SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549
                                    
                               FORM 10 - Q

_X_ Quarterly report pursuant to Section 13 or 15 (d) of the Securities 
    Exchange Act of 1934
    
For the quarter ended     December 31, 1997
                          _________________
           
                                   or
    
___ Transition report pursuant to Section 13 or 15 (d) of the Securities 
    Exchange Act of 1934
    
For the transition period from ____________ to ____________

Commission File Number   0 - 16123
                       _____________

                               Northeast Bancorp
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)                  
                                                                        
                 Maine                                 01 - 0425066            
________________________________________  _____________________________________
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)          
                                                                            
 232 Center Street, Auburn, Maine                        04210              
________________________________________  _____________________________________ 
(Address of principal executive offices)              (Zip Code)               
                                                
                               (207) 777 - 6411
_______________________________________________________________________________
               Registrant's telephone number, including area code

                                 Not Applicable
<PAGE> 2

_______________________________________________________________________________
Former name, former address and former fiscal year,if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter periods 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_   No ___

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE 
PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and 
reports required to be filed by Section 12, 13 or 15 (d) of the Securities 
Exchange Act of 1934 subsequent to the distribution of securities under a plan 
confirmed by a court.

                              Not Applicable

                     APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date.

Shares outstanding as of February 11, 1998: 2,234,638 of common stock, $1.00 
par value per share.

                                  

                          NORTHEAST BANCORP AND SUBSIDIARIES
                                   Table of Contents
                                    
Part I.   Financial Information
           
          Item 1.  Financial Statements (unaudited)
                     
                   Consolidated Balance Sheets
                    December 31, 1997 and June 30, 1997
                     
                   Consolidated Statements of Income
                    Three Months ended December 31, 1997 and 1996   
                      
                   Consolidated Statements of Income
                    Six Months ended December 31, 1997 and 1996   
                   
                   Consolidated Statements of Changes in Shareholders' Equity
                    Six Months ended December 31, 1997 and 1996 
                       
                   Consolidated Statements of Cash Flows
                    Six Months ended December 31, 1997 and 1996
                     
                   Notes to Consolidated Financial Statements
                     
          Item 2.  Management's Discussion and Analysis of Financial Condition
                    and Results of Operation

<PAGE> 3

          Item 3.  Quantitative and Qualitative Disclosure about Market Risk
           
Part II.  Other Information
            
          Items 1 - 6.
             
          Signature Page
              
          Index to Exhibits



NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
                                      
<TABLE>
<CAPTION>
                                 
                                                December 31,       June 30,
                                                    1997              1997     
                                              ---------------   ---------------
<S>                                           <C>               <C>            
                Assets                                        
Cash and due from banks                       $   5,354,321     $   6,112,425  
Interest bearing deposits in other banks            317,052           443,021  
Federal Home Loan Bank overnight deposits        11,968,000        12,218,898  
Trading account securities at market                 25,000            25,000  
Available for sale securities                    18,875,202        28,810,624  
Federal Home Loan Bank stock                      4,364,000         4,121,000  
Loans held for sale                                 370,749           240,000  
                                                                               
Loans                                           228,544,431       222,885,954  
  Less deferred loan origination fees/cost          (22,183)          203,819  
  Less allowance for loan losses                  2,773,000         2,741,809  
                                              _______________   _______________
    Net loans                                   225,793,614       219,940,326  
                                                                               
Bank premises and equipment, net                  4,561,119         4,774,561  
Real estate held for investment                     279,458           361,654  
Other real estate owned (net of allowance                                      
 for losses of $0 at 12/31/97 and $50,839                                      
 at 6/30/97)                                        518,791           563,207  
Goodwill (net of accumulated amortization                                      
 of $1,384,621 at 12/31/97 and $1,236,434                                      
 at 6/30/97)                                      2,072,102         2,220,289  
Other assets                                      4,233,799         4,198,689  
                                              _______________   _______________
    Total Assets                                278,733,207       284,029,694  
                                              ===============   ===============
                                                                               
                                                                               
     Liabilities and Shareholders' Equity                                      
Liabilities                                                                    
Deposits                                      $ 174,361,238     $ 172,921,286  
Repurchase Agreements                             5,737,121         5,098,622  
Advances from Federal Home Loan Bank             72,563,725        80,494,471  
<PAGE> 4

Notes payable                                     1,145,833         1,298,611  
Other Liabilities                                 1,891,611         2,121,123  
                                              _______________   _______________
  Total Liabilities                             255,699,528       261,934,113  
                                                                               
Shareholders' Equity                                                           
Preferred stock, Series A, 45,454 shares                                       
 issued and outstanding                             999,988           999,988  
Preferred stock, Series B, 71,428 shares                                       
 issued and outstanding                             999,992           999,992  
Common stock, par value $1,2,222,691 and                                      
 1,462,909 shares issued and outstanding at                                    
 12/31/97 and 6/30/97, respectively               2,222,691         1,462,909  
Additional paid in capital                        7,774,396         7,699,883  
Retained earnings                                11,174,839        11,266,984  
                                              _______________   _______________
                                                 23,171,906        22,429,756  
Net unrealized losses on available for sale                                    
 securities                                        (138,227)         (334,175) 
                                              _______________   _______________
 Total Shareholders' Equity                      23,033,679        22,095,581  
                                              _______________   _______________
  Total Liabilities and Shareholders' Equity  $ 278,733,207     $ 284,029,694  
                                              ===============   ===============
</TABLE>                                                                       
                                                                               
NORTHEAST BANCORP AND SUBSIDIARY                                               
Consolidated Statements of Income                                              
(Unaudited)                                                                    
                                                                               
<TABLE>                                                                        
<CAPTION>                                                                      
                                                      Three Months Ended       
                                                        December 31,           
                                                    1997              1996     
                                              _______________   _______________
<S>                                           <C>               <C>            
Interest and Dividend Income                                                   
Interest on FHLB overnight deposits           $     121,584     $      91,020  
Interest on loans & loans held for sale           5,256,343         4,652,547  
Interest on available for sale securities           437,952           597,753  
Dividends on Federal Home Loan Bank stock            71,904            51,894  
Other Interest Income                                 4,596             7,601  
                                              _______________   _______________
  Total Interest Income                           5,892,379         5,400,815  

Interest Expense                                                               
Deposits                                          1,901,610         1,727,321  
Repurchase agreements                                54,618            54,686  
Other borrowings                                  1,128,589           938,321  
                                              _______________   _______________
  Total Interest Expense                          3,084,817         2,720,328  
                                              _______________   _______________
Net Interest Income                               2,807,562         2,680,487  
Provision for loan losses                           227,663           153,443  
                                              _______________   _______________
  Net Interest Income after Provision for                                      
<PAGE> 5

   Loan Losses                                    2,579,899         2,527,044  
Other Income                                                                   
Service charges                                     237,235           264,768  
Available for sale securities gains (losses)         99,696            46,117  
Gain (Loss) on trading account                            0           (11,241) 
Other                                               405,177           111,650  
                                              _______________   _______________
  Total Other Income                                742,108           411,294  
                                                                               
Other Expenses                                                                 
Salaries and employee benefits                    1,272,952         1,121,180  
Net occupancy expense                               221,148           177,534  
Equipment expense                                   234,410           209,382  
Goodwill amortization                                74,094            74,094  
FDIC Insurance Assessment                              --             (83,140) 
Other                                               963,019           627,847  
                                              _______________   _______________
 Total Other Expenses                             2,765,623         2,126,897  
                                              _______________   _______________
                                                                               
Income Before Income Taxes                          556,384           811,441  
Income tax expense                                  200,318           300,894  
                                              _______________   _______________
Net Income                                    $     356,066     $     510,547  
                                              ===============   ===============
                                                                               
Earnings Per Share                                                             
 Basic                                        $          0.14   $          0.22
 Diluted                                      $          0.13   $          0.20

</TABLE>                                                                       
                                                                               
NORTHEAST BANCORP AND SUBSIDIARY                                               
Consolidated Statements of Income                                              
(Unaudited)                                                                    
                                                                               
<TABLE>                                                                        
<CAPTION>                                                                      
                                                       Six Months Ended
                                                         December 31,      
                                                    1997              1996
                                              _______________   _______________ 
<S>                                           <C>               <C>            
Interest and Dividend Income                                                   
Interest on FHLB overnight deposits           $     263,677     $     192,096  
Interest on loans & loans held for sale          10,428,625         9,095,960  
Interest on available for sale securities           926,435         1,207,023  
Dividends on Federal Home Loan Bank stock           141,741           100,127  
Other Interest Income                                 9,377            19,918  
                                              _______________   _______________
 Total Interest Income                           11,769,855        10,615,124  
                                                                               
Interest Expense                                                               
Deposits                                          3,785,093         3,466,915  
Repurchase agreements                               103,056            92,956  
Other borrowings                                  2,308,883         1,801,733  
<PAGE> 6

                                              _______________   _______________
  Total Interest Expense                          6,197,032         5,361,604  
                                              _______________   _______________
                                                                               
Net Interest Income                               5,572,823         5,253,520  
Provision for loan losses                           390,163           307,257  
                                              _______________   _______________
  Net Interest Income after Provision                                          
   for Loan Losses                                5,182,660         4,946,263  
                                                                               
Other Income                                                                   
Service charges                                     513,640           554,883  
Available for sale securities gains (losses)        207,692            74,417  
Gain (Loss) on trading account                        1,797            50,124  
Other                                               573,420           260,450  
                                              _______________   _______________
  Total Other Income                              1,296,549           939,874  
                                                                               
Other Expenses                                                                 
Salaries and employee benefits                    2,436,566         2,295,733  
Net occupancy expense                               442,534           339,212  
Equipment expense                                   454,096           411,651  
Goodwill amortization                               148,187           148,187  
FDIC Insurance Assessment                              --             296,860  
Other                                             1,560,839         1,273,880  
                                              _______________   _______________ 
  Total Other Expenses                            5,042,222         4,765,523  
                                              _______________   _______________
                                                                               
Income Before Income Taxes                        1,436,987         1,120,614  
Income tax expense                                  510,356           418,826  
                                              _______________   _______________
Net Income                                    $     926,631     $     701,788  
                                              ===============   ===============
                                                                               
Earnings Per Share                                                             
  Basic                                       $          0.39   $          0.30
  Diluted                                     $          0.35   $          0.27
                                                                               
</TABLE>                                                                       
                                                                               
NORTHEAST BANCORP AND SUBSIDIARY                                               
Consolidated Statements of Changes in Shareholders' Equity                     
Six Months Ended December 31, 1997 and 1996                                    
(Unaudited)                                                                    

<TABLE>
<CAPTION>
                                                                                Net Unrealized
                                                                                (Gains(Losses)
                                                        Additional               on Available
                                 Common     Preferred    Paid-In      Retained    for Sale        Treasury
<PAGE> 7
                                  Stock       Stock      Capital      Earnings   Securities         Stock        Total
                              ____________ ___________ ___________ _________________________  _____________   ____________
<S>                           <C>          <C>         <C>         <C>          <C>           <C>             <C> 
Balance at June 30, 1996        1,421,950   1,999,980   7,516,228    10,315,043    (837,354)       (52,277)    20,363,570 
Net income for six months
  ended December 31, 1996            --          --          --         701,788        --             --          701,788
Employee Stock Bonus                 --          --          (268)         --          --           13,642         13,374
Employee Stock Purchase               567        --         6,647          --          --             --            7,214
Dividends paid on common      
 Stock                               --          --          --        (197,027)       --             --         (197,027)
Dividends paid on preferred       
 Stock                               --          --          --         (69,999)       --             --          (69,999)
Net change in unrealized  
 losses on available for sale
  securities                         --          --          --            --       126,853           --          126,853
                              ____________ ___________ ___________ _________________________  _____________   ____________
Balance December 30, 1996     $ 1,422,517  $1,999,980  $7,522,607  $ 10,749,805 $  (710,501)  $    (38,635)   $20,945,773 
                              ============ =========== =========== =========================  =============   ============
              
Balance at June 30, 1997        1,462,909   1,999,980   7,699,883    11,266,984    (334,175)          --       22,095,581
Net income for six months             
  ended December 31, 1997            --          --          --         926,631        --             --          926,631
Employee Stock Bonus                  180        --         3,159          --          --             --            3,339
Employee Stock Purchase               345        --         5,341          --          --             --            5,686
Stock Split in the form of a             
 dividend                         740,807        --          --        (741,902)       --             --           (1,095)
Dividends paid on common      
  stock                              --          --          --        (206,875)       --             --         (206,875)
Dividends paid on preferred              
  stock                              --          --          --         (69,999)       --             --          (69,999)
Stock Options Exercised            18,450        --        66,013          --          --           44,988       129,451 
Treasury Stock Purchased             --          --          --            --          --          (44,988)      (44,988)
Net change in unrealized         
 losses on  available for sale
 securities                          --          --          --            --       195,948           --          195,948
<PAGE> 8

                              ____________ ___________ ___________ _________________________  _____________   ____________
Balance December 31, 1997     $ 2,222,691  $1,999,980  $7,774,396  $ 11,174,839 $  (138,227)  $          0    $23,033,679 
                              ============ =========== =========== =========================  =============   ============   

</TABLE>


NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Cash Flow
(Unaudited)

<TABLE>
<CAPTION>
                                                       Six Months Ended
                                                         December 31,     
                                                    1997              1996
                                              _______________   _______________
<S>                                           <C>               <C>            
Cash provided by operating activities         $     654,801     $   1,307,419  
                                                                               
Cash flows from investing activities:                                          
  FHLB stock purchased                             (243,000)         (777,000) 
  Available for sale securities purchased       (14,775,583)      (11,808,967) 
  Available for sale securities principal                                      
   reductions                                       750,117         1,030,230  
  Available for sale securities matured             749,497           650,000  
  Available for sale securities sold             23,662,251        11,059,818  
  New loans, net of repayments & charge offs     (5,759,169)      (18,686,790) 
  Net capital expenditures                         (141,207)         (403,715) 
  Real estate owned sold                             87,038           389,510  
  Real estate held for investment sold               68,743              --    
                                              _______________   _______________
   Net cash provided by (used in) investing                                    
    activities                                    4,398,687       (18,546,914) 
                                                                               
Cash flows from financing activities:                                          
  Net change in deposits                          1,439,952        (3,897,640) 
  Net change in repurchase agreements               638,499         1,450,880  
  Dividends paid                                   (276,874)         (267,026) 
  Proceeds from stock issuance                       93,488            20,588  
  Net decrease (increase) in advances from                                     
   Federal Home Loan Bank of Boston              (7,930,746)       16,508,985  
  Net change in notes payable                      (152,778)         (127,193) 
                                              _______________   _______________
   Net cash used (provided) by financing                                      
    activities                                   (6,188,459)       13,688,594  
                                              _______________   _______________
   Net decrease in cash and cash equivalents     (1,134,971)       (3,550,901) 

Cash and cash equivalents, beginning of                                         
 period                                          18,774,344        13,873,947  
                                              _______________   _______________

<PAGE> 9

Cash and cash equivalents, end of period      $  17,639,373     $  10,323,046  
                                              ===============   ===============
                                                                               
Cash and cash equivalents include cash on                                      
 hand, amounts due from banks,interest bearing                                 
 deposits and federal funds sold                                               
                                                                               
Supplemental schedule of noncash investing                                     
 activities:                                                                   
Net decrease in valuation for unrealized                                       
 market value adjustments on available for                                    
 sale securities                                    195,947           126,853  
Net transfer  from Loans to Other Real                                         
 Estate Owned                                        56,325           600,014 
                                                                              
Supplemental disclosure of cash paid during                                   
 the period for:                                                              
Income taxes paid, net of refunds                   366,000            13,000
Interest paid                                     6,229,407         5,274,161 

</TABLE>



NORTHEAST BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997

1.  Basis of Presentation
    _____________________
The accompanying unaudited condensed and consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for 
interim financial information and with the instructions to Form 10-Q and 
Article 10 of Regulation S-X.  Accordingly, they do not include all of the 
information and footnotes required by generally accepted accounting principles 
for complete financial statements.  In the opinion of management, all 
adjustments (consisting of normal recurring accruals) considered necessary for 
a fair presentation have been included.  Operating results for the six month 
period ended December 31, 1997 are not necessarily indicative of the results 
that may be expected for the year ending June 30, 1998.  For further 
information, refer to the audited consolidated financial statements and 
footnotes thereto for the fiscal year ended June 30, 1997 included in the 
Company's annual report on Form 10-K.

2.  Merger           
    ______
On October 24, 1997, the Company completed the merger of Cushnoc Bank & Trust 
Company (Cushnoc) into its wholly owned subsidiary Northeast Bank (the Bank). 
Under the terms of the agreement, the Company issued 2.089 shares of its common
stock for each share of Cushnoc, which had 90,000 common shares outstanding. 
The business combination was accounted for under the pooling of interest method
and, accordingly, the consolidated financial statements for periods prior to 
the combination have been restated to include the accounts and results of 
operations of Cushnoc.

The results of operations previously reported by the separate companies and the
combined amounts presented in the accompanying consolidated financial 
<PAGE> 10

statements are summarized below.

<TABLE>
<CAPTION>

                                    Three months ended         Six months ended
                                       September 30,             December 31,  
                                  1996             1997              1996      
                             _______________  _______________  ________________
<S>                          <C>              <C>              <C>             
Interest Income                                                                
Northeast                    $   4,716,634    $   5,396,273    $    9,634,223  
Cushnoc                            497,675          481,203           980,901  
Combined                         5,214,309        5,877,476        10,615,124  
                                                                               
Net Income                                                                     
Northeast                    $     184,261    $     552,841    $      711,421 
Cushnoc                              6,980           17,724            (9,633) 
Combined                           191,241          570,565           701,788 
                                                                               
                                                                              
                                     At September 30,           At December 31,
                                  1996             1997              1996      
                             _______________  _______________  ________________ 
Shareholders' Equity                                                           
Northeast                    $  18,201,498    $  20,464,660    $   18,743,078  
Cushnoc                          2,218,058        2,212,693         2,202,695  
Combined                        20,419,556       22,677,353        20,945,773  

No adjustments were necessary to conform Cushnoc's method of accounting to the 
methods used by Northeast.

</TABLE>

3.  Securities
    __________
Securities available for sale at cost and approximate market values are 
summarized below.

<TABLE>
<CAPTION>

                               December 31, 1997            June 30, 1997
                           _________________________  _________________________
                                          Market                     Market    
                               Cost        Value          Cost        Value    
                           ____________ ____________  ____________ ____________
<S>                        <C>          <C>           <C>          <C>         
Debt securities issued by                                                      
 the U.S. Treasury and                                                         
 other U.S. Government                                                         
 corporations and agencies $ 5,197,349  $ 5,189,871   $ 2,948,525  $ 2,905,400 
Corporate bonds                203,466      203,526       259,749      252,805 
Mortgage-backed securities  12,432,055   12,465,680    25,211,936   24,801,837 
Equity securities            1,251,767    1,016,125       896,739      850,582 
                           ____________ ____________  ____________ ____________
<PAGE> 11

                           $19,084,637  $18,875,202   $29,316,949  $28,810,624 
                           ============ ============  ============ ============
                                                                               
                               December 31, 1997            June 30, 1997      
                           _________________________  _________________________
                                          Market                     Market
                               Cost        Value          Cost        Value    
                           ____________ ____________  ____________ ____________
Due in one year or less    $   347,964  $   346,714   $   398,829  $   398,829 
Due after one year through                                                     
 five years                    703,748      702,813     1,403,991    1,396,491 
Due after five years                                                           
 through ten years           1,349,718    1,347,308       405,454      398,510 
Due after ten years          2,999,385    2,996,562     1,000,000      964,375 
Mortgage-backed securities                                                     
 (including securities with                                                    
 interest rates ranging                                                        
 from 5.15% to 9.0% maturing                                                   
 September 2003 to February                                                    
 2026)                      12,432,055   12,465,680    25,211,936   24,801,837 
Equity securities            1,251,767    1,016,125       896,739      850,582 
                           ____________ ____________  ____________ ____________
                           $19,084,637  $18,875,202   $29,316,949  $28,810,624 
                           ============ ============  ============ ============
                                                                               
</TABLE>

4.  Allowance for Loan Losses
    _________________________
The following is an analysis of transactions in the allowance for loan losses:

<TABLE>
<CAPTION>
                                                          Six Months Ended
                                                            December 31,
                                                         1997          1996    
                                                     ____________  ____________
<S>                                                  <C>           <C>         
Balance at beginning of year                         $ 2,741,809   $ 2,767,883 
Add provision charged to operations                      390,163       307,257 
Recoveries on loans previously charged off                90,350        33,075 
                                                     ____________  ____________
                                                       3,222,322     3,108,215 
 Less loans charged off                                  449,322       414,149 
                                                     ____________  ____________
 Balance at end of period                            $ 2,773,000   $ 2,694,066 
                                                     ============  ============

</TABLE>

5.  Advances from Federal Home Loan Bank
    ____________________________________
A summary of borrowings from the Federal Home Loan Bank is as follows:

<TABLE>

                                                December 31, 1997 
<PAGE> 12

                                  _____________________________________________
                                     Principal       Interest        Maturity 
                                      Amounts          Rates          Dates    
                                  ______________  _______________  ____________
                                  <C>             <C>              <C>         
                                  $ 55,695,891     4.97% - 6.39%       1998    
                                     2,800,000     5.64% - 5.96%       1999    
                                     3,000,000         6.27%           2000    
                                     1,535,991     6.21% - 6.49%       2001    
                                     5,000,000         5.71%           2002    
                                     2,531,843     6.36% - 6.67%       2003    
                                     2,000,000         6.65%           2005    
                                  ______________                               
                                  $ 72,563,725                                 
                                  ==============                               
                                                                               
                                                  June 30, 1997                
                                  _____________________________________________
                                     Principal       Interest        Maturity  
                                      Amounts          Rates          Dates    
                                  ______________  _______________  ____________
                                  $ 55,458,706     4.97% - 6.40%        1998    
                                    15,606,482     5.64% - 6.20%        1999   
                                     3,000,000         6.27%            2000   
                                       273,080         6.40%            2001   
                                     1,441,827     6.21% - 6.49%        2002   
                                       740,762     6.61% - 6.64%        2003   
                                     1,973,614     6.36% - 6.67%        2004   
                                     2,000,000         6.65%            2005
                                  ______________
                                  $ 80,494,471                                 
                                  ==============

</TABLE>

6.  Earnings Per Share.
    ___________________
On December 31, 1997, the Company adopted FASB Statement No. 128, "Earnings Per
Share". Earnings per share for prior periods have been restated in accordance 
with the requirements of Statement No. 128.



Item 2. Management's Discussion and Analysis of Financial Condition and Results
        _______________________________________________________________________
        of Operation
        ____________

Description of Operations
_________________________

Northeast Bancorp (the "Company"), is a unitary savings and loan holding 
company with the Office of Thrift Supervision ("OTS") as its primary regulator.
The Company has one wholly-owned subsidiary, Northeast Bank, FSB (the "Bank"), 
which has branches located in Auburn, Augusta, Bethel, Harrison, South Paris, 
Buckfield, Mechanic Falls, Brunswick, Richmond and Lisbon Falls, Maine.

<PAGE> 13

Merger
______

On October 24, 1997, the Bank completed its merger with Cushnoc Bank & Trust 
Company (Cushnoc).  On October 24, 1997, Cushnoc had approximately $21,000,000 
in total assets and $2,200,000 in stockholders' equity. Under the terms of the 
agreement, the Company issued 2.089 shares of its common stock for each share 
of Cushnoc, which had 90,000 common shares outstanding. The acquisition was 
accounted for under the pooling of interest method.  In accordance with the 
pooling of interest accounting method, the Company's financial statements and 
information provided for previous reporting periods have been restated to 
include Cushnoc's financial information.

Financial Condition 
___________________

Total consolidated assets were $278,733,207 on December 31, 1997, which 
represents a decrease of $5,296,487 from June 30, 1997.  Total net loans, loans
held for sale and Federal Home Loan Bank ("FHLB") stock increased by 
$5,853,288, $130,749 and $243,000, respectively, while cash equivalents and 
securities available for sale decreased by $1,134,971 and $9,935,422, 
respectively, during the same period. Total deposits and  repurchase agreements
increased by $2,078,451, while FHLB borrowings decreased by $7,930,746, from 
June 30, 1997 to December 31, 1997.

The decrease in cash equivalents and the increase in Bank's deposits were 
utilized to support the increase in the loan portfolio from June 30, 1997 to 
December 31, 1997.  FHLB stock increased due to previous levels of FHLB 
advances during the period.  The FHLB requires financial institutions to hold a
certain level of FHLB stock based on advances outstanding.

The decrease in securities available for sale was due to the Company 
repositioning the fixed rate mortgage-backed securities portfolio, taking 
advantage of price fluctuations in the current market. The sale of these 
securities strengthens the Company's Asset/Liability (ALCO) position and helps 
mitigate the Company's interest rate risk in an increasing rate environment.

At December 31, 1997, the carrying value of securities available for sale by 
the Company was $18,875,202, which is $209,435 less than the cost of the 
underlying securities. The difference between the carrying value and the cost 
of the securities was primarily attributable to the decline in the market value
of equity securities from the prices at the time of purchase. Management 
attributes the reduction in the market value of equity securities to the 
decline of the stock market during the quarter, which had a greater affect on
the market values of the Company's investments in high-tech stocks.  Management
reviews the portfolio of investments on an ongoing basis to determine if there 
has been an other-than-temporary decline in value. Some of the considerations 
management makes in the determination are market valuations of particular 
securities and economic analysis of the securities' sustainable market values 
based on the underlying companies profitability.  Management believes that the 
yields currently received on this portfolio are satisfactory and intends to 
hold these securities for the foreseeable future.

Total loans increased by $5,658,477 for the six months ended December 31, 1997.
The loan portfolio growth was in consumer installment and commercial loans. The
Bank sold approximately $9,000,000 of 1-4 family fixed rate mortgages during 
<PAGE> 14

the second quarter.  In December, 1997, the Bank replaced the loans sold by 
purchasing approximately $9,000,000 of 1-4 family mortgages.  The purchase 
consisted of 1-4 family adjustable rate mortgages secured by property located 
primarily in the state of Maine.  The Bank's local market, as well as the 
secondary market, continues to be very competitive for loan origination volume.
The local competitive environment and customer response to favorable secondary 
market rates have affected the Bank's ability to increase the loan portfolio.  
In the effort to increase loan volume, the Bank's offering rates for its loan 
products have been reduced to compete in the various markets. The Bank will 
experience some margin compression due to decreased loan rates.

The loan portfolio contains elements of credit and interest rate risk.  The 
Bank primarily lends within its local market areas, which management believes 
helps them to better evaluate credit risk.  The Bank also maintains a well 
collateralized position in real estate mortgages. Residential real estate 
mortgages make up 62% of the total loan portfolio, in which 59% of the 
residential loans are variable rate products, as compared to 69% and 49%, 
respectively, at December 31, 1996.  It is management's intent to increase the 
volume in variable rate residential loans to reduce the interest rate risk in 
this area. 

Twenty one percent of the Bank's total loan portfolio balance is commercial 
real estate mortgages.  Similar to residential mortgages, the Bank tries to 
mitigate credit risk by lending in its local market area as well as maintaining
a well collateralized position in real estate.  Commercial real estate loans 
have minimal interest rate risk as 89% of the portfolio consists of variable 
rate products. 

Commercial loans make up 10% of the total loan portfolio, of which 70% are 
variable rate instruments.  The credit loss exposure on commercial loans is 
highly dependent on the cash flow of the customer's business.  The Bank 
attempts to mitigate losses in commercial loans through lending in accordance 
with the Company's credit policies.

Consumer and other loans make up 7% of the loan portfolio.  Since these loans 
are primarily fixed rate products, they have interest rate risk when market 
rates increase.  These loans also have credit risk with, at times, minimal 
collateral security. Management attempts to mitigate these risks by keeping the
products offered short-term, receiving a rate of return commensurate with the 
measured risks, and lending to individuals in the Bank's known market areas.

The Bank's allowance for loan losses was $2,773,000 as of December 31, 1997 
versus $2,741,809 as of June 30, 1997, representing 1.21% and 1.23% of total 
loans, respectively.  The Bank had non-performing loans totaling $2,945,000 at 
December 31, 1997 compared to $2,881,000 at June 30, 1997. Non-performing 
commercial mortgages increased by 50% from June 30, 1997 to December 31, 1997. 
This increase was due to the addition of a single loan and in management's 
opinion does not indicate a trend. Non-performing loans represented 1.06% and 
1.01% of total assets at December 31, 1997 and June 30, 1997, respectively.  
The Bank's allowance for loan losses was equal to 94% and 95% of the total 
non-performing loans at December 31, 1997 and June 30, 1997, respectively.   At
December 31, 1997, the Bank had approximately $534,000 of loans classified 
substandard, exclusive of the non-performing loans stated above, that could 
potentially become non-performing due to delinquencies or marginal cash flows. 
These substandard loans have been reduced substantially in the past twelve 
months. The  decrease was attributed to the reclassification of loans to lower 
risk classifications as a result of favorable changes in the borrower's 
<PAGE> 15

financial condition, indicating a decreased potential for these loans becoming 
non-performing assets.  The following table represents the Bank's 
non-performing loans as of December 31, 1997 and June 30, 1997, respectively:

<TABLE>
<CAPTION>
                                                             
                                    December 31,        June 30, 
Description                             1997              1997    
__________________________        _______________   _______________
<S>                               <C>               <C>            
1-4 Family Mortgages              $     780,000     $   1,268,000  
Commercial Mortgages                  1,577,000         1,052,000  
Commercial Installment                  539,000           492,000  
Consumer Installment                     49,000            69,000  
                                  _______________   _______________
 Total non-performing             $   2,945,000     $   2,881,000  
                                  ===============   ===============
</TABLE>

The following table reflects the quarterly trend of total delinquencies 30 
days or more past due, including non-performing loans, for the Bank as a 
percentage of total loans: 

<TABLE> 
                   <C>        <C>        <C>         <C>
                   3-31-97    6-30-97    9-30-97     12-31-97

                    2.16%      1.94%      1.64%        1.72%

</TABLE>

At December 31, 1997, loans classified as non-performing included approximately
$888,000 of loan balances that are current and paying as agreed, but which the 
Bank maintains as non-performing until the borrower has demonstrated a 
sustainable period of performance.  Excluding these loans, the Bank's total 
delinquencies 30 days or more past due, as a percentage of total loans, would 
be 1.34% as of December 31, 1997. 

The level of the allowance for loan losses as a percentage of total loans has 
remained constant as well as the level of allowance for loan losses as a 
percentage of non-performing loans at December 30, 1997, when compared to June 
30,1997.  Based on reviewing the credit risk and collateral of delinquent, 
non-performing and classified loans, management considers the allowance for 
loan losses to be adequate.

On a regular and ongoing basis, management evaluates the adequacy of the 
allowance for loan losses.  The process to evaluate the allowance involves a 
high degree of management judgement.  The methods employed to evaluate the 
allowance for loan losses are quantitative in nature and consider such factors 
as the loan mix, the level of non-performing loans, delinquency trends, past
charge-off history, loan reviews and classifications, collateral, and the 
current economic climate.

While management uses its best judgement in recognizing loan losses in light of
available information, there can be no assurance that the Company will not have
to increase its provision for loan losses in the future as a result of changing
<PAGE> 16

economic conditions, adverse markets for real estate or other factors.  In 
addition, various regulatory agencies, as an integral part of their examination
process, periodically review the Bank's allowance for loan losses.  Such 
agencies may require the Bank to recognize additions to the allowance for loan 
losses based on their judgements about information available to them at the 
time of their examination.  The Bank's most recent examination by the OTS was 
on September 22, 1997.  At the time of the exam the regulators proposed no 
additions to the allowance for loan losses.

Total deposits were $174,361,238 and securities sold under repurchase 
agreements were $5,737,121 as of December 31, 1997.  These amounts represent an
increase of $1,439,952 and $638,499, respectively, compared to June 30, 1997.  
The increase in deposits and repurchase agreements was due to normal business 
growth.  Brokered deposits represented $7,178,760 of the total deposits at 
December 31, 1997.  The Bank utilizes brokered deposits as alternative sources 
of funds.  Brokered deposits are similar to local deposits, in that both are 
interest rate sensitive with  respect to the Bank's ability to retain the 
funds.  Cross selling strategies are employed by the Bank to develop deposit 
growth.  Even though deposit interest rates are competitive in our local 
markets, the rate of return remains stronger in other financial instruments
such as mutual funds and annuities.  Like other companies in the banking 
industry, the Bank will be challenged to maintain and/or increase its core 
deposit base.

Total advances from the FHLB were $72,563,725 as of December 31, 1997, a 
decrease of $7,930,746 compared to June 30, 1997.  The cash received from the 
sale of securities was utilized to decrease FHLB advances.  The Bank's current 
advance availability, subject to the satisfaction of certain conditions, is 
approximately $38,000,000 greater than the December 31, 1997 advances reported.
Mortgages, free of liens, pledges and encumbrances are required to be pledged 
to secure FHLB advances.  The Bank utilizes FHLB advances as alternative 
sources of funds, when the interest rates of the advances are less than market 
deposit interest rates and to fund short-term liquidity demands for loan 
volume.  With the borrowing capacity at the Federal Home Loan Bank, the normal 
growth in bank deposits and repurchase agreements and the immediate 
availability of the Bank's cash equivalents as well as securities available for
sale, management believes that the Company's available liquidity resources are 
sufficient to support the Company's needs.

Total equity of the Company was $23,033,679 as of December 31, 1997 versus 
$22,095,581 at June 30, 1997.   Book value per common share was $9.46 as of 
December 31, 1997 versus $9.16 at June 30, 1997.  Total equity to total assets 
of the Company as of December 31, 1997 was 8.26%. On December 15, 1997, the 
Company paid a 50% stock dividend to all shareholders. As a result of the stock
dividend, the Company's common shares outstanding increased by 740,807 shares. 
The June 30, 1997 book value per common share and the December 31, 1996 
earnings per share have been restated as a result of the stock dividend.

At December 31, 1997, the Bank's regulatory capital was in compliance with 
regulatory capital requirements as follows:

<TABLE>
<CAPTION>

                       Actual Capital      Required Capital    Excess Capital
                      Amount     Ratio      Amount     Ratio       Amount  
                   ____________ _______  ____________ _______  ______________
<PAGE> 17

<S>                <C>          <C>      <C>          <C>      <C>          
Tangible capital   $ 20,927,000  7.58%   $  4,144,000  1.50%   $  16,783,000
Core capital       $ 20,927,000  7.58%   $  8,288,000  3.00%   $  12,639,000
Leverage capital   $ 20,927,000  7.58%   $ 11,050,000  4.00%   $   9,877,000
Risk-based capital $ 22,131,000 12.34%   $ 14,351,000  8.00%   $   7,780,000

</TABLE>

Results of Operations
_____________________

Net income for the quarter ended December 31, 1997 was $356,066.  Basic 
earnings per share were $.14 and diluted earnings per share were $.13 for the 
quarter ended December 31, 1997.  This compares to earnings of $510,547 or 
basic earnings per share of $.22 and diluted earnings per share of $.20 for the
quarter ended December 31, 1996. Net income for the six months ended December 
31, 1997 was $926,631 versus $701,788 for the period ended December 31, 1996.
Basic earnings per share were $.39 and diluted earnings per share were $.35 for
the six months ended December 31, 1997 versus basic earnings per share of $.30 
and diluted earnings per share of $.27 for the period ended December 31, 1996. 
Net income and earnings per share have been restated to include the acquisition
of Cushnoc Bank under the pooling of interest method of accounting and the 
effect of the Company's 50% stock dividend in December, 1997.

The Company completed the acquisition of Cushnoc in the quarter ended December 
31, 1997.  The one-time costs associated with the acquisition totaled 
approximately $283,000 after tax of which $276,000 after tax was recognized in 
the quarter ended December 31, 1997. The Company's net operating income, before
the aforementioned one-time charge, was $631,665, basic earnings per share were
$.27 and diluted earnings per share were $.23 for the three months ended 
December 31, 1997, and $1,209,390, basic earnings per share were $.51 and 
diluted earnings per share were $.45, for the six months ended December 31, 
1997.

On December 31, 1997, the Company adopted FASB Statement No. 128, "Earnings Per
Share" and Statement No. 129 "Disclosure of Information about Capital 
Structure". Earnings per share for prior periods have been restated in 
accordance with the requirements of Statement No. 128.

In September of 1996, Congress enacted comprehensive legislation amending the 
FDIC BIF-SAIF deposit insurance assessment on savings and loan institution 
deposits.  The legislation imposed a one-time assessment on institutions 
holding SAIF deposits on March 31, 1995, in an amount necessary for the SAIF to
reach its 1.25% Designated Reserve Ratio.  Institutions with SAIF deposits were
required to pay an assessment rate of 65.7 cents per $100 of domestic deposits
held as of March 31, 1995.  The Bank held approximately $57,900,000 of SAIF 
deposits as of March 31, 1995.  This resulted in an expense of $380,000 which 
was reflected in the Company's September 30, 1996 quarter end financial 
statements.  During the December 31, 1996 quarter, Congress issued final 
legislation which enabled certain qualifying institutions an ability to apply
for a 20% discount on the special assessment. The Bank received a credit of 
$83,140 reducing the assessment expense in the December 31, 1996 quarter. The 
credit received from the FDIC increased the Company's basic and diluted 
earnings per share by $.02 for the quarter ended December 31, 1996. The net 
effect of the one time assessment was $296,860 and decreased the Company's 
basic earnings per share by $.09 and the diluted earnings per share by $.08 for
the six months ended December 31, 1996.  Commencing in 1997 and continuing 
<PAGE> 18

through 1999, the Bank is required to pay an annual assessment of 1.29 cents 
for every $100 of domestic BIF insured deposits and 6.44 cents for every $100 
of domestic SAIF insured deposits.  Commencing in 2000 and continuing through 
2017, banks will be required to pay a flat annual assessment of 2.43 cents for 
every $100 of domestic deposits.

The Company's net interest income was $5,572,823 for the six months ended 
December 31, 1997, versus $5,253,520 for the six months ended December 31, 
1996, an increase of $319,303.  Total interest income increased $1,154,731 
during the six months ended December 31, 1997 compared to the six months ended 
December 31, 1996, resulting primarily from an increase in the volume of loans 
offset in part by a decrease in rates. The increase in total interest expense 
of $835,428 for the six months ended December 31, 1997 resulted primarily from 
the increased volume of deposits and borrowings.

The changes in net interest income are presented in the schedule below.

<TABLE>
<CAPTION>

Northeast Bancorp
Rate/Volume Analysis for the six months ended
December 31, 1997 versus December 31, 1996


                              Difference Due to
                            Volume           Rate           Total
                        ______________  ______________  ______________
<S>                     <C>             <C>             <C> 
Investments             $    (195,781)  $     (50,619)  $    (246,400)
Loans                       1,529,451        (196,786)      1,332,665
FHLB & Other Deposits          70,786          (2,320)         68,466
                        ______________  ______________  ______________
  Total                     1,404,456        (249,725)      1,154,731


Deposits                      284,532          33,646         318,178
Repurchase Agreements          13,920          (3,820)         10,100
Borrowings                    522,431         (15,281)        507,150
                        ______________  ______________  ______________
  Total                       820,883          14,545         835,428
                        ______________  ______________  ______________
  Net Interest Income   $     583,573   $    (264,270)  $     319,303
                        ==============  ==============  ==============
</TABLE>

Rate/Volume amounts spread proportionately between volume and rate.


The majority of the Company's income is generated from the Bank.  Management 
believes that the Bank is slightly asset sensitive based on its own internal 
analysis which considers its core deposits long term liabilities that are 
matched to long term assets; therefore, it will generally experience a 
contraction in its net interest margins during a period of falling rates.  
Management believes that the maintenance of a slight asset sensitive position 
is appropriate since historically interest rates tend to rise faster than they 
decline.
<PAGE> 19

Approximately 26% of the Bank's loan portfolio is comprised of floating rate 
loans based on a prime rate index.  Interest income on these existing loans 
will increase as the prime rate increases, as well as on approximately 37% of 
other loans in the Bank's portfolio that are based on short-term rate indices 
such as the one-year treasury bill.  An increase in short-term interest rates
will also increase deposit and FHLB advance rates, increasing the Company's 
interest expense.  The Company is experiencing and anticipates additional net 
interest margin compression due to fluctuating rates.  The impact on net 
interest income will depend on, among other things, actual rates charged on the
Bank's loan portfolio, deposit and advance rates paid by the Bank and loan 
volume.

Total non-interest income was $742,108 and $1,296,549 for the three and six 
months ended December 31, 1997 versus $411,294 and $939,874 for the three and 
six months ended December 31, 1996.  Service fee income was $237,235 and 
$513,640 for the three and six months ended December 31, 1997 versus $264,768 
and $554,883 for the three and six months ended December 31, 1996.  The $27,533
and $41,243 service fee decrease for the three and six months ended December 
31, 1997, respectively, was primarily due to a reduction in loan servicing and 
deposit fee income.  Gains from available for sale securities were $99,696 and 
$207,692 for the three and six months ended December 31, 1997 versus $46,117 
and $74,417 for the three and six months ended December 31, 1996. The Company 
sold some of its available for sale securities during the three and six month 
period ended December 31, 1997, taking advantage of the fluctuation in market 
prices in the mortgage-backed security portfolio.  Income from trading account 
securities was $1,797 for the six month period ended December 31, 1997 versus 
$50,124  for the six month period ended December 31, 1996.  Larger gains on the
trading account portfolio were attained in the six month period ended December 
31, 1996, due to the appreciation in the market values of the securities 
classified as trading in that time period.

Other income was $405,177 and $573,420 for the three and six months ended 
December 31, 1997, which was an increase of $293,527 and $312,970 when compared
to other income of $111,650 and $260,450 for the three and six months ended 
December 31, 1996, respectively.  The increase in other income in the three and
six months ended December 31,1997, was primarily due to gains from the 1-4 
family mortgage sale previously discussed as well as income generated from the 
Bank's trust department and revenue from the sale of investments to customers 
through the Bank's relationship with Commonwealth Financial Services, Inc..

Total operating expense, or non-interest expense, for the Company was 
$2,765,623 and $5,042,222 for the three and six months ended December 31, 1997 
versus $2,126,897 and $4,765,523 for the three and six months ended December 
31, 1996. The increase in compensation expense for the three and six month 
period ended December 31, 1997 was primarily due to acquisition costs 
associated with Cushnoc Bank.  The increase in occupancy and equipment expense 
for the three and six months ended December 31, 1997 was due to costs 
associated with the new branch opened in Auburn, Maine as well as normal growth
and maintenance.  Other expenses increased by $335,172 and $286,959 for the 
three and six months ended December 31, 1997, compared to December 31, 1996.  
The increase in other expenses was primarily due to the acquisition costs 
associated with Cushnoc Bank. Excluding the previously discussed acquisition 
costs, the Company's total operating expenses were $2,341,624 and $4,607,209 
for the three and six months ended December 31, 1997.  As previously discussed
above, the Company's operating expenses, for the six months ended December 31,
1996, increased primarily due to the FDIC-SAIF deposit insurance assessment of 
$296,860.  Excluding the deposit assessment, the Company's operating expenses 
<PAGE> 20

were $4,468,663 for the six months ended December 31, 1996.

Impact of Inflation
___________________

The consolidated financial statements and related notes herein have been 
presented in terms of historic dollars without considering changes in the 
relative purchasing power of money over time due to inflation.  Unlike 
industrial companies, substantially all of the assets and virtually all of the
liabilities of the Company are monetary in nature.  As a result, interest rates
have a more significant impact on the Company's performance than the general 
level of inflation.  Over short periods of time, interest rates may not 
necessarily move in the same direction or in the same magnitude as inflation.

Year 2000
_________

The Company is currently addressing the Year 2000 issue. Many existing computer
programs and hardware configurations use only two digits to identify a year in 
the date field. Since these programs did not take into consideration the 
upcoming change in the century, many computer applications could create 
erroneous results by the year 2000 if not corrected. The Year 2000 issue will 
affect this Company and it will affect virtually all companies and 
organizations, including the Company's borrowers. The Company has organized a 
Year 2000 committee to research, develop and implement a plan that will correct
this issue before the year 2000. The Office of Thrift Supervision (OTS) has 
issued a formal regulation and comprehensive plan concerning the Year 2000 
issue for financial institutions, for which the OTS has oversight. The Company 
has adopted the regulatory comprehensive plan which has the following phases.

Awareness Phase
_______________

This phase consists of defining the Year 2000 problem; developing the resources
necessary to perform compliance work, establishing a Year 2000 program 
committee and developing an overall strategy that encompasses in-house systems,
service bureaus for systems that are outsourced, vendors, auditors, customers, 
and suppliers (including correspondents). This phase has been completed by the 
Company's committee.

Assessment Phase
________________

This phase consists of assessing the size and complexity of the problem and 
detailing the magnitude of the effort necessary to address the Year 2000 issue.
This phase must identify all hardware, software, networks, automated teller 
machines, other various processing platforms, and customer and vendor 
interdependencies affected by the Year 2000 date change. The assessment must go
beyond information systems and include environmental systems that are dependent
on embedded microchips, such as security systems, elevators and vaults. During 
this phase management also must evaluate the Year 2000 effect on other 
strategic business initiatives.  The assessment should consider the potential 
effect that mergers and acquisitions, major system development, corporate 
alliances, and system interdependencies will have on existing systems and/or 
the potential Year 2000 issues that may arise from acquired systems. The 
financial institution or vendor should also identify resource needs, establish 
time frames and sequencing of Year 2000 efforts. Resource needs include 
<PAGE> 21

appropriately skilled personnel, contractors, vendor support, budget 
allocations, and hardware capacity. This phase should clearly identify 
corporate accountability throughout the project, and policies should define 
reporting, monitoring, and notification requirements. Finally, contingency 
plans should be developed to cover unforeseen obstacles during the renovation 
and validation phases and include plans to deal with lesser priority systems 
that would be fixed later in the renovation phase.

The assessment phase has been materially completed, but is considered an 
ongoing phase for the Company. The Company has instituted a comprehensive plan 
to communicate with all its borrowers that the Company considers to be at risk 
concerning the Year 2000 issue.  The Company considers this plan necessary to 
mitigate the risk associated with borrowers not having the ability to make loan
payments due to a Year 2000 issue.  The company has currently estimated the 
following costs associated with the Year 2000 issue, (1) computer hardware 
replacement $470,000, (2) software replacement $20,000, (3) testing and 
administrative costs $27,000, and (4) potential contingency costs $95,000.  
These costs are under continuous review and will be revised as needed. As of 
December 31, 1997, the Company's current computer hardware and software have 
been substantially depreciated. Management anticipates the majority of these 
costs will be incurred over two fiscal years and will not materially effect the
Company's results of operations, liquidity and capital resources.

Renovation Phase
________________

This phase includes code enhancements, hardware and software upgrades, system 
replacements, vendor certification, and other associated changes. Work should 
be prioritized based on information gathered during the assessment phase. For 
institutions relying on outside servicers or third-party software providers, 
ongoing discussions and monitoring of vendor progress are necessary. The 
Company has limited out-side servicers and vendors. Each servicer and vendor
has been contacted and has or will provide information to the Company 
concerning their efforts to comply with the Year 2000 issue. The Company 
anticipates to have this phase completed by December 31, 1998.

Validation Phase
________________

Testing is a multifaceted process that is critical to the Year 2000 project and
inherent in each phase of the project management plan. This process includes 
the testing of incremental changes to hardware and software components. In 
addition to testing upgraded components, connections with other systems must be
verified, and all changes should be accepted by internal and external users. 
Management will establish controls to assure the effective and timely 
completion of all hardware and software testing prior to final implementation. 
As with the renovation phase, the Company will be in ongoing discussions with 
their vendors on the success of their validation efforts. The Company 
anticipates to have this phase completed by March 31, 1999.

Implementation Phase
____________________

In this phase, systems should be certified as Year 2000 compliant and be 
accepted by the business users. For any system failing certification, the 
business effect must be assessed clearly and the organization's Year 2000 
contingency plans should be implemented. Any potentially noncompliant mission-
<PAGE> 22

critical system should be brought to the attention of executive management
immediately for resolution. In addition, this phase must ensure that any new 
systems or subsequent changes to verified systems are compliant with Year 2000 
requirements. The Company anticipates to have this phase completed by June 30, 
1999.

In summary, the Company recognizes the Year 2000 as a global issue with 
potentially catastrophic results if not addressed. The Company has and will 
continue to undertake all the necessary steps to protect itself and its 
customers concerning the Year 2000 issue. Management is confident that all the 
instituted phases will be completed and in place prior to the year 2000.

Item 3. Quantitative and Qualitative Disclosure about Market Risk
        _________________________________________________________

There have been no material changes in the Company's market risk from June 30, 
1997.  For information regarding the Company's market risk, refer to the Annual
Report on Form 10-K dated as of June 30, 1997.

Forward - Looking Statements
____________________________

Certain statements contained herein are not based on historical facts and are 
"forward-looking statements" within the meaning of the Private Securities 
Litigation Reform Act of 1995. Forward-looking statements, which are based on 
various assumptions (some of which are beyond the Company's control), may be 
identified by reference to a future period or periods, or by the use of 
forward-looking terminology; such as "may", "will", "believe", "expect", 
"estimate", "anticipate", "continue", or similar terms or variations on those 
terms, or the negative of those terms. Actual results could differ materially 
from those set forth in forward-looking statements due to a variety of factors,
including, but not limited to, those related to the economic environment, 
particularly in the market areas in which the Company operates, competitive
products and pricing, fiscal and monetary policies of the U.S. Government, 
changes in government regulations affecting financial institutions, including 
regulatory fees and capital requirements, changes in prevailing interest rates,
acquisitions and the integration of acquired businesses, credit risk 
management, asset/liability management, the financial securities markets, and 
the availability of and the costs associated with sources of liquidity.


                   NORTHEAST BANCORP AND SUBSIDIARIES
                      Part II - Other Information

Item 1.  Legal Proceedings
         _________________
Not Applicable.
         
Item 2.  Changes in Securities
         _____________________
(a)  Not applicable.
          
(b)  Not applicable.
         
(c)  Not applicable.
         
Item 3.  Defaults Upon Senior Securities
<PAGE> 23
         _______________________________
Not Applicable.
          
Item 4.  Submission of Matters to a Vote of Security Holders
         ___________________________________________________

         SUMMARY OF VOTING AT 11/12/97 ANNUAL SHAREHOLDERS' MEETING
         __________________________________________________________
At the Annual Meeting of Shareholders held in Auburn, Maine on November 12, 
1997, the following proposals were approved, each proposal receiving the vote 
of the Company's outstanding common and preferred shares, voting as one class,
as follows:

Proposal 1 - Amendment to the Company's Articles of Incorporation to change the
term for newly elected directors to one year.
 Votes For        Votes Against        Votes Abstaining        Broker Non-Votes
 _________        _____________        ________________        ________________
 1,078,654           39,160                 2,330                  290,380    

Proposal 2 - Election of Directors 
                             Votes For     Votes Against     Votes Abstaining  
                             _________     _____________     ________________  
Ronald J. Goguen             1,225,607         400                 660         
John W. Trinward, D.M.D.     1,225,607         400                 660         
John Rosmarin                1,225,607         400                 660         
                                                                             
Messrs. Goguen, Trinward and Rosmarin were elected to serve until the 1998 
Annual Meeting.  The terms of the following Directors continued after the 
meeting: Ms. Hayes and Messrs. Bouchard, Cannan, Delamater, Jackson, Kendall, 
Wight, and Wilson.                                                          
                                                                               
Proposal 3 - Appointment of Baker Newman & Noyes, Limited Liability Company as 
auditors for fiscal year 1998.                                            
                             Votes For     Votes Against     Votes Abstaining
                             _________     _____________     ________________
                             1,225,507         760                 400

Item 5.  Other Information
         _________________
(a)  Not applicable
         
Item 6.  Exhibits and Reports on Form 8 - K
         __________________________________
(a)  Exhibits
            
2.1  Agreement and Plan of Merger dated as of May 9, 1997 by and among 
     Northeast Bancorp, Northeast Bank, FSB and Cushnoc Bank and Trust Company 
     incorporated by reference to Exhibit 2 to Northeast Bancorp's Registration
     Statement on Form S-4 (No. 333-31797) filed with the Securities and 
     Exchange Commission.
                                    
3.1  Conformed Articles of Incorporation of Northeast Bancorp as amended 
     November 12, 1997.
      
11   Statement regarding computation of per share earnings.
      
27   Financial data schedule
     
<PAGE> 24

(b)  Reports on Form 8 - K
     _____________________
     On December 15, 1997, the Company filed a report on Form 8-K announcing a 
     50% stock dividend.

     On January 14, 1998, the Company filed a report on Form 8 - K announcing 
     second quarter earnings which reflects combined earnings of Cushnoc Bank &
     Trust and Northeast Bancorp.  


NORTHEAST BANCORP AND SUBSIDIARIES
Signatures
                                    
Pursuant to the requirements of the Securities Act of 1934, the Registrant has 
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
                                    
                                    
                              NORTHEAST BANCORP             
                          _________________________
                                (Registrant)       
                                                       
                                                      
                           /s/ James D. Delamater            
                          _________________________
                             James D. Delamater          
                              President and CEO         
                                                         
                                                      
                            /s/ Richard Wyman               
                          _________________________ 
                                Richard Wyman        
                           Chief Financial Officer             
                                  
                                    
Date: February 12, 1998



NORTHEAST BANCORP AND SUBSIDIARIES
Index to Exhibits
                                    
EXHIBIT NUMBER                        DESCRIPTION                           
                 
     3.1         Conformed Articles of Incorporation of Northeast Bancorp as 
                 amended November 12, 1997.
                    
      11         Statement regarding computation of per share earnings 

      27         Financial data schedule