                               |  |                         | 794,072   
|Savings                           |  |                         | 6,127,839 
|Time Accounts less than $100,000  |  |                         | 14,902,226
|Time Accounts of $100,000 or more |  |                         | 3,453,608 
|Accrued Interest Payable          |  |                         | 368,949   
|                                  |  |                         |           
|Total Deposits                    |  | $                       | 27,952,696
|                                  |  |                         |           

|                                  |  | As of June 30, 2000 |           
|--------------------------------- |  | ------------------- | ----------
|
|Demand Deposit                    |  | $                   | 1,491,958 
|Now                               |  |                     | 387,797   
|Savings                           |  |                     | 5,786,894 
|Time Accounts less than $100,000  |  |                     | 8,271,953 
|Time Accounts of $100,000 or more |  |                     | 2,129,895 
|Accrued Interest Payable          |  |                     | 125,434   
|                                  |  |                     |           
|Total Deposits                    |  | $                   | 18,193,931
|                                  |  |                     |           

18

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PART II  OTHER INFORMATION

|Item 1. |  | Legal Proceedings                                                                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | There are no pending legal proceedings to which Northern Star Financial, Inc. or its subsidiaries are parties in other than nonmaterial legal proceedings occurring in the ordinary course of business.
|Item 2. |  | Changes in Securities                                                                                                                                                                                  
|        |  | None                                                                                                                                                                                                   
|Item 3. |  | Default Upon Senior Securities                                                                                                                                                                         
|        |  | None                                                                                                                                                                                                   
|Item 4. |  | Submission of Matters to a Vote of Security Holders.                                                                                                                                                   
|        |  | None                                                                                                                                                                                                   
|Item 5. |  | Other Information                                                                                                                                                                                      
|        |  | None                                                                                                                                                                                                   
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                                                                                                                       
|        |  | a)                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                        
|        |  | b)                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                        

19

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                        |  | NORTHERN STAR FINANCIAL, INC.
|----------------------- |  | -----------------------------
|                        |  |                              
|Date: February 12, 2001 |  | By                           
|Date: February 12, 2001 |  | By                           

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