Page 1



UNITED STATES
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, 2005
|--------------------- | -----------------

Or

___ Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period for _______________ to _______________

|Commission File Number | 1-14588
|---------------------- | -------

Northeast Bancorp
__________________________________________________________________________________________
(Exact name of registrant as specified in its charter)

|Maine
___________________________________                             | 01-042506
____________________________________
|--------------------------------------------------------------------- | ----------------------------------------------
|(State or other jurisdiction of incorporation or organization)        | (I.R.S. Employer Identification No.)          
|500 Canal Street, Lewiston, Maine
___________________________________ | 04240
____________________________________    
|(Address of Principal executive offices)                              | (Zip Code)                                    

(207) 786-3245
___________________________________________________________________________
Registrant's telephone number, including area code

Not Applicable
___________________________________________________________________________
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 subjected to such filing requirements for the past 90 days.  Yes X  No ___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,  or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer ___                Accelerated Filer ___          Non-accelerated Filer _X__

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes_ No X

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.  As of February 10, 2006, the registrant had outstanding
2,442,632 shares of common stock, $1.00 stated value per share.

Page 2

|Part I.  | Financial Information
|-------- | ---------------------
|         | Item 1.              
|         |                      
|         |                      
|         |                      
|         |                      
|         |                      
|         |                      
|         | Item 2.              
|         | Item 3.              
|         | Item 4.              
|Part II. | Other Information    
|         | Item 1.              
|         | Item 2.              
|         | Item 3.              
|         | Item 4.              
|         | Item 5.              
|         | Item 6.              



|                                                                                   |                                                                                            |                                                                                          |                                 |                      | Page 3        
|---------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------- | ------------------------------- | -------------------- | --------------
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|PART 1 - FINANCIAL INFORMATION                                                    
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|Item 1. Financial
      Statements                                                 |                                                                                            |                                                                                         
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|NORTHEAST BANCORP AND
      SUBSIDIARIES                                          
|Consolidated Balance Sheets                                                       
|(Unaudited)                                                                       
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|                                                                                   |                                                                                            |                                                                                          |                                 | December 31,         | June
      30,
|                                                                                   |                                                                                            |                                                                                          |                                 | 2005                 | 2005          
|Assets                                                                             |                                                                                            |                                                                                         
|Cash and due from
      banks                                                      | $    
      9,901,710                                                                      | $    
      9,254,312                                                                   
|Interest bearing
      deposits                                                    | 1,151,078                                                                                  | 1,063,923                                                                               
|Federal Home Loan
      Bank overnight deposits                                    | -                                                                                          | 3,555,000                                                                               
|                                                                                   |                                                                                            |                                                                                          | Total cash and cash equivalents | 11,052,788           | 13,873,235    
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|Available for sale
      securities, at market value                               | 78,918,086                                                                                 | 74,345,938                                                                              
|Loans held for sale                                                                | 440,500                                                                                    | 318,850                                                                                 
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|Loans receivable                                                                   | 447,895,934                                                                                | 461,052,388                                                                             
|                                                                                   | Less allowance for
      loan losses                                                       | 5,577,000                                                                                | 5,104,000                      
|                                                                                   | Net loans                                                                                  | 442,318,934                                                                              | 455,948,388                    
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|Premises and
      equipment, net                                                  | 7,693,981                                                                                  | 4,507,114                                                                               
|Aquired assets - net                                                               | 65,349                                                                                     | 88,646                                                                                  
|Accrued interest
      receivable - loans                                          | 2,029,587                                                                                  | 2,039,682                                                                               
|Accrued interest
      receivable - investments                                    | 588,583                                                                                    | 515,207                                                                                 
|FHLB and FRB stock,
      at cost                                                  | 7,104,000                                                                                  | 7,050,000                                                                               
|Goodwill                                                                           | 407,897                                                                                    | 407,897                                                                                 
|Intangible assets,
      net of accumulated amortization of $2,233,040 at 12/31/05 |                                                                                            |                                                                                         
|and $2,125,536 at
      6/30/05                                                    | 2,053,188                                                                                  | 2,160,693                                                                               
|Bank owned life
      insurance (BOLI)                                             | 8,725,438                                                                                  | 8,563,475                                                                               
|Other assets                                                                       | 6,327,870                                                                                  | 6,081,207                                                                               
|                                                                                   | Total assets                                                                               | $
      567,726,201                                                                      | $
      575,900,332            
|                                                                                   |                                                                                            |                                                                                          |                                 | =========            | =========     
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|Liabilities and
      Stockholders' Equity                                         |                                                                                            |                                                                                         
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|Liabilities:                                                                       |                                                                                            |                                                                                         
|                                                                                   | Deposits                                                                                   |                                                                                          |                                
|                                                                                   |                                                                                            | Demand                                                                                   | $   
      39,333,873           | $  
      39,854,720
|                                                                                   |                                                                                            | NOW                                                                                      | 60,404,112                      | 64,386,939          
|                                                                                   |                                                                                            | Money market                                                                             | 13,630,957                      | 17,142,325          
|                                                                                   |                                                                                            | Regular savings                                                                          | 26,750,556                      | 29,807,392          
|                                                                                   |                                                                                            | Brokered time
      deposits                                                             | 56,734,525                      | 70,424,426          
|                                                                                   |                                                                                            | Certificates of
      deposit                                                            | 203,970,038                     | 174,602,920         
|                                                                                   |                                                                                            |                                                                                          | Total deposits                  | 400,824,061          | 396,218,722   
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|                                                                                   | FHLB advances                                                                              | 70,509,987                                                                               | 86,197,602                     
|                                                                                   | Obigation under
      capital lease agreement                                              | 2,843,048                                                                                | -                              
|                                                                                   | Other borrowings                                                                           | 164,461                                                                                  | 220,105                        
|                                                                                   | Securities sold
      under repurchase agreements                                          | 32,369,391                                                                               | 33,379,412                     
|                                                                                   | Junior subordinated
      notes issued to affiliated trusts                                | 16,496,000                                                                               | 16,496,000                     
|                                                                                   | Other liabilities                                                                          | 3,798,763                                                                                | 3,518,918                      
|                                                                                   |                                                                                            |                                                                                          | Total liabilities               | 527,005,711          | 536,030,759   
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|Commitments and
      contingent liabilities                                       |                                                                                            |                                                                                         
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|Stockholders' equity                                                               |                                                                                            |                                                                                         
|                                                                                   | Preferred stock,
      cumulative, $1 par value, 1,000,000 shares authorized               |                                                                                          |                                
|                                                                                   |                                                                                            | and none issued and
      outstanding                                                    | -                               | -                   
|                                                                                   | Common stock, at
      stated value, 15,000,000 shares authorized; 2,527,332 and 2,519,832 |                                                                                          |                                
|                                                                                   |                                                                                            | shares issued and
      outstanding at December 31, 2005 and June 30, 2005, respectively | 2,527,332                       | 2,519,832           
|                                                                                   | Additional paid in
      capital                                                           | 6,607,020                                                                                | 6,530,836                      
|                                                                                   | Retained earnings                                                                          | 33,152,641                                                                               | 31,489,092                     
|                                                                                   | Accumulated other
      comprehensive loss                                                 | (1,566,503)                                                                              | (670,187)                      
|                                                                                   |                                                                                            | Total stockholders'
      equity                                                         | 40,720,490                      | 39,869,573          
|                                                                                   |                                                                                            |                                                                                          |                                 |                      |               
|                                                                                   |                                                                                            | Total liabilities
      and stockholders' equity                                         | $
      567,726,201             | $
      575,900,332 
|                                                                                   |                                                                                            |                                                                                          |                                 | =========            | =========     



|                                         |                                                               |                                                            |                      | Page 4            
|---------------------------------------- | ------------------------------------------------------------- | ---------------------------------------------------------- | -------------------- | ------------------
|                                         |                                                               |                                                            |                      |                   
|NORTHEAST BANCORP AND
      SUBSIDIARIES
|Consolidated Statements of Income       
|(Unaudited)                             
|                                         |                                                               |                                                            |                      |                   
|                                         |                                                               |                                                            | Three Months Ended  
|                                         |                                                               |                                                            | December 31,        
|                                         |                                                               |                                                            | 2005                 | 2004              
|Interest and
      dividend income:      |                                                               |                                                           
|                                         | Interest on loans                                             | $ 
      7,844,011                                         | $ 
      7,199,425  
|                                         | Interest on FHLB
      overnight deposits                     | 37,192                                                     | 13,782              
|                                         | Interest on fed
      funds sold                              | 1,078                                                      | -                   
|                                         | Interest and
      dividends on available for sale securities | 788,051                                                    | 672,823             
|                                         | Dividends on FHLB
      and FRB stock                         | 87,840                                                     | 64,540              
|                                         | Other interest
      income                                   | 8,068                                                      | 1,705               
|                                         |                                                               | Total interest and dividend
      income                   | 8,766,240            | 7,952,275         
|                                         |                                                               |                                                            |                      |                   
|Interest expense:                        |                                                               |                                                           
|                                         | Deposits                                                      | 2,771,214                                                  | 2,102,444           
|                                         | Repurchase
      agreements                                   | 224,204                                                    | 101,311             
|                                         | FHLB advances                                                 | 738,685                                                    | 918,450             
|                                         | Obligation under
      capital lease agreement                | 36,225                                                     | -                   
|                                         | Other borrowings                                              | 455                                                        | 10,443              
|                                         | Junior subordinated
      notes                               | 266,346                                                    | 301,056             
|                                         |                                                               | Total interest expense                                     | 4,037,129            | 3,433,704         
|                                         |                                                               |                                                            |                      |                   
|                                         |                                                               | Net interest income before
      provision for loan losses | 4,729,111            | 4,518,571         
|                                         |                                                               |                                                            |                      |                   
|Provision for loan
      losses          | 300,104                                                       | 299,984                                                   
|                                         |                                                               | Net interest income after
      provision for loan losses  | 4,429,007            | 4,218,587         
|                                         |                                                               |                                                            |                      |                   
|Noninterest income:                      |                                                               |                                                           
|                                         | Fees and service
      charges on loans                       | 165,264                                                    | 152,915             
|                                         | Fees for other
      services to customers                    | 281,074                                                    | 250,248             
|                                         | Net securities gains                                          | 3,031                                                      | 37,527              
|                                         | Gain (loss) on
      trading activities                       | -                                                          | -                   
|                                         | Gain on sales of
      loans                                  | 67,328                                                     | 58,636              
|                                         | Investment
      commissions                                  | 363,909                                                    | 379,925             
|                                         | Insurance
      commissions                                   | 409,332                                                    | 375,946             
|                                         | BOLI income                                                   | 91,336                                                     | 67,096              
|                                         | Other income                                                  | 140,747                                                    | 105,558             
|                                         |                                                               | Total noninterest income                                   | 1,522,021            | 1,427,851         
|                                         |                                                               |                                                            |                      |                   
|Noninterest expense:                     |                                                               |                                                           
|                                         | Salaries and
      employee benefits                          | 2,514,846                                                  | 2,385,609           
|                                         | Occupancy expense                                             | 390,597                                                    | 345,677             
|                                         | Equipment expense                                             | 378,165                                                    | 286,389             
|                                         | Intangible assets
      amortization                          | 66,762                                                     | 97,736              
|                                         | Other                                                         | 1,035,956                                                  | 1,418,944           
|                                         |                                                               | Total noninterest expense                                  | 4,386,326            | 4,534,355         
|                                         |                                                               |                                                            |                      |                   
|Income before income
      taxes         | 1,564,702                                                     | 1,112,083                                                 
|Income tax expense                       | 493,506                                                       | 347,201                                                   
|                                         |                                                               |                                                            |                      |                   
|                                         |                                                               | Net income                                                 | $ 
      1,071,196   | $   
      764,882
|                                         |                                                               |                                                            | ========             | ========          
|                                         |                                                               |                                                            |                      |                   
|Earnings per common
      share:         |                                                               |                                                           
|                                         | Basic                                                         | $          
      0.42                                     | $        
      0.30
|                                         | Diluted                                                       | $          
      0.42                                     | $        
      0.30
|                                         |                                                               |                                                            |                      |                   
|                                         |                                                               | Net interest margin                                        | 3.46%                | 3.37%             
|                                         |                                                               | Net interest spread                                        | 3.19%                | 3.16%             
|                                         |                                                               | Return on average assets
      (annualized)                | 0.74%                | 0.54%             
|                                         |                                                               | Return on average equity
      (annualized)                | 10.48%               | 7.89%             
|                                         |                                                               | Efficiency ratio                                           | 70%                  | 76%               



|                                         |                                                               |                                                            |                        | Page 5            
|---------------------------------------- | ------------------------------------------------------------- | ---------------------------------------------------------- | ---------------------- | ------------------
|                                         |                                                               |                                                            |                        |                   
|NORTHEAST BANCORP AND
      SUBSIDIARIES
|Consolidated Statements of Income       
|(Unaudited)                             
|                                         |                                                               |                                                            |                        |                   
|                                         |                                                               |                                                            | Six Months Ended      
|                                         |                                                               |                                                            | December 31,          
|                                         |                                                               |                                                            | 2005                   | 2004              
|Interest and
      dividend income:      |                                                               |                                                           
|                                         | Interest on loans                                             | $
      15,671,144                                         | $
      14,030,357    
|                                         | Interest on FHLB
      overnight deposits                     | 55,088                                                     | 20,245                
|                                         | Interest on fed
      funds sold                              | 6,724                                                      | -                     
|                                         | Interest and
      dividends on available for sale securities | 1,533,220                                                  | 1,350,105             
|                                         | Dividends on FHLB
      and FRB stock                         | 165,101                                                    | 116,673               
|                                         | Other interest
      income                                   | 14,446                                                     | 2,795                 
|                                         |                                                               | Total interest and dividend
      income                   | 17,445,723             | 15,520,175        
|                                         |                                                               |                                                            |                        |                   
|Interest expense:                        |                                                               |                                                           
|                                         | Deposits                                                      | 5,284,468                                                  | 4,075,971             
|                                         | Repurchase
      agreements                                   | 384,640                                                    | 180,701               
|                                         | FHLB advances                                                 | 1,722,251                                                  | 1,875,934             
|                                         | Obligation under
      capital lease agreement                | 60,454                                                     | -                     
|                                         | Other borrowings                                              | 1,316                                                      | 10,443                
|                                         | Junior subordinated
      notes                               | 528,402                                                    | 582,206               
|                                         |                                                               | Total interest expense                                     | 7,981,531              | 6,725,255         
|                                         |                                                               |                                                            |                        |                   
|                                         |                                                               | Net interest income before
      provision for loan losses | 9,464,192              | 8,794,920         
|                                         |                                                               |                                                            |                        |                   
|Provision for loan
      losses          | 600,609                                                       | 600,121                                                   
|                                         |                                                               | Net interest income after
      provision for loan losses  | 8,863,583              | 8,194,799         
|                                         |                                                               |                                                            |                        |                   
|Noninterest income:                      |                                                               |                                                           
|                                         | Fees and service
      charges on loans                       | 370,085                                                    | 213,464               
|                                         | Fees for other
      services to customers                    | 576,033                                                    | 492,178               
|                                         | Net securities gains                                          | 9,767                                                      | 39,091                
|                                         | Loss on trading
      activities                              | -                                                          | (160)                 
|                                         | Gain on sales of
      loans                                  | 167,308                                                    | 110,540               
|                                         | Investment
      commissions                                  | 721,256                                                    | 834,761               
|                                         | Insurance
      commissions                                   | 812,821                                                    | 473,279               
|                                         | BOLI income                                                   | 183,187                                                    | 160,093               
|                                         | Other income                                                  | 269,581                                                    | 268,543               
|                                         |                                                               | Total noninterest income                                   | 3,110,038              | 2,591,789         
|                                         |                                                               |                                                            |                        |                   
|Noninterest expense:                     |                                                               |                                                           
|                                         | Salaries and
      employee benefits                          | 5,114,077                                                  | 4,664,461             
|                                         | Occupancy expense                                             | 783,281                                                    | 655,454               
|                                         | Equipment expense                                             | 769,611                                                    | 542,099               
|                                         | Intangible assets
      amortization                          | 107,504                                                    | 121,133               
|                                         | Other                                                         | 2,070,947                                                  | 2,305,022             
|                                         |                                                               | Total noninterest expense                                  | 8,845,420              | 8,288,169         
|                                         |                                                               |                                                            |                        |                   
|Income before income
      taxes         | 3,128,201                                                     | 2,498,419                                                 
|Income tax expense                       | 1,014,908                                                     | 777,422                                                   
|                                         |                                                               |                                                            |                        |                   
|                                         |                                                               | Net income                                                 | $ 
      2,113,293     | $ 
      1,720,997
|                                         |                                                               |                                                            | ========               | ========          
|                                         |                                                               |                                                            |                        |                   
|Earnings per common
      share:         |                                                               |                                                           
|                                         | Basic                                                         | $         
      0.84                                      | $          
      0.68
|                                         | Diluted                                                       | $         
      0.83                                      | $          
      0.67
|                                         |                                                               |                                                            |                        |                   
|                                         |                                                               | Net interest margin                                        | 3.45%                  | 3.32%             
|                                         |                                                               | Net interest spread                                        | 3.17%                  | 3.11%             
|                                         |                                                               | Return on average assets
      (annualized)                | 0.73%                  | 0.62%             
|                                         |                                                               | Return on average equity
      (annualized)                | 10.32%                 | 8.98%             
|                                         |                                                               | Efficiency ratio                                           | 70%                    | 73%               



|                                                                 |                                                    |                                                   |                    |                      |                    |               | Page 6   
|---------------------------------------------------------------- | -------------------------------------------------- | ------------------------------------------------- | ------------------ | -------------------- | ------------------ | ------------- | ---------
|NORTHEAST BANCORP AND
      SUBIDIARIES                         
|Consolidated Statements of
      Changes in Stockholders' Equity
|Six Months Ended December 31,
      2005 and 2004               
|(Unaudited)                                                     
|                                                                 |                                                    |                                                   |                    |                      |                    |               |          
|                                                                 |                                                    |                                                   |                    |                      |                    | Accumulated   |          
|                                                                 |                                                    |                                                   |                    | Additional           |                    | Other         |          
|                                                                 |                                                    |                                                   | Common             | Paid-in              | Retained           | Comprehensive |          
|                                                                 |                                                    |                                                   | Stock              | Capital              | Earnings           | Income (Loss) | Total    
|Balance at June 30,
      2004                                   | $
      2,525,416                                  | $
      6,943,894                                 | $
      28,380,678 | $ 
      (1,396,968) | $
      36,453,020
|                                                                 | Net income for six
      months ended 12/31/04     | -                                                 | -                  | 1,720,997            | -                  | 1,720,997    
|                                                                 | Other comprehensive
      income net of tax:       |                                                   |                    |                      |                    |              
|                                                                 |                                                    | Net unrealized gains on
      investments         |                    |                      |                    |               |          
|                                                                 |                                                    | available for sale, net of
      reclassification |                    |                      |                    |               |          
|                                                                 |                                                    | adjustment                                        | -                  | -                    | -                  | 1,057,422     | 1,057,422
|                                                                 |                                                    | Total comprehensive income                        | -                  | -                    | -                  | -             | 2,778,419
|                                                                 |                                                    |                                                   |                    |                      |                    |               |          
|                                                                 | Dividends on common
      stock at $0.18 per share | -                                                 | -                  | (453,074)            | -                  | (453,074)    
|                                                                 | Purchase of 30,000
      shares of Company stock   | (30,000)                                          | (540,000)          | -                    | -                  | (570,000)    
|                                                                 | Common stock issued
      in connection with       |                                                   |                    |                      |                    |              
|                                                                 |                                                    | employee benefit and stock
      option plan      | 19,141             | 82,264               | -                  | -             | 101,405  
|                                                                 |                                                    |                                                   |                    |                      |                    |               |          
|Balance at December
      31, 2004                               | $
      2,514,557                                  | $
      6,486,158                                 | $
      29,648,601 | $   
      (339,546) | $
      38,309,770
|                                                                 | ========                                           | ========                                          | ========           | ========             | ========          
|                                                                 |                                                    |                                                   |                    |                      |                    |               |          
|Balance at June 30,
      2005                                   | $
      2,519,832                                  | $
      6,530,836                                 | $
      31,489,092 | $   
      (670,187) | $
      39,869,573
|                                                                 | Net income for six
      months ended 12/31/05     |                                                   |                    | 2,113,293            |                    | 2,113,293    
|                                                                 | Other comprehensive
      income net of tax:       |                                                   |                    |                      |                    |              
|                                                                 |                                                    | Net unrealized losses on
      investments        |                    |                      |                    |               |          
|                                                                 |                                                    | available for sale, net of
      reclassification |                    |                      |                    |               |          
|                                                                 |                                                    | adjustment                                        |                    |                      |                    | (896,316)     | (896,316)
|                                                                 |                                                    | Total comprehensive income                        |                    |                      |                    |               | 1,216,977
|                                                                 |                                                    |                                                   |                    |                      |                    |               |          
|                                                                 | Dividends on common
      stock at $0.18 per share |                                                   |                    | (449,744)            |                    | (449,744)    
|                                                                 | Common stock issued
      in connection with       |                                                   |                    |                      |                    |              
|                                                                 |                                                    | employee benefit and stock
      option plan      | 7,500              | 76,184               | -                  | -             | 83,684   
|                                                                 |                                                    |                                                   |                    |                      |                    |               |          
|Balance at Decmber
      31, 2005                                | $
      2,527,332                                  | $
      6,607,020                                 | $
      33,152,641 | $
      (1,566,503)  | $
      40,720,490
|                                                                 | ========                                           | ========                                          | ========           | ========             | ========          



|                                                                             |                        | Page 7            
|---------------------------------------------------------------------------- | ---------------------- | ------------------
|                                                                             |                        |                   
|NORTHEAST BANCORP AND
      SUBSIDIARIES                                    
|Consolidated Statements of Cash
      Flows                                 
|(Unaudited)                                                                 
|                                                                             |                        |                   
|                                                                             | Six
      Months Ended
|                                                                             | December
      31,    
|                                                                             | 2005                   | 2004              
|Cash provided by operating
      activities:                                 | $  
      3,127,606    | $ 
      3,011,355
|                                                                             |                        |                   
|Cash flows from investing
      activities:                                  |                        |                   
|Federal Reserve stock purchased                                              | (54,000)               | (405,500)         
|Available for sale securities
      purchased                                | (11,018,759)           | (1,901,051)       
|Available for sale securities
      matured                                  | 4,809,207              | 4,037,571         
|Available for sale securities
      sold                                     | 504,487                | 669,133           
|Net change in loans                                                          | 12,915,334             | (25,937,699)      
|Net capital expenditures                                                     | (831,062)              | (449,234)         
|Proceeds from sale of premises
      and equipment                           | -                      | 481,794           
|Proceeds from sale of acquired
      assets                                  | 185,097                | 290,180           
|Purchase of retirement annuity                                               | -                      | (900,000)         
|Acquisition of business                                                      | -                      | (993,469)         
|Net cash provided by (used in)
      investing activities                    | 6,510,304              | (25,108,275)      
|                                                                             |                        |                   
|Cash flows from financing
      activities:                                  |                        |                   
|Net change in deposits                                                       | 4,605,339              | 4,432,636         
|Net change in repurchase
      agreements                                    | (1,010,021)            | 10,159,040        
|Dividends paid                                                               | (449,744)              | (453,075)         
|Proceeds from stock issuance                                                 | 83,684                 | 101,405           
|Company stock repurchased                                                    | -                      | (570,000)         
|Advances from the Federal Home
      Loan Bank                               | 40,000,000             | 20,500,000        
|Net repayments on Federal Home
      Loan Bank                               | (60,901,615)           | (12,900,986)      
|Net advances (repayments) on
      Federal Home Loan Bank overnight advances | 5,214,000              | (5,377,000)       
|Proceeds from issuance of Junior
      Subordinated Notes                    | -                      | 10,000,000        
|Repayment of Junior Subordinated
      Notes                                 | -                      | (7,172,998)       
|Net cash (used) provided by
      financing activities                       | (12,458,357)           | 18,719,022        
|                                                                             |                        |                   
|Net decrease in cash and cash
      equivalents                              | (2,820,447)            | (3,377,898)       
|                                                                             |                        |                   
|Cash and cash equivalents,
      beginning of period                         | 13,873,235             | 14,647,785        
|Cash and cash equivalents, end
      of period                               | $
      11,052,788     | $
      11,269,887
|                                                                             | =========              | =========         
|                                                                             |                        |                   
|Cash and cash equivalents
      include cash on hand, amounts due            |                        |                   
|from banks, and interest bearing
      deposits.                             |                        |                   
|                                                                             |                        |                   
|Supplemental schedule of noncash
      activities:                           |                        |                   
|Net change in valuation for
      unrealized gains/losses, net of tax,       |                        |                   
|on available for sale securities                                             | (896,316)              | 1,057,422         
|Net transfer from loans to
      acquired assets                             | 161,800                | 302,590           
|Assumption of debt from
      Solon-Anson Insurance Agency acquisition       | -                      | 683,104           
|Deferred tax liability related
      to Solon-Anson acquisition              | -                      | 450,877           
|Capital lease asset and related
      obligation                             | 2,892,702              | -                 
|Security settlement due to
      broker                                      | 280,249                | -                 
|                                                                             |                        |                   
|Supplemental disclosure of cash
      paid during the period for:            |                        |                   
|Income taxes paid, net of
      refunds                                      | 1,292,850              | 1,043,222         
|Interest paid                                                                | 7,499,764              | 6,589,504         

Page 8

NORTHEAST BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2005

1.  Basis of Presentation

The accompanying unaudited condensed and consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States of America 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 accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, the accompanying
consolidated financial statements contain all adjustments (consisting
principally of normal recurring accruals) considered necessary for a fair
presentation of the Company's financial position at December 31, 2005, the
results of operations for the three and six month periods ended December 31,
2005 and 2004, the changes in stockholders' equity for the six months ended
December 31, 2005 and 2004, and the cash flows for the six months ended December
31, 2005 and 2004. Operating results for the six-month period ended December 31,
2005 are not necessarily indicative of the results that may be expected for the
fiscal year ending June 30, 2006. For further information, refer to the audited
consolidated financial statements and footnotes thereto for the fiscal year
ended June 30, 2005 included in the Company's Annual Report on Form 10-K.
Certain June 30, 2005 amounts have been reclassified to be consistent with the
December 31, 2005 financial statements.

2.  Junior Subordinated Notes

NBN Capital Trust II and III were created in December 2003 and NBN Capital
Trust IV was created December 2004. Each such trust is a Delaware statutory
trust (together, the "Private Trusts"). The exclusive purpose of the
Private Trusts was (i) issuing and selling Common Securities and Preferred
Securities in a private placement offering, (ii) using the proceeds of the sale
of the Private Trust Preferred Securities to acquire Junior Subordinated
Deferrable Interest Notes ("Junior Subordinated Notes"); and (iii)
engaging only in those other activities necessary, convenient, or incidental
thereto. Accordingly the Junior Subordinated Notes are the sole assets of each
of the Private Trusts.

The following table summarizes the junior subordinated notes issued by the
Company to each affiliated trust and the trust preferred and common securities
issued by each affiliated trust. Amounts include the junior subordinated notes
acquired by the affiliated trusts from us with the capital contributed by us in
exchange for the common securities of such trust. The trust preferred securities
were sold in two separate private placement offerings. The company has the right
to redeem the junior subordinated notes, in whole or impart, on or after March
30, 2009 for NBN Capital Trust II and III, and on or after February 23, 2010,
for NBN Capital Trust IV at the redemption price specified in the Indenture plus
accrued but unpaid interest to the redemption date.

|Affiliated Trusts     | Trust      
    Preferred   Securities | Common   Securities | Junior      
    Subordinated Notes | Interest Rate | Maturity Date    
|--------------------- | -------------------------------------- | ------------------- | ----------------------------------- | ------------- | -----------------
|NBN Capital Trust II  | $    3,000,000                         | $   93,000          | $  3,093,000                        | 7.33%         | March 30, 2009   
|NBN Capital Trust III | 3,000,000                              | 93,000              | 3,093,000                           | 6.50%         | March 30, 2009   
|NBN Capital Trust IV  | 10,000,000                             | 310,000             | 10,310,000                          | 5.88%         | February 23, 2010
|Total                 | $  16,000,000                          | $  496,000          | $ 16,496,000                        | 6.27%         |                  

NBN Capital Trust II pays a variable rate based on three month LIBOR, NBN
Capital Trust III pays a 6.50% fixed rate until March 30, 2009 when the rate
changes to a variable rate based on three month LIBOR, and NBN Capital Trust IV
pays a 5.88% fixed rate until February 23, 2010 when the rate changes to a
variable rate based on three month LIBOR. Accordingly, the Preferred Securities
of the Private Trusts currently pay quarterly distributions at an annual rate of
7.33% for the stated liquidation amount of $1,000 per Preferred Security for NBN
Capital Trust II, an annual rate of 6.50% for the stated liquidation amount of
$1,000 per Preferred Security for NBN Capital Trust III and an annual rate of
5.88% for the state liquidation amount of $1,000 per Preferred Security for NBN
Capital Trust IV. The Company has fully and unconditionally guaranteed all of
the obligations of each trust. The guaranty covers the quarterly distributions
and payments on liquidation or redemption of the Private Trust Preferred
Securities, but only to the extent of funds held by the trusts. Based on the
current rates, the annual interest expense is approximately $1,033,990.

Page 9

3.  Loans

The following is a summary of the composition of loans at:

|                        | December 31, 2005      | June 30, 2005          
|----------------------- | ---------------------- | -----------------------
|                        |                        |                        
|Residential real estate | $ 152,135,658          | $  148,840,093         
|Commercial real estate  | 123,221,909            | 125,898,821            
|Construction            | 6,505,348              | 12,201,353             
|Commercial              | 57,404,989             | 68,715,530             
|Consumer & Other        | 106,175,661            | 102,864,902            
|Total                   | 445,443,565            | 458,520,699            
|Net Deferred Costs      | 2,452,369              | 2,531,689              
|Total Loans             | $ 447,895,934========= | $  461,052,388=========

4.  Allowance for Loan Losses

The following is an analysis of transactions in the allowance for loan
losses:

|                                           | Six months
    Ended          
    December
    31,
|------------------------------------------ | ---------------------------------------------------
|                                           | 2005                                               
|Balance at beginning of period             | $ 5,104,000                                        
|Add provision charged to operations        | 600,609                                            
|Recoveries on loans previously charged off | 63,203                                             
|                                           | 5,767,812                                          
|Less loans charged off                     | 190,812                                            
|Balance at end of period                   | $ 5,577,000========                                

5.  Securities

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

|                                                                        | December 31, 2005      | June 30, 2005          
|----------------------------------------------------------------------- | ---------------------- | -----------------------
|                                                                        | Cost                   | Market     Value       
|                                                                        |                        |                        
|Debt securities issued by U. S. Government-
      sponsored enterprises | $  26,268,423          | $ 25,470,231           
|Corporate bonds                                                         | 500,000                | 487,295                
|Municipal Bonds                                                         | 8,587,238              | 8,424,574              
|Mortgage-backed securities                                              | 43,967,679             | 42,609,535             
|Equity securities                                                       | 1,968,234              | 1,926,451              
|                                                                        | $  81,291,574========= | $ 78,918,086  =========

|                                                                                                                                                         | December 31, 2005      | June 30, 2005         
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------- | ----------------------
|                                                                                                                                                         | Cost                   | Market     Value      
|Due in one year or less                                                                                                                                  | $   4,000,000          | $    3,922,600        
|Due after one year through five years                                                                                                                    | 18,387,821             | 17,792,183            
|Due after five years through ten years                                                                                                                   | 2,989,480              | 2,927,930             
|Due after ten years                                                                                                                                      | 9,978,360              | 9,739,387             
|Mortgage-backed securities (including securities
        with interest rates ranging from 4.0% to 8.5%
        maturing November 2007 to September 2032) | 43,967,679             | 42,609,535            
|Equity securities                                                                                                                                        | 1,968,234              | 1,926,451             
|                                                                                                                                                         | $ 81,291,574 ========= | $  78,918,086=========

Page10

6.  Advances from the Federal Home Loan Bank

A summary of borrowings from the Federal Home Loan Bank is as follows:

|December 31, 2005     
|----------------------
|Principal    Amounts  
|$  29,034,395         
|18,843,584            
|15,632,008            
|7,000,000             
|$  70,509,987=========



|June 30, 2005               
|----------------------------
|Principal    Amounts        
|$   49,309,004              
|13,831,915                  
|16,056,683                  
|7,000,000                   
|$   86,197,602    ==========

The Federal Home Loan Bank has the option to call $27,000,000 and $22,000,000
of the outstanding advances for the periods ending December 31, 2005 and June
30, 2005, respectively. The options are continuously callable quarterly until
maturity.

Page 11

7.  Stock Option Plans

Northeast Bancorp grants "incentive stock options" only to
employees of the Company, and grants "nonqualified stock options" to
employees and non-employee directors. All options granted under these plans are
required to have an exercise price per share equal to at least the fair market
value per share of common stock on the date the option is granted. Under
Accounting Principle Board Opinion No. 25, no compensation expense is recognized
on the grants issued to employees if the exercise price of the option is greater
than or equal to the fair market value of the underlying stock on the date of
grant. Generally options issued under the plan vest immediately upon being
granted.

The Company has elected to present in the notes of the consolidated financial
statements the impact to net income and earnings per share of estimating the
fair value of each option on the date of grant using the Black-Scholes
option-pricing model. No options were granted during the six months ended
December 31, 2005. The Company has elected to continue to disclose in the notes
to the consolidated financial statements under SFAS 148, Accounting for
Stock-Based Compensation - Transition and Disclosure, an amendment of SFAS 123.
If the Company had determined the cost for its stock options based on the fair
value method at the grant date under SFAS 123, Accounting for Stock-Based
Compensation, the Company's pro forma net income and earnings per share for
the six months ended December 31, 2005 and 2004 would have been the amounts
shown below. The Company has adopted SFAS 123R which requires the fair value
method be used to account for stock based compensation and the recognition of
the fair value of stock options as compensation expense in the financial
statements effective after July 1, 2005.

|                                                                                                                                                   | For the Three Months
                  Ended
      December 31, | For the Six Months
              Ended December 31,
|-------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ---------------------------------------------------
|                                                                                                                                                   | 2005                                                            | 2004                                               
|Net Income as reported                                                                                                                             | $  1,071,196                                                    | $   764,882                                        
|Deduct: Total stock-based compensation expense
        determined under fair value based method for all
        awards, net of related tax effects | --                                                              | 1,459                                              
|Pro forma net income                                                                                                                               | $  1,071,196========                                            | $    763,423========                               
|                                                                                                                                                   |                                                                 |                                                    
|Earnings per share                                                                                                                                 |                                                                 |                                                    
|Basic - as reported                                                                                                                                | $         
       0.42                                          | $         0.30                                     
|Basic - pro forma                                                                                                                                  | $          
      0.42                                          | $         0.30                                     
|                                                                                                                                                   |                                                                 |                                                    
|Diluted - as reported                                                                                                                              | $          
      0.42                                          | $         0.30                                     
|Diluted - pro forma                                                                                                                                | $          
      0.42                                          | $         0.30                                     

8. Capital Lease

The principal executive and administrative offices of the Company and the
Bank were relocated to 500 Canal Street, Lewiston, Maine ("Headquarters
Building") from 158 Court Street, Auburn, Maine in August, 2005. The Bank
entered into a 15 year lease with respect to the Headquarters Building and moved
our principal executive and administrative offices to this four story building
located in downtown Lewiston along with consolidating our operations, loan
processing and underwriting, loan servicing, accounting, human resources, and
commercial lending departments. We lease the entire building, a total of 27,000
square feet. For the first ten years of the lease the annual expense is
$264,000. Since the present value of the lease payments exceeded 90% of the fair
value of the property, we recorded a capital lease of $2,892,702 in Premises and
Equipment and an Obligation under Capital Lease Agreement with the Company's
other long-term debt. The capital lease asset is being amortized over the lease
term.

Page 12

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

This Management's Discussion and Analysis of Results of Operations and
Financial Condition presents a review of the results of operations for the three
and six months ended December 31, 2005 and 2004 and the financial condition at
December 31, 2005 and June 30, 2005. This discussion and analysis is intended to
assist in understanding the results of operations and financial condition of
Northeast Bancorp and its wholly-owned subsidiary, Northeast Bank. Accordingly,
this section should be read in conjunction with the consolidated financial
statements and the related notes and other statistical information contained
herein. See Form 10-K dated as of June 30, 2005 for discussion of the critical
accounting policies of the Company.

A Note about Forward Looking Statements

This report contains certain "forward-looking statements" within
the meaning of federal securities law Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934, such as statements
relating to our financial condition, prospective results of operations, future
performance or expectations, plans, objectives, prospects, loan loss reserve
adequacy, simulation of changes in interest rates, capital spending and finance
sources, and revenue sources. These statements relate to expectations concerning
matters that are not historical facts. Accordingly, statements that are based on
management's projections, estimates, assumptions, and judgments constitute
forward-looking statements. These 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 "believe", "expect",
"estimate", "anticipate", "continue",
"plan", "approximately", "intend",
"objective", "goal", "project", or other similar
terms or variations on those terms, or the future or conditional verbs such as
"will", "may", "should", "could", and
"would". In addition, the Company may from time to time make such oral
or written "forward-looking statements" in future filings with the
Securities and Exchange Commission (including exhibits thereto), in its reports
to shareholders, and in other communications made by or with the approval of the
Company.

Such forward-looking statements reflect our current views and expectations
based largely on information currently available to our management, and on our
current expectations, assumptions, plans, estimates, judgments, and projections
about our business and our industry, and they involve inherent risks and
uncertainties. Although we believe that these forward-looking statements are
based on reasonable estimates and assumptions, they are not guarantees of future
performance and are subject to known and unknown risks, uncertainties,
contingencies, and other factors. Accordingly, we can not give you any assurance
that our expectations will in fact occur or that our estimates or assumptions
will be correct. We caution you that actual results could differ materially from
those expressed or implied by such 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, the availability of and the costs associated with
sources of liquidity and properly managing and operating our insurance agency.
Accordingly, investors and others are cautioned not to place undue reliance on
such forward-looking statements. For a more complete discussion of certain risks
and uncertainties affecting the Company, please see "Item 1. Business -
Forward-Looking Statements and Risk Factors" set forth in our Form 10-K for
the fiscal year ended June 30, 2005. These forward-looking statements speak only
as of the date of this report and we do not undertake any obligation to update
or revise any of these forward-looking statements to reflect events or
circumstances occurring after the date of this report or to reflect the
occurrence of unanticipated events.

Overview of Operations

This Overview is intended to provide a context for the following Management's
Discussion and Analysis of the Results of Operations and Financial Condition.
Management's Discussion and Analysis of the Results of Operations and Financial
Condition should be read in conjunction with our unaudited consolidated
financial statements, including the notes there to, in this quarterly report on
Form 10-Q, as well as our audited consolidated financial statements for the year
ended June 30, 2005 as filed on Form 10-K with the SEC. We have attempted to
identify the most important matters on which our management focuses in
evaluating our financial condition and operating performance and the short-term
and long-term opportunities, challenges, and risks (including material trends
and uncertainties) which we face. We also discuss the action we are taking to
address these opportunities, challenges, and risks. The Overview is not intended
as a summary of, or a substitute for review of, Management's Discussion and
Analysis of the Results of Operations and Financial Condition. For comparative
purposes, certain amounts have been reclassified to conform to the current-year
presentation. The reclassifications had no impact on net income.

Northeast Bank is faced with two challenges: growing earning assets and
improving net interest margins.

Earning assets have declined compared to June 30, 2005. This decrease is
primarily attributable to the intense competition for commercial real estate and
small commercial loans. We believe that our competitors are not pricing or
structuring new transactions for risk. We have chosen to fully reflect risk in
our pricing and not to compromise our underwriting standards. In addition, we
have tightened our credit underwriting standards due to a perceived weakness in
commercial real estate values in our market, an increase in non-performing
loans, an increase in criticized loans (based on our internal rating system),
and an increase in loan delinquency.

Consequently, there has been a decrease in commercial real estate and
commercial loan originations. We expect an overall decrease in commercial real
estate and commercial loan originations for the fiscal year ending June 30, 2006
compared to fiscal 2005. The excess cash from the decrease in loans has been
used to purchase mortgage-backed and municipal securities.

To date, the repricing of prime rate indexed loans, both consumer and
commercial, has kept our yields increasing faster then the cost of
interest-bearing liabilities, improving our net interest margin. As with loans,
there is intense competition for new deposit relationships. We have increased
the interest rates for certificates of deposits to compete with banks in our
market as we enter periods of significant maturities of certificates of
deposits. The increase in the cost of interest-bearing liabilities is expected
to continue to exceed the increase in yields on earning assets, which occurred
over the last two months of the quarter ended December 31, 2005. Improving the
net interest margin will be difficult if increases in prime rate stop.

Opportunities that will improve non-interest income include the continued
expansion the wealth management division of our trust department increase trust
fees, expansion of the investment brokerage division increasing commission
revenue, and continued increase in sales of commercial and consumer property and
casualty insurance policies increasing commission revenue and the potential
expansion of Northeast Bank Insurance Agency, Inc. into southern Maine.

Description of Operations

Northeast Bancorp (the "Company") is a Maine corporation and a bank
holding company registered with the Federal Reserve Bank of Boston
("FRB") under the Bank Holding Company Act of 1956. The FRB is the
primary regulator of the Company and it supervises and examines our activities
on a continual basis. The Company also is a registered Maine financial
institution holding company under Maine law and is subject to regulation and
examination by the Superintendent of Maine Bureau of Financial Institutions. We
conduct business from our headquarters in Lewiston, Maine and, as of December
31, 2005, we had 13 banking offices and eight insurance offices all located in
western and south-central Maine. At December 31, 2005, we had consolidated
assets of $567.7 million and consolidated stockholders' equity of $40.7 million.

The Company's principal asset is all the capital stock of Northeast Bank (the
"Bank"), a Maine state-chartered universal bank. Accordingly, the
Company's results of operations are primarily dependent on the results of the
operations of the Bank. The Bank's 13 offices are located in Auburn, Augusta,
Bethel, Brunswick, Buckfield, Falmouth, Harrison, Lewiston (2), Lisbon Falls,
Mechanic Falls, Portland, and South Paris, Maine. The Bank's investment
brokerage division operates from the office in Falmouth, Maine from which
investment, insurance and financial planning products and services are offered.

The Bank has entered into an agreement on February 8, 2006 to sell the
deposits and certain loans from its Lisbon Falls branch to Androscoggin Savings
Bank of Lewiston, Maine, and then close the Lisbon Falls branch. Regulatory
approval is pending. The sale is scheduled to close on May 19, 2006. This
transaction is not expected to have a negative impact on the Bank's operating
results in future periods. The Bank will receive a premium of 5.5% on the
deposits transferred to Androscoggin Savings Bank, subject to certain
limitations. The Bank will replace the transferred deposits with the purchase of
brokered certificates of deposit. The deposit sale and branch closing will allow
us to focus our branch expansion opportunities where there is more robust
household growth. The costs of exiting the Lisbon Falls market are not material.
There is no impairment to be recognized for the Lisbon Falls branch building.

The Bank's wholly owned subsidiary, Northeast Bank Insurance Group Inc.
(formerly known as Northeast Financial Services Corporation), acquired 100% of
the outstanding stock of Solon-Anson Insurance Agency, Inc.
("Solon-Anson"), headquartered in Rangeley, Maine on September 29,
2004. Effective April 1, 2005, Solon-Anson Insurance Agency was merged with
Northeast Bank Insurance Group Inc. In addition to the agency office in
Rangeley, six insurance agency offices are located in Anson, Auburn, Augusta,
Bethel, Mexico, and South Paris, Maine. A new office was opened in Jackman,
Maine in August, 2005. All of our insurance offices offer personal and
commercial property and casualty insurance products. See Note 6 in our June 30,
2005 consolidated financial statements for more information on this transaction.

Page 13

Bank Strategy

The principal business of the Bank consists of attracting deposits from the
general public and applying those funds to originate or acquire residential
mortgage loans, commercial loans, commercial real estate loans, and a variety of
consumer, indirect auto and indirect recreational vehicle loans. The Bank sells
from time to time fixed rate residential mortgage loans into the secondary
market. The Bank also invests in mortgage-backed securities, securities issued
by United States government sponsored enterprises, corporate and municipal
securities. The Bank's profitability depends primarily on net interest income,
which is the difference between interest income earned from interest-earning
assets (i.e. loans and investments) and interest expense incurred on
interest-bearing liabilities (i.e. customer deposits and borrowed funds). The
relative balances of interest-earning assets and interest-bearing liabilities,
and the rates paid on these balances affect net interest income. The Bank also
emphasizes the growth of non-interest sources of income from investment and
insurance brokerage, trust management, and financial planning to reduce its
dependency on net interest income.

Our goal is to continue modest but profitable growth by increasing our loan
and deposit market share in our existing markets in western and south-central
Maine, closely managing the yields on earning assets and rates on
interest-bearing liabilities, introducing new financial products and services,
increasing the number of bank services sold to each household, increasing
non-interest income from expanded trust services, investment and insurance
brokerage services, and controlling the growth of non-interest expenses. It also
is part of our business strategy to make targeted acquisitions in our current
market areas from time to time when opportunities present themselves. Also, in
an effort to more efficiently manage the Bank's operations, the Bank
consolidated its operations into a new headquarters building in Lewiston, Maine
in August 2005.

The Company's profitability is affected by the Bank's interest rate spread,
which is the difference between the average yield earned on its interest-earning
assets and the average rate paid on its interest-bearing liabilities. Net
interest income continues to be our largest source of revenue, and is affected
by the level of interest rates, changes in interest rates and by changes in the
amount and composition of interest-earning assets and interest-bearing
liabilities. The level of the provision for loan losses, non-interest income and
expenses of the Company and the Bank, and the effective tax rate also affect
profitability. Non-interest income consists primarily of loan and deposit
service fees; trust, investment brokerage and insurance brokerage fees; and
gains on the sales of loans and investments. Non-interest expenses consist of
salaries and employee benefits, occupancy related expenses, deposit insurance
premiums paid to the FDIC, and other operating expenses, which include
advertising, computer services, supplies, telecommunication, and postage
expenses.

Results of Operations

Comparison of the Three and Six Months ended December 31, 2005 and 2004

General

The Company reported consolidated net income of $1,071,196, or $0.42 per
diluted share, for the three months ended December 31, 2005 compared with
$764,882, or $0.30 per diluted share, for the three months ended December 31,
2004, an increase of $306,314, or 40%. This increase in net income was the due
to an increase in net interest income, an increase in non-interest income, and a
decrease in non-interest expense. Net interest income increased $210,540, or 5%,
from higher net interest margin and increased earning assets. Non-interest
income increased $94,170, or 7%, primarily from increased insurance commissions
and fees and service charges on deposits. Non-interest expense decreased
$148,029, or 3%, primarily due to the write-off of unamortized deferred costs
related to trust preferred securities redeemed on December 31, 2004.

Annualized return on average equity ("ROE") and return on average
assets ("ROA") were 10.48% and 0.74%, respectively, for the quarter
ended December 31, 2005 as compared to 7.89% and 0.54%, respectively, for the
quarter ended December 31, 2004. The increase in the returns on average equity
and average assets was due to higher net income for the current quarter.

Net income for the six months ended December 31, 2005 was $2,113,293, or
$0.83 per diluted share, as compared to $1,720,997, or $0.67 per diluted share,
for the same period one year ago. Net income increased $392,296, or 23%, and was
due to an increase in net interest income, an increase in non-interest income
partially offset by an increase in non-interest expense. Net income was impacted
by a $669,272 increase in net interest income, a $518,249 increase in
non-interest income and a $557,251 increase in non-interest expense.
Non-interest income and expense reflects a full quarter impact for the
Solon-Anson Insurance Agency which was acquired September 29, 2004.

Annualized ROE and ROA were 10.32% and 0.73%, respectively, for the six
months ended December 31, 2005 and 8.98% and 0.62%, respectively, for the six
months ended December 31, 2004. The increase in both ratios was primarily due to
increased net income.

Page 14

Net Interest Income

Net interest income for the three months ended December 31, 2005 increased to
$4,729,111 as compared to $4,518,571 for the same period in 2004. The increase
in net interest income of $210,540 was primarily due to a 9 basis point increase
in net interest margin and higher average earning assets, which increased
$10,181,020, or 2%, for the quarter ended December 31, 2005 as compared to the
quarter ended December 31, 2004. The increase in average earning assets was
primarily due to an increase in investment securities from the purchase of U.S.
government sponsored enterprises, mortgage-backed, and municipal securities that
increased average investments $9,589,650, or 14%. Average loans as a percentage
of average earning assets was 84% and 85%, respectively, for quarters ended
December 31, 2005 and 2004. Further, our net interest margin was 3.46% and 3.37%
for the periods ended December 31, 2005 and 2004, respectively. Our net interest
spread for the three months ended December 31, 2005 was 3.19%, an increase of 3
basis points from 3.16% for the same period a year ago. Comparing the three
months ended December 31, 2005 and 2004, the yields on earning assets increased
49 basis points compared to a 46 basis point increase in the cost of
interest-bearing liabilities. The increases in our yield on earning assets and
in the cost of interest-bearing liabilities reflect the general rising interest
rate environment. We were able to generate a greater increase in the yield on
earning assets as compared to the cost of interest-bearing liabilities primarily
as a result of the repricing of variable, prime rate based loans.

The changes in net interest income are presented in the schedule below, which
compares the three months ended December 31, 2005 and 2004.

|                                                                                                                                                           | Difference Due to         |                          
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | -------------------------
|                                                                                                                                                           | Volume                    | Rate                     
|Investments                                                                                                                                                | $      98,292             | $      40,236            
|Loans, net                                                                                                                                                 | (7,789)                   | 652,375                  
|FHLB & Other Deposits                                                                                                                                      | 4,899                     | 25,952                   
|Total Interest-earnings Assets                                                                                                                             | 95,402                    | 718,563                  
|                                                                                                                                                           |                           |                          
|Deposits                                                                                                                                                   | 107,652                   | 561,118                  
|Repurchase Agreements                                                                                                                                      | (4,541)                   | 127,434                  
|Borrowings                                                                                                                                                 | (3,784)                   | (184,454)                
|Total Interest-bearing Liabilities                                                                                                                         | 99,327   
    __________  | 504,098   
    __________
|Net Interest Income                                                                                                                                        | $   
     (3,925)======== | $   214,465========      
|Rate/Volume amounts spread proportionately between volume and rate.
    Borrowings in the table include junior subordinated notes and FHLB
    borrowings.

Net interest income for the six months ended December 31, 2005 increased
$669,272 as compared to the six months ended December 31, 2004. The increase in
net interest income was due to a 13 basis point increase in net interest margin
combined with an increase in average earning assets of $19,595,597 for the six
months ended December 31, 2005 compared to the same period one year ago. The
increase in average earning assets was due to a $7,964,322, or 12%, increase in
investment securities and a $10,429,319, or 2%, increase in loans. Average loans
as a percentage of average assets was 84% and 85% for the six months ended
December 31, 2005 and 2004, respectively. For the same fiscal periods, net
interest margin was 3.45% and 3.32%, respectively. Net interest spread for the
six months ended December 31, 2005 was 3.17%, an increase of 6 basis points from
3.11% for the same period one year ago. The yields on earning assets increased
49 basis points compared to an increase of 43 basis points in the cost of
interest-bearing liabilities between the six months ended December 31, 2005 and
2004. The variable rate loans based on prime rate accounts for the yield
increase on earning assets and closely followed the actions by the Open Market
Committee of the Federal Reserve changing the federal funds rate.

The changes in net interest income are presented in the schedule below, which
compares the six months ended December 31, 2005 and 2004.

|                                                                                                                                                           | Difference Due to        |                          
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | -------------------------
|                                                                                                                                                           | Volume                   | Rate                     
|Investments                                                                                                                                                | $   164,366              | $     67,177             
|Loans, net                                                                                                                                                 | 333,340                  | 1,307,447                
|FHLB & Other Deposits                                                                                                                                      | 8,788  
    __________   | 44,430  
    __________  
|Total Interest-earnings Assets                                                                                                                             | 506,494                  | 1,419,054                
|                                                                                                                                                           |                          |                          
|Deposits                                                                                                                                                   | 180,970                  | 1,027,527                
|Repurchase Agreements                                                                                                                                      | 9,196                    | 194,743                  
|Borrowings                                                                                                                                                 | 142,612  
    __________ | (298,772) 
    __________
|Total Interest-bearing Liabilities                                                                                                                         | 332,778  
    __________ | 923,498  
    __________ 
|Net Interest Income                                                                                                                                        | $   173,716========      | $   495,556========      
|Rate/Volume amounts spread proportionately between volume and rate.
    Borrowings in the table include junior subordinated notes and FHLB
    borrowings.

Page 15

The Company's business primarily consists of the commercial banking
activities of the Bank. The success of the Company is largely dependent on its
ability to manage interest rate risk and, as a result, changes in interest
rates, as well as fluctuations in the level of assets and liabilities, affect
net interest income. This risk arises from our core banking activities, lending
and deposit gathering. In addition to directly impacting net interest income,
changes in interest rates can also affect the amount of loans originated and
sold by the Bank, the ability of borrowers to repay adjustable or variable rate
loans, the average maturity of loans, the rate of amortization of premiums and
discounts paid on securities, the amount of unrealized gains and losses on
securities available for sale and the fair value of our saleable assets and the
resultant ability to realize gains. The Bank has maintained an asset sensitive
position, which is the yield on interest-bearing assets reprice more quickly
than the cost of interest-bearing liabilities. As a result, the Bank is
generally expected to experience an improvement in its net interest margins
during a period of increasing interest rates. In fact, a slight improvement was
experienced for the three and six month periods ended December 31, 2005.

As of December 31, 2005 and 2004, 50% and 51%, respectively, of the Bank's
loan portfolio was composed of adjustable rate loans based on a prime rate index
or short-term rate indices such as the one-year Treasury bill. Interest income
on these existing loans will increase as short-term interest rates increase. An
increase in short-term interest rates will also increase deposit and FHLB
advance rates, increasing the Company's interest expense. Although the Bank has
experienced some net interest margin increase, the impact on future 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.

Provision for Loan Losses

The provision for loan losses for the three months ended December 31, 2005
was $300,104, an increase of less than 1%, from $299,984 for the three months
ended December 31, 2004. For the six months ended December 31, 2005 and 2004,
the provision for loan losses was $600,609 and $600,121, respectively, an
increase of less than 1%. The flat provision was primarily due to lower net
charge-offs, $59,104 for the three months ended December 31, 2005 compared to
$133,983 for the same period in 2004, and $127,609 for the six months ended
December 31, 2005 compared to $259,121 for the six months ended December 31,
2004. Loan delinquency increased compared to prior periods both in the loan
balances past due and as a percentage of total loans. This increase was due to
approximately $1.4 million of commercial loans that have matured and are pending
re-underwriting. Each of these loans has adequate collateral and no significant
losses are anticipated. Management believes that the increase in delinquency
does not indicate that an additional provision should be recognized. The impact
of these delinquencies is mitigated in part by a net decrease in total loans as
compared to June 30, 2005 and December 31, 2004. See Financial Condition for
discussion of the Allowance for Loan Losses for the factors impacting the
provision for loan losses. The allowance as a percentage of outstanding loans
increased to 1.25% at December 31, 2005 compared to 1.11% at June 30, 2005, and
1.06% at December 31, 2004.

Non-interest Income

Total non-interest income was $1,522,021 for the three months ended December
31, 2005, an increase of $94,170, or 7%, from $1,427,851 for the three months
ended December 31, 2004. This increase was the combined impact of a $12,349
increase in fees and service charges on loans from commercial loan prepayment
penalties and a decrease in the amortization of mortgage servicing rights,
$30,826 increase in other service fees primarily from overdraft fees, $8,692
increase in gains on the sale of loans from higher volume, $33,386 increase in
insurance commissions, $24,240 increase in BOLI income from higher interest
rates, and $35,189 increase in other income primarily from an increase in trust
fees. These increases were partially offset by a $16,016 decrease in lower
investment brokerage commission revenue from lower sales volume and a $34,496
decrease in net securities gains.

For the six months ended December 31, 2005 and 2004, total non-interest
income was $3,110,038 and $2,591,789, respectively, an increase of $518,249, or
20%. Insurance commission revenue increased $339,542 due to the full quarter
impact of the Solon-Anson acquisition, $156,621 increase in fees and service
charges on loans from late fees and commercial loan prepayment penalties and a
decrease in the amortization of mortgage servicing rights, $83,855 increase from
fees and service charges from deposit customers, $56,768 increase in gains on
the sales of loans from higher sales volume, and a $23,094 increase in BOLI
income. These increases were partially offset by an $113,505 decrease in
investment commission revenue on lower sales volume and $29,324 decrease in net
securities gains from lower trading volume.

Page 16

Non-interest Expense

Total non-interest expense for the three months ended December 31, 2005 was
$4,386,326, a decrease of $148,029, or 3%, from $4,534,355 for the three months
ended December 31, 2004. This decrease compared to the three months ended
December 31, 2005 was primarily due the write-off of the $392,249 unamortized
deferred cost related to the 1999 trust preferred securities redeemed December
31, 2004. This decrease was partially offset by increased salaries and employee
benefits, net occupancy expense, and equipment expense. Salaries and employee
benefits increased $129,237, or 5%, due to increased deferred compensation
expense and lower deferred costs due to lower loan originations compared to the
same period one year ago. Net occupancy expense increased $44,920, or 13%, due
to the capital lease amortization for the new Lewiston Gateway building and
higher utilities expense. The depreciation expense on new computer equipment and
furniture for the Lewiston Gateway and personal property taxes increased
equipment expense $91,776, or 32%. See Note 8 to our consolidated financial
statements for additional information on the capital lease.

Total non-interest expense for the six months ended December 31, 2005 was
$8,845,420, an increase of $557,251, or 7%, as compared to $8,288,169 for the
six months ended December 31, 2004. Salaries and employee benefits accounted for
$449,616 of this increase which was due to from deferred compensation expense
accrued for the former owners of Solon-Anson Insurance Agency, bonus expenses,
and lower deferred costs attributable to lower loan originations compared to the
same period one year ago. Relocation of the former operation center, executive
offices, loan processing, and commercial lending to the Lewiston Gateway
occurred in August, 2005. Net occupancy expense increased $127,827, or 19%, due
the amortization of the capital lease and utilities expense. Equipment expense
increased $227,512, or 42%, from the depreciation expense on new computer
equipment and furniture for the Lewiston Gateway and relocation expenses. Other
expense decreased $234,075, or 10%. This decrease was due to the write-off, at
the time of redemption of the 1999 trust preferred securities, of $392,249
unamortized deferred costs on December 31, 2004, and was partially offset by an
increase in professional fees for an efficiency study, and an increase in
advertising expenses related to an image campaign for the Bank

For the three and six months ended December 31, 2005, the increase in income
tax expense was primarily due to the increase in income before income taxes as
compared to the same periods in 2004.

Our efficiency ratio, total non-interest expense as a percentage of the sum
of net interest income and non-interest income, was 70% and 76% for the three
months ended December 31, 2005 and 2004, respectively and 70% and 73% for the
six months ended December 31, 2005 and 2004, respectively.

Financial Condition

Our consolidated assets were $567,726,201 and $575,900,332 as of December 31,
2005 and June 30, 2005, respectively, a decrease of $8,174,131, or 1%. This was
due to a $13,156,454 decrease in loans, primarily commercial, commercial real
estate, and construction loans, partially offset by an increase in investment
securities and the capital lease for our headquarters building. For the three
months ended December 31, 2005, total average assets were $573,545,619, an
increase of $11,313,468, or 2%, from $562,232,151 for the same period in 2004.
This average asset increase was primarily attributable to an increase in
investment securities from net excess funding.

Total stockholders' equity was $40,720,490 and $39,869,573 at December 31,
2005 and June 30, 2005, respectively, an increase of $850,917, or 2%, due to net
income for the six months ended December 31, 2005 and stock issued in connection
with employee stock options partially offset by a decrease in accumulated other
comprehensive income and dividends paid. The book value per outstanding share
was $16.11 at December 31, 2005 and $15.82 at June 30, 2005.

Investment Activities

The investment portfolio was $78,918,086 as of December 31,
2005, an increase of $4,572,148, or 6%, from $74,345,938 as of June 30, 2005.
The investment portfolio as of December 31, 2005 consisted of debt securities
issued by U.S. government-sponsored enterprises and corporations,
mortgage-backed securities, municipal securities and equity securities.
Generally, funds retained by the Bank as a result of increases in deposits or
decreases in loans, which are not immediately used by the Bank, are invested in
securities held in its investment portfolio. The investment portfolio is used as
a source of liquidity for the Bank. The investment portfolio is structured so
that it provides for an ongoing source of funds for meeting loan and deposit
demands and for reinvestment opportunities to take advantage of changes in the
interest rate environment.The investment
portfolio averaged $76,816,519 for the three months ended December 31, 2005 as
compared to $67,266,048 for the three months ended December 31, 2004, an
increase of $9,550,471, or 14%. This increase was due primarily to purchasing
municipal securities.

Our entire investment portfolio is classified as available for sale at
December 31, 2005 and June 30, 2005, and is carried at market value. Changes in
market value, net of applicable income taxes, are reported as a separate
component of stockholders' equity. Gains and losses on the sale of securities
are recognized at the time of the sale using the specific identification method.
The amortized cost and market value of available for sale securities at December
31, 2005 were $81,291,574 and $78,918,086, respectively. The difference between
the carrying value and the cost of the securities of $2,373,488 was primarily
attributable to the market value of U.S. government-sponsored enterprises and
mortgage-backed securities below their cost. The net unrealized loss on equity
securities was $41,783 and the net unrealized losses on U.S.
government-sponsored enterprises, corporate debt, mortgage-backed, and municipal
securities were $2,331,705 at December 31, 2005. The U.S. government-sponsored
enterprises, corporate debt, and mortgage-backed securities have decreased in
market value due to the recent increases in the interest rates as compared to
June 30, 2005. Substantially all of the U.S. government-sponsored enterprises,
corporate debt, mortgage-backed and municipal securities held in our portfolio
are high investment grade securities. Management believes that the yields
currently received on this portfolio are satisfactory. Management reviews the
portfolio of investments on an ongoing basis to determine if there have been any
other than temporary declines 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 company's profitability. Management also plans to hold the equity,
U.S. government-sponsored enterprises, corporate debt, mortgage-backed and
municipal securities until a recovery of market value occurs.

Page 17

Loan Portfolio

Total loans of $447,895,934 as of December 31, 2005 decreased $13,156,454, or
3%, from $461,052,388 as of June 30, 2005. Compared to June 30, 2005,
residential real estate and consumer loans increased, while construction,
commercial real estate and commercial loans decreased. Residential real estate
loans, which are comprised of purchased loans, residential real estate loans
originated for portfolio, and commercial real estate 1 to 4 family loans
increased $3,295,565, or 2%. Consumer loans increased $3,310,759, or 3%, due to
increased origination of indirect recreational vehicle and indirect auto loans.
Construction, commercial real estate and commercial loans decreased $5,696,005,
or 47%, $2,676,912, or 2%, and $11,310,541, or 16%, respectively, compared to
June 30, 2005. Commercial real estate and commercial loans originations
decreased during the three and six months ended December 31, 2005 due to the
tightening of our underwriting standards, which decreased origination volume,
and the loss of a few large commercial relationships due to competition. The
decrease in construction loan was partially due to the transfer to permanent
financing of several construction loans. Net deferred loan origination costs
decreased $79,320. The total loan portfolio averaged $452,506,235 for the three
months ended December 31, 2005, a decrease of $509,356, or less than 1%,
compared to the three months ended December 31, 2004.

The Bank primarily lends within its local market areas, which management
believes helps them to better evaluate credit risk. The Bank's loan portfolio as
of December 31, 2005 has had slight mix change with increases in residential
real estate and consumer loans more than offset by decreases in construction,
commercial real estate, and commercial loans when compared to June 30, 2005. The
Bank's local market, as well as the secondary market, continues to be very
competitive for loan volume. The local competitive environment and customer
response to favorable secondary market rates for 30 year fixed rate residential
real estate loans will have an adverse affect on the Bank's ability to increase
the loan portfolio.

Residential real estate loans consisting of primarily owner-occupied
residential loans as a percentage of total loans were 34%, 32% and 33% as of
December 31, 2005, June 30, 2005 and December 31, 2004, respectively. The
variable rate product as a percentage of total residential real estate loans was
43%, 42% and 42% for the same periods, respectively. Generally, management has
pursued a strategy of increasing the percentage of variable rate loans as a
percentage of the total loan portfolio to help manage interest rate risk. We
have sold virtually all of the newly originated 30-year fixed-rate residential
real estate loans also to manage interest rate risk. We currently plan to
continue to sell all newly originated 30-year fixed-rate residential real estate
loans into the secondary market, and hold 15-year fixed rate residential real
estate loans in portfolio. Average residential real estate mortgages of
$150,487,072 for the three months ended December 31, 2005 increased $3,724,183,
or 3%, from the three months ended December 31, 2004. This increase was due to
originating more adjustable rate residential real estate loans, which are held
in portfolio, than fixed rate loans. The volume of residential real estate loan
originations has decreased slightly to $6.9 million for the three months ended
December 31, 2005 compared to $8.4 million for the same period one year ago.
This origination volume is expected to continue to decrease as general interest
rates increase. Purchased loans included in our loan portfolio are pools of
residential real estate loans acquired from and serviced by other financial
institutions. In the past, the Bank has purchased these loan pools as an
alternative to mortgage-backed securities. The Bank has not pursued a similar
strategy recently.

Commercial real estate loans as a percentage of total loans were 27% as of
December 31, 2005, June 30, 2005 and December 31, 2004. Commercial real estate
loans have minimal interest rate risk because the portfolio consists primarily
of variable rate products. The variable rate products as a percentage of total
commercial real estate loans were 96%, 97% and 96% for the same periods,
respectively. The Bank tries to mitigate credit risk by lending in its market
area as well as maintaining a well-collateralized position in real estate.
Average commercial real estate loans of $122,042,334 for the three months ended
December 31, 2005 decreased $3,272,039, or 3%, from the same period in 2004. The
decrease in commercial real estate loans reflects our tightening of credit
underwriting standards and competition in existing business markets.

Construction loans as a percentage of total loans were 1%, 3%, and 3% as of
December 31, 2005, June 30, 2005 and December 31, 2004, respectively. Limiting
disbursements to the percentage of construction completed controls risk. An
independent consultant or appraiser verifies the construction progress.
Construction loans have maturity dates less than one year. Variable rate
products as a percentage of total construction loans were 62%, 56%, and 61% for
the same periods, respectively. Average construction loans were $10,228,682 and
$11,626,703 for the three months ended December 31, 2005 and 2004, respectively,
a decrease of $1,398,021, or 12%.

Commercial loans as a percentage of total loans were 13%, 15%, and 16% as of
December 31, 2005, June 30, 2005 and December 31, 2004, respectively. The
variable rate products as a percentage of total commercial loans were 58%, 58%,
and 59% for the same periods respectively. The repayment ability of commercial
loan customers 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. Average commercial loans of $60,752,759 for the three months
ended December 31, 2005 decreased $10,251,699, or 14%, from $71,004,458 for the
same period in 2004.

Page 18

Consumer and other loans as a percentage of total loans were 24%, 23%, and
21% for the periods ended December 31, 2005, June 30, 2005, and December 31,
2004, respectively. At December 31, 2005, indirect auto, indirect recreational
vehicle, and indirect mobile home loans represented 35%, 32%, and 29% of total
consumer loans, respectively, compared to 34%, 29%, and 32% of total consumer
loans at June 30, 2005. Since these loans are primarily fixed rate products,
they have interest rate risk when market rates increase. The consumer loan
department underwrites all the indirect automobile and recreational vehicle
loans and mobile home loans to mitigate credit risk. The Bank typically pays a
one-time origination fee to dealers of indirect 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 with average
lives of no longer than five years, receiving a rate of return commensurate with
the risk, and lending to individuals in the Bank's market areas. Average
consumer and other loans were $106,458,867 and $95,776,154 for the three months
ended December 31, 2005 and 2004, respectively. The $10,682,713, or 11%,
increase was due to increased indirect recreational vehicle and indirect auto
lending. The composition of consumer loans is detailed in the following table.

|                     | Consumer Loans
      as of |         
|-------------------- | -------------------------- | --------
|                     | December 31, 2005          |         
|Indirect Auto        | $   37,531,992             | 35%     
|Indirect RV          | 33,457,707                 | 32%     
|Indirect Mobile Home | 30,453,261                 | 29%     
|Subtotal Indirect    | 101,442,960                | 96%     
|Other                | 4,732,701                  | 4 %     
|Total                | $  106,175,661=========    | 100%====

Classification of Assets

Loans are classified as non-performing when reaching more than 90 days
delinquent, or when less than 90 days past due and based on our judgment the
loan is likely to present future principal and/or interest repayments problems.
In both situations, we stop accruing interest. The Bank had non-performing loans
totaling $3,714,000 and $1,698,000 at December 31, 2005 and June 30, 2005,
respectively, or 0.83% and 0.37% of total loans, respectively. The Bank's
allowance for loan losses was equal to 150% and 301% of the total non-performing
loans at December 31, 2005 and June 30, 2005, respectively. The following table
represents the Bank's non-performing loans as of December 31, 2005 and June 30,
2005, respectively:

|Description             | December 31, 2005    | June 30,2005       
|----------------------- | -------------------- | -------------------
|Residential Real Estate | $    627,000         | $    515,000       
|Commercial Real Estate  | 2,656,000            | 867,000            
|Commercial Loans        | 292,000              | 256,000            
|Consumer and Other      | 139,000              | 60,000             
|Total non-performing    | $  3,714,000======== | $ 1,698,000========

Management does believe that the increase in non-performing loans as of
December 31, 2005 was indicative of a trend. The total increase in
non-performing loans was $2,016,000, which was due to four commercial real
estate loans accounting for $1,727,000 of this increase, and matured loans
accounting for an additional $289,000. No significant losses are expected. Loans
classified as non-performing included approximately $1,387,000 of loan balances
that are current and paying as agreed. At December 31, 2005, the Bank had
$2,689,000 in loans classified special mention or substandard that management
believes could potentially become non-performing due to delinquencies or
marginal cash flows. These special mention and substandard loans increased by
$739,000 when compared to the $1,950,000 at June 30, 2005.

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

|12-31-05 | 9-30-05 | 6-30-05 | 3-31-05
|-------- | ------- | ------- | -------
|2.28%    | 1.25%   | 0.96%   | 0.68%  

The Bank maintains the loans 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 1.98% as of December 31, 2005.

Page 19

Allowance for Loan Losses

The Bank's allowance for loan losses was $5,577,000 as of December 31, 2005
as compared to $5,104,000 as of June 30, 2005, representing 1.25% and 1.11% of
total loans for each of the periods. Management maintains an allowance at a
level that it believes is reasonable for the overall risk inherent in the loan
portfolio. The allowance for loan losses represents management's estimate of
probable losses inherent in the loan portfolio. This evaluation process is
subject to numerous estimates and judgments. The frequency of default, risk
ratings, and the loss recovery rates, among other things, are considered in
making this evaluation, as are the size and diversity of individual large
credits. Changes in these estimates could have a direct impact on the provision
and could result in a change in the allowance. The larger the provision for loan
loss, the greater the negative impact on our net income. Larger balance,
commercial and commercial real estate loans representing significant individual
credit exposures are evaluated based upon the borrower's overall financial
condition, resources, and payment record; the prospects for support from any
financially responsible guarantors; and, if appropriate, the realizable value of
any collateral. The allowance for loan losses attributed to these loans is
established through a process that includes estimates of historical and
projected default rates and loss severities; internal risk ratings; and
geographic, industry, and other environmental factors. Management also considers
overall portfolio indicators, including trends in internally risk-rated loans,
classified loans, non accrual loans, and historical and forecasted write-offs;
and a review of industry, geographic, and portfolio concentrations, including
current developments. In addition, management considers the current business
strategy and credit process, including credit limit setting and compliance,
credit approvals, loan underwriting criteria, and loan workout procedures.
Within the allowance for loan losses, amounts are specified for larger-balance,
commercial and commercial real estate loans that have been individually
determined to be impaired. These specific reserves consider all available
evidence, including, as appropriate, the present value of the expected future
cash flows discounted at the loan's contractual effective rate and the fair
value of collateral. Each portfolio of smaller balance, residential real estate
and consumer loans, is collectively evaluated for impairment. The allowance for
loan losses is established via a process that includes historical delinquency
and credit loss experience, together with analyses that reflect current trends
and conditions. Management also considers overall portfolio indicators including
historical credit losses; delinquent, non-performing and classified loans;
trends in volumes; terms of loans; an evaluation of overall credit quality and
the credit process, including lending policies and procedures; and economic
factors. For the three months ended December 31, 2005, we have not changed our
approach in the determination of the allowance for loan losses. There have been
no material changes in the assumptions or estimation techniques as compared to
prior periods in determining the adequacy of the allowance for loan losses.

Management believes that the allowance for loan losses is adequate
considering the level of risk in the loan portfolio. While management believes
that it uses the best information available to make its determinations with
respect to the allowance, 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.
These agencies may require the Bank to recognize additions to the allowance for
loan losses based on their judgments about information available to them at the
time of their examination. The Bank's most recent joint examination by the
Federal Reserve Bank of Boston and the Maine Bureau of Financial Institutions
was completed in November 2005. At the time of the examination the regulators
proposed no adjustments to the allowance for loan losses.

Other Assets

Bank owned life insurance (BOLI) is invested in the general account of two
insurance companies and in separate accounts of a third insurance company.
Standard and Poor's rated these companies AA or better at December 31, 2005.
Interest earnings, net of mortality costs, increase cash surrender value. These
interest earnings are based on interest rates reset at least annually, subject
to minimum interest rates. These increases were recognized in other income and
are not subject to income taxes. Borrowing on or surrendering the policy may
subject the Bank to income tax expense on the increase in cash surrender value.
For this reason, management considers BOLI an illiquid asset. BOLI represented
18.9% of Company's capital plus the allowance for loan losses at December 31,
2005 and was below the 25% regulatory limit.

Intangible assets of $2,053,188 as of December 31, 2005 decreased $107,505
from $2,160,693 as of June 30, 2005. This asset consists of customer list and
non-compete agreement intangibles from insurance agency acquisitions. See Note 1
of the consolidated financial statements as of June 30, 2005 for additional
information on intangible assets.

Page 20

Capital Resources and Liquidity

The Bank continues to attract new local core and certificates of deposit
relationships. As alternative sources of funds, the Bank utilizes FHLB advances
and brokered time deposits ("brokered deposits") when their respective
interest rates are less than the interest rates on local market deposits. FHLB
advances are used to fund short-term liquidity demands and supplement the growth
in earning assets. .

Total deposits of $400,824,061 as of December 31, 2005 increased $4,605,339,
or 1%, from $396,218,722 as of June 30, 2005. Excluding the decrease in brokered
deposits, customer deposits increased $18,295,240, or 6%. Certificates of
deposits increased $29,367,118, or 17%, reflecting the successful promotions of
nine and twelve month certificates of deposit during the six months ended
December 31, 2005. Brokered deposits decreased $13,689,901 from the repayment of
maturing balances reducing our reliance on wholesale funding. All other types of
the deposits also decreased; demand deposit accounts decreased $520,847, NOW
accounts decreased $3,982,827, money market accounts decreased $3,511,368, and
savings accounts decreased $3,056,836 during the six months ended December 31,
2005. Management's continuing strategy offers certificate of deposit rates for
maturities two years and less near the top of the market to attract new deposit
account relationships.

Total average deposits of $404,507,819 for the three months ended December
31, 2005 increased $9,570,309, or 2%, compared to the average for the three
months ended December 31, 2004. This increase in total average deposits compared
to December 31, 2004 was due to a $3,261,230, or 9%, increase in average demand
deposits and a $50,218,861, or 33%, increase in certificates of deposit. These
increases were partially offset by a $7,078,981, or 10%, decrease in average NOW
accounts, a $3,736,551, or 20%, decrease in average money market accounts, and a
$1,307,072, or 5%, decrease in average savings accounts. These decreases reflect
customers moving funds to higher yielding accounts such as certificates of
deposit. Average brokered deposits decreased $31,787,178, or 35%, to $58,605,798
for the three months ended December 31, 2005. This decrease reflects our shift
to local deposits and away from brokered deposits to fund our earning assets. At
December 31, 2005, brokered deposits as a percentage of total assets was 10.0%
compared to 12.2% at June 30, 2005 and 14.4% at December 31, 2004. The weighted
average maturity for the brokered deposits was approximately 1.0 years. Even
though deposit interest rates have remained competitive, the rates of return are
potentially higher with other financial instruments such as mutual funds and
annuities. All interest-bearing non-maturing deposit accounts have market
interest rates. Like other companies in the banking industry, the Bank will be
challenged to maintain or increase its core deposits, and improve its net
interest margin as the mix of deposits shifts to certificates of deposit.

Brokered deposits are used by us as part of our overall funding strategy and
as an alternative to customer certificates of deposits, FHLB advances, and
junior subordinated debentures to fund the growth of our earning assets. Policy
limits the use of brokered deposits to 25% of total assets. We use four national
brokerage firms to source brokered deposits. Each brokerage company utilizes a
system of agents who solicit customers throughout the United States. The terms
of these deposits allow for withdrawal prior to maturity only in the case of the
depositor's death, have maturities generally beyond one year, have maturities no
greater than $5 million in any one month, and bear interest rates equal to or
slightly above comparable FHLB advance rates. Brokered deposits carry the same
risk as local certificates of deposit, in that both are interest rate sensitive
with respect to the Bank's ability to retain the funds. The Bank expects a
slight increase in the level of brokered deposits to fund its balance sheet
growth for the next twelve months.

Advances from the Federal Home Loan Bank (FHLB) were $70,509,987 as of
December 31, 2005, a decrease of $15,687,615, or 18%, from $86,197,602 as of
June 30, 2005. At December 31, 2005, we had pledged U.S. government agency and
mortgage-backed securities of $27,244,875 as collateral for FHLB advances. We
plan to continue to purchase additional U.S. government agency and
mortgage-backed securities to pledge as collateral for advances. These purchases
will be funded from the cash flow from mortgage-backed securities and
residential real estate loans principal and interest payments, and promotion of
deposit accounts including certificates of deposit and brokered deposits. Newly
originated adjustable residential real estate loans will be held in portfolio
and will qualify as collateral. In addition to U.S. government agency and
mortgage-backed securities, residential real estate loans, certain commercial
real estate loans, and certain FHLB deposits free of liens, pledges and
encumbrances are required to be pledged to secure FHLB advances. Municipal
securities can not be pledged. Average advances from the FHLB were $72,513,961
for the three months ended December 31, 2005, a decrease of $4,782,567, or 6%,
compared to $77,296,528 average for the same period last year.

Securities sold under repurchase agreements were $32,369,391 as of December
31, 2005, a decrease of $1,010,021, or 3%, from $33,379,412 as of June 30, 2005.
Market interest rates are offered on this product. At December 31, 2005, we had
pledged U.S. government agency and mortgage-backed securities of $36,077,928 as
collateral for repurchase agreements. Average securities sold under repurchase
agreements were $32,028,096 for the three months ended December 31, 2005, a
decrease of $1,440,090, or 4%, compared to the average for the three months
ended December 31, 2004.

The Bank has a line of credit under the Borrower-in-Custody program offered
through the Fed Discount Window. Under the terms of this credit line, the Bank
has pledged its indirect auto loans and the line bears a variable interest rate
equal to the then current federal funds rate plus 1.00%. At December 31, 2005,
there were no borrowings outstanding under this credit line.

The following table is a summary of the liquidity the Bank has the ability to
access as of December 31, 2005 in addition to the traditional retail deposit
products:

|Brokered time deposit                   | $ 84,506,000 | Subject to policy limitation of 25% of total assets                 
|--------------------------------------- | ------------ | --------------------------------------------------------------------
|Federal Home Loan Bank of Boston        | $ 36,307,000 | Unused advance capacity subject to eligible and qualified collateral
|Fed Discount Window Borrower-in-Custody | $ 28,287,000 | Unused credit line subject to the pledge of indirect auto loans     
|Total Unused Borrowing Capacity         | $149,100,000 |                                                                     

Brokered time deposits, retail deposits and FHLB advances are used by the
Bank to manage its overall liquidity position. While we closely monitor and
forecast our liquidity position, it is affected by asset growth, deposit
withdrawals and meeting other contractual obligations and commitments. The
accuracy of our forecast assumptions may increase or decrease the level of
brokered time deposits.

Management believes that there are adequate funding sources to meet its
liquidity needs for the foreseeable future. Primary among these funding sources
are the repayment of principal and interest on loans, the renewal of time
deposits, the potential growth in the deposit base, and the credit availability
from the Federal Home Loan Bank of Boston and the Fed Discount Window
Borrower-in-Custody program. Management does not believe that the terms and
conditions that will be present at the renewal of these funding sources will
significantly impact the Company's operations, due to its management of the
maturities of its assets and liabilities

The following table summarizes the outstanding junior subordinated notes as
of December 31, 2005:

Affiliated Trusts
      Outstanding Balance
    
    Rate
    First Call DateNBN Capital Trust II
      $    3,093,000
      7.33%
      March 30, 2009NBN Capital Trust III
      3,093,000
      6.50%
      March 30, 2009NBN Capital Trust IV
      10,310,000
      5.88%
      February 23, 2010Total
      $  16,496,000
      6.27%


The excess funds raised from the issuance of trust preferred securities are
available for capital contributions to the Bank. The annual interest expense is
approximately $1,033,990 based on the current interest rates.

See Note 2 for more information on NBN Capital Trusts II, III and IV and the
related junior subordinated debt.

Page 21

The 2004 Stock Repurchase Plan was approved by the Board of Directors
on January 16, 2004. It was extended by the Board of Directors on December 16,
2005 and will terminate on December 31, 2006. The repurchase program may be
discontinued by the Northeast Bancorp at any time. Under the 2004 Stock
Repurchase Plan, the Company may purchase up to 200,000 shares of its common
stock from time to time in the open market at prevailing prices. Common stock
repurchased pursuant to the plan will be classified as authorized but un-issued
shares of common stock available for future issuance as determined by the Board
of Directors, from time to time. For the three months ended December 31, 2005,
the Company did not repurchase any stock. Total stock repurchases under the 2004
Plan were 55,300 shares for $1,061,842 through December 31, 2005. On February 9,
2006, we repurchased 90,200 shares at the market price of $23.75 per share for a
total of $2,142,250. The number of shares that may yet be purchased under the
2004 Stock Repurchase Plan is 54,500 shares. Management believes that these and
future purchases have not and will not have a significant effect on the
Company's liquidity.

Total stockholders' equity of the Company was $40,720,490 as of December 31,
2005, as compared to $39,869,573 at June 30, 2005. The increase of $850,917, or
2%, was due to the net income for the six months ended December 31, 2005 of
$2,113,293 and stock issued in connection with employee stock options of
$83,684, partially offset by a decrease in other comprehensive income of
$896,316 and dividends paid of $449,744. Book value per common share was $16.11
as of December 31, 2005, as compared to $15.82 at June 30, 2005. The total
average equity to total average assets ratio of the Company was 7.07% as of
December 31, 2005 and 6.88% at June 30, 2005.

The Company's net cash provided by operating activities was
$3,127,606 during the three months ended December 31, 2005, which was an
$116,251 increase compared to the same period in 2004. Investing activities were
a net source of cash primarily due to the net decrease in loans partially offset
by purchasing investment securities during the six months ended December 31,
2005 as compared to the same period in 2004. Financing activities was a net use
of cash by repaying FHLB advances at maturity compared to the same period in
2004.Overall, the Company's cash and cash
equivalents decreased by $2,820,447 during the six months ended December 31,
2005. Compared to the six months ended December 31, 2004, our cash and cash
equivalents was virtually unchanged.

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 FRB 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 FRB 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. Regulations require a minimum Tier 1 capital equal to 4.0% of adjusted
total average assets, Tier 1 risk-based capital of 4.0% and a total 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", "under capitalized",
"significantly undercapitalized", and "critically
undercapitalized". As of December 31, 2005, the most recent notification
from the FRB 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, 2005, the Company's and Bank's regulatory capital was in
compliance with regulatory capital requirements as follows:

|Northeast Bancorp                      | Actual          | Required
      For Capital Adequacy
       Purposes | Required To Be "Well
       Capitalized" Under Prompt
       Corrective Action
       Provisions   
|-------------------------------------- | --------------- | --------------------------------------------------- | ---------------------------------------------------------------------------------------------------
|(Dollars in Thousands)                 | Amount          | Ratio                                               | Amount                                                                                             
|As of December 31, 2005:               |                 |                                                     |                                                                                                    
|Total capital to risk weighted assets  | $  61,517       | 14.36%                                              | $  34,265                                                                                          
|Tier 1 capital to risk weighted assets | $  53,262       | 12.44%                                              | $  17,133                                                                                          
|Tier 1 capital to total average assets | $  53,262       | 9.28%                                               | $  22,958                                                                                          
|                                       |                 |                                                     |                                                                                                    
|Northeast Bank                         | Actual          | Required
      For Capital Adequacy
       Purposes | Required To Be "Well
        Capitalized" Under Prompt
        Corrective Action
        Provisions
|(Dollars in Thousands)                 | Amount          | Ratio                                               | Amount                                                                                             
|As of December 31, 2005:               |                 |                                                     |                                                                                                    
|Total capital to risk weighted assets  | $ 
      55,062 | 12.91%                                              | $ 
      34,108                                                                                    
|Tier 1 capital to risk weighted assets | $  49,730       | 11.66%                                              | $ 
      17,054                                                                                    
|Tier 1 capital to total average assets | $ 
      49,730 | 8.72%                                               | $ 
      22,809                                                                                    

Page 22

Off-balance Sheet Arrangements and Aggregate Contractual Obligations

The Company is a party to financial instruments with off-balance sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, unused lines
of credit and standby letters of credit. These instruments involve, to varying
degrees, elements of credit and interest-rate risk in excess of the amounts
recognized in the condensed consolidated balance sheet. The contract or notional
amounts of these instruments reflect the extent of the Company's involvement in
particular classes of financial instruments.

The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit, unused
lines of credit and standby letters of credit is represented by the contractual
amount of those instruments. To control the credit risk associated with entering
into commitments and issuing letters of credit, the Company uses the same credit
quality, collateral policies, and monitoring controls in making commitments and
letters of credit as it does with its lending activities. The Company evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon extension of
credit, is based on management's credit evaluation.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total committed amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if it is
deemed necessary by the Company upon extension of credit, is based on
management's credit evaluation of the counter party.

Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loans to customers.

Unused lines of credit and commitments to extend credit typically result in
loans with a market interest rate.

A summary of the amounts of the Company's (a) contractual obligations,
and (b) other commitments with off-balance sheet risk, both at December 31,
2005, follows:

|                                                    |                                                    | Payments Due by Period 
|--------------------------------------------------- | -------------------------------------------------- | -----------------------
|Contractual Obligations                             | Total                                              | Less Than  1 Year      
|FHLB advances                                       | $  70,509,987                                      | $  29,034,395          
|Junior subordinated notes                           | 16,496,000                                         | -                      
|Capital lease obligation                            | 2,843,048                                          | 124,406                
|Other borrowings                                    | 164,461                                            | 164,461                
|Total long-term debt                                | 90,013,496                                         | 29,323,262             
|                                                    |                                                   
|Operating lease obligations (1)                     | 2,735,973                                          | 522,539                
|Total
      contractual obligations                 | $  92,749,469  ========                            | $  29,845,801  ========
|                                                   
|                                                    | Amount
      of Commitment Expiration - Per Period
|Commitments with off-balance sheet risk             | Total                                              | Less Than  1 Year      
|Commitments to
      extend credit (2)(4)           | $  8,097,000                                       | $ 
      8,097,000     
|Commitments related
      to loans held for sale(3) | 1,321,000                                          | 1,321,000              
|Unused lines of
      credit (4)(5)                 | 49,303,000                                         | 25,326,000             
|Standby letters of
      credit (6)                 | 1,379,000                                          | 1,379,000              
|                                                    | $  60,100,000 ========                             | $ 36,123,000 ========  

|    |                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents an off-balance sheet obligation.                                                                                                             
|(2) | Represents commitments outstanding for residential real estate,
      commercial real estate, and commercial loans.                                     
|(3) | Commitments of residential real estate loans that will be held for
      sale.                                                                          
|(4) | Loan commitments and unused lines of credit for commercial and
      construction loans expire or are subject to renewal in twelve months or
      less.
|(5) | Represents unused lines of credit from commercial, construction, and
      home equity loans.                                                           
|(6) | Standby letters of credit generally expire in twelve months.                                                                                            

Management believes that the Company has adequate resources to fund all of
its commitments.

The Bank has written options limited to those residential real estate loans
designated for sale in the secondary market and subject to a rate lock. These
rate-locked loan commitments are used for trading activities, not as a hedge.
The fair value of the outstanding written options at December 31, 2005 was a
gain of $1,393.

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.

Page 23

Item 3. Quantitative and Qualitative Disclosure about Market Risk

There have been no material changes in the Company's market risk from June
30, 2005. For information regarding the Company's market risk, refer to the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2005.

Item 4. Controls and Procedures

The Company maintains controls and procedures designed to ensure that
information required to be disclosed in the reports the Company files or submits
under the Securities Exchange Act of 1934 ("Exchange Act") is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission, and that such
information is accumulated and communicated to the Company's management,
including our Chief Executive Officer and Chief Financial Officer (the Company's
principal executive officer and principal financial officer, respectively), as
appropriate to allow for timely decisions regarding timely disclosure. In
designing and evaluating disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives and management is required to apply its judgment in evaluating the
cost/benefit relationship of possible controls and procedures.

Our management, with the participation of the Company's Chief Executive
Officer and Chief Financial Officer, have evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a - 15(e) and 15d -
15(e) under the Exchange Act) as of the end of the period covered by this Form
10-Q.

Based on this evaluation of our disclosure controls and procedures, our Chief
Executive Officer and Chief Financial Officer have concluded that these
disclosure controls and procedures were effective as of December 31, 2005.

There were no significant changes in our internal controls over financial
reporting (as defined in Rule 13a - 15(f) of the Exchange Act) that occurred
during the first six months of our 2006 fiscal year that has materially
affected, or in other factors that could affect, the Company's internal controls
over financial reporting.

Page 25

Part II - Other Information

|Item 1.    | Legal ProceedingsNone.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 2.(c) | Unregistered Sales of Equity Securities and Use of ProceedsNone.                                                                                                                                                                                                                                                                                                                                                                                               
|Item 3.    | Defaults Upon Senior SecuritiesNone.                                                                                                                                                                                                                                                                                                                                                                                                                           
|Item 4.    | Submission of Matters to a Vote of Security Holders
      SUMMARY OF VOTING AT 11/9/2005 ANNUAL SHAREHOLDERS' MEETINGAt the Annual Meeting of Shareholders held in Auburn, Maine on November
      9, 2005, 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 shares, as follows:
      Proposal 1 - Election of Directors:
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|           | John B. Bouchard                                                                                                                                                                                                                                                                                                                                                                                                                                               
|           | James P. Day                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|           | James D. Delamater                                                                                                                                                                                                                                                                                                                                                                                                                                             
|           | Ronald J. Goguen                                                                                                                                                                                                                                                                                                                                                                                                                                               
|           | Judith W. Kelly                                                                                                                                                                                                                                                                                                                                                                                                                                                
|           | Philip Jackson                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|           | Pender J. Lazenby                                                                                                                                                                                                                                                                                                                                                                                                                                              
|           | John Rosmarin                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|           | John Schiavi                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|           | Stephen W. Wight                                                                                                                                                                                                                                                                                                                                                                                                                                               
|           | Dennis A. Wilson                                                                                                                                                                                                                                                                                                                                                                                                                                               
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Item 5.    | Other InformationNone.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Item 6.    | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|           | List of Exhibits:                                                                                                                                                                                                                                                                                                                                                                                                                                              
|           | Exhibits No.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|           | 11                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|           | 31.1                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|           | 31.2                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|           | 32.1                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|           | 32.2                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Page 26

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, 2006
      
      NORTHEAST BANCORPBy:
      /s/ James D. DelamaterJames D. DelamaterPresident and CEOBy:
      /s/ Robert S. JohnsonRobert S. JohnsonChief Financial Officer


Page 27

NORTHEAST BANCORP
Index to Exhibits

|EXHIBIT NUMBER | DESCRIPTION
|-------------- | -----------
|               | 11         
|               | 31.1       
|               | 31.2       
|               | 32.1       
|               | 32.2