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          March 31, 1998 
                            --------------------

                                      or

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

For the transition period from ______________________ to ______________________

Commission File Number      0 - 16123
                         ---------------

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

               Maine                                01 - 0425066
---------------------------------------- --------------------------------------
   (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)                                           
                                                                             
    232 Center Street, Auburn, Maine                      04210                 
---------------------------------------- --------------------------------------
(Address of principal executive offices)                (Zip Code)

                                 (207) 777 - 6411
-------------------------------------------------------------------------------
               Registrant's telephone number, including area code              
<PAGE> 2

                                 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 periods that the 
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.     Yes _X_      No __         
                                   
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE 
PRECEDING FIVE YEARS:                  
                                 
Indicate by check mark whether the registrant has filed all documents and 
reports required to be filed by Section 12, 13 or 15 (d) of the Securities 
Exchange Act of 1934 subsequent to the distribution of securities under a plan 
confirmed by a court.                       
                                     
                                 Not Applicable

                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

Shares outstanding as of May 11, 1998: 2,461,030 of common stock, $1.00 par 
value per share.
-------------------------------------------------------------------------------

                                    
                                    
                                    
                                   
NORTHEAST BANCORP AND SUBSIDIARIES
Table of Contents

Part I.   Financial Information
                  
          Item 1.  Financial Statements (unaudited)
                        
                   Consolidated Balance Sheets
                    March 31, 1998 and June 30, 1997
                     
                   Consolidated Statements of Income
                    Three Months ended March 31, 1998 and 1997   
                     
                   Consolidated Statements of Income
                    Nine Months ended March 31, 1998 and 1997   
                   
                   Consolidated Statements of Changes in Shareholders' Equity
                    Nine Months ended March 31, 1998 and 1997 
                       
                   Consolidated Statements of Cash Flows
                    Nine Months ended March 31, 1998 and 1997


<PAGE> 3
                      
                   Notes to Consolidated Financial Statements
                     
          Item 2.  Management's Discussion and Analysis of Financial Condition
                    and Results of Operation
                        
          Item 3.  Quantitative and Qualitative Disclosure about Market Risk
          
Part II.  Other Information
                       
          Items 1 - 6.
                  
          Signature Page
             
          Index to Exhibits


NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)

<TABLE>
<CAPTION>
                                                 March 31,         June 30,
                                                   1998              1997      
                                              _______________   _______________
<S>                                           <C>               <C>            
                             Assets                                            
Cash and due from banks                       $   4,976,642     $   6,112,425  
Interest bearing deposits in other banks            286,735           443,021  
Federal Home Loan Bank overnight deposits         4,074,000        12,218,898  
Trading account securities at market                 58,063            25,000  
Available for sale securities                    16,398,409        28,810,624  
Federal Home Loan Bank stock                      5,255,700         4,121,000  
Loans held for sale                                 212,800           240,000  
                                                                              
Loans                                           270,342,582       222,885,954 
Deferred loan origination fees/cost                 183,723          (203,819) 
Allowance for loan losses                        (3,038,000)       (2,741,809) 
                                              ---------------   ---------------
    Net loans                                   267,488,305       219,940,326  
                                                                               
Bank premises and equipment, net                  4,448,881         4,774,561  
Real estate held for investment                     272,949           361,654  
Other real estate owned (net of allowance                                      
 for losses of $4,329 at 3/31/98 and                                           
 $50,839 at 6/30/97)                                438,602           563,207  
Goodwill (net of accumulated amortization                                      
 of $1,458,715 at 3/31/98 and $1,236,434                                       
 at 6/30/97)                                      1,998,008         2,220,289  
Other assets                                      4,714,149         4,198,689  
                                              ---------------   ---------------
    Total Assets                                310,623,243       284,029,694  
                                              ===============   ===============
                                                                               
                                                                               
                       Liabilities and Shareholders' Equity                    
                                                                               
<PAGE> 4

Liabilities                                                                    
Deposits                                      $ 173,971,101     $ 172,921,286  
Repurchase Agreements                             4,440,979         5,098,622 
Advances from Federal Home Loan Bank            105,113,653        80,494,471 
Notes payable                                     1,069,444         1,298,611
Other Liabilities                                 2,283,151         2,121,123
                                              ---------------   ---------------
  Total Liabilities                             286,878,328       261,934,113  
                                                                               
Shareholders' Equity                                                           
Preferred stock, Series A, 45,454                                              
 shares issued and outstanding                      999,988           999,988 
Preferred stock, Series B, 71,428                                             
 shares issued and outstanding                      999,992           999,992 
Common stock, par value $1, 2,236,668                                         
 and 1,462,909 shares issued and outstanding                                   
 at 3/31/98 and 6/30/97, respectively             2,236,668         1,462,909  
Additional paid in capital                        7,870,947         7,699,883  
Retained earnings                                11,738,073        11,266,984  
                                              ---------------   ---------------
                                                 23,845,668        22,429,756  
Net unrealized losses on available for                                         
 sale securities                                   (100,753)         (334,175) 
                                              ---------------   ---------------
  Total Shareholders' Equity                     23,744,915        22,095,581  
                                              ---------------   ---------------
   Total Liabilities and Shareholders' Equity $ 310,623,243     $ 284,029,694  
                                              ===============   ===============

</TABLE>


                                   
NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
                                    
<TABLE>
<CAPTION>
                                    
                                                      Three Months Ended
                                                         March 31,   
                                                   1998              1997      
                                              ---------------   ---------------
<S>                                           <C>               <C>            
Interest and Dividend Income                                                   
Interest on FHLB overnight deposits           $     188,201     $     123,798  
Interest on loans & loans held for sale           5,323,547         4,824,158  
Interest on available for sale securities           281,251           537,053  
Dividends on Federal Home Loan Bank stock            70,591            62,158  
Other Interest Income                                 5,384             4,249  
                                              ---------------   ---------------
  Total Interest Income                           5,868,974         5,551,416  
                                                                               
Interest Expense                                                               
Deposits                                          1,845,499         1,766,509  
Repurchase agreements                                51,244            50,744  
<PAGE> 5

Other borrowings                                  1,172,303         1,088,090  
                                              ---------------   ---------------
  Total Interest Expense                          3,069,046         2,905,343  
                                              ---------------   ---------------
                                                                               
Net Interest Income                               2,799,928         2,646,073  
Provision for loan losses                           156,304           153,452  
                                              ---------------   ---------------
  Net Interest Income after Provision                                          
   for Loan Losses                                2,643,624         2,492,621  
                                                                               
Other Income                                                                   
Service charges                                     227,757           259,084  
Available for sale securities gains (losses)         37,439            10,652  
Gain (Loss) on trading account                         --              64,841  
Other                                               330,163           322,926  
                                              ---------------   ---------------
  Total Other Income                                595,359           657,503  
                                                                               
Other Expenses                                                                 
Salaries and employee benefits                    1,069,548         1,163,669  
Net occupancy expense                               232,617           223,434  
Equipment expense                                   198,337           225,365  
Goodwill amortization                                74,094            74,094  
FDIC Insurance Assessment                              --                --    
Other                                               549,040           769,564  
                                              ---------------   ---------------
  Total Other Expenses                            2,123,636         2,456,126  
                                              ---------------   ---------------
                                                                               
Income Before Income Taxes                        1,115,347           693,998  
Income tax  expense                                 382,986           273,364  
                                              ---------------   ---------------
Net Income                                    $     732,361     $     420,634  
                                              ===============   ===============
                                                                               
Earnings Per Share                                                             
Basic                                         $         0.31    $        0.18  
Diluted                                       $         0.27    $        0.16 

</TABLE>



NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)

<TABLE>
<CAPTION>

                                                      Nine months Ended
                                                          March 31,     
                                                   1998              1997
                                              ---------------   ---------------
<S>                                           <C>               <C>            
Interest and Dividend Income                                                   
<PAGE> 6

Interest on FHLB overnight deposits           $     451,878     $     315,894  
Interest on loans & loans held for sale          15,752,172        13,920,118 
Interest on available for sale securities         1,207,686         1,744,076 
Dividends on Federal Home Loan Bank stock           212,331           162,285 
Other Interest Income                                14,762            24,167 
                                              ---------------   ---------------
  Total Interest Income                          17,638,829        16,166,540 
                                                                              
Interest Expense                                                               
Deposits                                          5,630,592         5,233,423 
Repurchase agreements                               154,300           143,700  
Other borrowings                                  3,481,186         2,889,823 
                                              ---------------   ---------------
  Total Interest Expense                          9,266,078         8,266,946  
                                              ---------------   ---------------
                                                                               
Net Interest Income                               8,372,751         7,899,594 
Provision for loan losses                           546,467           460,710 
                                              ---------------   ---------------
  Net Interest Income after Provision                                          
   for Loan Losses                                7,826,284         7,438,884  
                                                                               
Other Income                                                                   
Service charges                                     741,397           813,967  
Available for sale securities gains (losses)        245,131           115,532  
Gain (Loss) on trading account                        1,797            84,503  
Other                                               904,206           583,376  
                                              ---------------   ---------------
  Total Other Income                              1,892,531         1,597,378  
                                                                               
Other Expenses                                                                 
Salaries and employee benefits                    3,506,114         3,459,402  
Net occupancy expense                               675,151           562,647  
Equipment expense                                   652,433           637,016  
Goodwill amortization                               222,281           222,281  
FDIC Insurance Assessment                              --             296,860  
Other                                             2,110,501         2,043,444  
                                              ---------------   ---------------
  Total Other Expenses                            7,166,480         7,221,650  
                                              ---------------   ---------------
                                                                               
Income Before Income Taxes                        2,552,335         1,814,612  
Income tax  expense                                 893,343           692,190  
                                              ---------------   ---------------
Net Income                                    $   1,658,992     $   1,122,422  
                                              ===============   ===============
                                                                               
Earnings Per Share                                                             
  Basic                                       $         0.70    $         0.48 
  Diluted                                     $         0.62    $         0.44 

</TABLE>



NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders' Equity
<PAGE> 7

Nine Months Ended March 31, 1998 and 1997
(Unaudited)

<TABLE>
<CAPTION>
 
                                                                                Net Unrealized
                                                                                 Gains(Losses)
                                                       Additional                on Available
                                 Common     Preferred    Paid-In     Retained      for Sale      Treasury 
                                  Stock       Stock      Capital     Earnings     Securities       Stock          Total    
                              ------------ ----------- ----------- --------------------------- -------------  ------------
<S>                           <C>          <C>         <C>         <C>          <C>            <C>            <C>         
Balance at June 30, 1996        1,421,950   1,999,980   7,516,228    10,315,043      (837,354)      (52,277)   20,363,570 
Net income for nine months                                           
  ended March 31, 1997               --          --          --       1,122,422          --            --       1,122,422
Employee Stock Bonus                 --          --          (268)         --            --          13,642        13,374
Employee Stock Purchase               799        --         9,663          --            --            --          10,462
Dividends paid on common                                              
 Stock                               --          --          --        (295,808)         --            --        (295,808)
Dividends paid on preferred                                          
 Stock                               --          --          --        (104,998)         --            --        (104,998)
Common Stock Warrants                                                     
Exercised                          20,000        --        83,450          --            --         (28,420)       75,030
Stock Options Exercised            19,940        --        88,005          --            --          67,055       175,000 
Net change in unrealized                                                
 losses on available for sale                                       
  securities                         --          --          --            --          10,324          --          10,324
                              ------------ ----------- ----------- --------------------------- -------------  ------------
Balance March  31, 1997       $ 1,462,689  $1,999,980  $7,697,078  $ 11,036,659 $    (827,030) $          0   $21,369,376 
                              ============ =========== =========== =========================== =============  ============
                                                              
Balance at June 30, 1997        1,462,909   1,999,980   7,699,883    11,266,984      (334,175)         --      22,095,581 
Net income for nine months                                               
  ended March 31, 1998               --          --          --       1,658,992          --            --       1,658,992
Employee Stock Bonus                  250        --         4,397          --            --            --           4,647
<PAGE> 8

Employee Stock Purchase               502        --         8,167          --            --            --           8,669   

Stock Split in the form of a                                           
dividend                          740,807        --          --        (741,902)         --            --          (1,095)
Dividends paid on common                                                 
  stock                              --          --          --        (341,003)         --            --        (341,003)
Dividends paid on preferred                                                   
  stock                              --          --          --        (104,998)         --            --        (104,998)
Stock Options Exercised            32,200        --       158,500          --            --          44,988       235,688   
Treasury Stock Purchased             --          --          --            --            --         (44,988)      (44,988)
Net change in unrealized                                                    
  losses on  available for                                                  
  sale securities                    --          --          --            --         233,422          --         233,422
                              ------------ ----------- ----------- --------------------------- -------------  ------------
Balance March 31, 1998        $ 2,236,668  $1,999,980  $7,870,947  $ 11,738,073 $    (100,753) $          0   $23,744,915 
                              ============ =========== =========== =========================== =============  ============

</TABLE>



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

<TABLE>
<CAPTION>

                                                      Nine Months Ended
                                                          March 31,   
                                                   1998              1997
                                              ---------------   ---------------
<S>                                           <C>               <C>            
Cash provided by operating activities         $   1,650,521     $   2,205,901  
                                                                               
Cash flows from investing activities:                                          
  FHLB stock purchased                           (1,134,700)       (1,083,600) 
  Available for sale securities purchased       (15,331,083)      (13,262,186) 
  Available for sale securities principal                                      
   reductions                                     1,015,807         1,184,672 
  Available for sale securities matured            1,249,497         1,150,000  
  Available for sale securities sold             26,018,323        12,214,602  
  New loans, net of repayments & charge offs    (47,512,954)      (28,084,724) 
  Net capital expenditures                         (174,369)         (790,108) 
  Real estate owned sold                            161,896           399,257  
<PAGE> 9

  Real estate held for investment purchased            --              (1,965) 
  Real estate held for investment sold               68,743              --    
                                              ---------------   ---------------
    Net cash provided by (used in) investing                                   
     activities                                 (35,638,840)      (28,274,052) 
                                                                              
Cash flows from financing activities:                                          
  Net change in deposits                          1,049,815         7,414,372 
  Net change in repurchase agreements              (657,643)        1,025,630 
  Dividends paid                                   (446,001)         (400,806) 
  Proceeds from stock issuance                      215,166           273,866  
  Net increase in advances from Federal                                        
   Home Loan Bank of Boston                      24,619,182        14,126,875  
  Net change in notes payable                      (229,167)         (127,193) 
                                              ---------------   ---------------
    Net cash used (provided) by financing                                      
     activities                                  24,551,352        22,312,744 
                                              ---------------   ---------------
                                                                               
    Net decrease in cash and cash equivalents    (9,436,967)       (3,755,407) 
                                                                               
Cash and cash equivalents, beginning of period   18,774,344        13,873,947  
                                              ---------------   ---------------
                                                                               
Cash and cash equivalents, end of period      $   9,337,377     $  10,118,540  
                                              ===============   ===============
                                                                               
Cash and cash equivalents include cash on                                      
 hand, amounts due from banks, interest                                        
 bearing deposits and federal funds sold                                       
                                                                               
Supplemental schedule of noncash investing                                     
 activities:                                                                   
Net decrease in valuation for unrealized                                       
 market value adjustments on available for                                     
 sale securities                                    233,422            10,324 
Net transfer from Loans to Other Real                                         
 Estate Owned                                        56,325           551,265 
                                                                               
Supplemental disclosure of cash paid during                                    
the period for:                                                                
Income taxes paid, net of refunds                   434,000           291,000
Interest paid                                     9,209,376         8,170,414  

</TABLE>


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

1.  Basis of Presentation
    ---------------------
The accompanying unaudited condensed and consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for 
interim financial information and with the instructions to Form 10-Q and 
Article 10 of Regulation S-X.  Accordingly, they do not include all of the 
<PAGE> 10

information and footnotes required by generally accepted accounting principles 
for complete financial statements.  In the opinion of management, all 
adjustments (consisting of normal recurring accruals) considered necessary for 
a fair presentation have been included.  Operating results for the nine month 
period ended March 31, 1998 are not necessarily indicative of the results that 
may be expected for the year ending June 30, 1998.  For further information, 
refer to the audited consolidated financial statements and footnotes thereto 
for the fiscal year ended June 30, 1997 included in the Company's annual report
on Form 10-K.

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

The results of operations previously reported by the separate companies and the
combined amounts presented in the accompanying consolidated financial 
statements are summarized below.

<TABLE>
<CAPTION>
                                                                  Nine Months
                                     Three months ended              ended  
                                       September 31,               March 31,
                                    1996            1997             1997      
                               --------------- ---------------  ---------------
<S>                            <C>             <C>              <C>            
Interest Income:                                                               
Northeast                      $   4,716,634   $   5,396,273    $  14,732,307  
Cushnoc                              497,675         481,203        1,434,233  
Combined                           5,214,309       5,877,476       16,166,540  
                                                                               
Net Income:                                                                    
Northeast                      $     184,261   $     552,841    $   1,162,411  
Cushnoc                                6,980          17,724          (39,989)
Combined                             191,241         570,565        1,122,422
                                                                               
                                                                               
                                      At September 30,           At March 31,
                                    1996            1997             1997
                               --------------- ---------------  ---------------
Shareholders' Equity:                                                          
Northeast                      $  18,201,498   $  20,464,660    $  19,197,037  
Cushnoc                            2,218,058       2,212,693        2,172,339  
Combined                          20,419,556      22,677,353       21,369,376 

</TABLE>

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

<PAGE> 11

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

<TABLE>
<CAPTION>

                                March 31, 1998             June 30, 1997       
                           -------------------------  -------------------------
                                            Market                   Market
                               Cost          Value        Cost        Value
                           ------------ ------------  ------------ ------------
<S>                        <C>          <C>           <C>          <C>         
Debt securities issued by                                                      
 the U.S. Treasury and                                                         
 other U.S. Government                                                         
 corporations and agencies $ 4,947,085  $ 4,949,517   $ 2,948,525  $ 2,905,400 
Corporate bonds                203,210      203,525       259,749      252,805 
Mortgage-backed securities   9,999,924   10,038,344    25,211,936   24,801,837 
Equity securities            1,400,846    1,207,023       896,739      850,582 
                           ------------ ------------  ------------ ------------
                           $16,551,065  $16,398,409   $29,316,949  $28,810,624 
                           ============ ============  ============ ============
                                                                               
                                March 31, 1998             June 30, 1997
                           -------------------------  -------------------------
                                            Market                   Market 
                               Cost          Value        Cost        Value
                           ------------ ------------  ------------ ------------
Due in one year or less    $   347,689  $   346,814   $   398,829  $   398,829 
Due after one year                                                             
 through five years            553,481      551,703     1,403,991    1,396,491 
Due after five years                                                           
 through ten years           1,249,729    1,253,900       405,454      398,510 
Due after ten years          2,999,396    3,000,625     1,000,000      964,375 
Mortgage-backed securities                                                     
 (including securities with                                                    
 interest rates ranging                                                        
 from 5.15% to 9.0% maturing                                                  
 September 2003 to February                                                   
 2026)                       9,999,924   10,038,344    25,211,936   24,801,837 
Equity securities            1,400,846    1,207,023       896,739      850,582 
                           ------------ ------------  ------------ ------------
                           $16,551,065  $16,398,409   $29,316,949  $28,810,624 
                           ============ ============  ============ ============

</TABLE>

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

<TABLE>
<CAPTION>

                                                          Nine Months Ended
<PAGE> 12

                                                              March 31,   
                                                         1998          1997
                                                     ------------  ------------
<S>                                                  <C>           <C>         
Balance at beginning of year                         $ 2,741,809   $ 2,760,872 
Add provision charged to operations                      546,467       460,710 
Recoveries on loans previously charged off               249,202       111,516 
                                                     ------------  ------------
                                                       3,537,478     3,333,098 
  Less loans charged off                                 499,478       497,316 
                                                     ------------  ------------
  Balance at end of period                           $ 3,038,000   $ 2,835,782 
                                                     ============  ============

</TABLE>

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

<TABLE>
<CAPTION>

                                 March 31, 1998
                 -----------------------------------------------             
                    Principal        Interest        Maturity        
                     Amounts           Rates           Dates            
                 ---------------  ---------------  -------------
                 <C>              <C>              <C>           
                 $  56,230,931     5.64% - 6.39%       1999     
                     4,000,000     5.56% - 6.27%       2001       
                     1,444,399     6.21% - 6.49%       2002               
                     5,398,939     5.71% - 6.64%       2003        
                     2,039,384     6.36% - 6.67%       2004         
                     5,000,000         5.25%           2005          
                     2,000,000         6.65%           2006          
                    29,000,000     4.89% - 5.68%       2008       
                 ---------------                                          
                 $ 105,113,653                                         
                 ===============                                               
                                                                    
                                 June 30, 1997                      
                 -----------------------------------------------
                    Principal        Interest        Maturity    
                     Amounts           Rates           Dates      
                 ---------------  ---------------  -------------
                 $  55,458,706     4.97% - 6.40%       1998
                    15,606,482     5.64% - 6.20%       1999
                     3,000,000         6.27%           2000
                       273,080         6.40%           2001
                     1,441,827     6.21% - 6.49%       2002
                       740,762     6.61% - 6.64%       2003
                     1,973,614     6.36% - 6.67%       2004
                     2,000,000         6.65%           2005
                 ---------------                                   
                 $  80,494,471                                 
                 ===============
<PAGE> 13

</TABLE>

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

7.  Subsequent Events
    -----------------
In April of 1998, Square Lake Holding Corporation exercised 10,000 warrants at 
an aggregate price of $46,700. During the month of April 1998, Square Lake 
Holding Corporation also converted its Series B convertible preferred stock on 
a three for one basis and received 214,284 shares of common stock. The exercise
of the warrants and the conversion of the preferred stock increased the 
Company's common shares outstanding to 2,460,952. Square Lake Holding 
Corporation currently holds 45,454 shares of  Series A preferred stock 
convertible at a three for one rate as well as the ability to exercise 153,146 
warrants. 


                     NORTHEAST BANCORP AND SUBSIDIARY
                                  Part I.

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

Description of Operations
-------------------------

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

Merger
------

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

Financial Condition 
-------------------

Total consolidated assets were $310,623,243 on March 31, 1998, which 
represents an increase of $26,593,549 from June 30, 1997.  Total net loans, 
Federal Home Loan Bank ("FHLB") stock and other assets increased by 
<PAGE> 14

$47,547,979, $1,134,700 and $515,460, respectively, while cash equivalents and 
securities available for sale decreased by $9,436,967 and $12,412,215, 
respectively, during the same period. Total deposits and repurchase agreements 
as well as FHLB borrowings increased by $392,172 and $24,619,182, respectively
from June 30, 1997 to March 31, 1998.

The funds available from the decrease in cash equivalents and securities 
available for sale as well as the increase in FHLB borrowings were utilized to 
support the increase in the loan portfolio from June 30, 1997 to March 31, 
1998.  FHLB stock increased due to levels of FHLB advances during the period.  
The FHLB requires financial institutions to hold a certain level of FHLB stock 
based on advances outstanding.  The increase in other assets was primarily due 
to deferred mortgage servicing rights and federal income tax receivable.

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

At March 31, 1998, the carrying value of securities available for sale by the 
Company was $16,398,409, which is $152,656 less than the cost of the underlying
securities. The difference between the carrying value and the cost of the 
securities was primarily attributable to the decline in the market value of 
equity securities from the prices at the time of purchase. Management 
attributes the reduction in the market value of equity securities to the 
decline of the stock market at the end of the quarter, which had a greater 
affect on the market value of the Company's investments in high-tech stocks.  
Management reviews the portfolio of investments on an ongoing basis to 
determine if there has been an other-than-temporary decline in value. Some of 
the considerations management makes in the determination are market valuations 
of particular securities and economic analysis of the securities' sustainable 
market values based on the underlying companies profitability.

Total loans increased by $47,456,628 for the nine months ended March 31, 1998.
The loan portfolio growth was in 1-4 family mortgages, consumer installment and
commercial loans.  In the March 1998 quarter, the Bank purchased approximately 
$39,000,000 of 1-4 family mortgages.  The purchase consisted of 1-4 family 
adjustable and fixed rate mortgages secured by property located primarily in 
the Midwest states.  The Bank's local market, as well as the secondary market, 
continues to be very competitive for loan origination volume.  The local 
competitive environment and customer response to favorable secondary market 
rates have affected the Bank's ability to increase the loan portfolio.  In the 
effort to increase loan volume, the Bank's offering rates for its loan products
have been reduced to compete in the various markets. The Bank will experience 
some margin compression due to decreased loan rates.

The loan portfolio contains elements of credit and interest rate risk.  The 
Bank primarily lends within its local market areas, which management believes 
helps them to better evaluate credit risk.  The Bank also maintains a well 
collateralized position in real estate mortgages. Residential real estate 
mortgages make up 65% of the total loan portfolio, in which 63% of the 
residential loans are variable rate products, as compared to 70% and 53%, 
respectively, at March 31, 1997.  It is management's intent to increase the
volume in variable rate residential loans to reduce the interest rate risk in
this area. 

<PAGE> 15

At March 31, 1998, 18% of the Bank's total loan portfolio balance is commercial
real estate mortgages. Similar to residential mortgages, the Bank tries to 
mitigate credit risk by lending in its local market area as well as maintaining
a well collateralized position in real estate.  Commercial real estate loans 
have minimal interest rate risk as 88% of the portfolio consists of variable 
rate products. 

Commercial loans make up 9% of the total loan portfolio, of which 66% are 
variable rate instruments.  The credit loss exposure on commercial loans is 
highly dependent on the cash flow of the customer's business.  The Bank 
attempts to mitigate losses in commercial loans through lending in accordance 
with the Company's credit policies.

Consumer and other loans make up 8% of the loan portfolio.  Since these loans 
are primarily fixed rate products, they have interest rate risk when market 
rates increase.  These loans also have credit risk with, at times, minimal 
collateral security. Management attempts to mitigate these risks by keeping the
products offered short-term, receiving a rate of return commensurate with the 
measured risks, and lending to individuals in the Bank's known market areas.

The Bank's allowance for loan losses was $3,038,000 as of March 31, 1998 versus
$2,741,809 as of June 30, 1997, representing 1.12% and 1.23% of total loans, 
respectively.  The Bank had non-performing loans totaling $2,926,000 at March  
31, 1998 compared to $2,881,000 at June 30, 1997. Non-performing commercial 
mortgages increased by 33% from June 30, 1997 to March 31, 1998. This increase 
was due to the addition of a single loan and in management's opinion does not 
indicate a trend. Non-performing loans represented .94% and 1.01% of total 
assets at March 31, 1998 and June 30, 1997, respectively.  The Bank's allowance
for loan losses was equal to 104% and 95% of the total non-performing loans at 
March 31, 1998 and June 30, 1997, respectively.  At March 31, 1998, the Bank 
had approximately $451,000 of loans classified substandard, exclusive of the 
non-performing loans stated above, that could potentially become non-performing
due to delinquencies or marginal cash flows. These substandard loans have been 
reduced substantially in the past twelve months. The decrease was attributed 
to the reclassification of loans to lower risk classifications as a result of 
favorable changes in the borrower's financial condition, indicating a decreased
potential for these loans becoming non-performing assets.  The following table
represents the Bank's non-performing loans as of March 31, 1998 and June 30, 
1997, respectively:

<TABLE>
<CAPTION>

                                    March 31,         June 30,
            Description               1998              1997
     -------------------------   ---------------   ---------------
     <S>                         <C>               <C>             
     1-4 Family Mortgages        $     940,000     $   1,268,000
     Commercial Mortgages            1,400,000         1,052,000
     Commercial Installment            536,000           492,000
     Consumer Installment               50,000            69,000
                                 ---------------   ---------------
       Total non-performing      $   2,926,000     $   2,881,000  
                                 ===============   ===============
</TABLE>

The following table reflects the quarterly trend of total delinquencies 30 
<PAGE> 16

days or more past due, including non-performing loans, for the Bank as a 
percentage of total loans: 

<TABLE>
     <C>           <C>           <C>            <C>
       6-30-97       9-30-97       12-31-97       3-31-98
        1.94%         1.64%         1.72%          1.44%

</TABLE>

At March 31, 1998, loans classified as non-performing included approximately 
$646,000 of loan balances that are current and paying as agreed, but which the 
Bank maintains as non-performing until the borrower has demonstrated a 
sustainable period of performance. Excluding these loans, the Bank's total 
delinquencies 30 days or more past due, as a percentage of total loans, would 
be 1.20% as of March 31, 1998. 

The level of the allowance for loan losses as a percentage of total loans has 
decreased due to the increase of loan volume, while the level of allowance for 
loan losses as a percentage of non-performing loans increased at March 31, 
1998, when compared to June 30,1997.  Based on reviewing the credit risk and 
collateral of delinquent, non-performing and classified loans, management 
considers the allowance for loan losses to be adequate.

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

While management uses its best judgement in recognizing loan losses in light of
available information, there can be no assurance that the Company will not have
to increase its provision for loan losses in the future as a result of changing
economic conditions, adverse markets for real estate or other factors.  In 
addition, various regulatory agencies, as an integral part of their examination
process, periodically review the Bank's allowance for loan losses.  Such 
agencies may require the Bank to recognize additions to the allowance for loan 
losses based on their judgements about information available to them at the 
time of their examination.  The Bank's most recent examination by the OTS was 
on September 22, 1997.  At the time of the exam the regulators proposed no 
additions to the allowance for loan losses.

Total deposits were $173,971,101 and securities sold under repurchase 
agreements were $4,440,979 as of March 31, 1998.  These amounts represent an 
increase of $1,049,815 and a decrease of $657,643, respectively, compared to 
June 30, 1997.  The fluctuations in deposits and repurchase agreements were due
to normal business transactions.  Brokered deposits represented $7,078,080 of 
the total deposits at March 31, 1998.  The Bank utilizes brokered deposits as 
alternative sources of funds.  Brokered deposits are similar to local deposits,
in that both are interest rate sensitive with respect to the Bank's ability to
retain the funds.  Cross selling strategies are employed by the Bank to develop
deposit growth.  Even though deposit interest rates are competitive in our 
local markets, the rate of return remains stronger in other financial 
instruments such as mutual funds and annuities.  Like other companies in the 
banking industry, the Bank will be challenged to maintain and/or increase its
<PAGE> 17

core deposit base.

Total advances from the FHLB were $105,113,653 as of March 31, 1998, an 
increase of $24,619,182 compared to June 30, 1997.  The cash received from the 
increase in FHLB advances was utilized for the increased volume in loans.  The 
Bank's current advance availability, subject to the satisfaction of certain 
conditions, is approximately $22,000,000 greater than the March 31, 1998 
advances reported. Mortgages, free of liens, pledges and encumbrances are 
required to be pledged to secure FHLB advances.  The Bank utilizes FHLB 
advances as alternative sources of funds, when the interest rates of the 
advances are less than market deposit interest rates and to fund short-term 
liquidity demands for loan volume.  With the borrowing capacity at the Federal 
Home Loan Bank, the normal growth in bank deposits and repurchase agreements 
and the immediate availability of the Bank's cash equivalents as well as 
securities available for sale, management believes that the Company's available
liquidity resources are sufficient to support the Company's needs.

Total equity of the Company was $23,744,915 as of March 31, 1998 versus 
$22,095,581 at June 30, 1997.  Book value per common share was $9.72 as of 
March 31, 1998 versus $9.16 at June 30, 1997.  Total equity to total assets of 
the Company as of March 31, 1998 was 7.64%. On December 15, 1997, the Company 
paid a 50% stock dividend to all shareholders. As a result of the stock 
dividend, the Company's common shares outstanding increased by 740,807 shares. 
The June 30, 1997 book value per common share and the March 31, 1997 earnings 
per share have been restated as a result of the stock dividend.

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

<TABLE>
<CAPTION>

                      Actual Capital   Required Capital  Excess Capital
                      Amount      Ratio      Amount      Ratio       Amount   
                   ------------- -------  ------------- -------  --------------
<S>                <C>           <C>      <C>           <C>      <C>           
Tangible capital   $ 21,789,000   7.06%   $  4,629,000   1.50%   $  17,160,000 
Core capital       $ 21,789,000   7.06%   $  9,257,000   3.00%   $  12,532,000
Leverage capital   $ 21,789,000   7.06%   $ 12,343,000   4.00%   $   9,446,000
Risk-based capital $ 23,062,000  11.35%   $ 16,257,000   8.00%   $   6,805,000

</TABLE>

Results of Operations

Net income for the quarter ended March 31, 1998 was $732,361.  Basic earnings 
per share were $.31 and diluted earnings per share were $.27 for the quarter 
ended March 31, 1998.  This compares to earnings of $420,634 or basic earnings 
per share of $.18 and diluted earnings per share of $.16 for the quarter ended 
March 31, 1997. Net income for the nine months ended March 31, 1998 was 
$1,658,992 versus $1,122,422 for the period ended March 31, 1997. Basic 
earnings per share were $.70 and diluted earnings per share were $.62 for the 
nine months ended March 31, 1998 versus basic earnings per share of $.48 and 
diluted earnings per share of $.44 for the period ended March 31, 1997. Net 
income and earnings per share have been restated to include the acquisition of 
Cushnoc Bank under the pooling of interest method of accounting and the effect 
of the Company's 50% stock dividend in December, 1997.

<PAGE> 18

The Company completed the acquisition of Cushnoc in the quarter ended December 
31, 1997. The one-time costs associated with the acquisition totaled 
approximately $283,000 after tax of which $276,000 after tax was recognized in 
the quarter ended December 31, 1997. The Company's net operating income, before
the aforementioned one-time charge, was $1,941,469, basic earnings per share 
were $.82 and diluted earnings per share were $.72 for the nine months ended 
March 31, 1998.

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

In September of 1996, Congress enacted comprehensive legislation amending the 
FDIC BIF-SAIF deposit insurance assessment on savings and loan institution 
deposits.  The legislation imposed a one-time assessment on institutions 
holding SAIF deposits on March 31, 1995, in an amount necessary for the SAIF to
reach its 1.25% Designated Reserve Ratio.  Institutions with SAIF deposits were
required to pay an assessment rate of 65.7 cents per $100 of domestic deposits 
held as of March 31, 1995.  The Bank held approximately $57,900,000 of SAIF 
deposits as of March 31, 1995.  The net effect of the one time assessment was 
$296,860 and decreased the Company's basic earnings per share by $.09 and the 
diluted earnings per share by $.08 for the six months ended December 31, 1996.
Commencing in 1997 and continuing through 1999, the Bank is required to pay an 
annual assessment of 1.29 cents for every $100 of domestic BIF insured deposits
and 6.44 cents for every $100 of domestic SAIF insured deposits.  Commencing in
2000 and continuing through 2017, banks will be required to pay a flat annual 
assessment of 2.43 cents for every $100 of domestic deposits.

The Company's net interest income was $8,372,751 for the nine months ended 
March 31, 1998, versus $7,899,594 for the nine months ended March 31, 1997, an 
increase of $473,157.  Total interest income increased $1,472,289 during the 
nine months ended March 31, 1998 compared to the nine months ended March 31, 
1997, resulting primarily from an increase in the volume of loans offset in 
part by a decrease in rates. The increase in total interest expense of $999,132
for the nine months ended March 31, 1998 resulted primarily from the increased 
volume of deposits and borrowings.

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

Northeast Bancorp
Rate/Volume Analysis for the nine months ended
March 31, 1998 versus March 31, 1997

<TABLE>
<CAPTION>

                                      Difference Due to
                                    Volume         Rate         Total
                                 ------------   ------------   ------------
<S>                              <C>            <C>            <C>         
Investments                      $  (472,716)   $   (21,055)   $  (493,771)
Loans                              2,047,717       (215,663)     1,832,054
FHLB & Other Deposits                130,894          3,112        134,006
                                 ------------   ------------   ------------
  Total                            1,705,895       (233,606)     1,472,289
<PAGE> 19

                                                                            
Deposits                             347,483         49,686        397,169
Repurchase Agreements                 16,757         (6,157)        10,600
Borrowings                           615,191        (23,828)       591,363 
                                 ------------   ------------   ------------
  Total                              979,431         19,701        999,132 
                                 ------------------------------------------
    Net Interest Income          $   726,464    $  (253,307)   $   473,157
                                 ==========================================

</TABLE>

Rate/Volume amounts spread proportionately between volume and rate.

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

Approximately 22% of the Bank's loan portfolio is comprised of floating rate 
loans based on a prime rate index.  Interest income on these existing loans 
will increase as the prime rate increases, as well as on approximately 41% of 
other loans in the Bank's portfolio that are based on short-term rate indices 
such as the one-year treasury bill.  An increase in short-term interest rates 
will also increase deposit and FHLB advance rates, increasing the Company's 
interest expense.  The Company is experiencing and anticipates additional net 
interest margin compression due to fluctuating rates.  The impact on net 
interest income will depend on, among other things, actual rates charged on the
Bank's loan portfolio, deposit and advance rates paid by the Bank and loan 
volume.

Total non-interest income was $595,359 and $1,892,531 for the three and nine 
months ended March 31, 1998 versus $657,503 and $1,597,378 for the three and 
nine months ended March 31, 1997.  Service fee income was $227,757 and $741,397
for the three and nine months ended March 31, 1998 versus $259,084 and $813,967
for the three and nine months ended March 31, 1997.  The $31,327 and $72,570 
service fee decrease for the three and nine months ended March 31, 1998, 
respectively, was primarily due to a reduction in loan servicing and deposit 
fee income.  Gains from available for sale securities were $37,439 and $245,131
for the three and nine months ended March 31, 1998 versus $10,652 and $115,532 
for the three and nine months ended March 31, 1997. The Company sold some of 
its available for sale securities during the three and nine month period ended 
March 31, 1998, taking advantage of the fluctuation in market prices in the 
mortgage-backed security portfolio.  Income from trading account securities was
$1,797 for the nine month period ended March 31, 1998 versus $84,503  for the 
nine month period ended March 31, 1997.  Larger gains on the trading account 
portfolio were attained in the nine month period ended March 31, 1997, due to 
the appreciation in the market values of the securities classified as trading
in that time period.

Other income was $330,163 and $904,206 for the three and nine months ended 
March 31, 1998, which was an increase of $7,237 and $320,830 when compared to 
other income of $322,926 and $583,376 for the three and nine months ended March
<PAGE> 20

31, 1997, respectively.  The increase in other income in the three and nine 
months ended March 31,1998, was primarily due to gains from 1-4 family mortgage
and SBA guaranteed loan sales as well as income generated from the Bank's trust
department and revenue from the sale of investments to customers through the 
Bank's relationship with Commonwealth Financial Services, Inc..

Total operating expense, or non-interest expense, for the Company was 
$2,123,636 and $7,166,480 for the three and nine months ended March 31, 1998 
versus $2,456,126 and $7,221,650 for the three and nine months ended March 31, 
1997. The increase in compensation expense for the nine month period ended 
March 31, 1998 was primarily due to acquisition costs associated with Cushnoc 
Bank.  The increase in occupancy and equipment expense for the three and nine 
months ended March 31, 1998 was due to costs associated with the new branch 
opened in Auburn, Maine, the branches acquired from Cushnoc Bank as well as 
normal growth and maintenance.  Other expenses decreased by $220,524 for the 
three months and increased by $67,057 for the nine months ended March 31, 1998,
compared to March 31, 1997. The decrease in other expenses during the three 
month period was primarily due to the reduction in professional fees, 
advertising expenses, loan expenses and director fees. 

Impact of Inflation
-------------------

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

Year 2000
---------

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

Awareness Phase
---------------

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

<PAGE> 21

Assessment Phase
----------------

This phase consists of assessing the size and complexity of the problem and 
detailing the magnitude of the effort necessary to address the Year 2000 issue.
This phase must identify all hardware, software, networks, automated teller 
machines, other various processing platforms, and customer and vendor 
interdependencies affected by the Year 2000 date change. The assessment must go
beyond information systems and include environmental systems that are dependent
on embedded microchips, such as security systems, elevators and vaults. During 
this phase management also must evaluate the Year 2000 effect on other 
strategic business initiatives. The assessment should consider the potential 
effect that mergers and acquisitions, major system development, corporate 
alliances, and system interdependencies will have on existing systems and/or 
the potential Year 2000 issues that may arise from acquired systems. The 
financial institution or vendor should also identify resource needs, establish 
time frames and sequencing of Year 2000 efforts. Resource needs include 
appropriately skilled personnel, contractors, vendor support, budget 
allocations, and hardware capacity. This phase should clearly identify 
corporate accountability throughout the project, and policies should define 
reporting, monitoring, and notification requirements. Finally, contingency 
plans should be developed to cover unforeseen obstacles during the renovation 
and validation phases and include plans to deal with lesser priority systems
that would be fixed later in the renovation phase.

The assessment phase has been materially completed, but is considered an 
ongoing phase for the Company. The Company has instituted a comprehensive plan 
to communicate with all its borrowers that the Company considers to be at risk 
concerning the Year 2000 issue.  The Company considers this plan necessary to 
mitigate the risk associated with borrowers not having the ability to make loan
payments due to a Year 2000 issue.  The company has currently estimated the 
following costs associated with the Year 2000 issue, (1) computer hardware
replacement $470,000, (2) software replacement $30,000, (3) testing and 
administrative costs $84,000, and (4) potential contingency costs $95,000.  
These costs are under continuous review and will be revised as needed. As of 
March 31, 1998, the Company's current computer hardware and software have been 
substantially depreciated.

Renovation Phase
----------------

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

Validation Phase
----------------

Testing is a multifaceted process that is critical to the Year 2000 project and
inherent in each phase of the project management plan. This process includes 
<PAGE> 22

the testing of incremental changes to hardware and software components. In 
addition to testing upgraded components, connections with other systems must be
verified, and all changes should be accepted by internal and external users. 
Management will establish controls to assure the effective and timely 
completion of all hardware and software testing prior to final implementation. 
As with the renovation phase, the Company will be in ongoing discussions with 
their vendors on the success of their validation efforts.  The Company 
anticipates to have this phase completed by March 31, 1999.

Implementation Phase
--------------------

In this phase, systems should be certified as Year 2000 compliant and be 
accepted by the business users. For any system failing certification, the 
business effect must be assessed clearly and the organization's Year 2000 
contingency plans should be implemented. Any potentially noncompliant mission-
critical system should be brought to the attention of executive management 
immediately for resolution. In addition, this phase must ensure that any new 
systems or subsequent changes to verified systems are compliant with Year 2000 
requirements. The Company anticipates to have this phase completed by June 30, 
1999.

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

Item 3.  Quantitative and Qualitative Disclosure about Market Risk
         ---------------------------------------------------------

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

Forward - Looking Statements
----------------------------

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


<PAGE> 23

NORTHEAST BANCORP AND SUBSIDIARIES
Part II - Other Information


Item 1.  Legal Proceedings
         -----------------
Not Applicable.
         
Item 2.  Changes in Securities
         ---------------------
Not Applicable.
             
Item 3.  Defaults Upon Senior Securities
         -------------------------------
Not Applicable.
         
Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------
Not Applicable.
         
Item 5.  Other Information
         -----------------
(a)      Not applicable
         
Item 6.  Exhibits and Reports on Form 8 - K
         ----------------------------------
(a)      Exhibits
           
11       Statement regarding computation of per share earnings.
          
27       Financial data schedule
         
(b)      Reports on Form 8 - K
            
         On January 14, 1998, the Company filed a report on Form 8-K announcing
         second quarter earnings which reflects combined earnings of Cushnoc 
         Bank & Trust and Northeast Bancorp.


NORTHEAST BANCORP AND SUBSIDIARIES
Signatures

Pursuant to the requirements of the Securities Act of 1934, the Registrant has 
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.



                               NORTHEAST BANCORP             
                         ------------------------------                        
                                 (Registrant)           
                                                       
                                                        
                             /s/ James D. Delamater            
                         ------------------------------
                               James D. Delamater     
                               President and CEO         
                                                        
                                                         
<PAGE> 24

                                 /s/ Richard Wyman               
                         ------------------------------
                                   Richard Wyman       
                              Chief Financial Officer   
                                                        
                                                          

Date: May 12, 1998


NORTHEAST BANCORP AND SUBSIDIARIES
Index to Exhibits
                                    
EXHIBIT NUMBER                         DESCRIPTION                           
              
      11             Statement regarding computation of per share earnings 
                        
      27             Financial data schedule