<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)
   /X/   Annual report under section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended JUNE 30, 2001.
   / /   Transition report under section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ____________ to ______________.

                         Commission file number: 0-29687
            .........................................................

                                  Eagle Bancorp
 ...............................................................................
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

             United States                                81-0531318
 ..............................................    ..............................
(State or other jurisdiction of                        (I.R.S. Employer
incorporation  or organization)                        Identification No.)

     1400 Prospect Avenue, Helena, MT                          59601
 ..............................................    ..............................
(Address of principal executive offices)                     (Zip Code)

 Issuer's telephone number:        (406) 442-3080
                           .....................................................

Securities to be registered under Section 12(b) of the Act:
         Title of class                     Name of exchange on which registered

                None                                      N/A
  ................................          ....................................

Securities to be registered under Section 12(g) of the Act:

                     Common stock, par value $0.01 per share
 ................................................................................
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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
          .........             .........

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

Issuer's revenues for its most recent fiscal year are  $12,815,000
                                                       ...................

The aggregate market value of the common stock held by non-affiliates, computed
by reference to the closing price as of September 14, 2001, was $6,692,575.

As of September 14, 2001, there were 1,203,572 shares of common stock issued and
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         1.       Portions of the proxy statements for the annual meeting of
stockholders for the fiscal years ended June 30, 2000 and June 30, 2001 and
Registrant Statement on Form SB-2 filed on December 20, 1999 (Part III).

                       TRANSITIONAL SMALL BUSINESS DISCLOSURE
                       FORMAT (CHECK ONE):

                       YES                   NO          X
                               ........              ........

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

    ITEM                                                                                                  PAGE
     NO.                                                                                                   NO.
    ----                                                                                                  ----
                  PART I

<S>               <C>                                                                                     <C>
      1           Description of Business..............................................................   1
      2           Description of Business Properties...................................................   23
      3           Legal Proceedings....................................................................   23
      4           Submission of Matters to a Vote of Security Holders..................................   24

                  PART II

      5           Market for Common Equity and Related Stockholder Matters.............................   24
      6           Management's Discussion and Analysis.................................................   24
      7           Financial Statements and Supplementary Data..........................................   31
      8           Changes in and Disagreements With Accountants on Accounting and
                     Financial Disclosure..............................................................   31

                  PART III

      9           Directors and Executive Officers of the Registrant...................................   32
     10           Executive Compensation...............................................................   32
     11           Security Ownership of Certain Beneficial Owners and Management.......................   32
     12           Certain Relationships and Related Transactions.......................................   32
     13           Exhibits List including Consolidated Statements of Financial Condition and Reports on
                  Form 8-K.............................................................................   32

</TABLE>




                                       i
<PAGE>

                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS.

GENERAL

         Eagle Bancorp (Eagle) is a federally chartered stock holding company.
Its charter was approved on April 4, 2000, when it became the mid-tier stock
holding company for American Federal Savings Bank (the Bank), a federally
chartered stock savings bank headquartered in Helena, Montana. Eagle Bancorp's
principal business is to hold the capital stock of American Federal Savings
Bank. Upon the reorganization and conversion to stock form of American Federal
Savings Bank, Eagle Bancorp issued 575,079 shares of its common stock, par value
$.01 per share (the "Common Stock") to the public at a price of $8 per share.
This represents approximately 47% of the issued and outstanding shares of the
Common Stock. The remaining 648,493 shares of the Common Stock are held by Eagle
Financial MHC, Eagle Bancorp's mutual holding company.

         American Federal Savings Bank was founded in 1922 as a Montana
chartered building and loan association and has conducted operations in Helena
since that time. In 1975, American Federal adopted a federal thrift charter. We
currently have four full service offices and one satellite branch. We also have
six automated teller machines located in our market area and we participate in
the CashCard ATM network.


BUSINESS STRATEGY

         Since our founding in Helena in 1922, we have operated in the
southcentral portion of Montana. Since the advent of NOW accounts and low and no
cost checking or other transaction accounts, we have sought to operate in a
fashion similar to a commercial bank offering these kinds of deposits and
changing our emphasis on home mortgage lending by broadening and diversifying
the kind of loans we offer. As a result of these efforts, we provide full retail
banking services, including one- to four-family residential mortgage loans, home
equity loans, lines of credit, consumer loans, commercial real estate loans and
commercial loans for businesses as well as certificates of deposit, checking
accounts, NOW accounts, savings accounts and money market accounts.

         We attract deposits from the general public and use these deposits
primarily to originate loans and to purchase investment and mortgage-backed and
other securities. The principal sources of funds for lending and investing
activities are deposits, Federal Home Loan Bank advances, the repayment, sale
and maturity of loans and sale and maturity of securities. The principal sources
of income are interest on loans and investments. The principal expense is
interest paid on deposits and Federal Home Loan Bank advances.


MARKET AREA

         From our headquarters in Helena, Montana, we operate four full service
offices, including our main office, and one satellite branch. Our satellite
branch is located in Helena and our other full service branches are located in
Bozeman (opened 1980), Butte (opened 1979) and Townsend (opened 1979), Montana.

         Montana is one of the largest states in terms of land mass but ranks as
one of the least populated states. As of June 2001 it had a population of
902,000. Helena, where we are headquartered, is the county seat of Lewis and
Clark County, which has a population of approximately 55,700 and is located
within 120 miles of four of Montana's other five largest cities: Missoula, Great
Falls, Bozeman and Butte. It is approximately midway between Yellowstone and
Glacier National Parks. Helena is also Montana's state capital. Its economy has
shown slow growth, in terms of both employment and income. State government and
the numerous offices of the federal government comprise the largest employment
sector. Helena also has significant employment in the service industries.
Specifically, it has evolved into a central health care center with employment
in the medical and the supporting professions as well as the medical insurance
industry. The local economy is also dependent to a lesser


                                       1
<PAGE>

extent upon ranching and agriculture. These have been more cyclical in nature
and remain vulnerable to severe weather conditions, increased competition, both
domestic and international, as well as commodity prices.

         Bozeman, where we have a branch, is approximately 95 miles southeast of
Helena. It is located in Gallatin County, which has a population of
approximately 67,800. Bozeman is home to Montana State University and has
achieved its recent growth in part due to the growth of the University as well
as the increased tourism for resort areas in and near Bozeman. Agriculture,
however, remains an important part of Bozeman's economy. Bozeman has also become
an attractive location for retirees, primarily from the West Coast, owing to its
many winter and summer recreational opportunities and the presence of the
University. Residential construction in Bozeman has increased more rapidly than
such construction in Helena and the other cities in which we operate.

         Butte, Montana is approximately 64 miles southwest of Helena. We have
one branch in Butte. Butte and the surrounding Silverbow County have a
population of approximately 35,000. Butte's population has declined as a result
of the decline in the mining industry which had afforded many higher paying jobs
to residents of Butte and Silverbow County. Since mining's decrease in the
1980's, population losses have stabilized and new manufacturing jobs related to
production of materials for computer chips have been created. This has been
recently offset by the loss of high paying jobs due to the sale of the Montana
Power Company.

         Townsend is the smallest community in which we operate. We have one
branch in Townsend. It has a population of about 2,000. Many of its residents
commute to other Montana locations for work. Other employment In Townsend is
primarily in agriculture and services. Townsend is approximately 32 miles
southeast of Helena.


COMPETITION

         We face strong competition in our primary market area for the
attraction of retail deposits and the origination of loans. Until recently
Montana was a unit banking state. This means that the ability of Montana state
banks to create branches was either prohibited or significantly restricted. As a
result of unit banking, Montana has a significant number of independent
financial institutions serving a single community in a single location. While
the state's population is approximately 902,000 people, there were approximately
76 credit unions in Montana as well as four federally chartered thrift
institutions, and 84 commercial banks as of December 31, 2000. Our most direct
competition for depositors has historically come from locally owned and
out-of-state commercial banks, thrift institutions and credit unions operating
in our primary market area. The number of such competitor locations has
increased significantly in recent years. Our competition for loans also comes
from banks, thrifts and credit unions in addition to mortgage bankers and
brokers. Our principal market areas can be characterized as markets with
moderately increasing incomes, low unemployment, increasing wealth (particularly
in the growing resort areas such as Bozeman), and moderate population growth.


LENDING ACTIVITIES

         GENERAL. American Federal Savings Bank primarily originates one- to
four-family residential real estate loans and, to a lesser extent commercial
real estate loans, real estate construction loans, home equity loans, consumer
loans and commercial loans. Commercial real estate loans include loans on
multi-family dwellings, loans on nonresidential property and loans on developed
and undeveloped land. Home equity loans include loans secured by the borrower's
primary residence. Typically, the property securing such loans is subject to a
prior lien. Consumer loans consist of loans secured by collateral other than
real estate, such as automobiles, recreational vehicles and boats, personal
loans and lines of credit and loans made on deposits held by the Bank.
Commercial loans consist of business loans and lines of credit on a secured and
unsecured basis.

         LOAN PORTFOLIO COMPOSITION. The following table analyzes the
composition of the Bank's loan portfolio by loan category at the dates
indicated.


                                       2
<PAGE>

<TABLE>
<CAPTION>
                                                                           AT JUNE 30,
                                                -------------------------------------------------------------------
                                                             2001                                2000
                                                --------------------------------    -------------------------------
                                                                      (DOLLARS IN THOUSANDS)

                                                                   PERCENT OF                         PERCENT OF
                                                     AMOUNT           TOTAL             AMOUNT           TOTAL
                                                     ------           -----             ------           -----
<S>                                                <C>                <C>               <C>               <C>
First mortgage loans:
  Residential mortgage (1-4 family)(1)..           $ 75,962           65.60%            $74,337           68.66%
  Commercial real estate................              9,063            7.83               7,784            7.19
  Real estate construction.............               1,982            1.71               1,453            1.34
                                                    -------            ----             -------          ------
    Total first mortgage loans.........               7,007           75.14              83,574           77.19
                                                    -------           -----             -------          ------

Other loans:
  Home equity...........................             15,698           13.56              13,654           12.61
  Consumer..............................             10,362            8.95               8,279            7.65
  Commercial............................              2,721            2.35               2,758            2.55
                                                    -------          ------             -------          ------
    Total other loans...................             28,781           24.86              24,691           22.81
                                                    -------          ------             -------          ------
Total loans.............................            115,788          100.00%            108,265          100.00%
                                                    -------          ======             -------          ======

Less:
  Deferred loan fees....................                122                                 106
  Allowance for loan losses.............                688                                 712
                                                   --------                            --------

  Total loans, net......................           $114,978                            $107,447
                                                   ========                            ========
</TABLE>
--------------------
(1)   Excludes loans held for sale.


         FEE INCOME. American Federal Savings Bank receives lending related fee
income from a variety of sources. Its principal source of this income is from
the origination and subsequent servicing of sold mortgage loans. Fees generated
from mortgage loan servicing, which generally consists of collecting mortgage
payments, maintaining escrow accounts, disbursing payments to investors and
foreclosure processing for loans held by others, were $293,000 and $300,000 for
the years ended June 30, 2001 and 2000, respectively. Other loan related fee
income for contract collections, late charges, credit life commissions and
credit card fees were $93,000 and $87,000 for the years ended June 30, 2001 and
2000, respectively.

         LOAN MATURITY SCHEDULE. The following table sets forth the estimated
maturity of the loan portfolio of the Bank at June 30, 2001. Scheduled principal
repayments of loans do not necessarily reflect the actual life of such assets.
The average life of a loan is typically substantially less than its contractual
terms because of prepayments. In addition, due on sale clauses on loans
generally give American Federal Savings Bank the right to declare loans
immediately due and payable in the event, among other things, that the borrower
sells the real property, subject to the mortgage, and the loan is not paid off.
All mortgage loans are shown to be maturing based on the date of the last
payment required by the loan agreement, except as noted. Loans having no stated
maturity, those without a scheduled payment, demand loans and delinquent loans,
are shown as due within six months.


                                       3
<PAGE>

<TABLE>
<CAPTION>
                                               WITHIN 6       6 TO 12       1 YEAR TO      2 YEARS TO
                                                MONTHS        MONTHS         2 YEARS         5 YEARS     OVER 5 YEARS      TOTAL
                                                ------        ------         -------         -------     ------------      -----
                                                                                 (IN THOUSANDS)
<S>                                               <C>          <C>            <C>           <C>           <C>            <C>
Residential mortgage (1-4 family)(1)                $255         $141           $393          $3,608        $74,598        $78,995
Commercial real estate  ............                 379          177            201           1,484          6,822          9,063
Real estate construction............                 504        1,478              0               0              0          1,982
Home equity.........................                   3          828            985           5,959          7,923         15,698
Consumer............................                 603          794            850           6,453          1,662         10,362
Commercial .........................                 119          637            171             341          1,453          2,721
                                                  ------       ------         ------         -------       --------      ---------

      Total Loans(1)................              $1,863       $4,055         $2,600         $17,845        $92,458       $118,821
                                                  ======       ======         ======         =======        =======       ========
</TABLE>
--------------------

(1)  Includes loans held for sale.

                      -----------------------------------

         The following table sets forth the dollar amount of all loans, at June
30, 2001, due after June 30, 2002, which have pre-determined interest rates and
which have floating or adjustable interest rates:

<TABLE>
<CAPTION>
                                                       FIXED            ADJUSTABLE            TOTAL
                                                       -----            ----------            -----
                                                                  (DOLLARS IN THOUSANDS)

<S>                                                   <C>                <C>                  <C>
Residential mortgage (1-4 family).......              $70,397            $8,202               $78,599
Commercial real estate..................                8,308               199                 8,507
Real estate construction................                    0                 0                     0
Home equity.............................               11,771             3,096                14,867
Consumer................................                8,627               338                 8,965
Commercial..............................                1,698               267                 1,965
                                                    ---------            ------             ---------

Total(1)................................             $100,801           $12,102              $112,903
                                                     ========           =======              ========

Percent of total........................                89.28%            10.72%               100.00%
</TABLE>
--------------------

(1)  After June 30, 2002.


                                       4
<PAGE>

         The following table sets forth information with respect to our loan
originations, purchases and sales activity for the periods indicated.

                                                 FOR THE YEARS ENDED JUNE 30,
                                                 ----------------------------
                                                  2001                2000
                                                  ----                ----
                                                         (IN THOUSANDS)

Net loans receivable at beginning of
  Period(1):.................................     $108,308           $98,103

Loans originated:
  Residential mortgage (1-4 family)..........       55,170            32,172
  Commercial real estate ....................        2,580             2,587
  Real estate construction...................        4,343             4,548
  Home equity................................        9,038             8,189
  Consumer...................................        6,834             5,336
  Commercial loans...........................        1,826             1,544
                                                  --------          --------

         Total loans originated..............       79,791            54,376
                                                  --------          --------

Loans sold:
  Whole loans................................       33,435            15,148
  Participations.............................            0                 0
                                                  --------          --------

         Total loans sold....................       33,435            15,148
                                                  --------          --------

Principal repayments.........................       36,677            29,047

Allowance for losses decrease (increase).....           24                24

Net loan increase (decrease).................        9,703            10,205
                                                  --------          --------

Net loans receivable at end of period........     $118,011          $108,308
                                                  ========          ========
--------------------

(1)  Includes loans held for sale.


         RESIDENTIAL LENDING. American Federal Savings Bank's primary lending
activity consists of the origination of one-to-four-family residential mortgage
loans secured by property located in American Federal's market area.
Approximately 65.60% of the bank's loans as of June 30, 2001, were comprised of
such loans. American Federal Savings Bank generally originates one- to
four-family residential mortgage loans in amounts up to 80% of the lesser of the
appraised value or the selling price of the mortgaged property without requiring
private mortgage insurance. A mortgage loan originated by American Federal,
whether fixed rate or adjustable rate, can have a term of up to 30 years.
American Federal Savings Bank holds substantially all of its adjustable rate and
its 8, 10 and 12 year fixed rate loans in portfolio; its fixed rate 15 year
loans are held in portfolio or sold in the secondary market depending on market
conditions. All 30 year fixed rate loans are sold in the secondary market. The
volume of loan sales is dependent on the volume, type and term of loan
originations.

         Adjustable rate loans limit the periodic interest rate adjustment and
the minimum and maximum rates that may be charged over the term of the loan. The
majority of these loans are retained in the Bank's portfolio.

         American Federal Savings Bank obtains a significant portion of its
noninterest income from servicing loans sold. American Federal Savings Bank
offers many of the fixed rate loans it originates for sale in the secondary
market on a servicing retained basis. This means that we process the borrower's
payments and send them to the purchaser. The retention of servicing enables


                                       5
<PAGE>

American Federal Savings Bank to increase fee income and maintain a relationship
with the borrower. Servicing income was $293,000 for the year ended June 30,
2001. At June 30, 2001, American Federal Savings Bank had $110.48 million in
loans sold with servicing retained. American Federal Savings Bank does not
ordinarily purchase home mortgage loans from other financial institutions.

         Property appraisals on real estate securing American Federal's
single-family residential loans are made by state certified and licensed
independent appraisers approved annually by the board of directors. Appraisals
are performed in accordance with applicable regulations and policies. American
Federal Savings Bank generally obtains title insurance policies on all first
mortgage real estate loans originated. On occasion, refinancings of mortgage
loans are approved using title reports instead of title insurance. Title reports
are also allowed on home equity loans. Borrowers generally remit funds with each
monthly payment of principal and interest, to a loan escrow account from which
American Federal Savings Bank makes disbursements for such items as real estate
taxes and hazard and mortgage insurance premiums as they become due.

         HOME EQUITY LOANS. American Federal Savings Bank also originates home
equity loans. These loans are secured by the borrowers' primary real estate, but
are typically subject to a prior lien. At June 30, 2001, $15.70 million or
13.56% of our total loans, were home equity loans. Borrowers may use the
proceeds from the Bank's home equity loans for many purposes, including home
improvement, debt consolidation, or other purchasing needs. The Bank's home
equity loans are generally fixed rate, fixed payment loans and typically have
terms of no longer than fifteen years.

         Although home equity loans are secured by real estate, they carry a
greater risk than first lien residential mortgages because of the existence of a
prior lien on the property securing the loan, as well as the flexibility the
borrower has with respect to the loan proceeds. American Federal Savings Bank
attempts to minimize this risk by maintaining conservative underwriting policies
on such loans. We make home equity loans for up to only 85% of appraised value
of the underlying real estate collateral, less the amount of any existing prior
liens on the property securing the loan.

         COMMERCIAL REAL ESTATE. American Federal Savings Bank originates
commercial real estate mortgage loans, including both developed and undeveloped
land loans, and loans on multi-family dwellings. Commercial real estate loans
make up 7.83% of the Bank's total loan portfolio, or $9.06 million at June 30,
2001. The majority of these loans are non-residential commercial real estate
loans. American Federal Savings Bank's commercial real estate mortgage loans are
primarily permanent loans secured by improved property such as office buildings,
retail stores, commercial warehouses and apartment buildings. The terms and
conditions of each loan are tailored to the needs of the borrower and based on
the financial strength of the project and any guarantors. Generally, commercial
real estate loans originated by the Bank will not exceed 70% of the appraised
value or the selling price of the property, whichever is less. The average loan
size is approximately $100,000 and is typically made with fixed rates of
interest with five to 15 year maturities. Upon maturity, the loan is repaid or
the terms and conditions are renegotiated. Generally, all originated commercial
real estate loans are within the market area of the Bank and all are within the
state of Montana. American Federal Savings Bank's largest commercial single real
estate loan had a balance of approximately $549,000 on June 30, 2001, and was
secured by a commercial office building.

         REAL ESTATE CONSTRUCTION LENDING. American Federal Savings Bank also
lends funds for the construction of one- to four-family homes. Real estate
construction loans are made both to individual homeowners for the construction
of their primary residence and to a lesser extent, to local builders for the
construction of pre-sold houses or houses that are being built for speculative
purposes. Real estate construction loans accounted for $1.98 million or 1.71% of
American Federal's loan portfolio at June 30, 2001.

         CONSUMER LOANS. As part of its strategy to invest in higher yielding
shorter term loans, American Federal Savings Bank has made significant efforts
to grow its consumer lending portfolio. This portfolio includes personal loans
secured by collateral other than real estate, personal loans and lines of
credit, and loans secured by deposits held by the Bank. As of June 30, 2001,
consumer loans totaled $10.36 million or 8.95% of the Bank's total loan
portfolio. These loans consist primarily of auto loans, boat loans, personal
loans and credit lines and deposit account loans. Consumer loans are originated
in the Bank's market area and generally have maturities of up to 10 years. For
loans secured by savings accounts, American Federal Savings Bank will lend up to
90% of the account balance on single payment loans and up to 100% for monthly
payment loans.

                                       6
<PAGE>

         Consumer loans have a shorter term and generally provide higher
interest rates than residential loans. Consumer loans can be helpful in
improving the spread between average loan yield and cost of funds and at the
same time improve the matching of the maturities of rate sensitive assets and
liabilities. Increasing its consumer loans have been a major part of American
Federal's strategy of operating more like a commercial bank than a traditional
savings bank.

         The underwriting standards employed by American Federal Savings Bank
for consumer loans include a determination of the applicant's credit history and
an assessment of the applicant's ability to meet existing obligations and
payments on the proposed loan. The stability of the applicant's monthly income
may be determined by verification of gross monthly income from primary
employment, and additionally from any verifiable secondary income.
Creditworthiness of the applicant is of primary consideration; however, the
underwriting process also includes a comparison of the value of the collateral
in relation to the proposed loan amount.

         COMMERCIAL LOANS. Commercial loans amounted to $2.72 million, or 2.35%
of the Bank's total loan portfolio at June 30, 2001. American Federal Savings
Bank's commercial loans are traditional business loans and are not secured by
real estate. Such loans may be structured as unsecured lines of credit or may be
secured by inventory, accounts receivable or other business assets. While the
commercial loan portfolio amounts to only 2.35% of the total portfolio at June
30, 2001, American Federal Savings Bank intends to increase such lending by
focusing on market segments which it has not previously emphasized, such as
business loans to doctors, lawyers, architects and other professionals as well
as to small businesses within its market area. Our management believes that this
strategy provides opportunities for growth, without significant additional cost
outlays for staff and infrastructure.

         Commercial loans of this nature usually involve greater risk than 1-4
family residential mortgage loans. The collateral we receive is typically
related directly to the performance of the borrower's business which means that
repayment of commercial loans is dependent on the successful operations and
income stream of the borrower's business. Such risks can be significantly
affected by economic conditions. In addition, commercial lending generally
requires substantially greater oversight efforts compared to residential real
estate lending.

         LOANS TO ONE BORROWER. Under federal law, savings institutions have,
subject to certain exemptions, lending limits to one borrower in an amount equal
to the greater of $500,000 or 15% of the institution's unimpaired capital and
surplus. As of June 30, 2001, our largest aggregation of loans to one borrower
was $932,000, consisting of eleven loans secured primarily by residential rental
property. This was well below our federal legal lending limit to one borrower of
approximately $2.77 million at such date. At June 30, 2001, these loans were
current.

         LOAN SOLICITATION AND PROCESSING. Our customary sources of mortgage
loan applications include repeat customers, walk-ins, and referrals from home
builders and real estate brokers. We also advertise in local newspapers and on
local radio and television. Our branch managers and loan officers located at our
headquarters and in branches, have authority to approve certain types of loans
when presented with a completed application. Other loans must be approved at our
main offices as disclosed herein. No loan consultants or loan brokers are
currently used by us for either residential or commercial lending activities.

         After receiving a loan application from a prospective borrower, a
credit report and verifications are ordered to confirm specific information
relating to the loan applicant's employment, income and credit standing. When
required by our policies, an appraisal of the real estate intended to secure the
proposed loan is undertaken by an independent fee appraiser. In connection with
the loan approval process, our staff analyze the loan applications and the
property involved. Officers and branch managers are granted lending authority
based on the kind of loan types where they possess expertise and their level of
experience. We have established a series of loan committees to approve any loans
which may exceed the lending authority of particular officers or branch
managers. A quorum of the board of directors is required for approval of any
loan more than $950,000.


                                       7
<PAGE>

         Loan applicants are promptly notified of the decision by a letter
setting forth the terms and conditions of the decision. If approved, these terms
and conditions include the amount of the loan, interest rate basis, amortization
term, a brief description of real estate to be mortgaged, tax escrow and the
notice of requirement of insurance coverage to be maintained. We generally
require title insurance on first mortgage loans and fire and casualty insurance
on all properties securing loans, which insurance must be maintained during the
entire term of the loan.

         LOAN COMMITMENTS. We generally provide commitments to fund fixed and
adjustable-rate single-family mortgage loans for periods of 60 days at a
specified term and interest rate. The total amount of our commitments to extend
credit as of June 30, 2001, was approximately $4.62 million.


NON-PERFORMING LOANS AND PROBLEM ASSETS

         COLLECTION PROCEDURES. Generally, our collection procedures provide
that when a loan is 15 or more days delinquent, the borrower is notified with a
past due notice. If the loan becomes 30 days delinquent, the borrower is sent a
written delinquent notice requiring payment. If the delinquency continues,
subsequent efforts are made to contact the delinquent borrower, including face
to face meetings and counseling to resolve the delinquency. All collection
actions are undertaken with the objective of compliance with the Fair Debt
Collection Act.

         For mortgage loans and home equity loans, if the borrower is unable to
cure the delinquency or reach a payment agreement, we will institute foreclosure
actions. If a foreclosure action is taken and the loan is not reinstated, paid
in full or refinanced, the property is sold at judicial sale at which we may be
the buyer if there are no adequate offers to satisfy the debt. Any property
acquired as the result of foreclosure or by deed in lieu of foreclosure is
classified as real estate owned until such time as it is sold or otherwise
disposed of. When real estate owned is acquired, it is recorded at the lower of
the unpaid principal balance of the related loan or its fair market value less
estimated selling costs. The initial recording of any loss is charged to the
allowance for loan losses. As of June 30, 2000, American Federal Savings Bank
had no real estate owned.

         Loans are reviewed on a quarterly basis and are placed on non-accrual
status when they are more than 90 days delinquent. Loans may be placed on
non-accrual status at any time if, in the opinion of management, the collection
of additional interest is doubtful. Interest accrued and unpaid at the time a
loan is placed on non-accrual status is charged against interest income.
Subsequent payments are either applied to the outstanding principal balance or
recorded as interest income, depending on the assessment of the ultimate
collectibility of the loan. At June 30, 2001, we had $408,000 of loans that were
non-performing and held on non-accrual status.

         DELINQUENT LOANS. The following table provides information regarding
the Bank's loans that are delinquent 30 to 89 days at June 30, 2001:

<TABLE>
<CAPTION>
                                                                              PERCENTAGE OF TOTAL
                                       NUMBER              AMOUNT              DELINQUENT LOANS
                                       ------              ------              ----------------
                                                         (DOLLARS IN THOUSANDS)
<S>                                      <C>              <C>                  <C>
Loan Type:
 Mortgage (1-4 family)....                  7                $368                 35.39%
 Consumer.................                 41                 597                 57.40
 Commercial...............                  3                  75                  7.21
                                           --              ------                ------

 Total....................                 51              $1,040                100.00%
                                           ==              ======                ======
</TABLE>


                                       8
<PAGE>

         NON-PERFORMING ASSETS. The following table sets forth information
regarding American Federal Savings Bank's non-performing assets as of the dates
indicated. The Bank does not have any troubled debt restructurings within the
meaning of the Statement of Financial Accounting Standards No. 114.

<TABLE>
<CAPTION>

                                                                               AT JUNE 30,
                                                              -----------------------------------------------
                                                                       2001                       2000
                                                              -------------------------    ------------------
                                                                          (DOLLARS IN THOUSANDS)
         <S>                                                          <C>                        <C>
         Non-accrual loans............................                 $408                       $504
         Accruing loans delinquent 90 days or more....                   91                          3
         Real estate owned............................                    0                        121
                                                                       ----                       ----

         Total........................................                 $499                       $628
                                                                       ====                       ====

         Total non-performing loans as a percentage of
         total loan portfolio.........................                 0.43%                      0.47%

         Percentage of total assets...................                 0.30%                      0.33%
</TABLE>

         The decrease in non-accrual loans during the year ended June 30, 2001,
was attributable primarily to $111,000 in residential loans which were removed
from non-accrual status. During the year ended June 30, 2001, American Federal
Savings Bank had no foreclosures. Two properties, foreclosed in the previous
fiscal year, were sold during the current fiscal year.

         During the year ended June 30, 2001, approximately $19,000 of interest
would have been recorded on loans accounted for on a non-accrual basis if such
loans had been current according to the original loan agreements for the entire
period. This amount was not included in the Bank's interest income for the
period.

         CLASSIFIED ASSETS. Management, in compliance with regulatory
guidelines, conducts an internal loan review program, whereby loans are placed
or classified in categories depending upon the level of risk of non- payment or
loss. These categories are special mention, substandard, doubtful or loss. When
a loan is classified as substandard or doubtful, management is required to
establish an allowance for loan losses in an amount that is deemed prudent. When
management classifies a loan as a loss asset, a reserve equal to 100% of the
loan balance is required to be established or the loan is required to be
charged-off. The allowance for loan losses is composed of an allowance for both
inherent risk associated with lending activities and particular problem assets.

         Management's evaluation of the classification of assets and the
adequacy of the allowance for loan losses is reviewed by the Board on a regular
basis and by the regulatory agencies as part of their examination process. In
addition, each loan that exceeds $200,000 and each group of loans that exceeds
$200,000 is monitored more closely. The following table reflects our classified
assets.


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                 AT JUNE 30,
                                              ---------------------------------------------------
                                                        2001                        2000
                                              --------------------------     --------------------
                                                                (IN THOUSANDS)
<S>                                                    <C>                       <C>
Residential mortgages
  (1-4 family):
   Special mention....................                      $0                        $240
   Substandard........................                     983                         689
   Doubtful...........................                       0                           0
   Loss...............................                       0                           0

Commercial Real Estate:
   Special mention....................                      49                           0
   Substandard........................                       0                           0
   Doubtful...........................                       0                           0
   Loss...............................                       0                           0

Home equity loans:
   Special mention....................                       0                           0
   Substandard........................                     220                         218
   Doubtful...........................                       0                           0
   Loss...............................                       0                           0

Consumer loans:
   Special mention....................                       0                           0
   Substandard........................                      43                          31
   Doubtful...........................                       0                           0
   Loss...............................                      23                          19

Commercial loans:
   Special mention....................                     157                         150
   Substandard........................                      20                          89
   Doubtful...........................                       0                           0
   Loss...............................                       5                          10

Real estate owned:
   Special mention....................                       0                           0
   Substandard........................                       0                         121
   Doubtful...........................                       0                           0
   Loss...............................                       0                          12
                                                        ------                      ------

Total classified loans and real
estate owned..........................                  $1,500                      $1,579
                                                        ======                      ======
</TABLE>

         ALLOWANCE FOR LOAN LOSSES AND REAL ESTATE OWNED. American Federal
Savings Bank segregates the loan portfolio for loan losses into the following
broad categories: residential mortgages (1-4 family), commercial real estate,
real estate construction commercial loans, home equity loans and consumer loans.
American Federal Savings Bank provides for a general allowance for losses
inherent in the portfolio by the above categories, which consists of two
components. General loss percentages are calculated based on historical analyses
and other factors. A supplemental portion of the allowance is calculated for
inherent losses which probably exist as of the evaluation date even though they
might not have been identified by the more objective processes used. This is due
to the risk of error and/or inherent imprecision in the process. This portion of
the allowance is particularly subjective and requires judgments based on
qualitative factors which do not lend themselves to exact mathematical
calculations such as: trends in delinquencies and non-accruals; trends in
volume; terms and portfolio mix; new credit products;


                                       10
<PAGE>

changes in lending policies and procedures; changes in the outlook for the
local, regional and national economy; and peer group comparisons.

         At least quarterly, the management of the Bank evaluates the need to
establish reserves against losses on loans and other assets based on estimated
losses on specific loans and on any real estate owned when a finding is made
that a loss is estimable and probably. Such evaluation includes a review of all
loans for which full collectibility may not be reasonably assured and considers;
among other matters; the estimated market value of the underlying collateral of
problem loans; prior loss experience; economic conditions; and overall portfolio
quality.

         Provisions for losses are charged against earnings in the period they
are established. We had $688,000 in allowances for loan losses at June 30, 2001.

         While we believe we have established our existing allowance for loan
losses in accordance with generally accepted accounting principles, there can be
no assurance that regulators, in reviewing our loan portfolio, will not request
that we significantly increase our allowance for loan losses, or that general
economic conditions, a deteriorating real estate market, or other factors will
not cause us to significantly increase our allowance for loan losses, therefore
negatively affecting our financial condition and earnings.

         In making loans, we recognize that credit losses will be experienced
and that the risk of loss will vary with, among other things, the type of loan
being made, the creditworthiness of the borrower over the term of the loan and,
in the case of a secured loan, the quality of the security for the loan.

         It is our policy to review our loan portfolio, in accordance with
regulatory classification procedures, on at least a quarterly basis.
Additionally, we maintain a program of reviewing loan applications prior to
making the loan and immediately after loans are made in an effort to maintain
loan quality.

         The following table sets forth information with respect to our
allowance for loan losses at the dates indicated:

<TABLE>
<CAPTION>
                                                             FOR YEARS ENDED JUNE 30,
                                                       --------------------------------------
                                                             2001                 2000
                                                       -----------------    -----------------
                                                              (DOLLARS IN THOUSANDS)

<S>                                                        <C>                <C>
Balance at beginning of period.................               $712               $737
Loans charged-off..............................                (43)               (42)
Recoveries.....................................                 19                  2
                                                              ----               ----
Net loans charged-off..........................                (24)               (40)
                                                              ----               ----
Provision for possible loan losses.............                  0                 15
                                                              ----               ----

Balance at end of period.......................               $688               $712
                                                              ====               ====

Allowance for loan losses to total loans.......               0.60%              0.66%

Allowance for loan losses to total non-
  performing loans.............................             137.88%            141.27%

Net charge-offs to average loans
  outstanding during the period................              (0.02)%            (0.04)%
</TABLE>



                                       11
<PAGE>


         The following table presents our allocation of the allowance for loan
losses by loan category and the percentage of loans in each category to total
loans at the periods indicated.

<TABLE>
<CAPTION>
                                                                                AT JUNE 30,
                                     -----------------------------------------------------------------------------------------------
                                                          2001                                               2000
                                     -----------------------------------------------    --------------------------------------------
                                                                       LOANS IN                                           LOANS IN
                                                   PERCENTAGE OF         EACH                         PERCENTAGE OF         EACH
                                                    ALLOWANCE TO      CATEGORY TO                      ALLOWANCE TO     CATEGORY TO
                                       AMOUNT     TOTAL ALLOWANCE     TOTAL LOANS        AMOUNT      TOTAL ALLOWANCE    TOTAL LOANS
                                       ------     ---------------     -----------        ------      ---------------    ------------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                   <C>              <C>              <C>             <C>             <C>                 <C>
First Mortgage Loans :
  Residential mortgage (1-4
    family).......................      $191             27.76%           65.60%          $175            24.58%              68.66%
  Commercial real estate..........       190             27.62             7.83            197            27.67                7.19
  Real estate construction........         1              0.15             1.71              1             0.13                1.34
                                         ---             -----            -----            ---            -----               -----
          Total mortgage loans....       382             55.53            75.14            373            52.39               77.19
                                         ---             -----            -----            ---            -----               -----

Other loans:
  Home equity.....................       165             23.98            13.56            179            25.14               12.61
  Consumer........................       111             16.13             8.95            104            14.61                7.65
  Commercial......................        30              4.36             2.35             56             7.86                2.55
                                         ---             -----            -----            ---            -----               -----
          Total other loans.......       306             44.47            24.86            339            47.61               22.81
                                         ---             -----            -----            ---            -----               -----

          Total...................      $688            100.00%          100.00%          $712           100.00%             100.00%
                                        ====            ======           ======           ====           ======              ======
</TABLE>

INVESTMENT ACTIVITIES

         GENERAL. Federally chartered savings banks such as American Federal
Savings Bank have the authority to invest in various types of investment
securities, including United States Treasury obligations, securities of various
Federal agencies (including securities collateralized by mortgages),
certificates of deposits of insured banks and savings institutions, municipal
securities, corporate debt securities and loans to other banking institutions.

         Eagle maintains liquid assets which may be invested in specified
short-term securities and other investments. Liquidity levels may be increased
or decreased depending on the yields on investment alternatives. They may also
be increased based on management's judgment as to the attractiveness of the
yields then available in relation to other opportunities. Liquidity levels can
also change based on management's expectation of future yield levels, as well as
management's projections as to the short-term demand for funds to be used in the
Bank's loan origination and other activities. Eagle maintains an investment
securities portfolio and a mortgage-backed securities portfolio as part of its
investment portfolio.

         INVESTMENT POLICIES. The investment policy of Eagle, which is
established by the board of directors, is designed to foster earnings and
liquidity within prudent interest rate risk guidelines, while complementing
American Federal's lending activities. The policy provides for
available-for-sale, held-to-maturity and trading classifications. However, Eagle
does not hold any securities for purposes of trading and does not anticipate
doing so in the future. The policy permits investments in high credit quality
instruments with diversified cash flows while permitting us to maximize total
return within the guidelines set forth in our interest rate risk and liquidity
management policy. Permitted investments include but are not limited to U.S.
government obligations, government agency or government-sponsored agency
obligations, state, county and municipal obligations, and mortgage-backed
securities. Collateralized mortgage obligations guaranteed by government or
government-sponsored agencies, investment grade corporate debt securities, and
commercial paper are also included. We also invest in Federal Home Loan Bank
overnight deposits and federal funds, but these instruments are not considered
part of the investment portfolio.

         Our investment policy also includes several specific guidelines and
restrictions to insure adherence with safe and sound activities. The policy
prohibits investments in high risk mortgage derivative products (as defined


                                       12
<PAGE>

within the policy) without prior approval from the board of directors.
Management must demonstrate the business advantage of such investments. In
addition, the policy limits the maximum amount of the investment in a specific
investment category. We do not participate in hedging programs, interest rate
swaps, or other activities involving the use of off-balance sheet derivative
financial instruments, except certain financial instruments utilized as cash
flow hedges related to loans committed to be sold in the secondary market.
Further, Eagle does not invest in securities which are not rated investment
grade.

         The board through its asset liability committee has charged the Chief
Financial Officer to implement the investment policy. All transactions are
reported to the board of directors monthly, as well as the current composition
of the portfolio, including market values and unrealized gains and losses.

         INVESTMENT SECURITIES. We maintain a portfolio of investment
securities, classified as either available-for-sale or held-to-maturity to
enhance total return on investments. At June 30, 2001, our investment securities
were U.S. government and agency obligations, Small Business Administration
pools, municipal securities, mortgage-backed securities and corporate
obligations, all with varying characteristics as to rate, maturity and call
provisions. Investment securities held-to-maturity represented 23.32% of Eagle's
total investment portfolio. Securities available-for-sale totaled 76.68% of
Eagle's total investment portfolio.

         CORPORATE DEBT. We also invest in corporate securities. Corporate bonds
may offer a higher yield than a U.S. Treasury security of comparable duration.
These debt instruments also may have a higher risk of default due to adverse
change in the creditworthiness of the issuer. Our policy limits investments in
corporate bonds to securities rated investment grade or better.

         MORTGAGE-BACKED SECURITIES AND SMALL BUSINESS ADMINISTRATION LOAN
POOLS. We invest in mortgage-backed securities to provide earnings, liquidity,
cash flows and diversification to our overall balance sheet. These
mortgage-backed securities are classified as either available-for-sale or
held-to-maturity. These securities are participation certificates issued and
guaranteed by the Government National Mortgage Association, Freddie Mac and
Fannie Mae and secured by interests in pools of mortgages. Mortgage-backed
securities typically represent a participation interest in a pool of
single-family or multi-family mortgages, although we focus investments on
mortgage-backed securities secured by single-family mortgages. Expected
maturities will differ from the maturities actually set forth in the loans in
the pools due to scheduled repayments and because borrowers may have the right
to call or prepay obligations with or without prepayment penalties.

         Mortgage-backed securities typically are issued with stated principal
amounts. The securities are backed by pools of mortgages that have loans with
interest rates that are within a set range and have varying maturities. The
underlying pool of mortgages can be composed of either fixed-rate or adjustable
rate mortgage loans. Mortgage-backed securities are generally referred to as
mortgage participation certificates of pass-through certificates. The interest
rate risk characteristics of the underlying pool of mortgages (i.e., fixed-rate
or adjustable-rate) and the prepayment risk, are passed on to the certificate
holder. The life of a mortgage-backed pass-through security is equal to the life
of the underlying mortgages.

         Eagle also invests in securities secured by pools of Small Business
Administration loans. The securities are created and serviced by various issuers
and consist of pools of the guaranteed portions of Small Business Administration
business loans which are consolidated by the issuers and which are guaranteed by
the Small Business Administration as to payment of principal and interest. There
is an active secondary market for such securities and American Federal Savings
Bank believes that its investments in such pools are liquid investments.

         COLLATERALIZED MORTGAGE OBLIGATIONS. We also invest in collateralized
mortgage obligations, issued or sponsored by Fannie Mae and Freddie Mac.
Collateralized mortgage obligations are a type of debt security that aggregates
pools of mortgages and mortgage-backed securities and creates different classes
of securities with varying maturities and amortization schedules as well as a
residual interest with each class having different risk characteristics. The
cash flows from the underlying collateral are usually divided into "tranches" or
classes which have descending priorities with respect to the distribution of
principal and interest repayment of the underlying mortgages and mortgage-backed
securities as opposed to pass through mortgage-backed securities where cash
flows are distributed pro rata to all security holders. Unlike mortgage-backed
securities from which cash flow is received and prepayment risk is shared pro
rata by all securities holders, cash flows from the mortgages and


                                       13
<PAGE>

mortgage-backed securities underlying collateralized mortgage obligations are
paid in accordance with a predetermined priority to investors holding various
tranches of such securities or obligations. A particular tranche may carry
prepayment risk which may be different from that of the underlying collateral
and other tranches. Investing in collateralized mortgage obligations allows us
to protect ourselves to a degree from reinvestment risk resulting from
unexpected prepayment activity associated with conventional mortgage-backed
securities. Management believes these securities represent attractive
alternatives relative to other investments due to the wide variety of maturity,
repayment and interest rate options available. At June 30, 2001, 4.21% of our
investment portfolio (exclusive of interest-bearing-deposits with banks)
consisted of collateralized mortgage obligations.

         OTHER SECURITIES. Equity securities owned consist of a $1.49 million
investment in Federal Home Loan Bank of Seattle common stock as of June 30,
2001. As a member of the Federal Home Loan Bank of Seattle, ownership of Federal
Home Loan Bank of Seattle common shares is required. The remaining securities
and deposits provide diversification and complement our overall investment
strategy.

         The following table sets forth the carrying value of Eagle's investment
and mortgage-backed securities portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                                AT JUNE 30,
                                                          --------------------------------------------------------
                                                                     2001                          2000
                                                          ----------------------------    ------------------------

                                                             BOOK        PERCENTAGE         BOOK      PERCENTAGE
                                                             VALUE        OF TOTAL          VALUE      OF TOTAL
                                                             -----        --------          -----      --------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                                         <C>            <C>              <C>          <C>
Securities available-for-sale, at fair value:
U.S. Government and agency obligations...........           $4,610         13.33%           $4,151       13.96%
Corporate obligations............................            7,306         21.12             6,062       20.39
Municipal obligations............................            4,245         12.27             3,056       10.28
Collateralized mortgage obligations..............            1,186          3.43               361        1.21
Mortgage-backed securities.......................            4,103         11.86             4,583       15.42
Corporate preferred stock........................              154          0.45               201        0.68
                                                            ------         -----            ------       -----

Total securities available-for-sale..............           21,604         62.46            18,414       61.94
                                                            ------         -----            ------       -----

Securities held-to-maturity, at book value:

U.S. Government and Agency obligations...........            1,396          4.04             2,888        9.71
Mortgage-backed securities.......................            4,096         11.84             5,965       20.06
Municipal obligations............................            1,079          3.12             1,070        3.60
                                                            ------        ------            ------       -----

 Total securities held-to-maturity...............            6,571         19.00             9,923       33.37
                                                            ------         -----            ------       -----

Total securities.................................           28,175         81.46            28,337       95.51
                                                            ------         -----            ------       -----

Interest-bearing deposits........................            4,925         14.24                 0           0

Federal Home Loan Bank capital stock, at cost....            1,487          4.30             1,393        4.69
                                                            ------        ------            ------       -----

Total............................................          $34,587        100.00%          $29,730      100.00%
                                                           =======        ======           =======      ======
</TABLE>

         The following table sets forth information regarding the carrying
values, weighted average yields and maturities of Eagle's investment and
mortgage-backed securities portfolio at June 30, 2001.

                                       14
<PAGE>
<TABLE>
<CAPTION>
                                                                                   AT JUNE 30, 2001
                                               -------------------------------------------------------------------------------------
                                                    ONE YEAR OR LESS            ONE TO FIVE YEARS           MORE THAN FIVE YEARS
                                                    ----------------            -----------------           --------------------

                                                              ANNUALIZED                    ANNUALIZED                   ANNUALIZED
                                                               WEIGHTED                      WEIGHTED                     WEIGHTED
                                                CARRYING       AVERAGE      CARRYING         AVERAGE        CARRYING      AVERAGE
                                                  VALUE         YIELD         VALUE           YIELD           VALUE        YIELD
                                                  -----         -----         -----           -----           -----        -----
                                                                                                      (DOLLARS IN THOUSANDS)
<S>                                              <C>           <C>            <C>            <C>           <C>            <C>
Securities available-for-sale:
U.S. Government and agency
  obligations..............................        $507          6.30%          $525           6.55%         $3,578         5.58%
Corporate obligations......................         691          6.39          6,615           6.59               0         0.00
Municipal obligations......................           0          0.00              0           0.00           4,245         6.91
Collateralized mortgage obligations........           0          0.00              0           0.00           1,186         5.62
Mortgage-backed securities                            0          0.00            309           7.01           3,794         7.04
Corporate preferred stock..................           0          0.00              0           0.00             154         8.07
                                                  -----                        -----                         ------

Total securities available-for-sale........       1,198          6.35          7,449           6.60          12,957         6.48
                                                  -----                        -----                         ------

Securities held-to-maturity:
U.S. Government and agency obligations.....       1,396          6.13              0           0.00               0         0.00
Mortgage-backed securities.................         211          7.50          1,342           6.28           2,543         6.03
Municipal obligations......................           0          0.00            523           5.84             556         6.70
                                                  -----                        -----                         ------

Total securities held-to-maturity..........       1,607          6.31          1,865           6.16           3,099         6.15
                                                  -----                        -----                         ------

Total securities...........................       2,805          6.33          9,314           6.51          16,056         6.42
                                                  -----                        -----                         ------

Interest-bearing deposits..................       4,925          3.96              0           0.00               0          0.00
                                                  -----                        -----                         ------

Federal Home Loan Bank capital stock.......           0          0.00              0           0.00           1,487         7.00
                                                 ------                        -----                         ------

Total......................................      $7,730          4.82%        $9,314           6.51%        $17,543         6.47%
                                                 ======                       ======                        =======
<CAPTION>
                                                            AT JUNE 30, 2001
                                            ------------------------------------------------
                                                       TOTAL INVESTMENT SECURITIES
                                                       ---------------------------

                                                                                ANNUALIZED
                                                              APPROXIMATE        WEIGHTED
                                               CARRYING         MARKET           AVERAGE
                                                 VALUE           VALUE            YIELD
                                                 -----           -----            -----

<S>                                            <C>           <C>                 <C>
Securities available-for-sale:
U.S. Government and agency
  obligations..............................      $4,610        $4,610              5.77%
Corporate obligations......................       7,306         7,306              6.57
Municipal obligations......................       4,245         4,245              6.91
Collateralized mortgage obligations........       1,186         1,186              5.62
Mortgage-backed securities                        4,103         4,103              7.04
Corporate preferred stock..................         154           154              8.07
                                                 ------        ------

Total securities available-for-sale........      21,604        21,604              6.51
                                                 ------        -----

Securities held-to-maturity:
U.S. Government and agency obligations.....       1,396         1,415              6.13
Mortgage-backed securities.................       4,096         4,150              6.19
Municipal obligations......................       1,079         1,092              6.29
                                                 ------        ------

Total securities held-to-maturity..........       6,571         6,657              6.19

Total securities...........................      28,175        28,261              6.44

Interest-bearing deposits..................       4,925         4,925              3.96

Federal Home Loan Bank capital stock.......       1,487         1,487              7.00
                                                 ------        ------
Total......................................
                                                $34,587       $34,673              6.11%
                                                =======       =======
</TABLE>
                                       15
<PAGE>


SOURCES OF FUNDS

         GENERAL. Deposits are the major source of our funds for lending and
other investment purposes. Borrowings (principally from the Federal Home Loan
Bank of Seattle) are also used to compensate for reductions in the availability
of funds from other sources. In addition to deposits and borrowings, we derive
funds from loan and mortgage-backed securities principal repayments, and
proceeds from the maturity, call and sale of mortgage-backed securities and
investment securities and from the sale of loans. Loan and mortgage-backed
securities payments are a relatively stable source of funds, while deposit
inflows are significantly influenced by general interest rates and money market
conditions.

         DEPOSITS. We offer a variety of deposit accounts. Deposit account terms
vary, primarily as to the required minimum balance amount, the amount of time
that the funds must remain on deposit and the applicable interest rate.

         Our current deposit products include certificates of deposit accounts
ranging in terms from 90 days to five years as well as checking, savings and
money market accounts. Individual retirement accounts (IRAs) are included in
certificates of deposit.

         Deposits are obtained primarily from residents of Helena, Bozeman,
Butte and Townsend. We believe we are able to attract deposit accounts by
offering outstanding service, competitive interest rates and convenient
locations and service hours. We use traditional methods of advertising to
attract new customers and deposits, including radio, television, print media
advertising and sales training and incentive programs for employees. We do not
utilize the services of deposit brokers and management believes that an
insignificant number of deposit accounts are held by non-residents of Montana.

         We pay interest rates on deposits which are competitive in our market.
Interest rates on deposits are set weekly by senior management, based on a
number of factors, including: projected cash flow; a current survey of a
selected group of competitors' rates for similar products; external data which
may influence interest rates; investment opportunities and loan demand; and
scheduled certificate maturities and loan and investment repayments.

         Core-deposits are deposits which are more stable and somewhat less
sensitive to rate changes. They also represent a lower cost source of funds than
rate sensitive, more volatile accounts such as certificates of deposit. We
believe that our core deposits are our checking, as well as NOW accounts,
passbook and statement savings accounts, money market accounts and IRA accounts.
Based on our historical experience, we include IRA accounts funded by
certificates of deposit as core deposits because they exhibit the principal
features of core deposits in that they are stable and generally are not rate
sensitive. Core deposits amounted to $85.76 million or 63.97% of the Bank's
deposits at June 30, 2001 ($67.11 million or 50.06% if IRA certificates of
deposit are excluded). The presence of a high percentage of core deposits and,
in particular, transaction accounts, is part of our strategy to restructure our
liabilities to more closely resemble the lower cost liabilities of a commercial
bank. However, a significant portion of our deposits remain in certificate of
deposit form. These certificates of deposit, should they mature and be renewed
at higher rates, will result in an increase in our cost of funds.

         The following table sets forth American Federal's distribution of
deposit accounts at the dates indicated and the weighted average interest rate
on each category of deposit represented:



                                       16
<PAGE>

<TABLE>
<CAPTION>

                                                                                 AT JUNE 30,
                                           -----------------------------------------------------------------------------------------
                                                            2001                                           2000
                                           ---------------------------------------     ---------------------------------------------

                                                                        WEIGHTED                                         WEIGHTED
                                                         PERCENT        AVERAGE                         PERCENT          AVERAGE
                                             AMOUNT      OF TOTAL        RATE            AMOUNT         OF TOTAL           RATE
                                             ------      --------        ----            ------         --------           ----
                                                                            (DOLLARS IN THOUSANDS)
<S>                                          <C>            <C>         <C>              <C>              <C>            <C>
Noninterest checking...............            $6,486         4.84%       0.00%            $5,732           4.60%          0.00%
Passbook savings...................            20,688        15.43        3.00             20,936          16.82           3.00
NOW account/Interest bearing
  checking.........................            22,536        16.81        1.00             22,850          18.35           1.50
Money market accounts..............            17,399        12.98        3.78             14,716          11.82           3.97
                                              -------       ------                        -------         ------

Total..............................            67,109        50.06        2.24             64,234          51.59           2.42
                                              -------       ------                        -------         ------

Certificates of deposit accounts:
   IRA certificates................            18,646        13.91        5.05             19,251          15.46           5.36
   Step-rate certificates..........             1,724         1.29        5.16              3,451           2.77           5.29
   Other certificates..............            46,571        34.74        5.69             37,577          30.18           5.64
                                              -------       ------                        -------         ------
Total certificates of deposit......
                                               66,941        49.94        5.50             60,279          48.41           5.53
                                              -------       ------                        -------         ------

    Total deposits.................          $134,050       100.00%       3.87%          $124,513         100.00%          3.93%
                                             ========       ======                       ========         ======

<CAPTION>

         The following table sets forth the amounts and maturities of our
certificates of deposit as of June 30, 2001, for the maturity dates indicated:


                                                        CERTIFICATE OF DEPOSIT MATURITIES AS OF JUNE 30, 2001
                                    ------------------------------------------------------------------------------------------------
                                                                                (IN THOUSANDS)

                                                                                                  AFTER
                                         JUNE 30,         JUNE 30,           JUNE 30,            JUNE 30,
                                           2002             2003               2004                2005             TOTAL
                                           ----             ----               ----                ----             -----

<S>                                      <C>               <C>                <C>                  <C>              <C>
                4.01-6%......            $34,066           $8,289             $1,288               $427             $44,070
                6.01-8%......             20,075            1,731                494                571              22,871
                                         -------          -------             ------              -----              ------
                Total........            $54,141          $10,020             $1,782               $998             $66,941
                                         =======          =======             ======               ====             =======
</TABLE>


                                       17
<PAGE>

         The following table shows the amount of certificates of deposit of
$100,000 or more by time remaining until maturity as of June 30, 2001:

<TABLE>
<CAPTION>
                                                             JUMBO CERTIFICATES BY MATURITY
                            -------------------------------------------------------------------------------------------------
                                           MATURITY PERIOD                                        AMOUNT
                                                                                              (IN THOUSANDS)

<S>                                                                                            <C>
                            3 months or less..........................                          $2,769
                            Over 3 to 6 months........................                           1,826
                            Over 6 to 12 months.......................                           2,562
                            Over 12 months............................                           2,134
                                                                                                 -----

                                      Total...........................                          $9,291
                                                                                                ======

<CAPTION>

         The following table sets forth the net changes in deposit accounts for
the periods indicated:


                                                           YEAR ENDED JUNE 30,
                                          ------------------------------------------------------
                                                   2001                          2000
                                          ------------------------      ------------------------
                                                         (DOLLARS IN THOUSANDS)
<S>                                                <C>                        <C>
Opening balance...................                 $124,513                   $120,822
Deposits (Withdrawals), Net.......                    4,575                       (746)
Interest credited.................                    4,962                      4,437
                                                    -------                    -------

Ending balance....................                 $134,050                   $124,513
                                                    =======                    =======

Net increase......................                   $9,537                     $3,691

Percent increase..................                     7.66%                      3.05%

Weighted average cost of
  deposits during the period......                     4.01%                      3.87%

Weighted average cost
   of deposits at end of period...                     3.72%                      3.93%

</TABLE>

         Our depositors are primarily residents of the state of Montana. We have
no brokered deposits.


         BORROWINGS. Deposits are the primary source of funds for our lending
and investment activities and for general business purposes. However, as the
need arises or in order to take advantage of funding opportunities, we also
borrow funds in the form of advances from the Federal Home Loan Bank of Seattle
to supplement our supply of lendable funds and to meet deposit withdrawal
requirements.

         The following table sets forth information concerning our borrowing
from the Federal Home Loan Bank of Seattle at the end of, and during, the
periods indicated:



                                       18
<PAGE>

<TABLE>
<CAPTION>

                                                                              AT OR FOR THE YEAR ENDED JUNE 30,
                                                                 ------------------------------------------------------------
                                                                          2001                               2000
                                                                 ------------------------         ---------------------------
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                                       <C>                            <C>
    Advances from Federal Home Loan Bank:
      Average balance...................................                  $10,836                        $10,087
      Maximum balance at any month-end..................                   12,174                         14,127
      Balance at period end.............................                   11,444                          8,683
                                                                          -------                         ------

      Weighted average interest rate during the period..                     6.24%                          6.43%
      Weighted average interest rate at period end......                     6.15%                          6.42%

</TABLE>

SUBSIDIARY ACTIVITY

         We are permitted to invest in the capital stock of, or originate
secured or unsecured loans to, subsidiary corporations. We do not have any
subsidiaries, except for American Federal Savings Bank, the wholly owned
subsidiary of Eagle Bancorp.

PERSONNEL

         As of June 30, 2001, we had 73 full-time employees and three part-time
employees. The employees are not represented by a collective bargaining unit. We
believe our relationship with our employees to be good.


                                   REGULATION

         Set forth below is a brief description of laws which relate to the
regulation of American Federal and Eagle Bancorp. The description does not
purport to be complete and is qualified in its entirety by reference to
applicable laws and regulations.

REGULATION OF AMERICAN FEDERAL SAVINGS BANK

         GENERAL. As a federally chartered savings bank and a member of the
FDIC's Savings Association Insurance Fund, American Federal Savings Bank is
subject to extensive regulation by the Office of Thrift Supervision and the
FDIC. Lending activities and other investments must comply with federal
statutory and regulatory requirements. American Federal Savings Bank is also
subject to reserve requirements of the Federal Reserve System. Federal
regulation and supervision establishes a comprehensive framework of activities
in which an institution can engage and is intended primarily for the protection
of the Savings Association Insurance Fund of the FDIC and depositors. This
regulatory structure gives the regulatory authorities extensive discretion in
connection with their supervisory and enforcement activities and examination
policies, including policies regarding the classification of assets and the
establishment of adequate loan loss reserves.

         The Office of Thrift Supervision regularly examines American Federal
Savings Bank and prepares a report on its examination findings to American
Federal's board of directors. American Federal's relationship with its
depositors and borrowers is also regulated by federal law, especially in such
matters as the ownership of savings accounts and the form and content of
American Federal's mortgage documents.

         American Federal Savings Bank must file reports with the Office of
Thrift Supervision and the FDIC concerning its activities and financial
condition, and must obtain regulatory approvals prior to entering into
transactions such as mergers with or acquisitions of other financial
institutions. Any change in such regulations, whether by the Office of Thrift
Supervision, the FDIC or the United States Congress, could have a material
adverse impact on Eagle and American Federal, and their operations.

                                       19
<PAGE>

         INSURANCE OF DEPOSIT ACCOUNTS. The deposit accounts held by American
Federal Savings Bank are insured by the Savings Association Insurance Fund of
the FDIC to a maximum of $100,000 as permitted by law. Insurance on deposits may
be terminated by the FDIC it if finds an institution has engaged in unsafe or
unsound practices, is in an unsafe or unsound condition to continue operations
or has violated any applicable law, regulation, rule, order or condition imposed
by the FDIC or the institution's primary regulator.

         REGULATORY CAPITAL REQUIREMENTS. Office of Thrift Supervision capital
regulations require savings institutions to meet three capital standards. The
standards are tangible capital equal to 1.5% of adjusted total assets, core
capital equal to at least 4% of total adjusted assets, and risk-based capital
equal to 8% of total risk-weighted assets. American Federal's capital ratios at
June 30, 2001, are set forth below.

<TABLE>
<CAPTION>
                                                      ACTUAL                 FOR CAPITAL ADEQUACY PURPOSES
                                                      ------                 -----------------------------
                                               AMOUNT          RATIO           AMOUNT             RATIO
                                               ------          -----           ------             -----

                                                                 (DOLLARS IN THOUSANDS)
<S>                                             <C>             <C>            <C>                 <C>
        Tangible......................          $18,315         11.04%         $2,488              1.5%
        Leverage......................           18,315         11.04           6,635              4.0
        Tier 1 risk-based.............           18,315         18.51           3,958              4.0
        Total risk-based..............           18,975         19.18           7,916              8.0
</TABLE>

        Tangible capital is defined as core capital less all intangible assets,
less mortgage servicing rights and less investments. Core capital is defined as
common stockholders' equity, noncumulative perpetual preferred stock and
minority interests in the equity accounts of consolidated subsidiaries,
nonwithdrawable accounts and pledged deposits of mutual savings associations and
qualifying supervisory goodwill, less nonqualifying intangible assets, mortgage
servicing rights and investments.

         The risk-based capital standard for savings institutions requires the
maintenance of total risk-based capital of 8% of risk-weighted assets.
Risk-based capital is comprised of core and supplementary capital. The
components of supplementary capital include, among other items, cumulative
perpetual preferred stock, perpetual subordinated debt, mandatory convertible
subordinated debt, intermediate-term preferred stock, and the portion of the
allowance for loan losses not designated for specific loan losses. The portion
of the allowance for loan and lease losses includable in supplementary capital
is limited to a maximum of 1.25% of risk-weighted assets. Overall, supplementary
capital is limited to 100% of core capital. A savings association must calculate
its risk-weighted assets by multiplying each asset and off-balance sheet item by
various risk factors as determined by the Office of Thrift Supervision, which
range from 0% for cash to 100% for delinquent loans, property acquired through
foreclosure, commercial loans, and other assets.

         Office of Thrift Supervision rules require a deduction from capital for
institutions which have unacceptable levels of interest rate risk. The Office of
Thrift Supervision calculates the sensitivity of an institution's net portfolio
value based on data submitted by the institution in a schedule to its quarterly
Thrift Financial Report and using the interest rate risk measurement model
adopted by the Office of Thrift Supervision. The amount of the interest rate
risk component, if any, is deducted from an institution's total capital in order
to determine if it meets its risk-based capital requirement. Federal savings
institutions with less than $300 million in assets and a risk-based capital
ratio above 12% are exempt from filing the interest rate risk schedule. However,
the Office of Thrift Supervision may require any exempt institution to file such
schedule on a quarterly basis and may be subject to an additional capital
requirement based on its level of interest rate risk as compared to its peers.

         DIVIDEND AND OTHER CAPITAL DISTRIBUTION LIMITATIONS. The Office of
Thrift Supervision imposes various restrictions or requirements on the ability
of savings institutions to make capital distributions, including dividend
payments.

         Office of Thrift Supervision regulations impose limitations on all
capital distributions by savings institutions, such as cash dividends, payment
to repurchase or otherwise acquire its shares, payments to stockholders


                                       20
<PAGE>

of another institution in a cash-out merger, and other distributions charged
against capital. The rule establishes three tiers of institutions based
primarily on an institution's capital level. An institution that exceeds all
capital requirements before and after a proposed capital distribution and has
not been advised by the Office of Thrift Supervision that it is in need of more
than the normal supervision has the greatest amount of flexibility for
determining dividends. Such institutions can, after prior notice but without the
approval of the Office of Thrift Supervision, make capital distributions during
a calendar year. These distributions can be equal to the greater of 100% of its
net income to date during the calendar year plus the amount that would reduce by
one-half its excess capital divided by its fully phased-in capital requirements
at the beginning of the calendar year. At the institution's discretion,
dividends can also be 75% of its net income over the most recent four-quarter
period. Any additional capital distributions require prior regulatory notice. As
of June 30, 2001, American Federal Savings Bank had this level of flexibility
with respect to dividends.

         QUALIFIED THRIFT LENDER TEST. Federal savings institutions must meet a
qualified thrift lender test or they become subject to operating restrictions.
Until recently, the chief restriction was the elimination of borrowing rights
from the Federal Home Loan Bank. However, with passage of the Gramm-Leach-Bliley
Financial Modernization Act of 1999 by Congress, the failure to maintain
qualified thrift lender status will not affect borrowing rights with the Federal
Home Loan Bank. Notwithstanding these changes, American Federal Savings Bank
anticipates that it will maintain an appropriate level of investments consisting
primarily of residential mortgages, mortgage-backed securities and other
mortgage-related investment, and otherwise qualify as a qualified thrift lender.
The required percentage of these mortgage-related investments is 65% of
portfolio assets. Portfolio assets are all assets minus intangible assets,
property used by the institution in conducting its business and liquid assets
equal to 10% of total assets. Compliance with the qualified thrift lender test
is determined on a monthly basis in nine out of every twelve months.

         TRANSACTIONS WITH AFFILIATES. Generally, federal banking law requires
that transactions between a savings institution or its subsidiaries and its
affiliates must be on terms as favorable to the savings institution as
comparable transactions with non-affiliates. In addition, some transactions can
be restricted to an aggregate percentage of the savings institution's capital.
Collateral in specified amounts must usually be provided by affiliates in order
to receive loans from the savings institution. In addition, a savings
institution may not extend credit to any affiliate engaged in activities not
permissible for a bank holding company or acquire the securities of any
affiliate that is not a subsidiary. The Office of Thrift Supervision has the
discretion to treat subsidiaries of a savings institution as affiliates on a
case-by-case basis.

         LIQUIDITY REQUIREMENTS. The bank is required to maintain minimum levels
of liquid assets as defined by the Office of Thrift Supervision regulations. The
OTS recently eliminated the statutory requirement based upon a percentage of
deposits and short-term borrowings. The OTS states that the liquidity
requirement is retained for safety and soundness purposes, and that appropriate
levels of liquidity will depend upon the types of activities in which the bank
engages.

         FEDERAL HOME LOAN BANK SYSTEM. We are a member of the Federal Home Loan
Bank of Seattle, which is one of 12 regional Federal Home Loan Banks. Each
Federal Home Loan Bank serves as a reserve or central bank for its members
within its assigned region. It is funded primarily from funds deposited by
financial institutions and proceeds derived from the sale of consolidated
obligations of the Federal Home Loan Bank System. It makes loans to members
pursuant to policies and procedures established by the board of directors of the
Federal Home Loan Bank.

         As a member, we are required to purchase and maintain stock in the
Federal Home Loan Bank of Seattle in an amount equal to at least 1% of our
aggregate unpaid residential mortgage loans, home purchase contracts or similar
obligations at the beginning of each year, or 5% of our outstanding advances,
whichever is larger. We are in compliance with this requirement. The Federal
Home Loan Bank imposes various limitations on advances such as limiting the
amount of real estate related collateral to 30% of a member's capital and
limiting total advances to a member. As a federal savings bank, we were
mandatory members of the Federal Home Loan Bank of Seattle. Under the recently
enacted Gramm-Leach-Bliley Financial Modernization Act of 1999, we are now
voluntary members of the federal Home Loan Bank of Seattle. We could withdraw or
significantly reduce our required stock ownership in the Federal Home Loan Bank
of Seattle.

                                       21
<PAGE>

         FEDERAL RESERVE SYSTEM. The Federal Reserve System requires all
depository institutions to maintain noninterest bearing reserves at specified
levels against their checking, NOW and Super NOW checking accounts and
non-personal time deposits. The balances maintained to meet the reserve
requirements imposed by the Federal Reserve System may be used to satisfy the
Office of Thrift Supervision liquidity requirements.

         Savings institutions have authority to borrow from the Federal Reserve
System "discount window," but Federal Reserve System policy generally requires
savings institutions to exhaust all other sources before borrowing from the
Federal Reserve System.

REGULATION OF EAGLE BANCORP

         GENERAL. Eagle Bancorp, as a federal stock corporation in a mutual
holding company structure, is deemed a federal mutual holding company within the
meaning of Section 10(o) of the Home Owners Loan act ("HOLA"). Eagle is
registered and files reports with the Office of Thrift Supervision and is
subject to regulation and examination by the Office of Thrift Supervision. In
addition, the Office of Thrift Supervision has enforcement authority over Eagle
and any nonsavings institution subsidiary of Eagle The Office of Thrift
Supervision can restrict or prohibit activities that it determines to be a
serious risk to us. This regulation is intended primarily for the protection of
our depositors and not for the benefit of stockholders of Eagle.

FEDERAL TAXATION

         Savings institutions are subject to the Internal Revenue Code of 1986,
as amended, in the same general manner as other corporations. Prior to changes
to the Internal Revenue Code in 1996, thrift institutions enjoyed a tax
advantage over banks with respect to determining additions to its bad debt
reserves.

         The Internal Revenue Code was revised in August 1996 to equalize the
taxation of thrift institutions and banks, effective for taxable years beginning
after 1995. All thrift institutions are now subject to the same provisions as
banks with respect to deductions for bad debt. Now only thrift institutions that
are treated as small banks under the Internal Revenue Code may continue to
account for bad debts under the reserve method; however such institutions may
only use the experience method for determining additions to their bad debt
reserve. Thrift institutions that are not treated as small banks may no longer
use the reserve method to account for their bad debts but must now use the
specific charge-off method.

         The revisions to the Internal Revenue Code in 1996 also provided that
all thrift institutions must generally recapture any "applicable excess
reserves" into their taxable income, over a six year period beginning in 1996;
however, such recapture may be delayed up to two years if a thrift institution
meets a residential-lending test. Generally, a thrift institution's applicable
excess reserves equals the excess of the balance of its bad debt reserves as of
the close of its taxable year beginning before January 1, 1996, over the balance
of such reserves as of the close of its last taxable year beginning before
January 1, 1988. These are known as pre-1988 reserves. American Federal Savings
Bank will be required to recapture $175,000 of applicable excess reserve as of
June 30, 2001.

         In addition, all thrift institutions must continue to keep track of
their pre-1988 reserves because this amount remains subject to recapture in the
future under the Internal Revenue Code. A thrift institution such as American
Federal, would generally be required to recapture into its taxable income its
pre-1988 reserves in the case of excess distributions, and redemptions of
American Federal's stock and in the case of a reduction in American Federal's
outstanding loans when comparing loans currently outstanding to loans
outstanding at the end of the base year. For taxable years after 1995, American
Federal Savings Bank will continue to account for its bad debts under the
reserve method. The balance of American Federal's pre-1988 reserves equaled
$915,000.

         Eagle may exclude from its income 100% of dividends received from
American Federal Savings Bank as a member of the same affiliated group of
corporations. A 70% dividends received deduction generally applies with respect
to dividends received from corporations that are not members of such affiliated
group.

         American Federal's federal income tax returns for the last five tax
years have not been audited by the IRS.


                                       22
<PAGE>

STATE TAXATION

         American Federal Savings Bank files Montana tax returns. For Montana
tax purposes, savings institutions are presently taxed at a rate equal to 6.75%
of taxable income which is calculated based on federal taxable income, subject
to adjustments (including the addition of interest income on state and municipal
obligations).

         American Federal's state tax returns have not been audited for the past
five years by the state of Montana.


ITEM 2.  DESCRIPTION OF BUSINESS PROPERTIES.

         American Federal Savings Bank's executive office is located at 1400
Prospect Avenue in Helena, Montana. American Federal Savings Bank conducts its
business through five offices, which are located in Helena, Bozeman, Butte, and
Townsend, Montana. All of its offices are owned. Its principal banking office in
Helena also serves as its executive headquarters and operations center. This
office houses over 50% of American Federal Savings Bank's full-time employees.
The following table sets forth the location of each of American Federal's
offices, the year the office was opened, and the net book value including land,
buildings, computer software and its related equipment and furniture. The square
footage at each location is also shown.

<TABLE>
<CAPTION>
                                                                Net Book Value
                                                                      At
                                                                   June 30,        Square
       Location                  Address            Opened           2001         Footage
       --------                  -------            ------           ----         -------
<S>                      <C>                         <C>        <C>                <C>
Helena Main              1400 Prospect Ave.          1997       $4,935,529         32,304
 Office                  Helena, MT  59601

Helena Downtown          28 Neill Ave.               1987         $363,711          1,391
 Satellite Branch        Helena, MT  59601

Butte Office             3401 Harrison Ave.          1979         $604,175          3,890
                         Butte, MT  59701

Bozeman Office           606 North Seventh           1980         $563,740          5,886
                         Bozeman, MT  59715

Townsend Office          416 Broadway                1979          $38,472          1,973
                         Townsend, MT  59644

</TABLE>

         As of June 30, 2001, the net book value of land, buildings, furniture,
and equipment owned by American Federal, less accumulated depreciation, totaled
$6.5 million.


ITEM 3.  LEGAL PROCEEDINGS.

         American Federal, from time to time, is a party to routine litigation,
which arises in the normal course of business, such as claims to enforce liens,
condemnation proceedings on properties in which American Federal Savings Bank
holds security interests, claims involving the making and servicing of real
property loans, and other issues incident to the business of American Federal.
There were no lawsuits pending or known to be contemplated against American
Federal Savings Bank at June 30, 2001.


                                       23
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No matters were submitted to a vote of security holders in the fourth
quarter of the fiscal year ended June 30, 2001.


                                     PART II


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The common stock is traded on the OTC Bulletin Board under the symbol
"EBMT." At the close of business on June 30, 2001, there were 1,203,572 shares
of common stock outstanding, held by approximately 600 shareholders of record.
Eagle Financial MHC, Eagle's mutual holding company, held 648,493 shares of the
outstanding common stock.

         The high bid and asked prices noted below for the fourth quarter of
fiscal 2000 and the four quarters of the current fiscal year were obtained from
the OTC Bulletin Board. The quotations reflect interdealer prices without retail
markup, markdown or commission, and may not represent actual transactions.

<TABLE>
<CAPTION>
                                                                 HIGH BID         LOW BID
                                                                 --------         -------

<S>                                                               <C>             <C>
         Fourth quarter 2000 (commencing April 4)...........      $10.38          $8.00
         First quarter 2001.................................      $12.00          $8.63
         Second quarter 2001................................      $11.00          $9.88
         Third quarter 2001.................................      $12.77         $10.75
         Fourth quarter 2001................................      $13.75         $10.30
</TABLE>

         The closing price of the common stock on June 30, 2001, was $11.60. The
company had paid four quarterly dividends during the year, all in the amount of
$0.07 per share. Eagle Financial MHC waived receipt of its dividends during the
year.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

         This report contains certain "forward-looking statements." Eagle
desires to take advantage of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 and is including this statement for the
express purpose of availing itself of the protections of the safe harbor with
respect to all such forward-looking statements. These forward-looking
statements, which are included in Management's Discussion and Analysis, describe
future plans or strategies and include Eagle's expectations of future financial
results. The words "believe", "expect", "anticipate", "estimate", "project", and
similar expressions identify forward-looking statements. Eagle's ability to
predict results or the effect of future plans or strategies or qualitative or
quantitative changes based on market risk is inherently uncertain. Factors which
could affect actual results but are not limited to include (i) change in general
market interest rates, (ii) general economic conditions, (iii) local economic
conditions, (iv) legislative/regulatory changes, (v) monetary and fiscal
policies of the U.S. Treasury and Federal Reserve, (vi) changes in the quality
or composition of Eagle's loan and investment portfolios, (vii) demand for loan
products, (viii) deposit flows, (ix) competition, and (x) demand for financial
services in Eagle's markets. These factors should be considered in evaluating
the forward-looking statements. You are cautioned not to place undue reliance on
these forward-looking statements that speak only as of their dates.


                                       24
<PAGE>

GENERAL

         Eagle Bancorp's subsidiary, American Federal Savings Bank, operates as
a community savings bank. It raises money by offering FDIC-insured deposit
products and lending this money, primarily for the purpose of home financing. As
of June 30, 2001, 58.52% of its total loans were residential mortgage loans with
fixed rates and 7.08% were residential mortgage loans with adjustable rates.
Total first lien mortgage loans at June 30, 2001, were $87.01 million or 75.14%
of the total loan portfolio. Other loan products include home equity loans,
consumer and commercial loans. These loans totaled $28.78 million or 24.86% of
the total loan portfolio.

         The consolidated financial condition and operating results of Eagle are
primarily dependent on its wholly owned subsidiary, American Federal Savings
Bank. All references to the Company prior to April 4, 2000, except where
otherwise indicated, are to the Bank.


ANALYSIS OF NET INTEREST INCOME

         The Bank's earnings have historically depended upon primarily net
interest income, which is the difference between interest income earned on loans
and investments and interest paid on deposits and any borrowed funds. It is the
single largest component of Eagle's operating income. Net interest income is
affected by (i) the difference between rates of interest earned on loans and
investments and rates paid on interest-bearing deposits and borrowings (the
"interest rate spread") and (ii) the relative amounts of loans and investments
and interest-bearing deposits and borrowings.

         The following table presents the average balances of and the interest
and dividends earned or paid on each major class of loans and investments and
interest-bearing deposits and borrowings. Nonaccruing loans are included in
balances for all periods. Average balances are daily average balances. The
yields and costs include fees, which are considered adjustments to yields.


                                       25
<PAGE>

<TABLE>
<CAPTION>
                                                                           FOR THE YEARS ENDED JUNE 30,
                                            ----------------------------------------------------------------------------------------
                                                                2001                                            2000
                                            ---------------------------------------------    ---------------------------------------
                                                                              (DOLLARS IN THOUSANDS)
                                                               INTEREST                       AVERAGE        INTEREST
                                            AVERAGE DAILY        AND            YIELD/         DAILY            AND           YIELD/
                                               BALANCE         DIVIDENDS        RATE          BALANCE        DIVIDENDS        RATE
                                               -------         ---------        ----          -------        ---------        ----

<S>                                           <C>              <C>           <C>             <C>                <C>         <C>
Assets:
  Interest-earning assets:
    Federal Home Loan Bank Stock............     $1,428           $94           6.58%           $1,337             $92         6.88%
    Loans receivable, net...................    114,197         9,207           8.06           103,036           8,222         7.98
    Investment securities...................     28,367         1,751           6.17            30,014           1,824         6.08
     Interest-bearing deposits with banks...      2,206           117           5.30             1,159              62         5.35
                                               --------        ------           ----          --------          ------         ----
Total interest-earning assets...............    146,198        11,169           7.64           135,546          10,200         7.53
Noninterest-earning assets..................     13,824                                         14,968
                                               --------                                       --------
Total assets................................   $160,022                                       $150,514
                                               ========                                       ========

Liabilities and Equity:
   Interest-bearing liabilities:
    Deposit accounts:
       Money market.........................    $15,209          $602           3.96           $15,430            $587         3.80
       Passbooks                                 20,426           615           3.01            20,913             630         3.01
       Checking.............................     22,710           250           1.10            22,398             301         1.34
       Certificates of deposit .............     63,435         3,650           5.75            57,936           2,998         5.17
       Advances from Federal Home Loan
           Bank.............................     10,836           676           6.24            10,087             649         6.43
                                               --------        ------           ----          --------          ------         ----
Total interest-bearing liabilities..........    132,616         5,793           4.37           126,764           5,165         4.07
Other noninterest-bearing liabilities.......      2,175                                          5,946
Noninterest checking........................      5,948                                          2,435
                                               --------                                       --------
Total liabilities...........................    140,739                                        135,145
Total equity................................     19,283                                         15,369
                                               --------                                       --------

Total liabilities and equity................   $160,022                                       $150,514
                                               ========                                       ========
Net interest income/interest rate spread(1).                   $5,376           3.27%                           $5,035         3.46%
                                                               ======           =====                           ======         ====
Net interest margin(2)......................                                    3.68%                                          3.71%
                                                                                ====                                           ====

Total interest-earning assets to
interest-bearing liabilities................                                  110.24%                                        106.93%
                                                                              ======                                         ======
</TABLE>
---------------------

(1)  Interest rate spread represents the difference between the average yield on
     interest-earning assets and the average rate on interest-bearing
     liabilities.
(2)  Net interest margin represents income before the provision for loan losses
     divided by average interest-earning assets.


                                       26
<PAGE>

                          ---------------------------


RATE/VOLUME ANALYSIS

         The following table sets forth information regarding changes in
interest income and interest expense for the periods indicated. For each
category of our loans and investments and our interest-bearing deposits and
borrowings, information is provided on changes attributable to change in volume
(change in volume multiplied by the old rate). The table also provides
information on change in rate (changes in rate multiplied by old volume). The
combined effects of changes in rate and volume have been allocated
proportionately to the change due to rate and the change due to volume.

<TABLE>
<CAPTION>
                                                                    FOR THE YEAR ENDED JUNE 30,
                                        ------------------------------------------------------------------------------------
                                                                        INCREASE (DECREASE)
                                        ------------------------------------------------------------------------------------
                                                    2001 VS. 2000                              2000 VS. 1999
                                                        DUE TO                                    DUE TO
                                                        ------                                    ------
                                          VOLUME        RATE          NET          VOLUME          RATE           NET
                                          ------        ----          ---          ------          ----           ---
<S>                                         <C>           <C>         <C>           <C>           <C>            <C>
Interest earning assets:
  Loans receivable, net............           $902          $83         $985          $453          ($280)         $173
  Investment securities............           (100)          27          (73)          282             44           326
  Interest-bearing deposits with
     banks.........................             56           (1)          55          (346)            27          (319)
  Other earning assets.............              6           (4)           2             7             (9)           (2)
                                              ----         ----          ---           ---            ---          ----
Total interest earning assets......            864          105          969           396            218           178

Interest-bearing liabilities:
  Passbook, money market and
    checking accounts..............            (20)         (31)         (51)          114             58           172
  Certificates of deposit..........            299          353          652            55            (66)          (11)
  Borrowings.......................             47          (20)          27          (180)            (9)         (189)
                                              ----        -----          ---           ---            ---          ----
Total interest-bearing liabilities.            326          302          628           (11)           (17)          (28)
                                              ----        -----          ---           ---            ---          ----

Change in net interest income......           $538        ($197)        $341          $407          ($201)         $206
                                              ====        ======        ====          ====          ======         ====

</TABLE>

                      -----------------------------------

INTEREST RATE RISK ANALYSIS

         INTEREST RATE RISK ANALYSIS. In addition to the asset/liability
committee, the board of directors reviews our asset and liability policies. The
board of directors reviews interest rate risk and interest rate trends
quarterly, as well as liquidity and capital ratio requirements. Management
administers the policies and determinations of the board of directors with
respect to our asset and liability goals and strategies. Our asset and liability
policy and strategies are expected to continue as described so long as
competitive and regulatory conditions in the financial institution industry and
market interest rates continue as they have in recent years.


FINANCIAL CONDITION

         Total assets increased by $14.09 million, or 9.21%, to $167.12 million
at June 30, 2001, from $153.03 million at June 30, 2000. Total liabilities
increased by $12.72 million to $147.42 million at June 30, 2001, from $134.70
million at June 30, 2000. The growth reflects the success of the lending and
deposit programs during the past year.

                                       27
<PAGE>

         The growth in assets was in three main areas. Loans receivable
increased $7.53 million, or 7.01%, to $114.98 million at June 30, 2001, from
$107.45 million at June 30, 2000. Growth in the loan portfolio, while strong, is
lower than last year's growth due to the decline in interest rates, which
accelerated refinancing activity. Management decided to sell a higher percentage
of newly originated loans to avoid retaining low interest rate loans in the
portfolio. Within the loan portfolio, the two categories with the largest dollar
increase were home equity loans and consumer loans. Both categories increased
approximately $2 million over the previous year's balance. Interest-bearing
deposits with banks increased to $4.93 million at June 30, 2001, from zero at
June 30, 2000. The increase was attributed to the increased sale of loans and
higher refinance activity in mortgage loans. Investment securities
available-for-sale ("AFS") increased $3.19 million to $21.60 million at June 30,
2001, from $18.41 million at June 30, 2000. Investment securities
held-to-maturity ("HTM") declined to $6.57 million at June 30, 2001, from $9.92
million at June 30, 2000. The majority of new investment securities purchased
are placed in the AFS portfolio. This combined with maturities and principal
payments on securities contribute to the shift from the HTM portfolio to the AFS
portfolio.

         The growth in liabilities was primarily attributable to the growth in
deposits. Interest-bearing deposits increased to $127.56 million at June 30,
2001, from $118.78 million at June 30, 2000, an increase of $8.78 million, or
7.39%. This increase was the result of the promotion of "special rate"
certificate of deposit offers early in the year and an increase in money market
accounts in the fourth quarter. Certificates of deposit (CDs) increased $6.66
million, or 11.05%, to $66.94 million at June 30, 2001, from $60.28 million at
June 30, 2000. Money market accounts increased $2.68 million to $17.40 million
at June 30, 2001, from $14.72 million at June 30, 2000. Advances from the
Federal Home Loan Bank grew to $11.44 million at year-end 2001 from $8.68
million at year-end 2000, an increase of $2.76 million. This increase was the
result of two new Federal Home Loan Bank advances to the Bank during the first
half of the year to improve its liquidity position.

         Total shareholders' equity was $19.70 million at June 30, 2001, an
increase of $1.37 million. This increase was primarily attributable to the net
income for the year and the increase in accumulated other comprehensive income
that resulted from unrealized gains on securities available-for-sale.


COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDING JUNE 30, 2001 AND 2000

         NET INCOME. Eagle's net income was $1.22 million and $1.06 million for
the years ended June 30, 2001 and 2000 respectively. This increase of $162,000,
or 15.28%, was primarily due to increases in net interest income (before
provision for loan losses) of $341,000 and noninterest income of $243,000,
partially offset by an increase in noninterest expense of $311,000. Basic
earnings per share for the year ended June 30, 2001 (the Company's first full
year of operation as a public company) were $1.04. Diluted earnings per share
were $1.03.

         NET INTEREST INCOME. Net interest income (before provision for loan
losses) increased to $5.38 million for the year ended June 30, 2001, from $5.04
million for the previous year. This increase of $341,000, or 6.77%, was the
result of an increase in interest and dividend income of $969,000 offset by an
increase in interest expense of $628,000.

         INTEREST AND DIVIDEND INCOME. Total interest and dividend income was
$11.17 million for the year ended June 30, 2001, compared to $10.20 million for
the year ended June 30, 2000, representing an increase of $969,000, or 9.50%.
Interest and fees on loans increased to $9.21 million for 2001 from $8.22
million for 2000. This increase of $985,000, or 11.98%, was due primarily to an
increase in the average balances of loans receivable for the year ended June 30,
2001. Average balances for loans receivable, net, for the year ended June 30,
2001, were $114.20 million, compared to $103.04 million for the previous year.
This represents an increase of $11.16 million, or 10.83%. At year-end 2001, all
loan categories except commercial loans had shown increases from the prior
year-end. An increase in the average interest rate on loans receivable, to 8.06%
in 2001 compared to 7.98% in 2000 added to the increased income. Interest and
dividends on investment securities available-for-sale (AFS) increased to $1.21
million for the year ended June 30, 2001, from $1.05 million for year ended June
30, 2000, an increase of $156,000, or 14.86%. This increase was the result of
increased balances in the AFS portfolio during the year. Interest earned from
deposits at other banks increased to $117,000 for the year ended June 30, 2001,
from $62,000 for the year ended June 30, 2000. Higher average balances in these
accounts resulted from increased loan sale activity and greater loan
refinancing. These increases were partially offset by a decrease in interest and
dividends on investments held-to-maturity (HTM) of $229,000, from $771,000 in

                                       28
<PAGE>

2000 compared to $542,000 in 2001. Lower balances in the HTM category
contributed to the decrease.

         INTEREST EXPENSE. Total interest expense increased to $5.79 million for
the year ended June 30, 2001, from $5.16 million for the year ended June 30,
2000, an increase of $628,000, or 12.17%. Interest on deposits increased to
$5.12 million for the year ended June 30, 2001, from $4.52 million for the year
ended June 30, 2000. This increase of $600,000, or 13.27%, was the result of an
increase on average rates paid and an increase in balances on deposit accounts.
Time certificates of deposit (CDs) had the largest gain in balances during the
year. Special certificate of deposit offerings during the first half of the year
contributed to the increase. Average balances in certificate of deposit accounts
increased to $63.44 million at June 30, 2001, from $57.94 million at June
30,2000. The average rate paid on certificate of deposit accounts also increased
58 basis points, from 5.17% in 2000 to 5.75% in 2001. As market interest rates
have fallen since the beginning of calendar year 2001, the Company has been in a
position to renew certificate of deposit accounts at lower rates, which will
lower the average rate paid on the accounts in future quarters. An increase in
the average balance of borrowings from the Federal Home Loan Bank resulted in an
increase in interest paid on borrowings to $677,000 for the year ended June 30,
2001, from $649,000 for the year ended June 30, 2000.

         PROVISION FOR LOAN LOSSES. Provisions for loan losses are charged to
earnings to maintain the total allowance for loan losses at a level considered
adequate by American Federal Savings Bank to provide for probable loan losses
based on prior loss experience, volume and type of lending conducted by American
Federal, available peer group information, and past due loans in portfolio. The
Bank's policies require the review of assets on a quarterly basis. The Bank
classifies loans as well as other assets if warranted. While the Bank believes
it uses the best information available to make a determination with respect to
the allowance for loan losses, it recognizes that future adjustments may be
necessary. No provision was made for loan losses for the year ended June 30,
2001, compared to $15,000 for the same period ended June 30, 2000. This is a
reflection of the continued strong asset quality of American Federal's loan
portfolio, as non-performing loan ratios continue to be stable. Total classified
assets declined to $1.50 million at June 30, 2001, from $1.58 million at June
30, 2000. During the year, a transfer of $14,000 was made from the loan loss
reserve to the real estate owned (REO) reserve. The transfer was made to write
down the balances of the two foreclosed properties in Butte, Montana to their
net realizable value. Both REO properties were sold during the current period
with no additional loss incurred. The Bank currently has no foreclosed real
estate.

         NONINTEREST INCOME. Total noninterest income increased to $1.64 million
for the year ended June 30, 2001, from $1.40 million for the year ended June 30,
2000, an increase of $243,000 or 17.36%. This change was the result of an
increase in net gains on sale of loans to $418,000 for the year ended June 30,
2001, from $275,000 for the year ended June 30, 2000, an increase of $143,000 or
52.00%. This increase was attributable to increased loan originations during the
year ended June 30, 2001, and management's decision to sell newly originated
mortgage loans with maturities of 15 years or more. Previously, 15-year mortgage
loans had been kept in the portfolio. Loan originations increased significantly
due to the decline in interest rates during the period, which in turn
contributed to an increase in the amount of loans prepaid for refinancing
purposes. Other increases during the period were other noninterest income of
$46,000, net gain on sale of available-for-sale securities of $35,000, and
demand deposit service charges of $26,000. Two securities were sold for small
gains during the current year, compared to securities sold for losses of $30,000
in the previous year. Demand deposit service charges were higher as increased
fees were in effect for the entire year, compared to seven months in the
previous year. The increases in "other" noninterest income were the result of
increases in gain on sale of REO, earnings on life insurance policies, and late
charges. Mortgage loan servicing fees declined slightly from the previous year.

         NONINTEREST EXPENSE. Noninterest expense increased by $311,000 or 6.39%
to $5.18 million for the year ended June 30, 2001, from $4.87 million for the
year ended June 30, 2000. This increase was primarily due to an increase in
salaries and employee benefits to $2.80 million for the year ended June 30,
2001, from $2.68 million for the year ended June 30, 2000, an increase of
$124,000, or 4.63%. The increase in salaries and benefits was due to normal
merit raises and additional staff. Increased mortgage loan origination activity
allowed the capitalization of more origination costs, lowering salary expense.
Other benefit increases made up the difference, with the largest single increase
being health insurance. The new management retention stock plan also contributed
to the increase. Legal and accounting fees increased by $66,000 to $160,000 in
the year ended June 30, 2001, from $94,000 in the previous year. The increase
was related to Eagle's increased costs for such services as a public company,
and is expected to decline in the coming year. Other increases in noninterest

                                       29
<PAGE>

expenses were amortization of mortgage servicing rights of $48,000, occupancy
expense of $43,000, advertising costs of $35,000, and data processing expense of
$31,000. The increase in amortization of mortgage servicing rights was
attributable to the increased refinancing activity due to the decline in
interest rates. As loans prepay at faster rates, servicing assets are written
off at faster rates as well. Occupancy expense increased due to higher property
taxes and repairs. Advertising campaigns for certificate of deposit specials and
consumer loans also contributed to the increase. Data processing expense
increased due to increased maintenance costs. These increases were partially
offset by decreases of $25,000 in deposit insurance premiums and $15,000 in ATM
processing expenses. The decrease in deposit insurance premiums was due to the
FDIC lowering their assessment rate by 64%, while lower costs passed on by the
Bank's ATM processor led to lower processing expense for ATMs and debit cards.

         INCOME TAX EXPENSE. Eagle's income tax expense was $625,000 for the
year ended June 30, 2001, compared to $498,000 for the year ended June 30, 2000.
The effective tax rate for the year ended June 30, 2001, was 33.85% as opposed
to 32.00% for the year ended June 30, 2000.


LIQUIDITY AND CAPITAL RESOURCES

         The company's subsidiary, American Federal Savings Bank, is required to
maintain minimum levels of liquid assets as defined by the Office of Thrift
Supervision (OTS) regulations. The OTS recently eliminated the statutory
requirement based upon a percentage of deposits and short-term borrowings. The
OTS states that the liquidity requirement is retained for safety and soundness
purposes, and that appropriate levels of liquidity will depend upon the types of
activities in which the company engages. The Bank's liquidity increased due to
an increase in interest bearing deposits with banks for the year ended June 30,
2001.

         The Bank's primary sources of funds are deposits, repayment of loans
and mortgage-backed securities, maturities of investments, funds provided from
operations, and advances from the Federal Home Loan Bank of Seattle. Scheduled
repayments of loans and mortgage-backed securities and maturities of investment
securities are generally predictable. However, other sources of funds, such as
deposit flows and loan prepayments, can be greatly influenced by the general
level of interest rates, economic conditions and competition. The Bank uses
liquidity resources principally to fund existing and future loan commitments. It
also uses them to fund maturing certificates of deposit, demand deposit
withdrawals and to invest in other loans and investments, maintain liquidity,
and meet operating expenses.

         Net cash provided by the Company's operating activities, which is
primarily comprised of cash transactions affecting net income was ($325,000) for
the year ended June 30, 2001, and $1.59 million for the year ended June 30,
2000. The change was primarily a result of an increase in the amount of loans
held for sale.

         Net cash used in the Company's investing activities, which is primarily
comprised of cash transactions from the investment securities and
mortgage-backed securities portfolios and the loan portfolio, was $11.61 million
for the year ended June 30, 2001, and $8.12 million for the year ended June 30,
2000. The increase in cash used was due to increases in loans receivable of
$7.67 million and $4.93 million in interest bearing deposits. This was partially
offset by proceeds from maturities and principal repayments of investment
securities (net of purchases).

         Net cash provided by the Company's financing activities, which is
primarily cash transactions from net increases in deposits and net Federal Home
Loan Bank advances, totaled $11.88 million for the year ended June 30, 2001, and
$3.27 million for the year ended June 30, 2000. This increase in cash provided
was the result of a large increase in deposit accounts compared to the previous
year, and an increase in FHLB advances.

         Liquidity may be adversely affected by unexpected deposit outflows,
higher interest rates paid by competitors, and similar matters. Management
monitors projected liquidity needs and determines the level desirable based in
part on our commitments to make loans and management's assessment of our ability
to generate funds.

         At March 31, 2001 (the most recent report available), the Bank's
measure of sensitivity to interest rate movements, as measured by the OTS,
worsened slightly from the previous quarter. The market value of the Bank's


                                       30
<PAGE>

capital position, however, was improved from the previous quarter. The Bank is
well within the guidelines set forth by the Board of Directors for interest rate
sensitivity.

         As of June 30, 2001, the Bank's regulatory capital was in excess of all
applicable regulatory requirements. At June 30, 2001, the Bank's tangible, core,
and risk-based capital ratios amounted to 11.0%, 11.0%, and 19.2%, respectively,
compared to regulatory requirements of 1.5%, 4.0%, and 8.0%, respectively.


IMPACT OF INFLATION AND CHANGING PRICES

         Our financial statements and the accompanying notes, which are found in
Item 7, have been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position and operating
results in terms of historical dollars without considering the change in the
relative purchasing power of money over time and due to inflation. The impact of
inflation is reflected in the increased cost of our operations. Interest rates
have a greater impact on our performance than do the general levels of
inflation. Interest rates do not necessarily move in the same direction or to
the same extent as the prices of goods and services.


RECENT ACCOUNTING PRONOUNCEMENTS

         In July 2001, the Securities and Exchange Commission (SEC) released
Staff Accounting Bulletin No. 102, "Selected Loan Loss Allowance Methodology and
Documentation Issues" (SAB 102). SAB 102 expresses the staff's views on the
development, documentation, and application of a systematic methodology as
required by Financial Reporting Release No. 28 for determining allowances for
loan and lease losses in accordance with generally accepted accounting
principles. SAB 102 does not change generally accepted accounting principles,
but since it was issued in conjunction with the Federal Financial Institutions
Examination Council ("FFIEC") "Policy Statement on Allowance for Loan and Lease
Losses Methodologies and Documentation for Banks and Savings Institutions",
implies that it will have an impact on supervisory procedures by the banking
regulators. Management of the bank is closely monitoring the ongoing discussion
of loan loss allowance methodology, and is currently reviewing the FFIEC Policy
Statement.

         Also, in July 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations". This statement is effective for all business combinations
initiated after June 30, 2001. The FASB also issued SFAS No. 142 "Goodwill and
Other Intangible Assets" which is effective for all fiscal years beginning after
December 15, 2001. As such, management believes these pronouncements do not have
an affect on the consolidated financial position and results of operations as of
June 30, 2001, and for the year then ended. We are currently in the process of
evaluating the impact of these pronouncements on subsequent reporting periods,
as they would likely have a significant impact on any possible future
acquisition activity.


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         Eagle Bancorp's audited financial statements, notes thereto, and
auditor's reports are found immediately following Part III of this report.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

         Eagle changed its independent auditors during the fiscal year ended
June 30, 2000. The information required by Item 8 of this part is presented in
the proxy statement issued by the Board of Directors in connection with the
annual meeting of stockholders to be held October 18, 2001, which information is
hereby incorporated by reference into this annual report.


                                       31

<PAGE>

                                    PART III


         The information required by Items 9, 10, 11 and 12 of this part is
provided in the proxy statement issued by the Board of Directors in connection
with the annual meeting of stockholders to be held October 18, 2001, and has
been filed with the Securities and Exchange Commission and which is hereby
incorporated by reference into this annual report.


ITEM 13.  EXHIBITS LIST AND REPORTS ON FORM 8-K.

         A.       (1)    The following documents are filed as part of this
report: The audited Consolidated Statements of Financial Condition of Eagle
Bancorp and subsidiary as of June 30, 2001, and June 30, 2000, and the related
Consolidated Statements of Income, Consolidated Statements of Changes in
Stockholder Equity, and Consolidated Statements of Cash Flows for the years then
ended, together with the related notes and independent auditor's reports.

                  (2)    Schedules omitted as they are not applicable.

         B.       Exhibits

             *    2.1      Amended and Restated Plan of Mutual Holding Company
                           Reorganization and Stock Issuance
             *    3.1      Charter of Eagle Bancorp
             *    3.2      Bylaws of Eagle Bancorp
             *    4        Form of Stock Certificate of Eagle Bancorp
             *    10.1     Employee Stock Ownership Plan and Trust
             *    10.2     Employment Contract of Larry A. Dreyer
             **   10.3     Stock Plan
                  11       Computation of per share earnings (incorporated by
                           reference to Note 3 to Notes To Consolidated
                           Statements of Financial Condition dated June 30,
                           2001)
                  16.1     Letter of Moss Adams LLP
                  16.2     Letter of Anderson ZurMuehlen & Co, P.C.
                  21.1     Subsidiaries of Registrant (incorporated by reference
                           to Part I, Subsidiary Activity)
                  23.1     Consent of Anderson ZurMuehlen & Co., P.C.
                  99       Consolidated Statements of Financial Condition

         C.       No reports on Form 8-K


             ------------------

             *    Incorporated by reference to the identically number exhibit
                  of the Registration Statement on Form SB-2
                  (File No. 333-93077) filed with the SEC on December 20, 1999.
             **   Incorporated by reference to the proxy statement for 2000
                  Annual Meeting filed with the SEC on September 19, 2000.


                                       32

                               -------------------