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 31,1998
                               ________________
                                      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   1 - 14588
                         _________

                               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                     (Zip Code)              
    offices)

                               (207) 777 - 6411                                
_______________________________________________________________________________
              Registrant's telephone number, including area code               

                                Not Applicable                                 
_______________________________________________________________________________
<PAGE> 1

   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 period that the 
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.     Yes _X_    No ___

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 10, 1999: 2,765,576 of common stock, $1.00 
par value per share.
_______________________________________________________________________________

NORTHEAST BANCORP 
Table of Contents

Part I.   Financial Information
           
          Item 1.   Financial Statements (unaudited)
                    
                    Consolidated Balance Sheets
                     December 31, 1998 and June 30, 1998
                    
                    Consolidated Statements of Income
                     Three Months ended December 31, 1998 and 1997   
                     
                    Consolidated Statements of Income
                     Six Months ended December 31, 1998 and 1997   
                     
                    Consolidated Statements of Changes in Shareholders' Equity
                     Six Months ended December 31, 1998 and 1997 
                        
                    Consolidated Statements of Cash Flows
                     Six Months ended December 31, 1998 and 1997
                       
                    Notes to Consolidated Financial Statements
                       
          Item 2.   Management's Discussion and Analysis of Financial Condition
                     and Results of Operation
                    
          Item 3.   Quantitative and Qualitative Disclosure about Market Risk
                     
Part II.  Other Information
                      
          Item 1.   Legal Proceedings   
                    
          Item 2.   Changes in Securities    
                    
          Item 3.   Defaults Upon Senior Securities
                      
          Item 4.   Submission of Matters to a Vote of Security Holders
                      
          Item 5.   Other Information
                     
<PAGE> 2

          Item 6.   Exhibits and Reports on Form 8-K   


                     PART I - FINANCIAL INFORMATION
                                    
Item 1.  Financial Statements
                                    
NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
                                    
<TABLE>
<CAPTION>
                                               December 31,        June 30,
                                                   1998              1998      
                                              _______________   _______________
<S>                                           <C>               <C>            
Assets                                                       
Cash and due from bank                        $   5,092,834     $   6,821,574 
Interest bearing deposits in other banks            593,064           421,392
Federal Home Loan Bank overnight deposits        13,172,000         4,909,000
Trading account securities at market                   --              50,000
Available for sale securities                    17,372,783        13,608,823
Federal Home Loan Bank stock                      5,680,500         5,680,500
Loans held for sale                                 949,601           369,500
                                                                              
Loans                                           284,313,294       282,030,950
  Less allowance for loan losses                  2,869,000         2,978,000
                                              _______________   _______________
    Net loans                                   281,444,294       279,052,950
                                                                               
Bank premises and equipment, net                  4,794,612         4,473,885
Assets acquired through foreclosure                 273,515           381,288
Goodwill (net of accumulated amortization of                                   
 $1,680,995 at 12/31/98 and $1,532,808 at                                      
 6/30/98)                                         1,775,728         1,923,915 
Other assets                                      5,046,060         4,839,767 
                                              _______________   _______________
    Total Assets                                336,194,991       322,532,594
                                              ===============   ===============
                                                                               
Liabilities and Shareholders' Equity                                         
Liabilities                                                        
Deposits                                      $ 201,930,962     $ 184,024,097  
Repurchase Agreements                             9,278,719         5,205,594
Advances from Federal Home Loan Bank             92,109,544       104,439,952
Notes payable                                       840,278           993,055
Other Liabilities                                 5,836,232         2,730,369
                                              _______________   _______________
  Total Liabilities                             309,995,735       297,393,067 
                                                                               
Shareholders' Equity                                                     
Preferred stock, Series A                                 0           999,988
Common stock, par value $1, 2,755,076 and                                     
 2,614,285 shares issued and outstanding at                                  
 12/31/98 and 6/30/98, respectively               2,755,076         2,614,285
Additional paid in capital                       10,156,814         9,258,107
<PAGE> 3
Retained earnings                                13,365,169        12,331,595
                                              _______________   _______________
                                                 26,277,059        25,203,975
Accumulated other comprehensive income (loss)       (77,803)          (64,448)
                                              _______________   _______________
  Total Shareholders' Equity                     26,199,256        25,139,527  
                                              _______________   _______________
   Total Liabilities and Shareholders' Equity $ 336,194,991     $ 322,532,594
                                              ===============   ===============
</TABLE>

NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
                                    
<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                         December 31,      
                                                   1998              1997      
                                              _______________   _______________
<S>                                           <C>               <C>            
Interest and Dividend Income                                                   
Interest on FHLB overnight deposits           $      73,860     $     121,584  
Interest on loans & loans held for sale           6,179,727         5,256,343  
Interest on available for sale securities           177,051           437,952
Dividends on Federal Home Loan Bank stock            91,635            71,904
Other Interest Income                                 5,443             4,596
                                              _______________   _______________
  Total Interest Income                           6,527,716         5,892,379  
                                                                               
Interest Expense                                                               
Deposits                                          2,157,908         1,901,610
Repurchase agreements                                86,531            54,618
Other borrowings                                  1,379,940         1,128,589
                                              _______________   _______________
  Total Interest Expense                          3,624,379         3,084,817
                                              _______________   _______________
                                                                               
Net Interest Income                               2,903,337         2,807,562  
Provision for loan losses                           164,491           227,663  
                                              _______________   _______________
  Net Interest Income after Provision for                                      
   Loan Losses                                    2,738,846         2,579,899
                                                                              
Other Income                                                                   
Service charges                                     269,536           237,235
Net securities gains                                 47,699            99,696
Net gain on trading securities                        5,120                 0
Other                                               519,115           405,177
                                              _______________   _______________
  Total Other Income                                841,470           742,108  
                                                                               
Other Expenses                                                                
Salaries and employee benefits                    1,191,497         1,272,952
Net occupancy expense                               219,399           221,148 
Equipment expense                                   210,958           234,410
Goodwill amortization                                74,094            74,094
<PAGE> 4

Other                                               789,131           963,019
                                              _______________   _______________
  Total Other Expenses                            2,485,079         2,765,623  
                                              _______________   _______________
                                                                            
Income Before Income Taxes                        1,095,237           556,384
Income tax expense                                  394,669           200,318
                                              _______________   _______________
Net Income                                    $     700,568     $     356,066  
                                              ===============   ===============
                                                                               
Earnings Per Share                                                            
 Basic                                        $         0.26    $         0.14
 Diluted                                      $         0.25    $         0.13

</TABLE>

NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)

<TABLE>
<CAPTION>

                                                          Six Months Ended
                                                             December 31,
                                                   1998              1997      
                                              _______________   _______________
<S>                                           <C>               <C>            
Interest and Dividend Income                                                   
Interest on FHLB overnight deposits           $     190,094     $     263,677  
Interest on loans & loans held for sale          12,488,988        10,428,625  
Interest on available for sale securities           371,438           926,435
Dividends on Federal Home Loan Bank stock           181,838           141,741
Other Interest Income                                10,515             9,377
                                              _______________   _______________
  Total Interest Income                          13,242,873        11,769,855 
                                                                              
Interest Expense                                                               
Deposits                                          4,287,652         3,785,093 
Repurchase agreements                               139,276           103,056
Other borrowings                                  2,817,018         2,308,883
                                              _______________   _______________
  Total Interest Expense                          7,243,946         6,197,032  
                                              _______________   _______________
                                                                               
Net Interest Income                               5,998,927         5,572,823
Provision for loan losses                           369,421           390,163
                                              _______________   _______________
  Net Interest Income after Provision for                                     
   Loan Losses                                    5,629,506         5,182,660
                                                                               
Other Income                                                                  
Service charges                                     522,921           513,640
Net securities gains                                 58,490           207,692
Net gain on trading securities                       10,732             1,797
Other                                               670,997           573,420
<PAGE> 5

                                              _______________   _______________
  Total Other Income                              1,263,140         1,296,549  
                                                                               
Other Expenses                                                                 
Salaries and employee benefits                    2,388,228         2,436,566
Net occupancy expense                               354,309           442,534
Equipment expense                                   392,963           454,096
Goodwill amortization                               148,187           148,187
Other                                             1,519,199         1,560,839
                                              _______________   _______________
  Total Other Expenses                            4,802,886         5,042,222
                                              _______________   _______________
                                                                               
Income Before Income Taxes                        2,089,760         1,436,987  
Income tax expense                                  753,155           510,356
                                              _______________   _______________
Net Income                                    $   1,336,605     $     926,631  
                                              ===============   ===============
                                                                               
Earnings Per Share                                                             
 Basic                                        $         0.49    $         0.39 
 Diluted                                      $         0.48    $         0.35

</TABLE>

NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders' Equity
Six Months Ended December 31, 1998 and 1997
(Unaudited)

<TABLE>
<CAPTION>
                                                                                 Accumulated
                                                                                    Other
                                             Common    Additional               Comprehensive
                              Preferred     Stock at    Paid in     Retained       Income        Treasury
                                Stock      $1.00 Par    Capital     Earnings       (Loss)          Stock        Total
                             ____________ ___________ ___________ _____________ _____________  _____________ ____________
<S>                          <C>          <C>         <C>         <C>           <C>            <C>           <C>
Balance at June 30, 1997     $ 1,999,980  $1,462,909  $7,699,883  $ 11,266,984  $   (334,175)  $       --    $22,095,581
Net income for six months                                                      
  ended December 31, 1997           --          --          --         926,631          --             --        926,631
Other comprehensive income,                                                   
 net of tax: Adjustment of                                                   
 valuation reserve for          
 securities available for sale      --          --          --            --         195,948           --        195,948

<PAGE> 6

Comprehensive income                --          --          --            --            --             --      1,122,579
Cash dividends declared on                                                   
 common stock                       --          --          --        (206,875)         --             --       (206,875)
Cash dividends declared on                                                     
 preferred stock                    --          --          --         (69,999)         --             --        (69,999)
Stock Split in the form of                                                   
 a dividend                         --       740,807        --        (741,902)         --             --         (1,095)
Common stock issued in                                                        
 connection with employee                                                    
 benefit and stock option plans     --        18,975      74,513          --            --          (44,988)      48,500
Treasury Stock Purchased            --          --          --            --            --           44,988       44,988
                             ____________ ___________ ___________ _____________ _____________  _____________ ____________
Balance December 31, 1997    $ 1,999,980  $2,222,691  $7,774,396  $ 11,174,839  $   (138,227)  $          0  $23,033,679
                             ============ =========== =========== ============= =============  ============= ============
                                                                             
Balance at June 30, 1998         999,988   2,614,285   9,258,107    12,331,595       (64,448)          --     25,139,527
Net income for six months                                                   
  ended December 31, 1998           --          --          --       1,336,605          --             --      1,336,605
Other comprehensive income,                                                   
 net of tax: Adjustment of                                                    
 valuation reserve for                                                         
 securities available for sale      --          --          --            --         (13,355)          --        (13,355)
Comprehensive income                --          --          --            --            --             --      1,323,250
Cash dividends declared on                                                    
 common stock                       --          --          --        (277,364)         --             --       (277,364)
Cash dividends declared on                                                    
 preferred stock                    --          --          --         (25,667)         --             --        (25,667)
Preferred Stock Converted                                                     
 to Common Stock                (999,988)    136,362     863,626          --            --             --              0
Common stock issued in                                                     
 connection with employee                                                   
 benefit and stock option plans     --         4,429      35,081          --            --             --         39,510
                             ____________ ___________ ___________ _____________ _____________  _____________ ____________
Balance December 31, 1998    $         0  $2,755,076  $10,156,814 $ 13,365,169  $    (77,803)  $          0  $26,199,256
                             ============ =========== =========== ============= =============  ============= ============

</TABLE>
<PAGE> 7


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

<TABLE>
<CAPTION>
                                                       Six Months Ended
                                                         December 31,  
                                                   1998              1997      
                                              _______________   _______________
<S>                                           <C>               <C>            
Cash used in (provided by) operating 
 activities                                   $    (338,406)    $     654,801  
                                                                               
Cash flows from investing activities:                                          
 FHLB stock purchased                                  --            (243,000)
 Available for sale securities purchased         (8,699,888)      (14,775,583)
 Available for sale securities matured            2,387,746         1,499,614
 Available for sale securities sold               6,537,024        23,662,251
 New loans, net of repayments & charge offs      (2,090,976)       (5,759,169)
 Net capital expenditures                          (672,016)         (141,207)
 Assets acquired through foreclosure sold           299,163            87,038
 Real estate held for investment sold                50,000            68,743
                                              _______________   _______________
   Net cash used in (provided by) investing                                   
    activities                                   (2,188,947)        4,398,687  
                                                                               
Cash flows from financing activities:                                          
 Net change in deposits                          17,906,866         1,439,952
 Net change in repurchase agreements              4,073,125           638,499
 Dividends paid                                    (303,031)         (276,874)
 Proceeds from stock issuance                        39,510            93,488
 Net decrease in advances from Federal                                      
  Home Loan Bank of Boston                      (12,330,408)       (7,930,746)
 Net change in notes payable                       (152,778)         (152,778)
                                              _______________   _______________
   Net cash provided by (used in) financing
    activities                                    9,233,284        (6,188,459) 
                                              _______________   _______________
                                                                               
   Net increase (decrease) in cash and cash               
    equivalents                                   6,705,931        (1,134,971)
                                                                               
Cash and cash equivalents, beginning of period   12,151,966        18,774,344
                                              _______________   _______________
                                                                               
Cash and cash equivalents, end of period      $  18,857,897     $  17,639,373  
                                              ===============   ===============
                                                                               
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:                                                                 
                                                                             
<PAGE> 8

Net change in valuation for unrealized market                                
 value adjustments on available for sale                                     
 securities                                         (13,355)          195,948
Net transfer (to) from Loans to Other Real                                   
 Estate Owned                                       153,657            56,325
                                                                              
Supplemental disclosure of cash paid during                                  
 the period for:                                                              
Income taxes paid, net of refunds                   856,000           366,000
Interest paid                                     7,298,563         6,229,407

</TABLE>


                     NORTHEAST BANCORP AND SUBSIDIARY
               Notes to Consolidated Financial Statements
                            December 31, 1998

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, 1998 are not necessarily indicative of the results 
that may be expected for the fiscal year ending June 30, 1999.  For further 
information, refer to the audited consolidated financial statements and 
footnotes thereto for the fiscal year ended June 30, 1998 included in the 
Company's Annual Report on Form 10-K.

2.  Reporting Comprehensive Income
    ______________________________

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."  
SFAS No. 130 establishes standards for reporting and displaying comprehensive 
income, which is defined as all changes to equity except investments by and 
distributions to stockholders.  Net income is a component of comprehensive 
income, with all other components referred to in the aggregate as other  
comprehensive income.  Such components of total comprehensive income for the 
Company are net income and net unrealized gains (losses) on securities 
available for sale, net of tax.  The Company has adopted SFAS No. 130 effective
for the quarter ended September 30, 1998.

3.  Securities
    __________

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

<TABLE>
<CAPTION>
                               December 31, 1998            June 30, 1998
<PAGE> 9

                           _________________________  _________________________
                                           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 $   348,167  $   350,730   $ 4,696,659  $ 4,698,266 
Corporate bonds                202,429      205,336       202,952      203,484 
Mortgage-backed securities  15,608,884   15,619,847     7,723,843    7,714,332 
Equity securities            1,331,187    1,196,870     1,083,018      992,741 
                           ____________ ____________  ____________ ____________
                           $17,490,667  $17,372,783   $13,706,472  $13,608,823 
                           ============ ============  ============ ============

                               December 31, 1998            June 30, 1998      
                           _________________________  _________________________
                                           Market                     Market   
                               Cost        Value          Cost        Value
                           ____________ ____________  ____________ ____________
Due in one year or less    $   248,167  $   248,167   $   347,253  $   347,253 
Due after one year through                                                     
 five years                    202,429      205,336       452,952      450,984
Due after five years                                                           
 through ten years             100,000      102,563     1,100,000    1,103,200 
Due after ten years               --           --       2,999,406    3,000,313
Mortgage-backed securities                                                     
 (including securities with                                                    
 interest rates ranging                                                        
 from 5.15% to 9.0% maturing                                                   
 September 2003 to December                                                    
 2028)                      15,608,884   15,619,847     7,723,843    7,714,332 
Equity securities            1,331,187    1,196,870     1,083,018      992,741 
                           ____________ ____________  ____________ ____________
                           $17,490,667  $17,372,783   $13,706,472  $13,608,823 
                           ============ ============  ============ ============

</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,          
                                                    1998             1997
                                               _______________  _______________
<S>                                            <C>              <C>            
Balance at beginning of year                   $   2,978,000    $   2,741,809  
Add provision charged to operations                  369,421          390,163  
Recoveries on loans previously charged off            63,954           90,350
                                               _______________  _______________
<PAGE> 10

                                                   3,411,375        3,222,322  
 Less loans charged off                              542,375          449,322
                                               _______________  _______________
 Balance at end of period                      $   2,869,000    $   2,773,000  
                                               ===============  ===============

</TABLE>

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

<TABLE>
<CAPTION>

                                    December 31, 1998        
                       _____________________________________________
                         Principal        Interest        Maturity        
                          Amounts           Rates          Dates           
                       ______________  _______________  ____________
                       <C>             <C>              <C>          
                       $  28,800,000    4.64% - 5.96%       1999    
                           5,000,000    4.85% - 6.27%       2000
                           4,160,873    5.38% - 6.49%       2001
                           5,000,000        5.71%           2002
                           6,148,671    5.69% - 6.67%       2003
                           9,000,000    5.25% - 6.65%       2005
                          34,000,000    4.89% - 5.68%       2008
                       ______________                                
                       $  92,109,544                                
                       ==============                                
                                                                       
                                      June 30, 1998
                       _____________________________________________  
                         Principal         Interest       Maturity 
                          Amounts           Rates          Dates     
                       ______________  _______________  ____________        
                       $  43,745,440    5.55% - 6.00%       1999
                           4,000,000    5.88% - 6.27%       2000
                           1,212,676    5.56% - 6.40%       2001
                           1,138,627    6.21% - 6.49%       2002
                           9,631,854    5.69% - 6.64%       2003
                           1,711,355    6.36% - 6.67%       2004
                           9,000,000    5.25% - 6.65%       2005
                          34,000,000    4.89% - 5.68%       2008
                       ______________  
                       $ 104,439,952   
                       ==============

</TABLE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        _______________________________________________________________________
        of Operation
        ____________
<PAGE> 11


General
_______

This Management's Discussion and Analysis of Financial Condition and Results of
Operations presents a review of the material changes in the financial condition
of the Company from June 30, 1998 to December 31,1998, and the results of 
operations for the three and six months period ended December 31, 1998 and 
1997.  This discussion and analysis is intended to assist in understanding the 
financial condition and results of operations of the Company.  Accordingly, 
this section should be read in conjunction with the condensed consolidated 
financial statements and the related notes contained herein.

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, such as statements relating to financial 
condition and future prospects, loan loss reserve adequacy, year 2000 
readiness, simulation of changes in interest rates, prospective results of 
operations, capital spending and financing sources, and revenue sources.  
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. 
Such forward-looking statements reflect the current view of management and are 
based on information currently available to them, and upon current 
expectations, estimates, and projections regarding the Company and its 
industry, management's belief with respect there to, and certain assumptions 
made by management.  These forward-looking statements are not guarantees of 
future performance and are subject to risks, uncertainties, and other factors. 
Accordingly, 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, changes in technology, changes in the securities markets, and the 
availability of and the costs associated with sources of liquidity.

Description of Operations
_________________________

Northeast Bancorp (the "Company"), is a unitary savings and loan holding 
company and is primarily regulated by the Office of Thrift Supervision ("OTS").
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.

Financial Condition 
___________________

Total consolidated assets were $336,194,991 on December 31, 1998, which 
represents an increase of $13,662,397 from June 30, 1998.  Total net loans 
increased by  $2,391,344, from June 30, 1998 to December 31, 1998. Cash 
equivalents and securities increased by $6,705,931 and $3,713,960, 
<PAGE> 12

respectively, during the same period. Total deposits and  repurchase agreements
increased by $21,979,990, while Federal Home Loan Bank ("FHLB") borrowings 
decreased by $12,330,408 from June 30, 1998 to December 31, 1998.

The increase in cash equivalents and the decrease in total net loans from June
30, 1998 was due, in part, to the sale of approximately $6,700,000 of indirect
auto loans during the December 31, 1998 quarter.  The increase in deposits and 
repurchase agreements were utilized to support the increase in securities and 
to repay FHLB borrowings from June 30, 1998 to December 31, 1998.

At December 31, 1998, the carrying value of securities available for sale by 
the Company was $17,372,783, which is $117,883 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, which had a greater affect on the market value of 
the Company's investments in small cap technology 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.

Total loans increased by $2,282,344 for the six months ended December 31, 1998.
The loan portfolio growth was in consumer installment and commercial loans.  In
the December 1998 quarter, the Bank sold approximately $6,700,000 of indirect 
auto loans.  The Bank anticipates holding approximately $15,000,000 to 
$20,000,000 of indirect auto loans in its portfolio and currently holds 
approximately $13,000,000 as of December 31, 1998.  As the Bank continues to 
grow the indirect auto portfolio, it is the Bank's intent to build 
relationships with other institutions for future sales of indirect auto loans. 
In the September 1998 quarter, the Bank purchased approximately $5,900,000 of 
1-4 family mortgages.  The purchase consisted of 1-4 family fixed rate 
mortgages secured by property located primarily in the State of New York. The 
continued expansion into new markets diversifies the credit risk and the 
potential economic risks of the credits held in the Bank's purchased loan 
portfolio, such that the portfolio is not effected solely by the local State of
Maine economy.  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 an 
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. As the Bank expands its purchase of 
loans in other states, management researches the strength of the economy in the
respective state and underwrites every loan before purchase. These steps are 
taken to better evaluate and minimize the credit risk of out-of-state 
purchases.  The Bank also maintains a well collateralized position in real 
estate mortgages.

At December 31, 1998, residential real estate mortgages made up 60% of the 
total loan portfolio, of which 48% of the residential loans are variable rate 
<PAGE> 13

products, as compared to 62% and 59%, respectively, at December 31, 1997. 
Although the Bank has purchased fixed rate loans, it is management's intent, 
where market opportunities arise, to increase the volume in variable rate 
residential loans to reduce the interest rate risk in this area. 

At December 31, 1998, 18% of the Bank's total loan portfolio balance is 
commercial real estate mortgages.  Commercial real estate loans have minimal 
interest rate risk as 88% of the portfolio consists of variable rate products. 
At December  31, 1997, commercial real estate mortgages made up 21% of the 
total loan portfolio, of which 89% of the commercial real estate loans were 
variable rate products.  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 loans make up 10% of the total loan portfolio, of which 53% are 
variable rate instruments at December 31, 1998. At December 31, 1997 commercial
loans made up 10% of the total loan portfolio, of which 70% were variable rate 
instruments The credit loss exposure on commercial loans is highly dependent on
the cash flow of the customer's business.  The Bank  mitigates losses by 
strictly adhering to the Company's underwriting and credit policies.

Consumer and other loans make up 12% of the loan portfolio as of December 31, 
1998 as compared to 7% at December 31, 1997.  Since these loans are primarily 
fixed rate products, they have interest rate risk when market rates increase.  
These loans also have credit risk with minimal security.  The increase in 
consumer loans was primarily due to the volume generated from the automobile 
dealer finance department.  This department underwrites all the automobile 
dealer finance loans to protect credit quality.  The Bank primarily pays a 
nominal one time origination fee on the loans.  The fees are deferred and 
amortized over the life of the loans as a yield adjustment.  Management 
attempts to mitigate credit and interest rate risk by keeping the products 
offered short-term, receiving a rate of return commensurate with the risk, and 
lending to individuals in the Bank's known market areas.

The Bank's allowance for loan losses was $2,869,000 as of December 31, 1998 
versus $2,978,000 as of June 30, 1998, representing 1.01% and 1.06% of total 
loans, respectively.  The Bank had non-performing loans totaling $1,594,000 at 
December 30, 1998 compared to $2,248,000 at June 30, 1998.  Non-performing 
loans represented 0.47% and 0.70% of total assets at December 31, 1998 and June
30, 1998, respectively.  The Bank's allowance for loan losses was equal to 180%
and 132% of the total non-performing loans at December 31, 1998 and June 30, 
1998, respectively.  At December 31, 1998, the Bank had approximately $614,000 
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 increased by $514,000 when 
compared to the $100,000 at June 30, 1998.  The increase was attributed to 
management downgrading certain loans during its internal review process.

The following table represents the Bank's non-performing loans as of December 
31, 1998 and June 30, 1998, respectively:                                     

<TABLE>
<CAPTION>
                                      December 31,        June 30, 
                Description               1998              1998
         _________________________   _______________   _______________         
         <S>                         <C>               <C>            
<PAGE> 14

         1-4 Family Mortgages        $     972,000     $     783,000
         Commercial Mortgages              478,000           956,000
         Commercial Loans                   22,000           509,000
         Consumer Installment              122,000                 0
                                     _______________   _______________
          Total non-performing       $   1,594,000     $   2,248,000  
                                     ===============   ===============

</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>
<CAPTION>
               03-31-98     06-30-98     09-30-98     12-31-98     
               ________     ________     ________     ________
               <C>          <C>          <C>          <C>     
                 1.44%        1.09%        0.89%        1.27%

</TABLE>

At December 31, 1998, loans classified as non-performing included approximately
$375,000 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 1.14% as of December 31, 1998.  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
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 November 30, 1998.  At the time of the exam the regulators proposed no 
additions to the allowance for loan losses.

The bank's premises and equipment increased by $320,727 from June 30, 1998 to 
December 31, 1998.  The increase was due to the purchase and replacement of the
Bank's mainframe and software.

The Bank's other liabilities was $5,836,232 as of December 31, 1998, which was 
<PAGE> 15

an increase of $3,105,863 when compared to June 30, 1998.  The increase was due
to an amount due to the broker for the purchase of available for sale 
securities.

Capital Resources and Liquidity
_______________________________

Cash provided by operating activities in the consolidated statements of cash 
flow decreased by $993,207 from December 31, 1997 to December 31, 1998 as a 
result of reduction in other liabilities due to transaction timing differences.

The Bank continues to attract new local deposit relationships.  The Bank 
utilizes, as alternative sources of funds, brokered certificate of deposits 
("C.D.s") when national deposit interest rates are less than the interest rates
on local market deposits.  Brokered C.D.s are also used to supplement the 
growth in earning assets.  Brokered C.D.s carry the same risk as local deposit 
C.D.s, in that both are interest rate sensitive with respect to the Bank's 
ability to retain the funds.  The Bank also utilizes FHLB advances, as 
alternative sources of funds, when the interest rates of the advances are less 
than market deposit interest rates.  FHLB advances are also used to fund 
short-term liquidity demands.

Total deposits were $201,930,962 and securities sold under repurchase 
agreements were $9,278,719 as of December 31, 1998.  These amounts represent an
increase of $17,906,866 and $4,073,125, respectively, compared to June 30, 
1998.  The increase in deposits was primarily due to the $10,000,000 increase 
in NOW demand deposits and a $9,000,000 increase in time deposits.  The 
increase in NOW deposits was attributable to the development of a demand 
account where the interest rate increases as deposit balances increase.  
Brokered deposits represented $8,804,744 of the total deposits at December 31, 
1998, which increased by $1,230,034 compared to the $7,574,710 balance as of 
June 30, 1998.  Cross selling strategies are employed by the Bank to develop 
deposit growth.  Even though deposit interest rates have remained competitive,
the rates of return are much higher with 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 deposits.

Total advances from the FHLB were $92,109,544 as of December 31, 1998, a 
decrease of $12,330,408 compared to June 30, 1998.  The cash received from the 
increase in the Bank's deposits was utilized to repay FHLB advances.  The Bank 
has unused borrowing capacity from the FHLB through its advances program.  The 
Bank's current advance availability, subject to the satisfaction of certain 
conditions, is approximately $35,000,000 over and above the December 31, 1998 
advances.  Mortgages, free of liens, pledges and encumbrances are required to 
be pledged to secure FHLB advances.  The Bank's ability to access principal 
sources of funds is immediate and 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 $26,199,256 as of December 31, 1998 versus 
$25,139,527 at June 30, 1998.  Book value per common share was $9.51 as of 
December 31, 1998 versus $9.23 at June 30, 1998.  The total equity to total 
assets ratio of the Company was 7.79% as of December 31, and June 30, 1998.

In November of 1998 Square Lake Holding Corporation converted its Series A 
<PAGE> 16

preferred stock into 136,362 shares of common stock.  Square Lake Holding 
Corporation is a Maine corporation and a subsidiary of a Canadian corporation 
of which Ronald Goguen is a 95% shareholder and director.  Mr. Goguen, also is 
a director, and, through the ownership of his affiliates, a principal 
shareholder of the Company.

The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), 
contains various provisions intended to capitalize the Bank Insurance Fund 
("BIF") and also affects a number of regulatory reforms that impact all insured
depository institutions, regardless of the insurance fund in which they 
participate.  Among other things, FDICIA grants the OTS broader regulatory 
authority to take prompt corrective action against insured institutions that do
not meet capital requirements, including placing undercapitalized institutions 
into conservatorship or receivership.  FDICIA also grants the OTS broader 
regulatory authority to take corrective action against insured institutions 
that are otherwise operating in an unsafe and unsound manner.

FDICIA defines specific capital categories based on an institution's capital 
ratios.  The OTS has issued regulations requiring a minimum regulatory tangible
capital equal to 1.5% of adjusted total assets, core capital of 3.0%, leverage 
capital of 4.0% and a risk-based capital standard of 8.0%.  The prompt 
corrective action regulations define specific capital categories based on an 
institution's capital ratios.  The capital categories, in declining order, are 
"well capitalized", "adequately capitalized", "undercapitalized", 
"significantly undercapitalized", and "critically undercapitalized".  As of 
December 31,1998, the most recent notification from the OTS categorized the 
Bank as well capitalized.  There are no conditions or events since that 
notification that management believes has changed the institution's category.

At December 31, 1998, the Bank's regulatory capital was in compliance with 
regulatory capital requirements as follows:

<TABLE>
<CAPTION>

                                                                To Be "Well    
                                                             Capitalized" Under
                                             For Capital     Prompt Corrective 
                         Actual           Adequacy Purposes  Action Provisions 
                         Amount   Ratio    Amount    Ratio    Amount    Ratio  
                       _________ ________ _________ ________ _________ ________
<S>                    <C>       <C>      <C>       <C>      <C>       <C>     
(Dollars in Thousands)                                                         
As of December 31,                                                             
 1998:                                                                         
Tier 1 (Core) capital                                                          
 (to risk weighted                                                              
 assets)               $ 24,213   10.91%  $  8,880    4.00%  $ 13,320    6.00% 
Tier 1 (Core) capital
 (to total assets)     $ 24,213    7.24%  $ 13,373    4.00%  $ 16,716    5.00%
Total Capital (to risk
 weighted assets)      $ 25,791   11.62%  $ 17,760    8.00%  $ 22,220   10.00%

</TABLE>

Results of Operations
<PAGE> 17

_____________________

Net income for the quarter ended December 31, 1998 was $700,568 or basic 
earnings per share of $0.26 and diluted earnings per share of $0.25.  This 
compares to earnings of $356,066 or basic earnings per share of $0.14 and 
diluted earnings per share of $0.13 for the quarter ended December 31, 1997. 
Net income for the six months ended December 31, 1998 was $1,336,605 versus 
$926,631 for the period ended December 31, 1997.  Basic earnings per share were
$.49 and diluted earnings per share were $.48 for the six months ended December
31, 1998 versus basic earnings per share of $.39 and diluted earnings per share
of $.35 for the period ended December 31, 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 September 30, 1998, the Company adopted FASB Statement No. 130, "Reporting 
Comprehensive Income".  Comparative financial information in the Statements of 
Changes in Shareholders' Equity for earlier periods have been reclassified in 
accordance with the requirement of Statement No. 130.

The Company's net interest income was $5,998,927 for the six months ended 
December 30, 1998, versus $5,572,823 for the six months ended December 31, 
1997, an increase of $426,104.  Total interest income increased $1,473,018 
during the six months ended December 31, 1998 compared to the six months ended 
December 31, 1997, 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 $1,046,914 for the six months ended December 31, 1998 resulted primarily 
from the increased volume of deposits and borrowings.

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

Northeast Bancorp
Rate/Volume Analysis for the six months ended
December 31, 1998 versus December 31, 1997

<TABLE>
<CAPTION>

                                 Difference Due to
                             Volume        Rate         Total
                           ___________  ___________  ___________            
<S>                        <C>          <C>          <C>        
Investments                $ (459,709)  $  (54,705)  $ (514,414)
Loans                       2,762,863     (702,500)   2,060,363 
FHLB & Other Deposits         (70,498)      (2,433)     (72,931)
                           _____________________________________
  Total                     2,232,656     (759,638)   1,473,018 
                                                                   
Deposits                      378,836      123,723      502,559 
Repurchase Agreements          35,604          616       36,220 
<PAGE> 18

Borrowings                    597,075      (88,940)     508,135 
                           _____________________________________
  Total                     1,011,515       35,399    1,046,914
                           _____________________________________
   Net Interest Income     $1,221,141   $ (795,037)  $  426,104
                           =====================================
</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 categorizes its core deposits as long term liabilities which are
then matched to long term assets.  As a result, the Bank 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.

Approximately 21% 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 29% 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 Bank's 
interest expense.  Although the Bank has experienced some net interest margin 
compression, 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.  The net interest margin compression at
the Bank has been primarily due to the decrease in loan rates.  Loan yields 
have decreased due to the effect of the Federal Reserve easing the prime 
lending rate in September and October of 1998 as well as loans within the Bank
refinancing to lower current market rates.  As of December 31, 1998 the Bank's 
net loan yields have decreased by 11 basis points when compared to net loan 
yields at September 30,1998.

Total non-interest income was $841,470 and $1,263,140 for the three and six 
months ended December 31, 1998 versus $742,108 and $1,296,549 for the three and
six months ended December 31, 1997.  Service fee income was $269,536 and 
$522,921 for the three and six months ended December 31, 1998 versus $237,235 
and $513,640 for the three and six months ended December 31, 1997.  The $32,301
and $9,281 service fee increase for the three and six months ended December 31,
1998, respectively, was primarily due to an increase in loan servicing and 
deposit fee income.  Gains from available for sale securities were $47,699 and 
$58,490 for the three and six months ended December 31, 1998 versus $99,696 and
$207,692 for the three and six months ended December 31, 1997.  The Company 
sold a larger volume 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.  

Other income was $519,115 and $670,997 for the three and six months ended 
December 31, 1998, which was an increase of $113,938 and $97,577 when compared 
to other income of $405,177 and $573,420 for the three and six months ended 
December 31, 1997, respectively.  The increase in other income in the three and
six months ended December 31,1998, was primarily due to gains from 1-4 family 
mortgage and indirect auto loan sales.

<PAGE> 19

Total non-interest expense for the Company was $2,485,079 and $4,802,886 for 
the three and six months ended December 31, 1998, which was a decrease of 
$280,544 and $239,336, respectively, when compared to total non-interest 
expense of $2,765,623 and $5,042,222 for the three and six months ended 
December 31, 1997.  Total non-interest expense for the Company was higher for 
the three and six month period ended December 31, 1997 primarily due to 
acquisition costs associated with Cushnoc Bank.

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 OTS, which primarily regulates thrifts, 
savings and loan associations, and savings and loan holding companies, has 
issued a formal regulation and comprehensive plan concerning the Year 2000 
issue for such financial institutions.  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
<PAGE> 20
 
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 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 is in the process of developing its
contingency plan and anticipates its completion by June 30, 1999. 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, (i) computer hardware replacement $130,000, (ii) software
replacement $72,000, (iii) testing and administrative costs $84,000, and (iv) 
potential contingency costs $60,000. As of December 31, 1998, the Company has 
incurred approximately $37,333 of capitalized purchases and $84,600 of 
cumulative Year 2000 expenses.  These costs are under continuous review and 
will be revised as needed.  There can be no assurance that actual costs will 
not exceed the Company's estimates.  During the quarter ended December 31, 
1998, the Company replaced its computer mainframe and software as planned to 
accommodate the growth of the Company through merger and acquisitions.  The 
previous mainframe and software had been fully depreciated through the normal
course of its depreciable life and the costs associated with the replacement of
these items was in the Company's general business plan for fiscal 1999.  The 
anticipated Year 2000 hardware and software costs indicated above are in 
addition to the Company's costs associated with the replacement of the 
mainframe and software.

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 services or third-party software providers, 
ongoing discussions and monitoring of vendor progress are necessary. The 
Company has limited out-side services 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 has 
materially completed this phase and is in the process of converting the data
communications network.  The Company anticipates completion of this phase by 
March 31, 1999.  However, there can be no assurance that these services or 
vendors will become Year 2000 compliant in a timely manner.

Validation Phase
________________
<PAGE> 21


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 has 
completed the testing all of its critical systems and will implement the data 
communications testing after conversion.  The Company anticipates completion of
this phase 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 non-compliant mission-
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 completion of this phase 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.  
However, failure to meet the Year 2000 deadlines could have a material adverse 
effect on the Company.

Item 3.  Quantitative and Qualitative Disclosure about Market Risk
         _________________________________________________________

There have been no material changes in the Company's market risk from June 30, 
1998.  For information regarding the Company's market risk, refer to the 
Company's Annual Report on Form 10-K dated as of June 30, 1998.

Part II -      OTHER INFORMATION

Item 1.   Legal Proceedings
          _________________
          None.

Item 2.   Changes in Securities
          _____________________

          None.

Item 3.   Defaults Upon Senior Securities
          _______________________________

          None.
<PAGE> 22


Item 4.   Submission of Matters to a Vote of Security Holders
          ___________________________________________________

          SUMMARY OF VOTING AT 11/10/98 ANNUAL SHAREHOLDERS' MEETING
          __________________________________________________________

At the Annual Meeting of Shareholders held in Auburn, Maine on November 10, 
1998, the following matters were submitted to a vote of, and approved by, the 
Company's shareholders, each such proposal receiving the vote of the Company's 
outstanding common and preferred shares, voting as one class, as follows:

Proposal 1 - Election of Directors:

<TABLE>
<CAPTION>
                                    Votes For         Votes Withheld
                                 _______________     ________________
<S>                              <C>                 <C>            
John W. Trinward, D.M.D.             2,082,411               61,350
John B. Bouchard                     2,081,411               62,350
A. William Cannan                    2,082,411               61,350
Ronald J. Goguen                     2,079,411               64,350
Judith W. Hayes                      2,082,411               61,350
John Rosmarin                        2,081,411               62,350
John Schiavi                         2,077,061               66,700
Stephen W. Wight                     2,075,911               67,850
Dennis A. Wilson                     2,082,411               61,350

</TABLE>

Proposal 2 - Approval of increased Number of Shares of Authorized Common Stock.
Proposal to approve and adopt an amendment to the Articles of Incorporation of 
the Company to increase the number of its shares of authorized common stock to 
15 million shares.

<TABLE>
<CAPTION>

        Votes For       Votes Against     Votes Abstain       Non-Vote
     _______________   _______________   _______________   _______________    
     <C>               <C>               <C>               <C>            
         1,971,287           154,222            15,625             2,627

</TABLE>

Proposal 3 - Ratification of Appointment of Auditors.  Proposal to ratify the 
appointment of Baker, Newman & Noyes, Limited Liability Company, as the 
Company's auditors for the 1999 fiscal year.

<TABLE>
<CAPTION>

                 Votes For       Votes Against     Votes Abstain
              _______________   _______________   _______________              
              <C>               <C>               <C>            
                  2,132,156             3,640             7,965  
<PAGE> 23


</TABLE>

Item 5.   Other Information
          _________________
             
          None.

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

(a)  Exhibits
     ________

     3.1  Conformed Articles of Incorporation of Northeast Bancorp as amended 
          November 10, 1998.

     11   Statement regarding computation of per share earnings.

     27   Financial data schedule

(b)  Reports on Form 8 - K
     _____________________

     No reports on Form 8-K have been filed during the quarter ended December 
     31, 1998. 

                                    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.

Date: February 10, 1999                         NORTHEAST BANCORP             


                                      By:       /s/  James D. Delamater  
                                          _____________________________________
                                                     James D. Delamater    
                                                     President and CEO      
                                                                              
                                                                              
                                      By:       /s/  Richard Wyman          
                                         _____________________________________
                                                     Richard Wyman
                                                     Chief Financial Officer

NORTHEAST BANCORP
Index to Exhibits
                                   

EXHIBIT NUMBER                            DESCRIPTION                           

     3.1     Conformed Articles of Incorporation of Northeast Bancorp as 
             amended November 10, 1998.
             
     11      Statement regarding computation of per share earnings 
             
<PAGE> 24

     27      Financial data schedule