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      September 30, 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 - 14588
                         _________

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

                Maine                                 01 - 0425066             
_____________________________________    ______________________________________
   (State or other jurisdiction of        (I.R.S. Employer Identification No.) 
    incorporation or organization)        
                                            
  232 Center Street, Auburn, Maine                      04210
_____________________________________    ______________________________________
   (Address of principal executive                    (Zip Code)               
    offices)                                 
                                              
                               (207) 777 - 6411
_______________________________________________________________________________
              Registrant's telephone number, including area code               
                                                 
                                Not Applicable
_______________________________________________________________________________
Former name, former address and former fiscal year,if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.     Yes _X_    No ___              


Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date.  
Shares outstanding as of November 06, 1998: 2,618,684 of common stock, $1.00 
par value per share.
_______________________________________________________________________________


<PAGE> 2
                                    


                            NORTHEAST BANCORP 
                            Table of Contents

Part I.   Financial Information

          Item 1.   Financial Statements (unaudited)
                     
                    Consolidated Balance Sheets
                     September 30, 1998 and June 30, 1998
                      
                    Consolidated Statements of Income
                     Three Months ended September 30, 1998 and 1997   
                    
                    Consolidated Statements of Changes in Shareholders' Equity
                     Three Months ended September 30, 1998 and 1997 
                       
                    Consolidated Statements of Cash Flows
                     Three Months ended September 30, 1998 and 1997
                        
                    Notes to Consolidated Financial Statements
                       
          Item 2.   Management's Discussion and Analysis of Financial Condition
                     and Results of Operation
                      
          Item 3.   Quantitative and Qualitative Disclosure about Market Risk

                    
Part II.  Other Information
                        
          Item 1.   Legal Proceddings

          Item 2.   Changes in Securities

          Item 3.   Defaults Upon Senior Securities

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

          Item 5.   Other Information

          Item 6.   Exhibits and Reports on Form 8-K


PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements

NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)

<TABLE>
<CAPTION>
                                               September 30,       June 30,
                                                   1998              1998      
<PAGE> 3
                                              _______________   _______________
<S>                                           <C>               <C>            
                    Assets                                         
Cash and due from banks                       $   4,916,299     $   6,821,574  
Interest bearing deposits in other banks            311,017           421,392
Federal Home Loan Bank overnight deposits         6,006,000         4,909,000
Trading account securities at market                   -               50,000
Available for sale securities                    12,486,127        13,608,823
Federal Home Loan Bank stock                      5,680,500         5,680,500
Loans held for sale                                 435,650           369,500
                                                                               
Loans                                           290,056,925       282,030,950
  Less allowance for loan losses                  2,870,000         2,978,000
                                              _______________   _______________
    Net loans                                   287,186,925       279,052,950
                                                                               
Bank premises and equipment, net                  4,706,732         4,473,885  
Assets acquired through foreclosure                 135,622           381,288
Goodwill (net of accumulated amortization                                      
 of $1,606,902 at 9/30/98 and                                                 
 $1,532,808 at 6/30/98)                           1,849,821         1,923,915
Other assets                                      4,946,380         4,839,767
                                              _______________   _______________
    Total Assets                                328,661,073       322,532,594
                                              ===============   ===============
                                                                               
   Liabilities and Shareholders' Equity                                        
Liabilities                                                                    
Deposits                                      $ 195,394,972     $ 184,024,097
Repurchase Agreements                             5,532,249         5,205,594
Advances from Federal Home Loan Bank             99,003,912       104,439,952
Notes payable                                       916,667           993,055
Other Liabilities                                 2,104,371         2,730,369
                                              _______________   _______________
  Total Liabilities                             302,952,171       297,393,067  
                                                                             
Shareholders' Equity                                                          
Preferred stock, Series A, 45,454 shares                                       
issued and outstanding                              999,988           999,988
Common stock, par value $1, 2,618,384 and                                     
2,614,285 shares issued and outstanding at                                 
9/30/98 and 6/30/98, respectively                 2,618,384         2,614,285
Additional paid in capital                        9,290,192         9,258,107
Retained earnings                                12,811,559        12,331,595
                                              _______________   _______________
                                                 25,720,123        25,203,975 
Accumulated other comprehensive income (loss)       (11,221)          (64,448)
                                              _______________   _______________
 Total Shareholders' Equity                      25,708,902        25,139,527
                                              _______________   _______________
  Total Liabilities and Shareholders' Equity  $ 328,661,073     $ 322,532,594
                                              ===============   ===============

</TABLE>

NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
<PAGE> 4

                                    
<TABLE>
<CAPTION>
                                    
                                                     Three Months Ended
                                                        September 30,      
                                                   1998              1997
                                              _______________   _______________
<S>                                           <C>               <C>            
Interest and Dividend Income                                                   
Interest on FHLB overnight deposits           $     116,234     $     142,093  
Interest on loans & loans held for sale           6,309,260         5,172,282
Interest on available for sale securities           194,387           488,483
Dividends on Federal Home Loan Bank stock            90,203            69,836
Other Interest Income                                 5,072             4,783
                                              _______________   _______________
  Total Interest Income                           6,715,156         5,877,477 
                                                                               
Interest Expense                                                               
Deposits                                          2,129,744         1,883,484  
Repurchase agreements                                52,744            48,438
Other borrowings                                  1,437,078         1,180,294
                                              _______________   _______________
  Total Interest Expense                          3,619,566         3,112,216
                                              _______________   _______________
                                                                               
Net Interest Income                               3,095,590         2,765,261
Provision for loan losses                           204,931           162,500
                                              _______________   _______________
  Net Interest Income after Provision for                                      
   Loan Losses                                    2,890,659         2,602,761
                                                                               
Other Income                                                                   
Service charges                                     253,385           276,405
Net securities gains                                 10,791           107,996
Net gain  on trading securities                       5,612             1,797
Other                                               236,733           168,866
                                              _______________   _______________
  Total Other Income                                506,521           555,064  
                                                                              
Other Expenses                                                                 
Salaries and employee benefits                    1,196,731         1,163,615 
Net occupancy expense                               219,761           221,386
Equipment expense                                   182,003           219,686
Goodwill amortization                                74,094            74,094
Other                                               730,068           598,440
                                              _______________   _______________
  Total Other Expenses                            2,402,657         2,277,221
                                              _______________   _______________
                                                                             
Income Before Income Taxes                          994,523           880,604
Income tax  expense                                 358,486           310,039
                                              _______________   _______________
Net Income                                    $     636,037     $     570,565
                                              ===============   ===============
                                                                               
Earnings Per Share                                                             
<PAGE> 5

 Primary                                      $         0.24    $         0.24
 Diluted                                      $         0.23    $         0.21

</TABLE>

NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders' Equity
Three Months Ended September 30, 1998 and 1997
(Unaudited)

<TABLE>
<CAPTION>

         
                                                                                 Accumulated
                                                                                    Other
                                             Common                             Comprehensive
                              Preferred     Stock at    Common      Retained       Income         Treasury
                                Stock      $1.00 Par    Surplus     Earnings       (Loss)          Stock        Total
                             ____________ ___________ ___________ _____________ _____________  _____________ ____________
<S>                          <C>          <C>         <C>         <C>           <C>            <C>           <C>
Balance at June 30, 1997       1,999,980   1,462,909   7,699,882    11,266,984      (334,175)          --     22,095,580
Net income for three months                                                   
  ended September 30, 1997          --          --          --         570,565          --             --        570,565
Other comprehensive income,                                                   
 net of tax:                                                                  
 Adjustment of valuation                                                      
  reserve for securities                                                    
  available for sale                --          --          --            --          61,827           --         61,827
Comprehensive income                --          --          --            --            --             --        632,392
Cash dividends declared on                                                   
 common stock                       --          --          --        (103,371)         --             --       (103,371)
Cash dividends declared on                                                    
 preferred stock                    --          --          --         (34,999)         --             --        (34,999)
Common stock issued in                                                        
 connection with employee                                                     
 benefit and stock option                                                     
 plans                              --        18,673      69,077          --            --          (44,988)      42,762
Treasury Stock Purchased            --          --          --            --            --           44,988       44,988
                             ____________ ___________ ___________ _____________ _____________  _____________ ____________

<PAGE> 6

Balance September 30, 1997   $ 1,999,980  $1,481,582  $7,768,959  $ 11,699,179  $   (272,348)  $          0  $22,677,352 
                             ============ =========== =========== ============= =============  ============= ============
                                                                              
Balance at June 30, 1998         999,988   2,614,285   9,258,107    12,331,595       (64,448)          --     25,139,527
Net income for three months                                                   
  ended September 30, 1998          --          --          --         636,037          --             --        636,037
Other comprehensive income,                                                    
 net of tax:                                                                   
  Adjustment of valuation                                                     
   reserve for securities                                                     
    available for sale              --          --          --            --          53,227           --         53,227
Comprehensive income                --          --          --            --            --             --        689,264
                                                                               
Cash dividends declared on                                                    
 common stock                       --          --          --        (138,573)         --             --       (138,573)
Cash dividends declared on                                                   
 preferred stock                    --          --          --         (17,500)         --             --        (17,500)
Common stock issued in                                                         
 connection with employee                                                     
 benefit and stock option                                                     
 plans                              --         4,099      32,085          --            --             --         36,184
                             ____________ ___________ ___________ _____________ _____________  _____________ ____________
Balance September 30, 1998   $   999,988  $2,618,384  $9,290,192  $ 12,811,559  $    (11,221)  $          0  $25,708,902 
                             ============ =========== =========== ============= =============  ============= ============

</TABLE>

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

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                        September 30,
                                                   1998              1997      
                                              _______________   _______________
<S>                                           <C>               <C>            
Cash provided by operating activities         $    (210,989)    $     589,087  

Cash flows from investing activities:                                          
  FHLB stock purchased                                 --            (243,000) 
  Available for sale securities purchased          (532,917)       (4,293,677) 
  Available for sale securities principal                                      
   reductions                                       291,994           472,238  
<PAGE> 7

  Available for sale securities matured           1,350,000           250,000  
  Available for sale securities sold                 49,669         3,409,863 
  New loans, net of repayments & charge offs     (7,867,188)       (2,627,669)
  Net capital expenditures                         (376,651)          (58,377)
  Assets acquired through foreclosure sold          262,219            87,038  
  Real estate held for investment sold               50,000            63,793 
                                              _______________   _______________
   Net cash used in investing activities         (6,772,874)       (2,939,791) 
                                                                               
Cash flows from financing activities:                                         
  Net change in deposits                         11,370,876           363,286 
  Net change in repurchase agreements               326,655          (258,247) 
  Dividends paid                                   (156,073)         (138,370)
  Proceeds from stock issuance                       36,184            87,750
  Net decrease (increase) in advances from                                    
   Federal Home Loan Bank of Boston              (5,436,040)          513,413 
  Net change in notes payable                       (76,389)          (76,389)
                                              _______________   _______________
   Net cash provided by financing activities      6,065,213           491,443
                                              _______________   _______________
                                                                               
   Net decrease in cash and cash equivalents       (918,650)       (1,859,261)
                                                                               
Cash and cash equivalents, beginning of period   12,151,966        18,774,345  
                                              _______________   _______________
Cash and cash equivalents, end of period      $  11,233,316     $  16,915,084  
                                              ===============   ===============
                                                                              
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                                     53,227            61,827 
Net transfer (to) from Loans to Other Real                                     
 Estate Owned                                          --              56,325
                                                                               
Supplemental disclosure of cash paid during                                    
 the period for:                                                              
Income taxes paid, net of refunds                   206,000             5,000
Interest paid                                     3,615,158         3,129,301 

</TABLE>

                     NORTHEAST BANCORP AND SUBSIDIARY
               Notes to Consolidated Financial Statements
                           September 30, 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> 8

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

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

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

<TABLE>
<CAPTION>
                              September 30, 1998            June 30, 1998
                           -------------------------  -------------------------
                                           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 $ 3,596,487  $ 3,602,648   $ 4,696,659  $ 4,698,266 
Corporate bonds                202,691      209,042       202,952      203,484
Mortgage-backed securities   7,426,950    7,557,956     7,723,843    7,714,332
Equity securities            1,277,000    1,116,481     1,083,018      992,741
                           ------------ ------------  ------------ ------------
                           $12,503,128  $12,486,127   $13,706,472  $13,608,823 
                           ============ ============  ============ ============
                                                                               
                              September 30, 1998            June 30, 1998      
                           -------------------------  -------------------------
                                           Market                     Market   
                               Cost        Value          Cost        Value    
                           ------------ ------------  ------------ ------------
Due in one year or less    $   247,070  $   247,070   $   347,253  $   347,253 
Due after one year                                                            
 through five years            302,938      304,385       452,952      450,984
Due after five years                                                          
 through ten years           1,249,753    1,259,610     1,100,000    1,103,200
Due after ten years          1,999,417    2,000,625     2,999,406    3,000,313 
<PAGE> 9

Mortgage-backed securities                                                    
 (including securities with                                                   
 interest rates ranging                                                        
 from 5.15% to 9.0%           
 maturing September 2003          
 to February 2026)           7,426,950    7,557,956     7,723,843    7,714,332
Equity securities            1,277,000    1,116,481     1,083,018      992,741
                           ------------ ------------  ------------ ------------
                           $12,503,128  $12,486,127   $13,706,472  $13,608,823 
                           ============ ============  ============ ============
</TABLE>

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

<TABLE>
<CAPTION>
                                                         Three Months Ended    
                                                           September 30,      
                                                         1998          1997    
                                                     ------------  ------------
<S>                                                  <C>           <C>         
Balance at beginning of year                         $ 2,978,000   $ 2,741,809
Add provision charged to operations                      204,931       162,500
Recoveries on loans previously charged off                25,523        72,872
                                                     ------------  ------------
                                                       3,208,454     2,977,181
  Less loans charged off                                 338,454       185,861
                                                     ------------  ------------
  Balance at end of period                           $ 2,870,000   $ 2,791,320
                                                     ============  ============
</TABLE>

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

<TABLE>
<CAPTION>
                                     September 30, 1998
                        ---------------------------------------------
                          Principal         Interest       Maturity
                           Amounts           Rates          Dates
                        --------------  ---------------  ------------
                        <C>             <C>              <C>         
                        $  36,500,000    5.55% - 5.96%       1999    
                            4,000,000    5.88% - 6.27%       2000       
                            4,256,961    5.38% - 6.40%       2001           
                           11,246,951    5.69% - 6.67%       2003          
                            9,000,000    5.25% - 6.65%       2005           
                           34,000,000    4.89% - 5.68%       2008           
                        --------------                                 
                        $  99,003,912                                   
                        ==============                                   
                                                                         
                                        June 30, 1998            
<PAGE> 10

                        --------------------------------------------- 
                          Principal         Interest       Maturity
                           Amounts           Rates          Dates
                        --------------  ---------------  ------------
                        $  43,745,440    5.55% - 6.00%       1999
                            4,000,000    5.88% - 6.27%       2000
                            1,212,676    5.56% - 6.40%       2001
                            1,138,627    6.21% - 6.49%       2002
                            9,631,854    5.69% - 6.64%       2003
                            1,711,355    6.36% - 6.67%       2004
                            9,000,000    5.25% - 6.65%       2005
                           34,000,000    4.89% - 5.68%       2008
                        --------------
                        $ 104,439,952 
                        ==============
</TABLE>


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

General
_______

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

Certain statements contained herein are not based on historical facts and are 
"forward-looking statements" within the meaning of the Private Securities 
Litigation Reform Act of 1995, such as statements relating to financial 
condition and future prospects, loan loss reserve adequacy, year 2000 
readiness, simulation of changes in interest rates, prospective results of 
operations, capital spending and financing sources, and revenue sources.  
Forward-looking statements, which are based on various assumptions (some of 
which are beyond the Company's control), may be identified by reference to a 
future period or periods, or by the use of forward-looking terminology; such as
"may", "will", "believe", "expect", "estimate", "anticipate", "continue", or 
similar terms or variations on those terms, or the negative of those terms. 
Such forward-looking statements reflect the current view of management and are 
based on information currently available to them, and upon current 
expectations, estimates, and projections regarding the Company and its 
industry, management's belief with respect there to, and certain assumptions 
made by management.  These forward-looking statements are not guarantees of 
future performance and are subject to risks, uncertainties, and other factors. 
Accordingly, actual results could differ materially from those set forth in 
forward-looking statements due to a variety of factors, including, but not 
limited to, those related to the economic environment, particularly in the 
market areas in which the Company operates, competitive products and pricing, 
fiscal and monetary policies of the U.S. Government, changes in government 
<PAGE> 11

regulations affecting financial institutions, including regulatory fees and 
capital requirements, changes in prevailing interest rates, acquisitions and 
the integration of acquired businesses, credit risk management, asset/liability
management, changes in technology, changes in the securities markets, and the 
availability of and the costs associated with sources of liquidity.

Description of Operations
_________________________

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

Financial Condition 
___________________

Total consolidated assets were $328,661,073 on September 30, 1998, which 
represents an increase of $6,128,479 from June 30, 1998.  Total net loans 
increased by $8,133,975, from June 30, 1998 to September 30, 1998, while cash 
equivalents and securities decreased by $918,650 and $1,172,696, respectively, 
during the same period.  Total deposits and repurchase agreements increased by 
$11,697,530, while Federal Home Loan Bank ("FHLB") borrowings decreased by 
$5,436,040 from June 30, 1998 to September 30, 1998.

The funds available from the decrease in cash equivalents, scheduled maturities
of securities available for sale and the increase in deposits were utilized to 
support the increase in the loan portfolio and to repay FHLB borrowings from 
June 30, 1998 to September 30, 1998.

At September 30, 1998, the carrying value of securities available for sale by 
the Company was $12,486,127, which is $17,001 less than the cost of the 
underlying securities.  The difference between the carrying value and the cost 
of the securities was primarily attributable to the decline in the market value
of equity securities from the prices at the time of purchase.  Management 
attributes the reduction in the market value of equity securities to the 
decline of the stock market, which had a greater affect on the market value of 
the Company's investments in 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 $8,025,975 for the three months ended September 30, 
1998.  The loan portfolio growth was in 1-4 family mortgages, consumer 
installment and commercial loans.  In the September 1998 quarter, the Bank 
purchased approximately $5,900,000 of 1-4 family mortgages.  The purchase 
consisted of 1-4 family fixed rate mortgages secured by property located 
primarily in the State of New York.  The continued expansion into new markets 
diversifies the credit risk and the potential economic risks of the credits 
held in the Bank's purchased loan portfolio, such that the portfolio is not 
effected solely by the local State of Maine economy.  The Bank's local market, 
as well as the secondary market, continues to be very competitive for loan 
origination volume.  The local competitive environment and customer response
to favorable secondary market rates have affected the Bank's ability to 
<PAGE> 12

increase the loan portfolio.  In an effort to increase loan volume, the Bank's 
offering rates for its loan products have been reduced to compete in the 
various markets.  The Bank will experience some margin compression due to 
decreased loan rates.

The loan portfolio contains elements of credit and interest rate risk.  The 
Bank primarily lends within its local market areas, which management believes 
helps them to better evaluate credit risk.  As the Bank expands its purchase of
loans in other states, management researches the strength of the economy in the
respective state and underwrites every loan before purchase.  These steps are 
taken to better evaluate and minimize the credit risk of out-of-state 
purchases.  The Bank also maintains a well collateralized position in real 
estate mortgages.

At September 30, 1998, residential real estate mortgages made up 60% of the 
total loan portfolio, in which 51% of the residential loans are variable rate 
products, as compared to 65% and 53%, respectively, at September 30, 1997. 
Although the Bank has purchased fixed rate loans, it is management's intent, 
where market opportunities arise, to increase the volume in variable rate 
residential loans to reduce the interest rate risk in this area. 

At September 30, 1998, 17% of the Bank's total loan portfolio balance is 
commercial real estate mortgages.  Commercial real estate loans have minimal 
interest rate risk as 88% of the portfolio consists of variable rate products. 
At September 30, 1997, commercial real estate mortgages made up 18% of the 
total loan portfolio, in which 88% of the commercial real estate loans were 
variable rate products.  The Bank tries to mitigate credit risk by lending in 
its local market area as well as maintaining a well collateralized position in 
real estate.

Commercial loans make up 10% of the total loan portfolio, of which 57% are 
variable rate instruments at September 30, 1998.  At September 30, 1997 
commercial loans made up 8% of the total loan portfolio, of which 69% were 
variable rate instruments.   The credit loss exposure on commercial loans is 
highly dependent on the cash flow of the customer's business.  The Bank  
mitigates losses by strictly adhering to the Company's underwriting and credit 
policies.

Consumer and other loans make up 13% of the loan portfolio as of September 30, 
1998 which compares to 8% at September 30, 1997.  Since these loans are 
primarily fixed rate products, they have interest rate risk when market rates 
increase.  These loans also have credit risk with minimal security.  The 
increase in consumer loans was primarily due to the volume generated from the 
automobile dealer finance department.  This department underwrites all the 
automobile dealer finance loans to protect credit quality. The Bank primarily 
pays a nominal one time origination fee on the loans.  The fees are deferred 
and amortized over the life of the loans as a yield adjustment.  Management 
attempts to mitigate credit and interest rate risk by keeping the products 
offered short-term, receiving a rate of return commensurate with the risk, and
lending to individuals in the Bank's known market areas.

The Bank's allowance for loan losses was $2,870,000 as of September 30, 1998 
versus $2,978,00 as of June 30, 1998, representing 0.99% and 1.06% of total 
loans, respectively.  The Bank had non-performing loans totaling $1,771,000 at 
September 30, 1998 compared to $2,248,000 at June 30, 1998.  Non-performing 
loans represented 0.54% and 0.70% of total assets at September 30, 1998 and 
June 30, 1998, respectively.  The Bank's allowance for loan losses was equal to
<PAGE> 13

162% and 132% of the total non-performing loans at September 30, 1998 and June 
30, 1998, respectively.  At September 30, 1998, the Bank had approximately 
$983,000 of loans classified substandard, exclusive of the non-performing loans
stated above, that could potentially become non-performing due to delinquencies
or marginal cash flows.  These substandard loans increased by $883,000 when 
compared to the $100,000 at June 30, 1998.  The increase was attributed to 
management downgrading certain loans during its internal review process.

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

<TABLE>
<CAPTION>
                                      September 30,       June 30,
                Description               1998              1998
         _________________________   _______________   _______________         
         <S>                         <C>               <C>            
         1-4 Family Mortgages        $     710,000     $     783,000  
         Commercial Mortgages              691,000           956,000  
         Commercial Loans                  310,000           509,000  
         Consumer Installment               60,000                 0  
                                     _______________   _______________
  Total non-performing               $   1,771,000     $   2,248,000  
                                     ===============   ===============
</TABLE>

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

<TABLE>

               12-31-97     03-31-98     06-30-98     09-30-98
               ________     ________     ________     ________
               <C>          <C>          <C>          <C>     
                1.72%        1.44%        1.09%        0.89%
</TABLE>

At September 30, 1998, loans classified as non-performing included 
approximately $378,000 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 0.76% as of September 30, 1998.  

The level of the allowance forloan losses as a percentage of total loans has 
decreased due to the increase of loan volume as well as a reduction in the 
allowance for loan losses balance due to the charge-off of a commercial real 
estate loan, while the level of allowance for loan losses as a percentage of 
non-performing loans increased at September 30, 1998, when compared to June 30,
1998.  Based on reviewing the credit risk and collateral of delinquent, non-
performing and classified loans, management considers the allowance for loan 
losses to be adequate.

On a regular and ongoing basis, management evaluates the adequacy of the 
allowance for loan losses.  The process to evaluate the allowance involves a 
high degree of management judgement.  The methods employed to evaluate the 
allowance for loan losses are quantitative in nature and consider such factors 
<PAGE> 14

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.

The bank's premises and equipment increased by $232,847 from June 30, 1998 to 
September 30, 1998.  The increase was due to the purchase and replacement of 
the Bank's mainframe and software.

Capital Resources and Liquidity
_______________________________

Cash provided by operating activities in the consolidated statements of cash 
flow decreased by $800,076 from September 30, 1997 to September 30, 1998 as a 
result of reduction in other liabilities due to transaction timing differences.

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

Total deposits were $195,394,972 and securities sold under repurchase 
agreements were $5,532,249 as of September 30, 1998.  These amounts represent 
an increase of $11,370,875 and $326,655, respectively, compared to June 30, 
1998.  The increase in deposits was primarily due to the $6,000,000 increase in
NOW demand deposits.  The increase in NOW deposits was attributable to the 
development of a demand account where the interest rate increases as deposit 
balances increase.  Brokered deposits represented $10,340,009 of the total 
deposits at September 30, 1998, which increased by $2,765,299 compared to the 
$7,574,710 balance as of June 30, 1998.  Cross selling strategies are employed 
by the Bank to develop deposit growth.  Even though deposit interest rates have
remained competitive, the rates of return are much higher at other financial 
instruments such as mutual funds and annuities.  Like other companies in the 
banking industry, the Bank will be challenged to maintain and or increase its 
core deposits.

Total advances from the FHLB were $99,003,912 as of September 30, 1998, a 
decrease of $5,436,040 compared to June 30, 1998.  The cash received from the 
increase in the Bank's deposits was utilized to repay FHLB advances.  The Bank 
has unused borrowing capacity from the FHLB through its advances program.  The 
<PAGE> 15

Bank's current advance availability, subject to the satisfaction of certain 
conditions, is approximately $22,000,000 over and above the September 30, 1998 
advances.  Mortgages, free of liens, pledges and encumbrances are required to 
be pledged to secure FHLB advances.  The Bank's ability to access principal 
sources of funds is immediate and with the borrowing capacity at the Federal
Home Loan Bank, the normal growth in bank deposits and repurchase agreements 
and the immediate availability of the Bank's cash equivalents as well as 
securities available for sale, management believes that the Company's available
liquidity resources are sufficient to support the Company's needs.

Total equity of the Company was $25,708,902 as of September 30, 1998 versus 
$25,139,527 at June 30, 1998.  Book value per common share was $9.44 as of 
September 30, 1998 versus $9.23 at June 30, 1998.  The total equity to total 
assets ratio of the Company was 7.82% as of September 30, 1998 and 7.79% at 
June 30, 1998.

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

FDICIA defines specific capital categories based on an institution's capital 
ratios.  The OTS has issued regulations requiring a minimum regulatory tangible
capital equal to 1.5% of adjusted total assets, core capital of 3.0%, leverage 
capital of 4.0% and a risk-based capital standard of 8.0%.  The prompt 
corrective action regulations define specific capital categories based on an 
institution's capital ratios.  The capital categories, in declining order, are 
"well capitalized", "adequately capitalized", "undercapitalized", 
"significantly undercapitalized", and "critically undercapitalized".  As of 
September 30, 1998, the most recent notification from the OTS categorized the 
Bank as well capitalized.  There are no conditions or events since that 
notification that management believes has changed the institution's category.

At September 30, 1998, the Bank's regulatory capital was in compliance with 
regulatory capital requirements as follows:

<TABLE>
<CAPTION>
                                                                To Be "Well    
                                                             Capitalized" Under
                                             For Capital     Prompt Corrective 
                             Actual       Adequacy Purposes  Action Provisions 
                        Amount    Ratio    Amount    Ratio    Amount    Ratio  
                       _________ ________ _________ ________ _________ ________
<S>                    <C>       <C>      <C>       <C>      <C>       <C>     
(Dollars in Thousands)                                                         
As of September 30,                                                            
 1998:                                                                         
Tier 1 (Core) capital                                                          
 (to risk weighted                                                             
 assets)               $ 23,386   10.46%  $  8,946    4.00%  $ 13,419    6.00% 
<PAGE> 16

Tier 1 (Core) capital                                                          
 (to total assets)     $ 23,386    7.16%  $ 13,065    4.00%  $ 16,332    5.00% 
Total Capital (to                                                             
 risk weighted assets) $ 24,796   11.09%  $ 17,892    8.00%  $ 22,365   10.00%

</TABLE>

Results of Operations
_____________________

Net income for the quarter ended September 30, 1998 was $636,037 or basic 
earnings per share of $0.24 and diluted earnings per share of $0.23.  This 
compares to earnings of $570,565 or basic earnings per share of $0.24 and 
diluted earnings per share of $0.21 for the quarter ended September 30, 1997.  
The Company anticipates earnings to steadily increase in the near future, but 
the instability of the current economy could effect the predictability of the 
Company's anticipated short term earnings.

On September 30, 1998, the Company adopted FASB Statement No. 130, "Reporting 
Comprehensive Income".  Comparative financial information in the Statements of 
Changes in Shareholders' Equity for earlier periods have been reclassified in 
accordance with the requirement of Statement No. 130. 

The Company's net interest income was $3,095,590 for the three months ended 
September 30, 1998, versus $2,765,261 for the three months ended September 30, 
1997, an increase of $330,329.  Total interest income increased $837,679 during
the three months ended September 30, 1998 compared to the three months ended 
September 30, 1997.  The increase in net income was due primarily from an 
increase in the volume of loans offset in part by a decrease in rates.  The 
increase in total interest expense of $507,350 for the three months ended 
September 30, 1998 was due 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 three months ended
                 September 30, 1998 versus September 30, 1997

<TABLE>
<CAPTION>
 
                                  Difference Due to
                                  Volume        Rate         Total   
                                ___________  ___________  ___________
<S>                             <C>          <C>          <C>         
Investments                     $ (245,503)  $  (27,741)  $ (273,244)
Loans                            1,348,258     (211,279)   1,136,979 
FHLB & Other Deposits              (26,973)         917      (26,056)
                                _____________________________________
  Total                          1,075,782     (238,103)     837,679
                                                                      
Deposits                           163,617       82,643      246,260  
Repurchase Agreements                5,489       (1,183)       4,306
Borrowings                         322,846      (66,062)     256,784
                                _____________________________________
  Total                            491,952       15,398      507,350 
<PAGE> 17

                                _____________________________________
   Net Interest Income          $  583,830   $ (253,501)  $  330,329 
                                =====================================

</TABLE>

Rate/Volume amounts spread proportionately between volume and rate.

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

Approximately 21% of the Bank's loan portfolio is comprised of floating rate 
loans based on a prime rate index.  Interest income on these existing loans 
will increase as the prime rate increases, as well as on approximately 31% 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.  Although the Company has experienced some net interest 
margin compression, the impact on net interest income will depend on, among 
other things, actual rates charged on the Bank's loan portfolio, deposit and 
advance rates paid by the Bank and loan volume.

Total non-interest income was $506,521 for the three months ended September 30,
1998 versus $555,064 for the three months ended September 30, 1997.  Service 
fee income was $253,385 for the three months ended September 30, 1998 versus 
$276,405 for the three months ended September 30, 1997.  The $23,020 service 
fee decrease for the three months ended September 30, 1998 was primarily due to
a reduction in loan servicing and deposit fee income.  Gains from available for
sale securities were $10,791 for the three months ended September 30, 1998 
versus $107,996 for the three ended September 30, 1997.  The Company sold some 
of its available for sale securities during the three month period ended 
September 30, 1997, taking advantage of the fluctuation in market prices in the
mortgage-backed security portfolio.

Other income was $236,733 for the three month period ended September 30, 1998, 
which was an increase of $67,867 when compared to other income of $168,866 for 
the three months ended September 30, 1997.  The increase in other income in the
three months ended September 30,1998, was primarily due to gains from the sale 
of 1-4 family mortgages, other real estate owned and real estate held for 
investment.

Total non-interest expense, for the Company was $2,402,657 for the three months
ended September 30, 1998 versus $2,277,221 for the three months ended September
30, 1997.  A portion of the increase in non-interest expense was due to an 
increase in compensation expense of $33,116, for the three month period ended 
September 30, 1998, attributable primarily to normal salary and benefit 
increases.  Other expenses increased by $131,627 for the three months ended 
September 30, 1998, compared to September 30, 1997.  The increase in other 
expenses during the three month period was principally due to the following: 
(i) an increase of $28,000 in processing fees due to the Bank outsourcing its 
check processing to a third party, (ii) an increase of $17,000 in advertising 
<PAGE> 18

expense (which continues the Company's strategy to increase market exposure), 
(iii) an increase of $39,000 in loan servicing fees due to the increase in 
purchased loans, (iv) an increase of $17,000 in supplies expense due to timing 
differences in purchasing, and (v) an increase of $21,000 in year 2000 
expenses. The non-interest expense increase above was offset by the reduction 
of $39,308 in occupancy and equipment expense due to reductions in maintenance 
contracts.

Impact of Inflation
___________________

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

Year 2000
_________

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

Awareness Phase
_______________

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

Assessment Phase 
________________

This phase consists of assessing the size and complexity of the problem and 
detailing the magnitude of the effort necessary to address the Year 2000 issue.
This phase must identify all hardware, software, networks, automated teller 
machines, other various processing platforms, and customer and vendor 
interdependencies affected by the Year 2000 date change.  The assessment must 
go beyond information systems and include environmental systems that are 
dependent on embedded microchips, such as security systems, elevators and 
<PAGE> 19

vaults.  During this phase management also must evaluate the Year 2000 effect 
on other strategic business initiatives.  The assessment should consider the
potential effect that mergers and acquisitions, major system development, 
corporate alliances, and system interdependencies will have on existing systems
and/or the potential Year 2000 issues that may arise from acquired systems. 
The financial institution or vendor should also identify resource needs, 
establish time frames and sequencing of Year 2000 efforts.  Resource needs 
include appropriately skilled personnel, contractors, vendor support, budget 
allocations, and hardware capacity.  This phase should clearly identify 
corporate accountability throughout the project, and policies should define 
reporting, monitoring, and notification requirements.  Finally, contingency 
plans should be developed to cover unforeseen obstacles during the renovation 
and validation phases and include plans to deal with lesser priority systems
that would be fixed later in the renovation phase.

The assessment phase has been materially completed, but is considered an 
ongoing phase for the Company.  The Company is in the process of developing its
contingency plan.  The Company has instituted a comprehensive plan to 
communicate with all its borrowers that the Company considers to be at risk 
concerning the Year 2000 issue.  The Company considers this plan necessary to 
mitigate the risk associated with borrowers not having the ability to make loan
payments due to a Year 2000 issue.  The company has currently estimated the 
following costs associated with the Year 2000 issue, (i) computer hardware 
replacement $130,000, (ii) software replacement $72,000, (iii) testing and
administrative costs $84,000, and (iv) potential contingency costs $60,000.  As
of September 30, 1998, the Company has incurred approximately $59,200 of 
cumulative Year 2000 expenses.  These costs are under continuous review and 
will be revised as needed.  There can be no assurance that actual costs will 
not exceed the Company's estimates.  During the quarter ended September 30, 
1998, the Company replaced its computer mainframe and software as planned to 
accommodate the growth of the Company through merger and acquisitions.  The 
previous mainframe and software had been fully depreciated through the normal 
course of its depreciable life and the costs associated with the replacement of
these items was in the Company's general business plan for fiscal 1999.  The 
anticipated Year 2000 hardware and software costs indicated above are in 
addition to the Company's costs associated with the replacement of the 
mainframe and software.

Renovation Phase
________________

This phase includes code enhancements, hardware and software upgrades, system 
replacements, vendor certification, and other associated changes.  Work should 
be prioritized based on information gathered during the assessment phase.  For 
institutions relying on outside 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 completion of this phase by December 31, 1998.  However, there can 
be no assurance that these servicers or vendors will become Year 2000 compliant
in a timely manner or that their plan will be completed by December 31, 1998.

Validation Phase
________________

Testing is a multifaceted process that is critical to the Year 2000 project and
<PAGE> 20

inherent in each phase of the project management plan.  This process includes 
the testing of incremental changes to hardware and software components.  In 
addition to testing upgraded components, connections with other systems must be
verified, and all changes should be accepted by internal and external users.  
Management will establish controls to assure the effective and timely 
completion of all hardware and software testing prior to final implementation.
As with the renovation phase, the Company will be in ongoing discussions with 
their vendors on the success of their validation efforts.  The Company 
anticipates completion of this phase by December 31, 1998. 

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 completion of this phase by March 31, 
1999.

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

Item 3.  Quantitative and Qualitative Disclosure about Market Risk
         _________________________________________________________

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


Part II -      OTHER INFORMATION

Item 1.   Legal Proceedings
          _________________
          None.

Item 2.   Changes in Securities
          _____________________
          None.

Item 3.   Defaults Upon Senior Securities
          _______________________________
          None.

Item 4.   Submission of Matters to a Vote of Security Holders
          ___________________________________________________
          None.

Item 5.   Other Information
<PAGE> 21

          _________________
          None.

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
          _____________________
          No reports on Form 8-K have been filed during the quarter ended 
          September 30, 1998. 



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

Date:  November 06, 1998                     NORTHEAST BANCORP             



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


NORTHEAST BANCORP
Index to Exhibits
                                    
EXHIBIT NUMBER                            DESCRIPTION                           

     11          Statement regarding computation of per share earnings 

     27          Financial data schedule