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        U.S. SECURITIES AND EXCHANGE COMMISSION
                Washington, D.C.  20549


                      FORM 10-QSB


(Mark One)

 [x]     Quarterly Report Pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934

         For the quarterly period ended September 30, 1997


 [x]     Transition Report Pursuant to Section 13 or 15(d) of    
         the Exchange Act

         For the transition period from ______ to ______

           Commission file number:  0-23525

                           
               NORTH ARKANSAS BANCSHARES, INC.
               -------------------------------
            (Exact Name of Small Business Issuer 
                as Specified in its Charter)


        Tennessee                      [Application Pending]     
        ---------                      ---------------------
(State or Other Jurisdiction of          (I.R.S. Employer  
 Incorporation or Organization)         Identification No.)

          200 Olivia Drive, Newport, Arkansas 72112
          -----------------------------------------
           (Address of Principal Executive Offices)

                        (870) 523-3611
                        --------------
     Registrant's Telephone Number, Including Area Code

   Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the pre-
ceding 12 months (or for 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 [ ] No [X]   
The issuer has not been subject to such filing requirements for
the past 90 days.

   As of December 24, 1997, the issuer had 370,300 shares of
Common Stock issued and outstanding.

     Transitional Small Business Disclosure Format (check one):

     Yes  [ ]                 No  [X]  
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     On November 10, 1997, the Registrant's Registration
Statement on Form SB-2 was declared effective by the Securities
and Exchange Commission.  The Registration Statement and the
related Prospectus which formed a part thereof related to the
offering of the Registrant's common stock in connection with the
conversion from mutual to stock form (the "Conversion") of
Newport Federal Savings Bank (the "Bank").  Upon consummation of
the Conversion, the Bank will become a wholly owned subsidiary
of the Registrant, and the Registrant will close the public
offering of its common stock.  The Registrant has not engaged in
any business to date and is not expected to engage in any
business until the consummation of the Conversion.  The
Registrant will not have any material assets or liabilities
prior to the consummation of the Conversion.  The information
presented in this Form 10-QSB therefore relates solely to the
business conducted by the Bank.


                       CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

     Statements of Financial Condition as of
        September 30, 1997 (unaudited) and June 30, 1997 . . . 3

     Statements of Operations for the Three Months Ended
        September 30, 1997 and 1996 (unaudited). . . . . . . . 4

     Statement of Retained Earnings for the Three Months
        Ended September 30, 1997 (unaudited) . . . . . . . . . 5

     Statements of Cash Flows for the Three Months Ended
        September 30, 1997 and 1996 (unaudited). . . . . . . . 6

     Notes to Financial Statements . . . . . . . . . . . . . . 7


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations . . . . . . . . . 8


PART II. OTHER INFORMATION

Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . 9

Item 2. Changes in Securities. . . . . . . . . . . . . . . . . 9

Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . 9

Item 4. Submissions of Matters to a Vote of Security Holders . 9

Item 5. Other Information. . . . . . . . . . . . . . . . . . . 9

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 9

SIGNATURES
                            2<PAGE>
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           PART I  -  FINANCIAL INFORMATION

             NEWPORT FEDERAL SAVINGS BANK


           Statements of Financial Condition

         September 30, 1997 and June 30, 1997


<TABLE>
<CAPTION>
                                                      September 30,      June 30,
                                                          1997             1997 
                                                      -------------    -------------
                                                       (Unaudited)
              Assets
              ------
<S>                                                   <C>              <C>
Cash and amounts due from banks, includes
  interest-bearing deposits of $568,431 
  and $603,729 in September 30, 1997 and 
  June 30, 1997, respectively                         $    642,273    $     884,002
Certificates of deposit with other financial
  institutions                                             691,000          691,000
Investment securities held-to-maturity, at cost          5,189,826        5,922,956
Loans receivable, net                                   25,181,835       24,794,194
Office properties and equipment, net                     1,655,175        1,651,298
Accrued interest receivable                                210,177          227,356
Other assets                                               179,805          207,760
                                                      ------------     ------------
          Total assets                                $ 33,750,091     $ 34,378,566
                                                      ============     ============

     Liabilities and Retained Earnings
     ---------------------------------

Deposits                                              $ 30,340,991     $ 31,072,533
Federal Home Loan Bank advances                            814,337          618,389
Advances from borrowers for taxes and insurance              8,513           57,459
Other liabilities                                          300,385          363,916
                                                      ------------     ------------
          Total liabilities                             31,464,226       32,112,297

Retained earnings - substantially restricted             2,285,865        2,266,269

Commitments and contingencies                                         

           Total liabilities and retained earnings    $ 33,750,091     $ 34,378,566
                                                      ============     ============
</TABLE>

See accompanying notes to financial statements.


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             NEWPORT FEDERAL SAVINGS BANK


                Statements of Operations

     Three Months Ended September 30, 1997 and 1996

<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                              September 30,
                                                      ------------------------------
                                                          1997             1996
                                                      -------------    -------------
<S>                                                   <C>              <C>
Interest income:
    Loans receivable                                  $    493,331     $    488,862
    Deposits in other financial institutions                16,366           23,252
    Mortgage-backed securities                              81,400           79,571
    Investment securities                                   13,074           22,612
                                                      ------------     ------------
          Total interest income                            604,171          614,297
                                                      ------------     ------------
Interest expense:
    Deposits                                               395,757          388,864
    Federal Home Loan advances                              10,034            2,022
                                                      ------------     ------------
          Total interest expense                           405,791          390,886
                                                      ------------     ------------
                                                           198,380          223,411
          Net interest income           
Provision for loan losses                                       --               --
          Net interest income after provision
           for loan losses                                 198,380          223,411
                                                      ------------     ------------
Non-interest income - other                                 45,002           22,279
                                                      ------------     ------------
Non-interest expenses:
     Salaries and employee benefits                        100,503           90,977
     Legal and professional fees                            10,426              265
     Data processing fees                                   23,360           14,678
     Federal insurance expense                               7,422          197,761
     Furniture and equipment expense                         8,834            6,384
     Occupancy expense                                      12,112           21,960
     Other                                                  61,129           31,412
                                                      ------------     ------------
                                                           223,786          363,437
                                                      ------------     ------------
           Income (loss) before income taxes                19,596         (117,747)
Income tax expense (benefit)                                    --               --
                                                      ------------     ------------
           Net income (loss)                          $     19,596     $   (117,747)
                                                      ============     ============= 
</TABLE>

See accompanying notes to financial statements.

 
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             NEWPORT FEDERAL SAVINGS BANK


            Statement of Retained Earnings

         Three Months Ended September 30, 1997


<TABLE>
<S>                                        <C>
Balance at June 30, 1997                   $  2,266,269

Net Income                                       19,596
                                           ------------

Balance at September 30, 1997              $  2,285,865
                                           ============
</TABLE>

                              5<PAGE>
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               NEWPORT FEDERAL SAVINGS BANK

                 Statements of Cash Flows

      Three Months Ended September 30, 1997 and 1996


<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                              September 30,
                                                      ------------------------------
                                                          1997             1996
                                                      -------------    -------------
<S>                                                   <C>              <C>
Cash flows from operating activities:
   Net income (loss)                                  $     19,596     $   (117,747)
   Adjustment to reconcile net income (loss) to 
      net cash provided by operating activities:
        Depreciation                                        15,342           10,898
        Loss on sale of real estate owned                      267               --
        FHLB stock dividends                                (4,200)          (3,964)
        Net premium amortization on investments              2,727            2,539
        Provision for loan losses                               --               --
        Increase in interest receivable                    (17,179)         (30,304)
        Increase in other assets                           (27,955)         (14,013)
        Increase in other liabilities                      (63,531)         168,290
                                                      ------------     ------------
          Net cash provided by operating activities         15,335           15,699

Cash flows from investing activities:
   Purchase of held to maturity ("HTM") securities              --         (850,312)
   Proceeds from maturities/principal repayments
       of HTM securities                                   734,603          151,031
   Net increase in loan receivable                        (404,647)      (1,082,597)
   Net decrease in certificates of deposit with
       other financial institutions                             --          100,000
   Purchase of office properties and equipment             (19,219)          (5,741)
   Proceeds from sale of real estate owned                  16,739               --
                                                      ------------     ------------
          Net cash provided by (used in)
            investing activities                           327,476       (1,687,619)
                                                      ------------     ------------
Cash flows from financing activities:
 Net increase (decrease) in deposits and advances
   from borrowers                                         (780,488)         998,544
 Net increase (decrease) in Federal Home Loan advances     195,948          849,201
                                                      ------------     ------------
          Net cash (used in) provided by
            financing activities                          (584,540)       1,147,745
                                                      ------------     ------------

Net decrease in cash and amounts due from banks           (241,729)        (524,175)

Cash and amounts due from banks at beginning of year       884,002        1,167,202
                                                      ------------     ------------
Cash and amounts due from banks at end of year        $    642,273     $    643,027
                                                      ============     ============

Supplemental disclosures of cash flow information:
    Cash paid during the year:
        Transfers from real estate acquired through
          foreclosure                                 $     17,006     $         --
        Interest on deposits                               397,036          389,978
        Income taxes                                            --            2,102
                                                      ============     ============
</TABLE> 

See accompanying notes to financial statements.


                             6<PAGE>
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                NEWPORT FEDERAL SAVINGS BANK
 
                NOTES TO FINANCIAL STATEMENTS
 
     FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

NOTE 1 - NORTH ARKANSAS BANCSHARES, INC.

North Arkansas Bancshares, Inc. (the "Company") was incorporated
under the laws of the State of Tennessee for the purpose of
becoming the holding company of Newport Federal Savings Bank
(the "Bank") in connection with the Bank's conversion from a
federally chartered mutual savings bank to a federally chartered
capital stock savings bank.  On November 12, 1997, the Company
commenced a subscription offering of its shares in connection
with the Bank's conversion.  The Company's offering and the
Bank's conversion closed on December 18, 1997.  A total of
370,300 shares were sold at $10.00 per share.  Prior to
consummation of the conversion, the Company had no assets or
liabilities and as of September 30, 1997, no shares had been
issued.

NOTE 2 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-QSB and
on the same basis as the Bank's audited financial statements. 
In the opinion of management, all adjustments, consisting of
normal recurring accruals, necessary to present fairly the
financial position, results of operations, and cash flows for
the interim periods presented have been included.  The results
of operations for such interim periods are not necessarily
indicative of the results expected for the full year.

NOTE 3 - EARNINGS PER SHARE

As of September 30, 1997, neither the Company nor the Bank had
issued any shares of common stock.  As such the statements of
operations do not disclose earnings per share as would otherwise
be required.

NOTE 4 - PLAN OF CONVERSION

On May 29, 1997, the Bank's Board of Directors formally approved
a plan ("Plan") to convert from a federally chartered mutual
savings bank to a federally chartered stock savings bank subject
to approval by the Bank's members and the Office of Thrift
Supervision.  The Plan called for the common stock of the Bank
to be purchased by the Company and the common stock of the
Company to be offered to various parties in a subscription
offering at a price based upon an independent appraisal of the
Bank.  All requisite approvals were obtained and the conversion
and the Company's offering were consummated effective December
18, 1997.  Conversion costs at September 30, 1997 were deferred
and were deducted from the gross offering proceeds upon
consummation of the conversion. 

Upon consummation of the conversion, the Bank established a
liquidation account in an amount equal to its retained earnings
as reflected in the latest statement of financial condition used
int he final conversion prospectus.  The liquidation account
will be maintained for the benefit of certain depositors of the
Bank who continue to maintain their deposit accounts in the Bank
after conversion.  In the event of a complete liquidation of he
Bank, such depositors will be entitled to receive a distribution
from the liquidation account before any liquidation may be made
with respect to the common stock.

                             7<PAGE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS

GENERAL
 
     The Company had only recently been formed and had no assets
or liabilities and had not issued any shares of stock at
September 30, 1997.  Accordingly, the following discussion
relates only to the financial condition and results of
operations of the Bank.

     The Bank's results of operations depend primarily on net
interest income, which is determined by (i) the differences
between the rates of interest earned on interest-earning assets
and the rates paid on interest-bearing liabilities (interest
rate spread) and (ii) the relative amounts of interest earning
assets and interest-bearing liabilities.  The Bank's results of
operations are also affected by non-interest expense, including
primarily compensation and employee benefits, federal deposit
insurance premiums and office occupancy expenses.  The Bank's
results of operations are also affected significantly by general
and economic and competitive conditions, particularly changes in
market interest rates, government policies and actions of
regulatory authorities, all of which are beyond the Bank's
control.  Based on the Bank's review of its internal bookkeeping
practices and conferences with its third party service
companies, the Bank does not expect to incur significant
additional bookkeeping, data processing or other expenses or to
encounter significant difficulties with its data processing
provider in connection with issues related to the upcoming
millenium.


COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1997 AND JUNE
30, 1997        

     The Bank's total assets at September 30, 1997 were $33.8
million, a slight decrease from June 30, 1997's level of $34.4
million.  The decrease was due to the combined effects of
decreases in cash and securities due to a $732,000 reduction in
deposits and payments on and maturities of investment
securities.  Net loans receivable increased by $5.4 million, or
21.78%, which reflected the Bank's continued marketing efforts. 
The $19,000 increase in retained earnings reflected earnings for
the period.  At September 30, 1997, the Bank was in compliance
with all applicable regulatory capital requirements with total
core and tangible capital of $2.3 million (6.77% of adjusted
total assets) and total risk-based capital of $2.4 million
(13.08% of risk-weighted assets)

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1997 AND 1996

     The Bank earned net income of $19,000 for the three months
ended September 30, 1997 as compared to a net loss of $117,000
for the three month period ended September 30, 1996.  The
$136,000 improvement in our net income for the first three
months of fiscal year 1998 was due primarily to the absence of
any SAIF special assessment during the most recent period. 
During the three months ended September 30, 1996, the Bank
incurred a special assessment equal to $179,000.  This special
assessment was required to be paid by all institutions with
deposits insured by the SAIF.  No similar special assessment was
incurred during the 1997 period.

     Net interest income during the three months ended September
30, 1997 decreased by $25,000 as compared to the same period in
1996.  During the three months ended September 30, 1997, the
Bank placed its largest loan on nonaccrual status.  As such, the
Bank was required to deduct from interest income all previously
accrued interest that was unpaid which amounted to approximately
$21,000. 

LIQUIDITY AND CAPITAL RESOURCES

    The Bank is required to maintain minimum levels of liquid
assets as defined by OTS regulations.  This requirement, which
varies from time to time depending upon economic conditions and
deposit flows, is based upon a percentage of our deposits and
short-term borrowings.  The required ratio at September 30, 1997
was 5% for the month ended September 30, 1997 the Bank was in
compliance.  As a result of the conversion, the Bank's liquidity
has increased due to the additional funds it received. 

    The Bank's primary sources of funds are deposits, repayment
of loans and mortgage-backed securities, maturities of
investments and interest-bearing deposits, funds provided from
operations and advances from the FHLB of Dallas.  While
scheduled repayments of loans and mortgage-backed securities and
maturities of investment securities are predicable sources of
funds, deposit flows and loan prepayments are greatly influenced
by the general level of interest rates, economic conditions and
competition.  The Bank uses its liquidity resources principally
to fund existing and future loan commitments, to fund maturing
certificates of deposit and demand deposit withdrawals, to
invest in other interest-earning assets, to maintain liquidity,
and to meet operating expenses.


                             8<PAGE>
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             PART II  -  OTHER INFORMATION

Item 1.   Legal Proceedings

     None.

Item 2.   Changes in Securities 

     None.

Item 3.   Defaults 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)  Exhibits.  

     Exhibit 27     Financial Data Schedule (EDGAR only)

     (b)  Reports on Form 8-K.  During the quarter ended
September 30, 1997, the registrant did not file any current
reports on Form 8-K.


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                      SIGNATURES



    In accordance with the requirements of the Securities
Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.

                                NORTH ARKANSAS BANCSHARES, INC.



Date: December 29, 1997         By: /s/ Brad Snider
                                   --------------------------    
                                Brad Snider, President, Chief    
                                Executive Officer and Treasurer 
                               (Duly Authorized and Principal    
                                Financial Officer)