| For the fiscal year ended |   June 30, 2011 |
|---------------------------|--------------------------------|

| For the transition period from |   | to |   |
|--------------------------------|--------|----|--------|

| Commission file number |   1-34682 |
|------------------------|---------------------|

| Eagle Bancorp Montana, Inc. |
|-----------------------------|

| Delaware                                                                |   | 27-1449820                          |
|-------------------------------------------------------------------------|--------|-------------------------------------|
|  State or other jurisdiction of incorporation or organization |   | (I.R.S. EmployerIdentification No.) |

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

| Registrant’s telephone number, including area code |  406-442-3080 |
|----------------------------------------------------------|--------------------|

| Title of each class                 |   | Name of each exchange on which registered |
|-------------------------------------|--------|-------------------------------------------|
|  Common stock, par value $0.01 |   | The NASDAQ Stock Market LLC               |
|                                |

|   |
|--------|

|   |
|--------|

----

| Large accelerated filer  ̈                                             | Accelerated filer  ̈    |
|----------------------------------------------------------------------------|-----------------------------|
|                                                                       |                        |
| Non-accelerated filer  ̈ (Do not check if a smaller reporting company) | Smaller reporting company x |

| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). |                       ̈ Yes    x No |
|---------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|        |                                                                                                          | Page   |
|-------------|---------------------------------------------------------------------------------------------------------------|--------|
|        | PART I                                                                                                        |   |
| ITEM 1.     | DESCRIPTION OF BUSINESS.                                                                                      | 2      |
| ITEM 1A.    | RISK FACTORS.                                                                                                 | 27     |
| ITEM 1B.    | UNRESOLVED STAFF COMMENTS.                                                                                    | 30     |
| ITEM 2.     | PROPERTIES.                                                                                                   | 30     |
| ITEM 3.     | LEGAL PROCEEDINGS.                                                                                            | 31     |
| ITEM 4.     | (REMOVED AND RESERVED).                                                                                       | 31     |
|        | PART II                                                                                                       |   |
| ITEM 5.     | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. | 32     |
| ITEM 6.     | SELECTED FINANCIAL DATA.                                                                                      | 33     |
| ITEM 7.     | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.                        | 33     |
| ITEM 7A.    | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                                                   | 42     |
| ITEM 8.     | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                                                  | 42     |
| ITEM 9.     | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.                         | 42     |
| ITEM 9A(T). | CONTROLS AND PROCEDURES.                                                                                      | 42     |
| ITEM 9B.    | OTHER INFORMATION.                                                                                            | 43     |
|        | PART III                                                                                                      |   |
| ITEM 10.    | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.                                                       | 44     |
| ITEM 11.    | EXECUTIVE COMPENSATION.                                                                                       | 44     |
| ITEM 12.    | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.               | 45     |
| ITEM 13.    | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.                                    | 45     |
| ITEM 14.    | PRINCIPAL ACCOUNTING FEES AND SERVICES.                                                                       | 45     |
| ITEM 15.    | EXHIBITS, FINANCIAL STATEMENT SCHEDULES.                                                                      | 45     |

----

| ●   | changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | general economic conditions, either nationally or in our market areas, that are worse than expected; |
|---------------------|------------------------------------------------------------------------------------------------------|

| ●   | competition among depository and other financial institutions; |
|---------------------|----------------------------------------------------------------|

| ●   | changes in the prices, values and sales volume of residential and commercial real estate in Montana; |
|---------------------|------------------------------------------------------------------------------------------------------|

| ●   | inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| ●   | adverse changes or volatility in the securities markets; |
|---------------------|----------------------------------------------------------|

| ●   | our ability to enter new markets successfully and capitalize on growth opportunities; |
|---------------------|---------------------------------------------------------------------------------------|

| ●   | our ability to successfully integrate acquired entities, if any; |
|---------------------|------------------------------------------------------------------|

| ●   | changes in consumer spending, borrowing and savings habits; |
|---------------------|-------------------------------------------------------------|

| ●   | changes in our organization, compensation and benefit plans; |
|---------------------|--------------------------------------------------------------|

| ●   | our ability to continue to increase and manage our commercial and residential real estate, multi-family, and commercial business loans; |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ●   | possible impairments of securities held by us, including those issued by government entities and government sponsored enterprises; |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ●   | the level of future deposit premium assessments; |
|---------------------|--------------------------------------------------|

| ●   | the impact of a recurring recession on our loan portfolio (including cash flow and collateral values), investment portfolio, customers and capital market activities; |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | the impact of the current restructuring of the U.S. financial and regulatory system; |
|---------------------|--------------------------------------------------------------------------------------|

| ●   | the failure of assumptions underlying the establishment of allowance for possible loan losses and other estimates; |
|---------------------|--------------------------------------------------------------------------------------------------------------------|

| ●   | changes in the financial performance and/or condition of our borrowers and their ability to repay their loans when due; and |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------|

| ●   | the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

PART

| ITEM 1. | DESCRIPTION OF BUSINESS. |
|---------|--------------------------|

| ●   | Continue to diversify our portfolio through growth in commercial real estate and commercial business loans as a complement to our traditional single family residential real estate lending. Such loans now constitute about 40% of total loans; |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Continue to emphasize the attraction and retention of lower cost long-term core deposits; |
|---------------------|-------------------------------------------------------------------------------------------|

| ●   | Seek opportunities where presented to acquire other institutions or expand our branch structure; |
|---------------------|--------------------------------------------------------------------------------------------------|

| ●   | Maintain our high asset quality levels; and |
|---------------------|---------------------------------------------|

| ●   | Operate as a community-oriented independent financial institution that offers a broad array of financial services with high levels of customer service. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                           |   | At June 30,            |
|------------------------------------------------|--------|------------------------|
|                                           |   | 2011                   |   | 2010 |
|                                           |   | (Dollars in thousands) |
|                                           |   | Amount                 |   |   | Percent of Total |   |   | Amount |   |   | Percent of Total |   |
| Real estate loans:                             |   |                   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage (one- to four-family) (1) |   | $                      | 70,003 |   |   |   | 37.34 | % |   | $ | 73,010 |   |   |   | 42.81 | % |
| Commercial real estate                         |   |                   | 64,701 |   |   |   | 34.52 | % |   |   | 41,677 |   |   |   | 24.44 | % |
| Real estate construction                       |   |                   | 5,020 |   |   |   | 2.68 | % |   |   | 7,016 |   |   |   | 4.11 | % |
| Total real estate loans                        |   |                   | 139,724 |   |   |   | 74.54 | % |   |   | 121,703 |   |   |   | 71.36 | % |
|                                           |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other loans:                                   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity                                    |   |                   | 27,816 |   |   |   | 14.84 | % |   |   | 29,795 |   |   |   | 17.46 | % |
| Consumer                                       |   |                   | 9,343 |   |   |   | 4.98 | % |   |   | 9,613 |   |   |   | 5.64 | % |
| Commercial                                     |   |                   | 10,564 |   |   |   | 5.64 | % |   |   | 9,452 |   |   |   | 5.54 | % |
| Total other loans                              |   |                   | 47,723 |   |   |   | 25.46 | % |   |   | 48,860 |   |   |   | 28.64 | % |
|                                           |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                    |   |                   | 187,447 |   |   |   | 100.00 | % |   |   | 170,563 |   |   |   | 100.00 | % |
|                                           |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                                          |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred loan fees (expenses)                  |   |                   | 176 |   |   |   |   |   |   |   | (39 | ) |   |   |   |   |
| Allowance for loan losses                      |   |                   | 1,800 |   |   |   |   |   |   |   | 1,100 |   |   |   |   |   |
|                                           |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans, net                               |   | $                      | 185,471 |   |   |   |   |   |   | $ | 169,502 |   |   |   |   |   |
|                                           |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)  Excludes loans held for sale.   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                           |   | Within 6 Months |   |   | 6 to 12 Months |   |   | More than 1 year to 2 years |   |   | More than 2 years to 5 years |   |   | Over 5 years |   |   | Total  |   |
|------------------------------------------------|--------|-----------------|--------|--------|----------------|--------|--------|-----------------------------|--------|--------|------------------------------|--------|--------|--------------|--------|--------|--------|--------|
|                                           |   | (In thousands)  |
| Residential mortgage (one- to four-family) (1) |   | $               | 15     |   |           | $      | 59     |                        |   | $      | 271                          |   |   | $            | 3,185  |   |   | $      | 68,254 |   |   | $ | 71,784 |   |
| Commercial real estate and land                |   |            | 2,928  |   |           |   | 4,615  |                        |   |   | 2,393                        |   |   |         | 9,699  |   |   |   | 45,067 |   |   |   | 64,702 |   |
| Real estate construction                       |   |            | 4,629  |   |           |   | 391    |                        |   |   | -                            |   |   |         | -      |   |   |   | - |   |   |   | 5,020 |   |
| Home equity                                    |   |            | 2,645  |   |           |   | 1,346  |                        |   |   | 3,608                        |   |   |         | 11,419 |   |   |   | 8,798 |   |   |   | 27,816 |   |
| Consumer                                       |   |            | 865    |   |           |   | 309    |                        |   |   | 1,309                        |   |   |         | 5,213  |   |   |   | 1,648 |   |   |   | 9,344 |   |
| Commercial                                     |   |            | 1,824  |   |           |   | 1,618  |                        |   |   | 1,622                        |   |   |         | 2,155  |   |   |   | 3,346 |   |   |   | 10,565 |   |
|                                           |   |            |   |   |           |   |   |                        |   |   |                         |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Total loans (1)                                |   | $               | 12,906 |   |           | $      | 8,338  |                        |   | $      | 9,203                        |   |   | $            | 31,671 |   |   | $      | 127,113 |   |   | $ | 189,231 |   |
|                                           |   |            |   |   |           |   |   |                        |   |   |                         |   |   |         |   |   |   |   |   |   |   |   |   |   |
| (1)  Includes loans held for sale.   |   |            |   |   |           |   |   |                        |   |   |                         |   |   |         |   |   |   |   |   |   |   |   |   |   |

|                                       |   | Fixed                  |    |   | Adjustable |   |   | Total  |   |
|--------------------------------------------|--------|------------------------|---------|--------|------------|--------|--------|--------|--------|
|                                       |   | (Dollars in thousands) |    |
|                                       |   |                   |    |   |       |   |   |   |   |
| Residential mortgage (one- to four-family) |   | $                      | 58,952  |   |       | $      | 12,758 |   |   | $ | 71,710 |   |
| Commercial real estate and land            |   |                   | 56,629  |   |       |   | 530    |   |   |   | 57,159 |   |
| Home equity                                |   |                   | 18,416  |   |       |   | 5,409  |   |   |   | 23,825 |   |
| Consumer                                   |   |                   | 7,421   |   |       |   | 749    |   |   |   | 8,170 |   |
| Commercial                                 |   |                   | 6,514   |   |       |   | 609    |   |   |   | 7,123 |   |
|                                       |   |                   |    |   |       |   |   |   |   |   |   |   |
| Total loans (1)                            |   | $                      | 147,932 |   |       | $      | 20,055 |   |   | $ | 167,987 |   |
|                                       |   |                   |    |   |       |   |   |   |   |   |   |   |
| Percent of total                           |   |                   | 88.06   | %      |       |   | 11.94  | %      |   |   | 100.00 | % |
|                                       |   |                   |    |   |       |   |   |   |   |   |   |   |
| (1)  Due after June 30, 2012.    |   |                   |    |   |       |   |   |   |   |   |   |   |

----

|                                                 |   | Year Ended June 30, |    |
|------------------------------------------------------|--------|---------------------|---------|
|                                                 |   | 2011                |    |   | 2010 |   |
|                                                 |   | (In thousands)      |    |
|                                                 |   |                |    |   |   |   |
| Net loans receivable at beginning of period (1) |   | $                   | 177,197 |   |   | $ | 172,546 |   |
|                                                 |   |                |    |   |   |   |   |   |
| Loans originated:                                    |   |                |    |   |   |   |   |   |
| Residential mortgage (one- to four-family)           |   |                | 115,030 |   |   |   | 89,428 |   |
| Commercial real estate and land                      |   |                | 38,131  |   |   |   | 15,573 |   |
| Real estate construction                             |   |                | 13,180  |   |   |   | 9,193 |   |
| Home equity                                          |   |                | 16,550  |   |   |   | 18,438 |   |
| Consumer                                             |   |                | 6,068   |   |   |   | 6,685 |   |
| Commercial                                           |   |                | 15,311  |   |   |   | 10,354 |   |
|                                                 |   |                |    |   |   |   |   |   |
| Total loans originated                               |   |                | 204,270 |   |   |   | 149,671 |   |
|                                                 |   |                |    |   |   |   |   |   |
| Loans sold:                                          |   |                |    |   |   |   |   |   |
| Whole loans                                          |   |                | 112,444 |   |   |   | 76,925 |   |
|                                                 |   |                |    |   |   |   |   |   |
| Principal repayments and loan refinancings           |   |                | 80,853  |   |   |   | 67,440 |   |
|                                                 |   |                |    |   |   |   |   |   |
| Deferred loan fees decrease (increase)               |   |                | (215    | ) |   |   | 60 |   |
|                                                 |   |                |    |   |   |   |   |   |
| Allowance for losses decrease (increase)             |   |                | (700    | ) |   |   | (715 | ) |
|                                                 |   |                |    |   |   |   |   |   |
| Net loan increase (decrease)                         |   |                | 10,058  |   |   |   | 4,651 |   |
|                                                 |   |                |    |   |   |   |   |   |
| Net loans receivable at end of period (1)            |   | $                   | 187,255 |   |   | $ | 177,197 |   |
|                                                 |   |                |    |   |   |   |   |   |
| (1)  Includes loans held for sale.         |   |                |    |   |   |   |   |   |

----

----

----

----

|                                       |   |                   |   |   |   |   |   |                                 |   |
|--------------------------------------------|--------|------------------------|--------|--------|--------|--------|--------|--------------------------------------|--------|
|                                       |   | Number                 |   |   | Amount |   |   | Percentage of Total Delinquent Loans |   |
|                                       |   | (Dollars in thousands) |   |
|                                       |   |                   |   |   |   |   |   |                                 |   |
| Loan type:                                 |   |                   |   |   |   |   |   |                                 |   |
| Residential mortgage (one- to four-family) |   |                   | 7      |   |   | $      | 638    |                                 |   |   | 20.46 | % |
| Real estate construction                   |   |                   | 1      |   |   |   | 770    |                                 |   |   | 24.69 | % |
| Commercial real estate and land            |   |                   | 3      |   |   |   | 1,501  |                                 |   |   | 48.12 | % |
| Home equity                                |   |                   | 6      |   |   |   | 132    |                                 |   |   | 4.23 | % |
| Consumer                                   |   |                   | 19     |   |   |   | 78     |                                 |   |   | 2.50 | % |
| Commercial business                        |   |                   | -      |   |   |   | -      |                                 |   |   | 0.00 | % |
|                                       |   |                   |   |   |   |   |   |                                 |   |   |   |   |
| Total                                      |   |                   | 36     |   |   | $      | 3,119  |                                 |   |   | 100.00 | % |

|                                                  |   | At June 30,            |
|-------------------------------------------------------|--------|------------------------|
|                                                  |   | 2011                   |   | 2010 |
|                                                  |   | (Dollars in thousands) |
|                                                  |   |                   |   |   |   |   |
| Non-accrual loans                                     |   |                   |   |   |   |   |
| Real estate loans:                                    |   |                   |   |   |   |   |
| Residential mortgage (one- to four-family)            |   | $                      | 1,424 |   |   | $ | 754 |   |
| Real estate construction                              |   |                   | 650 |   |   |   | 650 |   |
| Commercial real estate and land                       |   |                   | 186 |   |   |   | 1,316 |   |
| Home equity                                           |   |                   | 376 |   |   |   | 40 |   |
| Consumer                                              |   |                   | 56 |   |   |   | 12 |   |
| Commercial business                                   |   |                   | 247 |   |   |   | 10 |   |
| Accruing loans delinquent 90 days or more             |   |                   | - |   |   |   | 29 |   |
| Total nonperforming loans                             |   |                   | 2,939 |   |   |   | 2,811 |   |
| Real estate owned and other repossed property, net    |   |                   | 1,181 |   |   |   | 619 |   |
| Total nonperforming assets                            |   | $                      | 4,120 |   |   | $ | 3,430 |   |
|                                                  |   |                   |   |   |   |   |   |   |
| Total nonperforming loans to net loans                |   |                   | 1.57 | % |   |   | 1.65 | % |
| Total nonperforming loans to total assets             |   |                   | 0.89 | % |   |   | 0.86 | % |
| Total allowance for loan loss to non-performing loans |   |                   | 61.25 | % |   |   | 39.13 | % |
| Total nonperforming assets to total assets            |   |                   | 1.24 | % |   |   | 1.05 | % |

----

|                                         |   | At June 30,            |
|----------------------------------------------|--------|------------------------|
|                                         |   | 2011                   |   | 2010 |
|                                         |   | (Dollars in thousands) |
| Residential mortgage (one- to four-family):  |   |                   |   |   |   |   |
| Special Mention                              |   | $                      | - |   |   | $ | 536 |   |
| Substandard                                  |   |                   | 1,300 |   |   |   | 782 |   |
| Doubtful                                     |   |                   | - |   |   |   | - |   |
| Loss                                         |   |                   | 111 |   |   |   | 90 |   |
|                                         |   |                   |   |   |   |   |   |   |
| Commercial Real Estate and Land:             |   |                   |   |   |   |   |   |   |
| Special Mention                              |   |                   | - |   |   |   | - |   |
| Substandard                                  |   |                   | 738 |   |   |   | 1,787 |   |
| Doubtful                                     |   |                   | - |   |   |   | - |   |
| Loss                                         |   |                   | 260 |   |   |   | 311 |   |
|                                         |   |                   |   |   |   |   |   |   |
| Real Estate construction:                    |   |                   |   |   |   |   |   |   |
| Special Mention                              |   |                   | - |   |   |   | - |   |
| Substandard                                  |   |                   | 721 |   |   |   | - |   |
| Doubtful                                     |   |                   | - |   |   |   | - |   |
| Loss                                         |   |                   | - |   |   |   | - |   |
|                                         |   |                   |   |   |   |   |   |   |
| Home equity loans:                           |   |                   |   |   |   |   |   |   |
| Special Mention                              |   |                   | - |   |   |   | 84 |   |
| Substandard                                  |   |                   | 233 |   |   |   | 214 |   |
| Doubtful                                     |   |                   | - |   |   |   | - |   |
| Loss                                         |   |                   | 378 |   |   |   | 5 |   |
|                                         |   |                   |   |   |   |   |   |   |
| Consumer loans:                              |   |                   |   |   |   |   |   |   |
| Special Mention                              |   |                   | - |   |   |   | - |   |
| Substandard                                  |   |                   | 121 |   |   |   | 79 |   |
| Doubtful                                     |   |                   | - |   |   |   | - |   |
| Loss                                         |   |                   | 14 |   |   |   | 10 |   |
|                                         |   |                   |   |   |   |   |   |   |
| Commercial loans:                            |   |                   |   |   |   |   |   |   |
| Special Mention                              |   |                   | 1,454 |   |   |   | - |   |
| Substandard                                  |   |                   | 446 |   |   |   | 97 |   |
| Doubtful                                     |   |                   | - |   |   |   | - |   |
| Loss                                         |   |                   | 125 |   |   |   | - |   |
|                                         |   |                   |   |   |   |   |   |   |
| Securities available for sale:               |   |                   |   |   |   |   |   |   |
| Special Mention                              |   |                   | - |   |   |   | - |   |
| Substandard                                  |   |                   | 436 |   |   |   | 701 |   |
| Doubtful                                     |   |                   | - |   |   |   | - |   |
| Loss                                         |   |                   | - |   |   |   | - |   |
|                                         |   |                   |   |   |   |   |   |   |
| Real estate owned/repossessed property:      |   |                   |   |   |   |   |   |   |
| Special Mention                              |   |                   | - |   |   |   | - |   |
| Substandard                                  |   |                   | 1,181 |   |   |   | 619 |   |
| Doubtful                                     |   |                   | - |   |   |   | - |   |
| Loss                                         |   |                   | 189 |   |   |   | - |   |
|                                         |   |                   |   |   |   |   |   |   |
| Total classified loans and real estate owned |   | $                      | 7,707 |   |   | $ | 5,315 |   |

----

----

|                                              |   | For the Years Ended    |   |
|---------------------------------------------------|--------|------------------------|--------|
|                                              |   | June 30,               |   |
|                                              |   | 2011                   |   | 2010 |
|                                              |   | (Dollars in thousands) |   |
|                                              |   |                   |   |   |   |   |
| Balance at beginning of period                    |   | $                      | 1,100  |   |   | $ | 525 |   |
|                                              |   |                   |   |   |   |   |   |   |
| Provision for loan losses                         |   |                   | 948    |   |   |   | 715 |   |
| Loans charged-off                                 |   |                   |   |   |   |   |   |   |
| Real estate loans                                 |   |                   | (75    | ) |   |   | (50 | ) |
| Commercial real estate and land                   |   |                   | (130   | ) |   |   | - |   |
| Real estate construction                          |   |                   | -      |   |   |   | - |   |
| Home equity                                       |   |                   | (30    | ) |   |   | - |   |
| Consumer                                          |   |                   | (17    | ) |   |   | (71 | ) |
| Commercial business loans                         |   |                   | -      |   |   |   | (22 | ) |
| Recoveries                                        |   |                   |   |   |   |   |   |   |
| Real estate loans                                 |   |                   | -      |   |   |   | - |   |
| Commercial real estate and land                   |   |                   | -      |   |   |   | - |   |
| Real estate construction                          |   |                   | -      |   |   |   | - |   |
| Home equity                                       |   |                   | -      |   |   |   | - |   |
| Consumer                                          |   |                   | 4      |   |   |   | 3 |   |
| Commercial business loans                         |   |                   | -      |   |   |   | - |   |
| Net loans charged-off                             |   |                   | (248   | ) |   |   | (140 | ) |
|                                              |   |                   |   |   |   |   |   |   |
| Balance at end of period                          |   | $                      | 1,800  |   |   | $ | 1,100 |   |
|                                              |   |                   |   |   |   |   |   |   |
| Allowance for loan losses to total loans          |   |                   | 0.96   | % |   |   | 0.64 | % |
| Allowance for loan losses to total non-performing |   |                   |   |   |   |
| loans                                             |   |                   | 61.25  | % |   |   | 39.13 | % |
| Net recoveries (charge-offs) to average loans     |   |                   |   |   |   |
| outstanding during the period                     |   |                   | -0.13  | % |   |   | -0.08 | % |

----

|                                                   |   | 2011                   |   |   | 2010                                       |   |
|--------------------------------------------------------|--------|------------------------|--------|--------|--------------------------------------------|--------|
|                                                   |   | (Dollars in thousands) |   |
|                                                   |   | Amount                 |   |   | Percentage of Allowance to Total Allowance |   |   | Loan Category to Total Loans |   |   | Amount |   |   | Percentage of Allowance to Total Allowance |   |   | Loan Category to Total Loans |   |
|   Real estate loans:                         |   |                   |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Residential mortgage (one- to four-family) |   | $                      | 369    |   |                                       |   | 20.56 | % |   |   | 37.34 | % |   | $ | 391 |   |   |   | 35.55 | % |   |   | 42.81 | % |
|   Commercial real estate and land            |   |                   | 652    |   |                                       |   | 36.22 | % |   |   | 34.52 | % |   |   | 447 |   |   |   | 40.62 | % |   |   | 24.43 | % |
|   Real estate construction                   |   |                   | 18     |   |                                       |   | 0.94 | % |   |   | 2.68 | % |   |   | 110 |   |   |   | 10.00 | % |   |   | 4.11 | % |
|   Total real estate loans                    |   |                   | 1,039  |   |                                       |   | 57.72 | % |   |   | 74.54 | % |   |   | 948 |   |   |   | 86.17 | % |   |   | 71.35 | % |
|                                                   |   |                   |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other loans:                                           |   |                   |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Home equity                                |   |                   | 481    |   |                                       |   | 26.72 | % |   |   | 14.84 | % |   |   | 6 |   |   |   | 0.55 | % |   |   | 17.47 | % |
|   Consumer                                   |   |                   | 57     |   |                                       |   | 3.17 | % |   |   | 4.98 | % |   |   | 78 |   |   |   | 7.10 | % |   |   | 5.64 | % |
|   Commercial business                        |   |                   | 223    |   |                                       |   | 12.39 | % |   |   | 5.64 | % |   |   | 68 |   |   |   | 6.18 | % |   |   | 5.54 | % |
|   Total other loans                          |   |                   | 761    |   |                                       |   | 42.28 | % |   |   | 25.46 | % |   |   | 152 |   |   |   | 13.83 | % |   |   | 28.65 | % |
|                                                   |   |                   |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | $                      | 1,800  |   |                                       |   | 100.00 | % |   |   | 100.00 | % |   | $ | 1,100 |   |   |   | 100.00 | % |   |   | 100.00 | % |

----

| INVESTMENT ACTIVITIES |
|-----------------------|

----

|                                                      |   | At June 30,            |
|-----------------------------------------------------------|--------|------------------------|
|                                                      |   | 2011                   |   | 2010 |
|                                                      |   | (Dollars in Thousands) |
|                                                      |   | Carrying Value         |   |   | Percentage of Total |   |   | Carrying Value |   |   | Percentage of Total |   |
| Securities available-for-sale, at fair value:             |   |                   |   |   |   |   |   |   |   |   |   |   |
|   U.S. Government and agency obligations        |   | $                      | 26,208 |   |   |   | 23.50 | % |   | $ | 32,241 |   |   |   | 27.41 | % |
|   Corporate obligations                         |   |                   | 6,216 |   |   |   | 5.57 | % |   |   | 7,451 |   |   |   | 6.33 | % |
|   Municipal obligations                         |   |                   | 39,186 |   |   |   | 35.13 | % |   |   | 35,412 |   |   |   | 30.11 | % |
|   Collateralized mortgage obligations           |   |                   | 24,718 |   |   |   | 22.16 | % |   |   | 37,669 |   |   |   | 32.03 | % |
|   Mortgage-backed securities                    |   |                   | 6,372 |   |   |   | 5.71 | % |   |   | 1,755 |   |   |   | 1.49 | % |
|                                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total securities available for sale                       |   |                   | 102,700 |   |   |   | 92.07 | % |   |   | 114,528 |   |   |   | 97.37 | % |
|                                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities held to maturity, at book value:               |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipal obligations                                     |   |                   | - |   |   |   | 0.00 | % |   |   | 125 |   |   |   | 0.11 | % |
|                                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total securities held to maturity                         |   |                   | - |   |   |   | 0.00 | % |   |   | 125 |   |   |   | 0.11 | % |
|                                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total securities                                          |   |                   | 102,700 |   |   |   | 92.07 | % |   |   | 114,653 |   |   |   | 97.48 | % |
|                                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing deposits                     |   |                   | 1,837 |   |   |   | 1.65 | % |   |   | 966 |   |   |   | 0.82 | % |
|                                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Federal funds sold                            |   |                   | 5,000 |   |   |   | 4.48 | % |   |   | - |   |   |   | 0.00 | % |
|                                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Federal Home Loan Bank capital stock, at cost |   |                   | 2,003 |   |   |   | 1.80 | % |   |   | 2,003 |   |   |   | 1.70 | % |
|                                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                     |   | $                      | 111,540 |   |   |   | 100.00 | % |   | $ | 117,622 |   |   |   | 100.00 | % |

----

|                                        |   | At June 30, 2011    |   |
|---------------------------------------------|--------|---------------------|--------|
|                                        |   | One Year or Less    |   |   | One to Five Years |   |   | More than Five to Ten Years |   | More than Ten Years |   |   | Total Investment Securities |   |
|                                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities available-for-sale:              |   | Carrying Value |   | Annualized Weighted Average Yield |   | Carrying Value |   |   | Annualized Weighted Average Yield |   |   | Carrying Value |   |   | Annualized Weighted Average Yield |   | Carrying Value |   |   | Annualized Weighted Average Yield |   | Carrying Value |   |   | Approximate Market Value |   | Annualized Weighted Average Yield |
| U.S. Government and agency obligations      |   | $                   | 5,605  |   |   |   | 1.47 | % |   | $ | 16,709 |   |   |   | 2.27 | % |   | $ | 2,596 |   |   |   | 1.39 | % |   | $ | 1,300 |   |   |   | 1.64 | % |   | $ | 26,210 |   |   | $ | 26,210 |   |   |   | 1.98 | % |
| Corporate obligations                       |   |                | 4,198  |   |   |   | 4.66 |   |   |   | 2,018 |   |   |   | 3.87 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,216 |   |   |   | 6,216 |   |   |   | 4.40 |   |
| Municipal obligations                       |   |                | -      |   |   |   | - |   |   |   | 4,541 |   |   |   | 4.42 |   |   |   | 11,315 |   |   |   | 5.26 |   |   |   | 23,328 |   |   |   | 6.47 |   |   |   | 39,184 |   |   |   | 39,184 |   |   |   | 5.88 |   |
| Private collateralized mortgage obligations |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 291 |   |   |   | 6.35 |   |   |   | 291 |   |   |   | 291 |   |   |   | 6.35 |   |
| Collateralized mortgage obligations         |   |                | -      |   |   |   | - |   |   |   | 1,843 |   |   |   | 3.01 |   |   |   | 3,335 |   |   |   | 3.40 |   |   |   | 19,249 |   |   |   | 4.01 |   |   |   | 24,427 |   |   |   | 24,427 |   |   |   | 3.85 |   |
| Mortgage-backed securities                  |   |                | 3      |   |   |   | 0.06 |   |   |   | 49 |   |   |   | 4.17 |   |   |   | 2,558 |   |   |   | 2.91 |   |   |   | 3,762 |   |   |   | 3.52 |   |   |   | 6,372 |   |   |   | 6,372 |   |   |   | 3.28 |   |
|                                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total securities available for sale         |   |                | 9,806  |   |   |   | 2.84 |   |   |   | 25,160 |   |   |   | 2.84 |   |   |   | 19,804 |   |   |   | 4.14 |   |   |   | 47,930 |   |   |   | 5.12 |   |   |   | 102,700 |   |   |   | 102,700 |   |   |   | 4.15 |   |
|                                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                   |   |                | 1,837  |   |   |   | 0.87 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,837 |   |   |   | 1,837 |   |   |   | 0.87 |   |
|                                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                          |   |                | 5,000  |   |   |   | 0.25 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,000 |   |   |   | 5,000 |   |   |   | 0.25 |   |
|                                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Bank capital stock        |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,003 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,003 |   |   |   | 2,003 |   |   |   | - |   |
|                                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                       |   | $                   | 16,643 |   |   |   | 1.84 | % |   | $ | 25,160 |   |   |   | 2.84 | % |   | $ | 21,807 |   |   |   | 3.76 | % |   | $ | 47,930 |   |   |   | 5.12 | % |   | $ | 111,540 |   |   | $ | 111,540 |   |   |   | 3.85 | % |

----

| SOURCES OF FUNDS |
|------------------|

----

|                                    |   | At June 30,            |
|-----------------------------------------|--------|------------------------|
|                                    |   | 2011                   |   | 2010 |
|                                    |   | (Dollars in thousands) |
|                                    |   |                   |   |   |   |   |   | Weighted |   |   |   |   |   |   |   |   | Weighted |   |
|                                    |   |                   |   |   | Percent |   |   | Average |   |   |   |   |   | Percent |   |   | Average |   |
|                                    |   | Amount                 |   |   | of Total |   |   | Rate |   |   | Amount |   |   | of Total |   |   | Rate |   |
|                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest checking                    |   | $                      | 19,052 |   |   |   | 9.11 | % |   |   | 0.00 | % |   | $ | 18,376 |   |   |   | 9.28 | % |   |   | 0.00 | % |
| Savings                                 |   |                   | 36,945 |   |   |   | 17.66 | % |   |   | 0.10 | % |   |   | 30,875 |   |   |   | 15.60 | % |   |   | 0.21 | % |
| NOW account/Interest bearing            |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   checking                    |   |                   | 40,352 |   |   |   | 19.29 | % |   |   | 0.05 | % |   |   | 34,658 |   |   |   | 17.51 | % |   |   | 0.15 | % |
| Money market accounts                   |   |                   | 28,284 |   |   |   | 13.51 | % |   |   | 0.12 | % |   |   | 29,021 |   |   |   | 14.65 | % |   |   | 0.24 | % |
|                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total           |   |                   | 124,633 |   |   |   | 59.58 | % |   |   | 0.07 | % |   |   | 112,930 |   |   |   | 57.05 | % |   |   | 0.16 | % |
| Certificates of deposit accounts:       |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    IRA certificates      |   |                   | 25,020 |   |   |   | 11.96 | % |   |   | 1.07 | % |   |   | 26,358 |   |   |   | 13.32 | % |   |   | 2.10 | % |
|    Brokered certificates |   |                   | - |   |   |   | 0.00 | % |   |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |   |   | 0.00 | % |
|    Other certificates    |   |                   | 59,533 |   |   |   | 28.46 | % |   |   | 1.38 | % |   |   | 58,651 |   |   |   | 29.63 | % |   |   | 1.61 | % |
| Total certificates of deposit           |   |                   | 84,553 |   |   |   | 40.42 | % |   |   | 1.29 | % |   |   | 85,009 |   |   |   | 42.95 | % |   |   | 1.76 | % |
|                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total deposits  |   | $                      | 209,186 |   |   |   | 100.00 | % |   |   | 0.57 | % |   | $ | 197,939 |   |   |   | 100.00 | % |   |   | 0.85 | % |

|             |   |     |   |   |     |   |   |     |   |   | After    |   |   |   |   |
|------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|--------|--------|
|             |   | June 30, |   |   | June 30, |   |   | June 30, |   |   | June 30, |   |   |   |   |
|             |   | 2012     |   |   | 2013     |   |   | 2014     |   |   | 2015     |   |   | Total  |   |
|             |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |
| under 0.51%      |   | $        | 7,009  |   |     | $      | -      |     |   | $      | -        |   |   | $      | -      |   |   | $ | 7,009 |   |
| 0.51-0.75%       |   |     | 15,352 |   |     |   | 20     |     |   |   | -        |   |   |   | -      |   |   |   | 15,372 |   |
| 0.76-1.00%       |   |     | 19,519 |   |     |   | 4,604  |     |   |   | -        |   |   |   | -      |   |   |   | 24,123 |   |
| 1.01-1.25%       |   |     | 10,871 |   |     |   | 2,934  |     |   |   | 257      |   |   |   | -      |   |   |   | 14,062 |   |
| 1.26-1.50%       |   |     | 1,196  |   |     |   | 353    |     |   |   | 305      |   |   |   | 61     |   |   |   | 1,915 |   |
| 1.51-2.00%       |   |     | 5,846  |   |     |   | 51     |     |   |   | 105      |   |   |   | 280    |   |   |   | 6,282 |   |
| 2.01% and higher |   |     | 2,521  |   |     |   | 4,499  |     |   |   | 4,114    |   |   |   | 4,656  |   |   |   | 15,790 |   |
|             |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Total            |   | $        | 62,314 |   |     | $      | 12,461 |     |   | $      | 4,781    |   |   | $      | 4,997  |   |   | $ | 84,553 |   |

----

|                |   |   | Balance     |   |    |      |
|---------------------|--------|--------|-------------|--------|---------|-----------|
| (In thousands)      |   |   |        |   | Greater |      |   |   |
|                |   |   | $100 - $250 |   |    | than $250 |   | Total |   |
| 3 months or less    |   | $      | 3,719       |   |    | $         | 1,142 |   |   | $ | 4,861 |   |
| Over 3 to 6 months  |   |   | 6,322       |   |    |      | 1,117 |   |   |   | 7,439 |   |
| Over 6 to 12 months |   |   | 4,893       |   |    |      | 1,821 |   |   |   | 6,714 |   |
| Over 12 months      |   |   | 5,773       |   |    |      | 676 |   |   |   | 6,449 |   |
|                |   |   |        |   |    |      |   |   |   |   |   |   |   |
|   Total   |   | $      | 20,707      |   |    | $         | 4,756 |   |   | $ | 25,463 |   |

|                                   |   | Year Ended June 30,    |    |
|----------------------------------------|--------|------------------------|---------|
|                                   |   | 2011                   |    |   | 2010 |   |
|                                   |   | (Dollars in thousands) |    |
|                                   |   |                   |    |   |   |   |
| Opening balance                        |   | $                      | 197,939 |   |   | $ | 187,199 |   |
| Deposits, net                          |   |                   | 9,867   |   |   |   | 8,592 |   |
| Interest credited                      |   |                   | 1,380   |   |   |   | 2,148 |   |
|                                   |   |                   |    |   |   |   |   |   |
| Ending balance                         |   | $                      | 209,186 |   |   | $ | 197,939 |   |
|                                   |   |                   |    |   |   |   |   |   |
| Net increase                           |   | $                      | 11,247  |   |   | $ | 8,348 |   |
|                                   |   |                   |    |   |   |   |   |   |
| Percent increase                       |   |                   | 5.68    | % |   |   | 4.67 | % |
|                                   |   |                   |    |   |   |   |   |   |
| Weighted average cost of               |   |                   |    |   |   |   |   |   |
|   deposits during the period |   |                   | 0.75    | % |   |   | 1.19 | % |
|                                   |   |                   |    |   |   |   |   |   |
| Weighted average cost of               |   |                   |    |   |   |   |   |   |
|   deposits at end of period  |   |                   | 0.57    | % |   |   | 0.85 | % |

----

|                                                         |   | Ended June 30,         |
|--------------------------------------------------------------|--------|------------------------|
|                                                         |   | 2011                   |   | 2010 |
|                                                         |   | (Dollars in thousands) |   |
| FHLB Advances:                                               |   |                   |   |   |   |   |
|   Average balance                                  |   | $                      | 41,008 |   |   | $ | 43,090 |   |
|   Maximum balance at any month-end                 |   |                   | 45,346 |   |   |   | 45,500 |   |
|   Balance at period end                            |   |                   | 37,896 |   |   |   | 44,224 |   |
|   Weighted average interest rate during the period |   |                   | 3.47 | % |   |   | 3.95 | % |
|   Weighted average interest rate at period end     |   |                   | 3.26 | % |   |   | 3.32 | % |
|                                                         |   |                   |   |   |   |   |   |   |
| Repurchase Agreements:                                       |   |                   |   |   |   |   |   |   |
|   Average balance                                  |   | $                      | 23,000 |   |   | $ | 23,000 |   |
|   Maximum balance at any month-end                 |   |                   | 23,000 |   |   |   | 23,000 |   |
|   Balance at period end                            |   |                   | 23,000 |   |   |   | 23,000 |   |
|   Weighted average interest rate during the period |   |                   | 4.66 | % |   |   | 4.66 | % |
|   Weighted average interest rate at period end     |   |                   | 4.66 | % |   |   | 4.66 | % |
|                                                         |   |                   |   |   |   |   |   |   |
| Other:                                                       |   |                   |   |   |   |   |   |   |
|   Average balance                                  |   | $                      | - |   |   | $ | - |   |
|   Maximum balance at any month-end                 |   |                   | - |   |   |   | - |   |
|   Balance at period end                            |   |                   | - |   |   |   | - |   |
|   Weighted average interest rate during the period |   |                   | n/a |   |   |   | n/a |   |
|   Weighted average interest rate at period end     |   |                   | n/a |   |   |   | n/a |   |
|                                                         |   |                   |   |   |   |   |   |   |
| Total borrowings:                                            |   |                   |   |   |   |   |   |   |
|   Average balance                                  |   | $                      | 64,008 |   |   | $ | 66,090 |   |
|   Maximum balance at any month-end                 |   |                   | 68,346 |   |   |   | 68,500 |   |
|   Balance at period end                            |   |                   | 60,896 |   |   |   | 67,224 |   |
|   Weighted average interest rate during the period |   |                   | 3.90 | % |   |   | 4.13 | % |
|   Weighted average interest rate at period end     |   |                   | 3.79 | % |   |   | 3.78 | % |

----

----

----

----

----

----

| ITEM 1A. | RISK FACTORS. |
|----------|---------------|

----

----

----

| ITEM 1B. | UNRESOLVED STAFF COMMENTS. |
|----------|----------------------------|

| ITEM 2. | PROPERTIES. |
|---------|-------------|

----

|                       |   |                          |   |                    |   | Value At       |   |   |    |   |
|----------------------------|--------|-------------------------------|--------|-------------------------|--------|----------------|--------|--------|---------|--------|
|                       |   |                          |   |                    |   | June 30, 2011  |   |   | Square  |   |
| Location                   |   | Address                       |   | Opened                  |   | (In thousands) |   |   | Footage |   |
|                       |   |                          |   |                    |   |           |   |   |    |   |
| Helena Main Office         |   | 1400 Prospect Ave.            |   | 1997                    |   | $              | 3,785  |   |    |   | 32,304 |   |
|                       |   | Helena, MT  59601   |   |                    |   |           |   |   |    |   |   |   |
|                       |   |                          |   |                    |   |           |   |   |    |   |   |   |
| Helena Neill Avenue Branch |   | 28 Neill Ave.                 |   | 1987                    |   | $              | 1,064  |   |    |   | 1,391 |   |
|                       |   | Helena, MT  59601   |   |                    |   |           |   |   |    |   |   |   |
|                       |   |                          |   |                    |   |           |   |   |    |   |   |   |
| Helena Skyway Branch       |   | 2090 Cromwell Dixon           |   | 2009                    |   | $              | 2,294  |   |    |   | 4,643 |   |
|                       |   | Helena, MT 59602              |   |                    |   |           |   |   |    |   |   |   |
|                       |   |                          |   |                    |   |           |   |   |    |   |   |   |
| Butte Office               |   | 3401 Harrison Ave.            |   | 1979                    |   | $              | 545    |   |    |   | 3,890 |   |
|                       |   | Butte, MT  59701    |   |                    |   |           |   |   |    |   |   |   |
|                       |   |                          |   |                    |   |           |   |   |    |   |   |   |
| Bozeman Office             |   | 606 North Seventh             |   | 1980                    |   | $              | 395    |   |    |   | 5,886 |   |
|                       |   | Bozeman, MT  59715  |   | (closed August 1, 2010) |   |           |   |   |    |   |   |   |
|                       |   |                          |   |                    |   |           |   |   |    |   |   |   |
| Bozeman Branch             |   | 1455 Oak St                   |   | 2009                    |   | $              | 7,867  |   |    |   | 19,818 |   |
|                       |   | Bozeman, MT 59715             |   |                    |   |           |   |   |    |   |   |   |
|                       |   |                          |   |                    |   |           |   |   |    |   |   |   |
| Townsend Office            |   | 416 Broadway                  |   | 1979                    |   | $              | 201    |   |    |   | 1,973 |   |
|                       |   | Townsend, MT  59644 |   |                    |   |           |   |   |    |   |   |   |

| ITEM 3. | LEGAL PROCEEDINGS. |
|---------|--------------------|

| ITEM 4. | (REMOVED AND RESERVED). |
|---------|-------------------------|

----

PART

| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
|---------|---------------------------------------------------------------------------------------------------------------------|

|                                                                  |    |     |   |    |   |   |   | Dividends |
|-----------------------------------------------------------------------|---------|----------|--------|---------|--------|--------|--------|-----------|
| Quarter Ended                                                         |    | High Bid |   | Low Bid |   | Paid   |
| Fiscal Year 2011                                                      |    |     |   |    |   |   |   |      |   |
| June 30, 2011                                                         |    | $        | 11.75  |    |   | $      | 10.49  |      |   | $ | 0.070 |   |
| March 31, 2011                                                        |    | $        | 11.81  |    |   | $      | 10.58  |      |   | $ | 0.070 |   |
| December 31, 2010                                                     |    | $        | 10.83  |    |   | $      | 9.05   |      |   | $ | 0.070 |   |
| September 30, 2010                                                    |    | $        | 9.95   |    |   | $      | 9.00   |      |   | $ | 0.070 |   |
| Fiscal Year 2010                                                      |    |     |   |    |   |   |   |      |   |   |   |   |
| June 30, 2010                                                         |    | $        | 10.79  |    |   | $      | 9.70   |      |   | $ | 0.068 |   |
| March 31, 2010                                                        | *  | $        | 11.58  |    |   | $      | 8.59   |      |   | $ | 0.068 |   |
| December 31, 2009                                                     | *  | $        | 9.21   |    |   | $      | 7.50   |      |   | $ | 0.068 |   |
| September 30, 2009                                                    | *  | $        | 8.64   |    |   | $      | 7.11   |      |   | $ | 0.068 |   |
|                                                                  |    |     |   |    |   |   |   |      |   |   |   |   |
|                                                                  |    |     |   |    |   |   |   |      |   |   |   |   |
| *Dividend paid adjusted for the 3.8 to 1.0 exchange on April 5, 2010. |    |     |   |    |   |   |

----

| Period                               |   | Total number of shares purchased |    |   | Average price paid per share |   |   | Total number of shares purchased as part of publicly announced plans or programs |   |   | Maximum number of shares that may yet be purchased under the plans or programs |   |
|--------------------------------------|--------|--------------------------------------------|---------|--------|------------------------------|--------|--------|---------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------|--------|
|                                 |   |                                       |    |   |                         |   |   |                                                                                  |   |   |                                                                                |   |
| April 1, 2011 through April 30, 2011 |   |                                       | -       |   |                         |   | n/a    |                                                                                  |   |   | n/a                                                                                 |   |   |   | 204,156 |   |
| May 1, 2011 through May 31, 2011     |   |                                       | 5,160   |   |                         |   | 11.26  |                                                                                  |   |   | 5,160                                                                               |   |   |   | 198,996 |   |
| June 1, 2011 through June 30, 2011   |   |                                       | 159,280 |   |                         |   | 10.91  |                                                                                  |   |   | 159,280                                                                             |   |   |   | 39,716 |   |
|      Total  |   |                                       | 164,440 |   |                         | $      | 10.92  |                                                                                  |   |   | 164,440                                                                             |   |   |   |   |   |

| ITEM 6. | SELECTED FINANCIAL DATA. |
|---------|--------------------------|

| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
|---------|----------------------------------------------------------------------------------------------|

----

| RECENT ACCOUNTING PRONOUNCEMENTS |
|----------------------------------|

----

----

| FINANCIAL CONDITION |
|---------------------|

----

----

|                                                                     |   | For the twelve months ended June 30, |
|--------------------------------------------------------------------------|--------|--------------------------------------|
|                                                                     |   | 2011                                 |   | 2010 |
|                                                                     |   | (Dollars in thousands)               |
|                                                                     |   | Average                              |   |   | Interest |   |   |   |   |   | Average |   |   | Interest |   |   |   |   |
|                                                                     |   | Daily                                |   |   | and |   |   | Yield/ |   |   | Daily |   |   | and |   |   | Yield/ |   |
|                                                                     |   | Balance                              |   |   | Dividends |   |   | Cost(3) |   |   | Balance |   |   | Dividends |   |   | Cost(3) |   |
| Assets:                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-earning assets:                                     |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      FHLB stock                                 |   | $                                    | 2,003 |   |   | $ | - |   |   |   | 0.00 | % |   | $ | 2,002 |   |   | $ | - |   |   |   | 0.00 | % |
|      Loans receivable, net                      |   |                                 | 185,223 |   |   |   | 11,279 |   |   |   | 6.09 | % |   |   | 172,338 |   |   |   | 10,857 |   |   |   | 6.30 | % |
|      Investment securities                      |   |                                 | 107,010 |   |   |   | 3,659 |   |   |   | 3.42 | % |   |   | 97,077 |   |   |   | 4,023 |   |   |   | 4.14 | % |
|      Interest-bearing deposits with banks       |   |                                 | 5,874 |   |   |   | 21 |   |   |   | 0.36 | % |   |   | 7,151 |   |   |   | 27 |   |   |   | 0.38 | % |
| Total interest-earning assets                                            |   |                                 | 300,110 |   |   |   | 14,959 |   |   |   | 4.98 | % |   |   | 278,568 |   |   |   | 14,907 |   |   |   | 5.35 | % |
| Noninterest-earning assets                                               |   |                                 | 31,505 |   |   |   |   |   |   |   |   |   |   |   | 30,315 |   |   |   |   |   |   |   |   |   |
| Total assets                                                             |   | $                                    | 331,615 |   |   |   |   |   |   |   |   |   |   | $ | 308,883 |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Equity:                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing liabilities:                                |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Deposit accounts:                          |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Money market                   |   | $                                    | 28,075 |   |   | $ | 46 |   |   |   | 0.16 | % |   | $ | 27,420 |   |   | $ | 111 |   |   |   | 0.40 | % |
|        Savings                        |   |                                 | 33,850 |   |   |   | 48 |   |   |   | 0.14 | % |   |   | 28,226 |   |   |   | 92 |   |   |   | 0.33 | % |
|        Checking                       |   |                                 | 40,057 |   |   |   | 28 |   |   |   | 0.07 | % |   |   | 36,125 |   |   |   | 72 |   |   |   | 0.20 | % |
|        Certificates of deposit        |   |                                 | 84,391 |   |   |   | 1,270 |   |   |   | 1.50 | % |   |   | 89,197 |   |   |   | 1,886 |   |   |   | 2.11 | % |
|      Advances from FHLB & subordinated debt |   |                                 | 69,163 |   |   |   | 2,694 |   |   |   | 3.90 | % |   |   | 71,245 |   |   |   | 2,944 |   |   |   | 4.13 | % |
| Total interest-bearing liabilities                                       |   |                                 | 255,536 |   |   |   | 4,086 |   |   |   | 1.60 | % |   |   | 252,213 |   |   |   | 5,105 |   |   |   | 2.02 | % |
| Non-interest checking                                                    |   |                                 | 19,381 |   |   |   |   |   |   |   |   |   |   |   | 17,551 |   |   |   |   |   |   |   |   |   |
| Other noninterest-bearing liabilities                                    |   |                                 | 3,158 |   |   |   |   |   |   |   |   |   |   |   | 3,549 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                        |   |                                 | 278,075 |   |   |   |   |   |   |   |   |   |   |   | 273,313 |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total equity                                                             |   |                                 | 53,540 |   |   |   |   |   |   |   |   |   |   |   | 35,570 |   |   |   |   |   |   |   |   |   |
|                                                                     |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and equity                                             |   | $                                    | 331,615 |   |   |   |   |   |   |   |   |   |   | $ | 308,883 |   |   |   |   |   |   |   |   |   |
| Net interest income/interest rate spread(1)                              |   |                                 | $ | 10,873 |   |   |   | 3.38 | % |   |   |   |   |   | $ | 9,802 |   |   |   | 3.33 | % |
|                                                                     |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin(2)                                                   |   |                                 |   |   |   |   |   |   |   |   | 3.62 | % |   |   |   |   |   |   |   |   |   |   | 3.52 | % |
| Total interest-earning assets to interest-bearing liabilities            |   |                                 |   | 117.44 | % |   |   |   |   |   |   |   |   |   |   | 110.45 | % |

| (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.                                    |
| (3) | For purposes of this table, tax exempt income is not calculated on a tax equivalent basis.                                                                |

----

|                                                 |   | For the Years Ended June 30, |
|------------------------------------------------------|--------|------------------------------|
|                                                 |   | Increase (Decrease)          |
|                                                 |   | (In thousands)               |   |
|                                                 |   | 2011 vs 2010                 |   |   | 2010 vs 2009 |
|                                                 |   |                         |   |   | Due to |   |   |   |   |   |   |   |   | Due to |   |   |   |   |
|                                                 |   | Volume                       |   |   | Rate |   |   | Net |   |   | Volume |   |   | Rate |   |   | Net |   |
| Interest earning assets:                             |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Loans receivable, net                    |   | $                            | 812 |   |   | $ | (390 | ) |   | $ | 422 |   |   | $ | (323 | ) |   | $ | (231 | ) |   | $ | (554 | ) |
|   Investment securities                    |   |                         | 412 |   |   |   | (776 | ) |   |   | (364 | ) |   |   | 871 |   |   |   | (770 | ) |   |   | 101 |   |
|   Interest-bearing deposits with banks     |   |                         | (5 | ) |   |   | (1 | ) |   |   | (6 | ) |   |   | 18 |   |   |   | (6 | ) |   |   | 12 |   |
|   Other earning assets                     |   |                         | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total interest earning assets                        |   |                         | 1,219 |   |   |   | (1,167 | ) |   |   | 52 |   |   |   | 566 |   |   |   | (1,007 | ) |   |   | (441 | ) |
|                                                 |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                        |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Passbook, money market and               |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     checking accounts            |   |                         | 29 |   |   |   | (182 | ) |   |   | (153 | ) |   |   | 47 |   |   |   | (325 | ) |   |   | (278 | ) |
|   Certificates of deposit                  |   |                         | (102 | ) |   |   | (514 | ) |   |   | (616 | ) |   |   | 76 |   |   |   | (798 | ) |   |   | (722 | ) |
|   Borrowings & subordinated debentures |   |                         | (86 | ) |   |   | (164 | ) |   |   | (250 | ) |   |   | (68 | ) |   |   | 58 |   |   |   | (10 | ) |
| Total interest-bearing liabilities                   |   |                         | (159 | ) |   |   | (860 | ) |   |   | (1,019 | ) |   |   | 55 |   |   |   | (1,065 | ) |   |   | (1,010 | ) |
|                                                 |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in net interest income                        |   | $                            | 1,378 |   |   | $ | (307 | ) |   | $ | 1,071 |   |   | $ | 511 |   |   | $ | 58 |   |   | $ | 569 |   |

----

----

| Impact of Inflation and Changing Prices |
|-----------------------------------------|

----

| Changes in Market                  |   | Net Portfolio Value as % of PV of Assets |
|------------------------------------|--------|------------------------------------------|
|  Interest Rates(Basis Points) |   | At June 30, 2011Projected NPV       |   | Board Policy Limit(if applicable) |
|                               |   |                                     |   | Must be at least: |
|                               |   |                                     |   |   |
| +300                               |   | 16.14%                                   |   | 7.00% |
| +200                               |   | 17.44%                                   |   | 8.00% |
| +100                               |   | 18.53%                                   |   | 9.00% |
| 0                                  |   | 19.30%                                   |   | - |
| -100                               |   | 19.95%                                   |   | 10.00% |

| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
|----------|-------------------------------------------------------------|

| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
|---------|----------------------------------------------|

| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
|---------|---------------------------------------------------------------------------------------|

| ITEM 9A. | CONTROLS AND PROCEDURES. |
|----------|--------------------------|

----

| ITEM 9B. | OTHER INFORMATION. |
|----------|--------------------|

----

PART

| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
|----------|---------------------------------------------------------|

| Peter J. Johnson, President & Chief Executive Officer | Age 54 |
|-----------------------------------------------------------|--------|

| Clinton J. Morrison, Senior Vice President & Chief Financial Officer |   Age 41 |
|--------------------------------------------------------------------------|--------------------|

| Michael C. Mundt, Senior Vice President & Chief Lending Officer | Age 57 |
|---------------------------------------------------------------------|--------|

| Robert M. Evans, Senior Vice President & Chief Information Officer | Age 63 |
|------------------------------------------------------------------------|--------|

| Rachel R. Amdahl, Senior Vice President/Operations | Age 42 |
|----------------------------------------------------|--------|

| ITEM 11. | EXECUTIVE COMPENSATION. |
|----------|-------------------------|

----

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
|----------|-------------------------------------------------------------------------------------------------|

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
|----------|----------------------------------------------------------------------------|

| ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES. |
|----------|-----------------------------------------|

| ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES. |
|----------|------------------------------------------|

| (a) | (1) | The following documents are filed as part of this report:  The audited Consolidated Statements of Financial Condition of Eagle Bancorp Montana, Inc. and subsidiary as of June 30, 2011 and June 30, 2010 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. |
|--------|-----|-----------------------------------------------|

|   | (3) | Exhibits. |
|--------|-----|-----------|

| **     | 3.1    | Amended and Restated Certificate of Incorporation of Eagle Bancorp Montana, Inc.                                                      |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                  |
| *      | 3.2    | Bylaws of Eagle Bancorp Montana, Inc.                                                                                                 |
|   |   |                                                                                                                                  |
| *      | 4      | Form of Common Stock Certificate of Eagle Bancorp Montana, Inc.                                                                       |
|   |   |                                                                                                                                  |
| ***    | 10.1   | Employee Stock Ownership Plan.                                                                                                        |
|   |   |                                                                                                                                  |
| ****   | 10.2   | Eagle Bancorp 2000 Stock Incentive Plan.                                                                                              |
|   |   |                                                                                                                                  |
| *      | 10.3   | Employment Contract, effective as of October 1, 2009, between Peter J. Johnson and American Federal Savings Bank.                     |
|   |   |                                                                                                                                  |
| *      | 10.4   | Form of Change in Control Agreement between Clinton J. Morrison and American Federal Savings Bank.                                    |
|   |   |                                                                                                                                  |
| *      | 10.5   | Form of Change in Control Agreement between Michael C. Mundt and American Federal Savings Bank.                                       |
|   |   |                                                                                                                                  |
| *      | 10.6   | Form of Change in Control Agreement between Robert M. Evans and American Federal Savings Bank.                                        |
|   |   |                                                                                                                                  |
| *      | 10.7   | Form of Change in Control Agreement between Rachel R. Amdahl and American Federal Savings Bank.                                       |
|   |   |                                                                                                                                  |
| *      | 10.8   | Amendment No. 1 to Employment Contract, effective as of January 22, 2010, between Peter J. Johnson and American Federal Savings Bank. |
|   |   |                                                                                                                                  |
| *      | 10.9   | Salary Continuation Agreement, dated April 18, 2002, between Larry A. Dreyer and American Federal Savings Bank.                       |
|   |   |                                                                                                                                  |
| *      | 10.10  | First Amendment to Salary Continuation Agreement, dated December 31, 2006, between Larry A. Dreyer and American Federal Savings Bank. |

----

| *      | 10.11  | Salary Continuation Agreement, dated April 18, 2002, between Peter J. Johnson and American Federal Savings Bank.                                                                                                       |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                   |
| *      | 10.12  | First Amendment to Salary Continuation Agreement, dated December 31, 2006, between Peter J. Johnson and American Federal Savings Bank.                                                                                 |
|   |   |                                                                                                                                                                                                                   |
| *      | 10.13  | Salary Continuation Agreement, dated November 15, 2007, between Clinton J. Morrison and American Federal Savings Bank.                                                                                                 |
|   |   |                                                                                                                                                                                                                   |
| *      | 10.14  | Salary Continuation Agreement, dated April 18, 2002, between Michael C. Mundt and American Federal Savings Bank.                                                                                                       |
|   |   |                                                                                                                                                                                                                   |
| *      | 10.15  | First Amendment to Salary Continuation Agreement, dated December 31, 2006, between Michael C. Mundt and American Federal Savings Bank.                                                                                 |
|   |   |                                                                                                                                                                                                                   |
| *      | 10.16  | Salary Continuation Agreement, dated April 18, 2002, between Robert M. Evans and American Federal Savings Bank.                                                                                                        |
|   |   |                                                                                                                                                                                                                   |
| *      | 10.17  | First Amendment to Salary Continuation Agreement, dated December 31, 2006, between Robert M. Evans and American Federal Savings Bank.                                                                                  |
|   |   |                                                                                                                                                                                                                   |
| *      | 10.18  | Salary Continuation Agreement, dated November 16, 2006, between Rachel R. Amdahl and American Federal Savings Bank.                                                                                                    |
|   |   |                                                                                                                                                                                                                   |
| *      | 10.19  | American Federal Savings Bank Split-Dollar Plan, effective October 21, 2004.                                                                                                                                           |
|   |   |                                                                                                                                                                                                                   |
| *      | 10.20  | Summary of American Federal Savings Bank Bonus Plan.                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                   |
| *      | 21.1   | Subsidiaries of Registrant.                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                   |
|   | 31.1   | Certification by Peter J. Johnson, Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                |
|   |   |                                                                                                                                                                                                                   |
|   | 31.2   | Certification by Clinton J.  Morrison, Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  |
|   |   |                                                                                                                                                                                                                   |
|   | 32.1   | Certification by Peter J. Johnson, Chief Executive Officer and Clinton J. Morrison, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

|   | * | Incorporated by reference to the identically numbered exhibit of the Registration Statement on Form S-1 (File No. 333-163790) filed with the SEC on December 17, 2009. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ** | Incorporated by reference to the identically numbered exhibit of the Current Report on Form 8-K filed with the SEC on February 23, 2010. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | *** | Incorporated by reference to the Registration Statement on Form SB-2 filed with the SEC on December 20, 1999. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

|   | **** | Incorporated by reference to the proxy statement for the 2000 Annual Meeting filed with the SEC on September 19, 2000. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------|

----

|   | EAGLE BANCORP MONTANA, INC.             |   |
|--------|-----------------------------------------|--------|
|   |                                    |   |
|   | /s/ Peter J. Johnson                    |   |
|   | Peter J. Johnson                        |   |
|   | President & Chief Executive Officer |   |

| Signatures              |   | Title                                                                            |   | Date      |
|-------------------------|--------|----------------------------------------------------------------------------------|--------|-----------|
|                    |   |                                                                             |   |      |
|                    |   |                                                                             |   |      |
| /s/ Peter J. Johnson    |   | President & Chief Executive Officer                                          |   | 9/19/2011 |
| Peter J. Johnson        |   | Director (Principal Executive Officer)                                           |   |      |
|                    |   |                                                                             |   |      |
| /s/ Clinton J. Morrison |   | Senior Vice President and Chief                                                  |   | 9/19/2011 |
| Clinton J. Morrison     |   | Financial Officer (Principal Financial Officer and Principal Accounting Officer) |   |      |
|                    |   |                                                                             |   |      |
| /s/ Larry A. Dreyer     |   | Chairman                                                                         |   | 9/19/2011 |
| Larry A. Dreyer         |   |                                                                             |   |      |
|                    |   |                                                                             |   |      |
| /s/ James A. Maierle    |   | Vice Chairman                                                                    |   | 9/19/2011 |
| James A. Maierle        |   |                                                                             |   |      |
|                    |   |                                                                             |   |      |
| /s/ Rick F. Hays        |   | Director                                                                         |   | 9/19/2011 |
| Rick F. Hays            |   |                                                                             |   |      |
|                    |   |                                                                             |   |      |
| /s/ Lynn E. Dickey      |   | Director                                                                         |   | 9/19/2011 |
| Lynn E. Dickey          |   |                                                                             |   |      |
|                    |   |                                                                             |   |      |
| /s/ Maureen J. Rude     |   | Director                                                                         |   | 9/19/2011 |
| Maureen J. Rude         |   |                                                                             |   |      |
|                    |   |                                                                             |   |      |
| /s/ Thomas J. McCarvel  |   | Director                                                                         |   | 9/19/2011 |
| Thomas J. McCarvel      |   |                                                                             |   |      |

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|                                                    |                                                             | Page   |
|---------------------------------------------------------|------------------------------------------------------------------|--------|
|                                                    |                                                             |   |
| Report of Independent Registered Public Accounting Firm | 1                                                                |
|                                                    |                                                             |   |
| Financial Statements                                    |                                                             |
|                                                    |                                                             |   |
|                                                    | Consolidated Statements of Financial Condition                   | 2      |
|                                                    |                                                             |   |
|                                                    | Consolidated Statements of Income                                | 3      |
|                                                    |                                                             |   |
|                                                    | Consolidated Statements of Changes in Stockholders’ Equity | 4      |
|                                                    |                                                             |   |
|                                                    | Consolidated Statements of Cash Flows                            | 5      |
|                                                    |                                                             |   |
|                                                    | Notes to Consolidated Financial Statements                       | 6      |

----

|   |                              |
|--------|------------------------------|
|   |                         |
|   | Certified Public Accountants |

----

| EAGLE BANCORP MONTANA, INC. AND SUBSIDIARY                       |
|------------------------------------------------------------------|
| Consolidated Statements of Financial Condition                   |
| June 30, 2011 and 2010                                           |
| (Dollars in Thousands, Except for Per Share Data)                |
|                                                             |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |
| Assets                                                           |   | 2011 |   | 2010 |
|                                                             |   |   |   |   |   |   |
| Cash and due from banks                                          |   | $ | 2,703 |   |   | $ | 2,543 |   |
| Interest bearing deposits in banks                               |   |   | 1,837 |   |   |   | 966 |   |
| Federal funds sold                                               |   |   | 5,000 |   |   |   | - |   |
| Cash and cash equivalents                                        |   |   | 9,540 |   |   |   | 3,509 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Securities available-for-sale                                    |   |   | 102,700 |   |   |   | 114,528 |   |
| Securities held-to-maturity (fair value                          |   |   |   |   |   |   |   |   |
| approximates $0 in 2011 and $125 in 2010)                        |   |   | - |   |   |   | 125 |   |
| FHLB stock restricted, at cost                                   |   |   | 2,003 |   |   |   | 2,003 |   |
| Investment in Eagle Bancorp Statutory Trust I                    |   |   | 155 |   |   |   | 155 |   |
| Mortgage loans held for sale                                     |   |   | 1,784 |   |   |   | 7,695 |   |
| Loans receivable, net of deferred loan fees and                  |   |   |   |   |   |   |   |   |
| allowance for loan losses of $1,800 in 2011 and $1,100 in 2010   |   |   | 185,471 |   |   |   | 169,502 |   |
| Accrued interest and dividend receivable                         |   |   | 1,558 |   |   |   | 1,610 |   |
| Mortgage servicing rights, net                                   |   |   | 2,142 |   |   |   | 2,337 |   |
| Premises and equipment, net                                      |   |   | 16,151 |   |   |   | 15,848 |   |
| Cash surrender value of life insurance                           |   |   | 6,900 |   |   |   | 6,691 |   |
| Real estate and other assets aquired in settlement of loans, net |   |   | 1,181 |   |   |   | 619 |   |
| Other assets                                                     |   |   | 1,508 |   |   |   | 1,117 |   |
|                                                             |   |   |   |   |   |   |   |   |
|                                                             |   | $ | 331,093 |   |   | $ | 325,739 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Liabilities and Shareholders' Equity                             |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |
| Noninterest bearing                                              |   | $ | 19,052 |   |   | $ | 18,376 |   |
| Interest bearing                                                 |   |   | 190,134 |   |   |   | 179,563 |   |
| Total deposits                                                   |   |   | 209,186 |   |   |   | 197,939 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Accrued expenses and other liabilities                           |   |   | 3,371 |   |   |   | 2,989 |   |
| FHLB advances and other borrowings                               |   |   | 60,896 |   |   |   | 67,224 |   |
| Subordinated debentures                                          |   |   | 5,155 |   |   |   | 5,155 |   |
| Total liabilities                                                |   |   | 278,608 |   |   |   | 273,307 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Shareholders' equity                                             |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |
| Preferred stock, no par value; 1,000,000                         |   |   |   |   |   |   |   |   |
| shares authorized, no shares issued or outstanding               |   |   | - |   |   |   | - |   |
| Common stock, $0.01 par value; 8,000,000 shares                  |   |   |   |   |   |   |   |   |
| authorized; 4,083,127 shares issued;                             |   |   |   |   |   |   |   |   |
| 3,918,687 and 4,083,127 shares outstanding at                    |   |   |   |   |   |   |   |   |
| June 30, 2011 and 2010, respectively                             |   |   | 41 |   |   |   | 41 |   |
| Capital surplus                                                  |   |   | 22,110 |   |   |   | 22,104 |   |
| Unallocated common stock held by ESOP                            |   |   | (1,722 | ) |   |   | (1,889 | ) |
| Treasury stock, at cost                                          |   |   | (1,796 | ) |   |   | - |   |
| Retained earnings                                                |   |   | 31,918 |   |   |   | 30,652 |   |
| Net accumulated other comprehensive gain                         |   |   | 1,934 |   |   |   | 1,524 |   |
| Total shareholders' equity                                       |   |   | 52,485 |   |   |   | 52,432 |   |
|                                                             |   |   |   |   |   |   |   |   |
|                                                             |   | $ | 331,093 |   |   | $ | 325,739 |   |

----

| EAGLE BANCORP MONTANA, INC. AND SUBSIDIARY                  |
|-------------------------------------------------------------|
| Consolidated Statements of Income                           |
| Years Ended June 30, 2011 and 2010                          |
| (Dollars in Thousands, Except for Per Share Data)           |
|                                                        |   |   |   |   |   |   |
|                                                        |   | 2011 |   | 2010 |
| Interest and dividend income                                |   |   |   |   |   |   |
| Loans, including fees                                       |   | $ | 11,279 |   |   | $ | 10,857 |   |
| Securities available-for-sale                               |   |   | 3,653 |   |   |   | 4,003 |   |
| Securities held- to-maturity                                |   |   | - |   |   |   | 11 |   |
| Trust preferred securities                                  |   |   | 6 |   |   |   | 9 |   |
| Deposits with banks                                         |   |   | 21 |   |   |   | 27 |   |
| Total interest income                                       |   |   | 14,959 |   |   |   | 14,907 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Interest expense                                            |   |   |   |   |   |   |   |   |
| Deposits                                                    |   |   | 1,392 |   |   |   | 2,161 |   |
| FHLB advances and other borrowings                          |   |   | 2,502 |   |   |   | 2,635 |   |
| Subordinated debentures                                     |   |   | 192 |   |   |   | 309 |   |
| Total interest expense                                      |   |   | 4,086 |   |   |   | 5,105 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Net interest income                                         |   |   | 10,873 |   |   |   | 9,802 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Provision for loan losses                                   |   |   | 948 |   |   |   | 715 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Net interest income after provision for loan losses         |   |   | 9,925 |   |   |   | 9,087 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Noninterest income                                          |   |   |   |   |   |   |   |   |
| Service charges on deposit accounts                         |   |   | 733 |   |   |   | 765 |   |
| Net gain on sale of loans                                   |   |   | 2,187 |   |   |   | 1,280 |   |
| Mortgage loan service fees                                  |   |   | 830 |   |   |   | 770 |   |
| Net realized gain on sales of available for sale securities |   |   | 19 |   |   |   | 33 |   |
| Net gain on preferred stock - FASB ASC 825                  |   |   | - |   |   |   | 84 |   |
| Net loss on sale of OREO                                    |   |   | (2 | ) |   |   | - |   |
| Other income                                                |   |   | 856 |   |   |   | 661 |   |
| Total noninterest income                                    |   |   | 4,623 |   |   |   | 3,593 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Noninterest expenses                                        |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                              |   |   | 4,948 |   |   |   | 4,750 |   |
| Occupancy and equipment expense                             |   |   | 1,346 |   |   |   | 1,177 |   |
| Data processing                                             |   |   | 504 |   |   |   | 407 |   |
| Advertising                                                 |   |   | 524 |   |   |   | 438 |   |
| Amortization of mortgage servicing rights                   |   |   | 1,158 |   |   |   | 487 |   |
| Federal insurance premiums                                  |   |   | 257 |   |   |   | 275 |   |
| Postage                                                     |   |   | 123 |   |   |   | 144 |   |
| Legal, accounting, and examination fees                     |   |   | 363 |   |   |   | 318 |   |
| Consulting fees                                             |   |   | 180 |   |   |   | 170 |   |
| ATM processing                                              |   |   | 64 |   |   |   | 69 |   |
| Provision for valuation loss on OREO                        |   |   | 201 |   |   |   | - |   |
| Other expense                                               |   |   | 1,414 |   |   |   | 996 |   |
| Total noninterest expenses                                  |   |   | 11,082 |   |   |   | 9,231 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Income before income taxes                                  |   |   | 3,466 |   |   |   | 3,449 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Income tax expense                                          |   |   | 1,056 |   |   |   | 1,035 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Net income                                                  |   | $ | 2,410 |   |   | $ | 2,414 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Basic earnings per share*                                   |   | $ | 0.62 |   |   | $ | 0.60 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Diluted earnings per share *                                |   | $ | 0.62 |   |   | $ | 0.54 |   |

----

| EAGLE BANCORP MONTANA, INC. AND SUBSIDIARY                 |   |
|------------------------------------------------------------|--------|
| Consolidated Statements of Changes in Stockholders' Equity |   |
| Years Ended June 30, 2011 and 2010                         |   |
| (Dollars in Thousands, Except for Per Share Data)          |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   | Unallocated |   |   |   |   |   |   |   | Other |   |   |   |
|                                                       |   | Preferred |   |  Common |   | Capital |   | ESOP |   | Treasury |   | Retained |   | Comprehensive |   |   |   |
|                                                       |   | Stock |   | Stock |   | Surplus |   | Shares |   | Stock |   | Earnings |   | Gain/(Loss) |   | Total |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2009                                   |   | $ | - |   |   | $ | 12 |   |   | $ | 4,564 |   |   | $ | (18 | ) |   | $ | (5,034 | ) |   | $ | 28,850 |   |   | $ | (582 | ) |   | $ | 27,792 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,414 |   |   |   |   |   |   |   | 2,414 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in net unrealized appreciation on                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale securities and cash flow           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| hedges, net                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,106 |   |   |   | 2,106 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total comprehensive income                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4,520 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends paid                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (612 | ) |   |   |   |   |   |   | (612 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasury stock purchased (805 shares @ $28.25)             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (22 | ) |   |   |   |   |   |   |   |   |   |   | (22 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock conversion                                           |   |   |   |   |   |   | (12 | ) |   |   | (4,564 | ) |   |   |   |   |   |   | 5,056 |   |   |   |   |   |   |   |   |   |   |   | 480 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock sold/issued                                          |   |   |   |   |   |   | 41 |   |   |   | 22,053 |   |   |   | (1,971 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 20,123 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ESOP allocated prior to conversion                         |   |   |   |   |   |   |   |   |   |   | 50 |   |   |   | 18 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 68 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ESOP shares allocated or committed                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to be released for allocation (8,214) shares               |   |   |   |   |   |   |   |   |   |   | 1 |   |   |   | 82 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 83 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2010                                   |   | $ | - |   |   | $ | 41 |   |   | $ | 22,104 |   |   | $ | (1,889 | ) |   | $ | - |   |   | $ | 30,652 |   |   | $ | 1,524 |   |   | $ | 52,432 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,410 |   |   |   |   |   |   |   | 2,410 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in net unrealized appreciation on                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale securities and cash flow           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| hedges, net                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 410 |   |   |   | 410 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total comprehensive income                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,820 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends paid                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,144 | ) |   |   |   |   |   |   | (1,144 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasury stock purchased                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (164,440 shares @ $10.92 average cost per share)           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,796 | ) |   |   |   |   |   |   |   |   |   |   | (1,796 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ESOP shares allocated or committed                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to be released for allocation (16,616) shares              |   |   |   |   |   |   |   |   |   |   | 6 |   |   |   | 167 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 173 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2011                                   |   | $ | - |   |   | $ | 41 |   |   | $ | 22,110 |   |   | $ | (1,722 | ) |   | $ | (1,796 | ) |   | $ | 31,918 |   |   | $ | 1,934 |   |   | $ | 52,485 |   |

----

| EAGLE BANCORP MONTANA, INC. AND SUBSIDIARY                       |   |
|------------------------------------------------------------------|--------|
| Consolidated Statements of Cash Flows                            |   |
| Years Ended June 30, 2011 and 2010                               |   |
| (Dollars in Thousands, Except for Per Share Data)                |   |
|                                                             |   |   |   |   |   |   |
|                                                             |   | 2011 |   | 2010 |
| Cash flows from operating activities                             |   |   |   |   |   |   |
| Net income                                                       |   | $ | 2,410 |   |   | $ | 2,414 |   |
| Adjustments to reconcile net income to                           |   |   |   |   |   |   |   |   |
| net cash provided by operating activities                        |   |   |   |   |   |   |   |   |
| Provision for other real estate owned valuation losses           |   |   | 201 |   |   |   | - |   |
| Provision for loan losses                                        |   |   | 948 |   |   |   | 715 |   |
| Depreciation                                                     |   |   | 739 |   |   |   | 651 |   |
| Net amortization of securities premium & discounts           |   |   | 553 |   |   |   | 393 |   |
| Amortization of capitalized mortgage servicing rights            |   |   | 1,158 |   |   |   | 487 |   |
| Net gain on sale of loans held for sale                          |   |   | (2,187 | ) |   |   | (1,280 | ) |
| Net realized gain on sales of available-for-sale securities      |   |   | (19 | ) |   |   | (33 | ) |
| Net recognized gain on preferred stock -  FASB ASC 825 |   |   | - |   |   |   | (84 | ) |
| Net loss on sale of foreclosed real estate                       |   |   | 2 |   |   |   | - |   |
| Net loss on sale/disposal of fixed assets                        |   |   | 84 |   |   |   | 2 |   |
| Appreciation in cash surrender value of life insurance, net      |   |   | (209 | ) |   |   | (195 | ) |
| Net change in                                                    |   |   |   |   |   |   |   |   |
| Loans held for sale                                              |   |   | 7,775 |   |   |   | (793 | ) |
| Accrued interest receivable                                      |   |   | 52 |   |   |   | (211 | ) |
| Other assets                                                     |   |   | (342 | ) |   |   | 1,084 |   |
| Accrued expenses and other liabilities                           |   |   | 331 |   |   |   | (748 | ) |
| Net cash provided by operating activities                        |   |   | 11,496 |   |   |   | 2,402 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Cash flows from investing activities                             |   |   |   |   |   |   |   |   |
| Activity in available-for-sale securities                        |   |   |   |   |   |   |   |   |
| Sales                                                            |   |   | 5,544 |   |   |   | 8,928 |   |
| Maturities, prepayments and calls                                |   |   | 25,093 |   |   |   | 11,556 |   |
| Purchases                                                        |   |   | (18,434 | ) |   |   | (50,266 | ) |
| Activity in held to maturity securities                          |   |   |   |   |   |   |   |   |
| Maturities, prepayments and calls                                |   |   | 125 |   |   |   | 250 |   |
| FHLB stock purchased                                             |   |   | - |   |   |   | (3 | ) |
| Loan originations and principal collections, net                 |   |   | (18,810 | ) |   |   | (3,820 | ) |
| Proceeds from sale of foreclosed real estate                     |   |   | 166 |   |   |   | 28 |   |
| Additions to premises and equipment                              |   |   | (1,128 | ) |   |   | (2,771 | ) |
| Net cash used in investing activities                            |   |   | (7,444 | ) |   |   | (36,098 | ) |
|                                                             |   |   |   |   |   |   |   |   |
| Cash flows from financing activities                             |   |   |   |   |   |   |   |   |
| Net increase in deposits                                         |   |   | 11,247 |   |   |   | 10,740 |   |
| Net change in federal funds purchased                            |   |   | - |   |   |   | - |   |
| Net change in advances from the FHLB and other borrowings        |   |   | (6,328 | ) |   |   | 168 |   |
| Purchase of treasury stock, at cost                              |   |   | (1,796 | ) |   |   | (22 | ) |
| Issuance of common stock                                         |   |   | - |   |   |   | 22,574 |   |
| Purchase ESOP shares                                             |   |   | - |   |   |   | (1,971 | ) |
| Dividends paid                                                   |   |   | (1,144 | ) |   |   | (612 | ) |
| Net cash provided by financing activities                        |   |   | 1,979 |   |   |   | 30,877 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Net change in cash and cash equivalents                          |   |   | 6,031 |   |   |   | (2,819 | ) |
|                                                             |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at beginning of year                   |   |   | 3,509 |   |   |   | 6,328 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of year                         |   | $ | 9,540 |   |   | $ | 3,509 |   |

----

| NOTE 1:  | Summary of Significant Accounting Policies |
|---------------|--------------------------------------------|

|   | Nature of Operations |
|--------|----------------------|

|   | On April 5, 2010, Eagle Bancorp completed its second-step conversion from the partially-public mutual holding company structure to the fully publicly-owned stock holding company structure.  As part of that transaction it also completed a related stock offering.  As a result of the conversion and offering, Eagle Bancorp Montana, Inc. (“the Company”, or “Eagle”) became the stock holding company for American Federal Savings Bank (“the Bank”), and Eagle Financial MHC and Eagle Bancorp ceased to exist.  The Company sold a total of 2,464,274 shares of common stock at a purchase price of $10.00 per share in the offering for gross proceeds of $24.6 million.  Concurrent with the completion of the offering, shares of Eagle Bancorp common stock owned by the public were exchanged.  Stockholders of Eagle Bancorp received 3.800 shares of the Company's common stock for each share of Eagle Bancorp common stock that they owned immediately prior to completion of the transaction. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company’s Employee Stock Ownership Plan (“ESOP”), which purchased shares in the Offering, was authorized to purchase up to 8% of the shares sold in the Offering, or 197,142 shares.  The ESOP completed its purchase of all such authorized shares in the Offering, at a total cost of $1,971,420. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Bank is a federally chartered savings bank subject to the regulations of the Office of Thrift Supervision (“OTS”).  These regulations have been transferred to the Office of the Comptroller of the Currency (“OCC”) effective July 21, 2011.  The Bank is a member of the Federal Home Loan Bank System and its deposit accounts are insured to the applicable limits by the Federal Deposit Insurance Corporation (“FDIC”). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Bank is headquartered in Helena, Montana, and operates additional branches in Butte, Bozeman, and Townsend, Montana.  The Bank’s market area is concentrated in south central Montana, to which it primarily offers commercial, residential, and consumer loans.  The Bank’s principal business is accepting deposits and, together with funds generated from operations and borrowings, investing in various types of loans and securities.  Collectively, Eagle Bancorp Montana Inc., and the Bank are referred to herein as “the Company.” |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Principles of Consolidation |
|--------|-----------------------------|

|   | The consolidated financial statements include the accounts of Eagle Bancorp Montana Inc. and the Bank.  All significant intercompany transactions and balances have been eliminated in consolidation. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Use of Estimates |
|--------|------------------|

|   | In preparing financial statements in conformity with U.S. generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, mortgage servicing rights, the valuation of financial instruments, deferred tax assets and liabilities, and the valuation of foreclosed assets.  In connection with the determination of the estimated losses on loans, foreclosed assets, and valuation of mortgage servicing rights, management obtains independent appraisals and valuations. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 1:  | Summary of Significant Accounting Policies – continued |
|---------------|--------------------------------------------------------------|

|   | Significant Group Concentrations of Credit Risk |
|--------|-------------------------------------------------|

|   | Most of the Company’s business activity is with customers located within the south-central Montana area.  Note 3 discusses the types of securities that the Company invests in.  Note 4 discusses the types of lending that the Company engages in.  The Company does not have any significant concentrations to any one industry or customer. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company carries certain assets with other financial institutions which are subject to credit risk by the amount such assets exceed federal deposit insurance limits. At June 30, 2011 and June 30, 2010, no account balances were held with correspondent banks that were in excess of FDIC insured levels, except for federal funds sold.  Also, from time to time, the Company is due amounts in excess of FDIC insurance limits for checks and transit items.  Management monitors the financial stability of correspondent banks and considers amounts advanced in excess of FDIC insurance limits to present no significant additional risk to the Company. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash and Cash Equivalents |
|--------|---------------------------|

|   | For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet captions “cash and due from banks,”  “interest bearing deposits in banks,” and “federal funds sold” all of which mature within ninety days. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Bank is required to maintain a reserve balance with the Federal Reserve Bank.  The Bank properly maintained amounts in excess of required reserves of $50,000 as of June 30, 2011 and 2010. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Investment Securities |
|--------|-----------------------|

|   | The Company designates debt and equity securities as held-to-maturity, available-for-sale, or trading. |
|--------|--------------------------------------------------------------------------------------------------------|

|   | Held-to-maturity – Debt investment securities that management has the positive intent and ability to hold until maturity are classified as held-to-maturity and are carried at their remaining unpaid principal balance, net of unamortized premiums or unaccreted discounts.  Premiums are amortized and discounts are accreted using the interest method over the period remaining until maturity. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Available-for-sale – Investment securities that will be held for indefinite periods of time, including securities that may be sold in response to changes in market interest or prepayment rates, need for liquidity, and changes in the availability of and the yield of alternative investments, are classified as available-for-sale.  These assets are carried at fair value.  Unrealized gains and losses, net of tax, are reported as other comprehensive income.  Gains and losses on the sale of available-for-sale securities are recorded on the trade date and determined using the specific identification method. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Declines in the fair value of individual held-to-maturity and available-for-sale securities below their cost that are other than temporary are recognized by write-downs of the individual securities to their fair value.  Such write-downs would be included in earnings as realized losses. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 1:  | Summary of Significant Accounting Policies – continued |
|---------------|--------------------------------------------------------------|

|   | Trading – No investment securities were designated as trading at June 30, 2011 and 2010. |
|--------|------------------------------------------------------------------------------------------------|

|   | Securities – FASB ASC 825 – Beginning fiscal year, July 1, 2007, the Company elected to account for its preferred stock under, FASB ASC 825 which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.  Subsequent changes in fair value of these assets are recognized in earnings when incurred.  On July 1, 2007 a charge to retained earnings for $118,000 was recorded in accordance with the implementation of FASB ASC 825 to record the unrealized loss (net of taxes) on preferred stock at that date. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Federal Home Loan Bank Stock |
|--------|------------------------------|

|   | The Company’s investment in Federal Home Loan Bank (“FHLB”) stock is a restricted investment carried at cost ($100 per share par value), which approximates its fair value.  As a member of the FHLB system, the Company is required to maintain a minimum level of investment in FHLB stock based on specific percentages of its outstanding FHLB advances.  The Company may request redemption at par value of any stock in excess of the amount it is required to hold.  Stock redemptions are made at the discretion of the FHLB.  The Bank redeemed no FHLB shares during the years ended June 30, 2011 and 2010. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Mortgage Loans Held-for-Sale |
|--------|------------------------------|

|   | Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated market value, determined in aggregate, plus the fair value of associated derivative financial instruments.  Net unrealized losses, if any, are recognized in a valuation allowance by a charge to income. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans |
|--------|-------|

|   | The Company grants mortgage, commercial and consumer loans to customers.  A substantial portion of the loan portfolio is represented by mortgage loans in south central Montana.  The ability of the Company’s debtors to honor their contracts is dependent upon the general economic conditions in this area. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans receivable that management has the intent and ability to hold until maturity are reported at the outstanding principal balance adjusted for any charge-offs, allowance for loan losses, and any deferred fees or costs on originated loans and unamortized premiums or unaccreted discounts on purchased loans.  Loan origination fees, net of certain direct origination costs are deferred and amortized over the contractual life of the loan, as an adjustment of the yield, using the interest method. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well secured and in process of collection.  Personal loans are typically charged off no later than 180 days past due.  Past due status is based on the contractual terms of the loan.  In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 1:  | Summary of Significant Accounting Policies – continued |
|---------------|--------------------------------------------------------------|

|   | Loans – continued |
|--------|-------------------------|

|   | All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income.  The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual.  Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Allowance for Loan Losses |
|--------|---------------------------|

|   | The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revisions as more information becomes available. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The allowance consists of specific, general and unallocated components.  For such loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.  The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors.  An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses.  The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all the circumstances surrounding the loan and the borrower, including the length of delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.  Accordingly, the Company does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject of a restructuring agreement. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 1:  | Summary of Significant Accounting Policies – continued |
|---------------|--------------------------------------------------------------|

|   | Mortgage Servicing Rights |
|--------|---------------------------|

|   | Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets.  Generally, purchased servicing rights are capitalized at the cost to acquire the rights.  For sales of mortgage loans, a portion of the cost of originating the loan is allocated to the servicing right based on relative fair value.  Fair value is based on a market price valuation model that calculates the present value of estimated future net servicing income.  The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost.  Impairment is determined by stratifying rights into tranches based on predominant characteristics, such as interest rate, loan type and investor type.  Impairment is recognized through a valuation allowance for an individual tranche, to the extent that the fair value is less than the capitalized amount for the tranches.  If the Bank later determines that all or a portion of the impairment no longer exists for a particular tranche, a reduction of the allowance may be recorded as an increase to income.  Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Servicing fee income is recorded for fees earned for servicing loans.  The fees are based on a contractual percentage of the outstanding principal and are recorded as income when earned.  The amortization of mortgage servicing rights is netted against loan servicing fee income. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash Surrender Value of Life Insurance |
|--------|----------------------------------------|

|   | Life insurance policies are initially recorded at cost at the date of purchase.  Subsequent to purchase, the policies are periodically adjusted for fair value.  The adjustment to fair value increases or decreases the carrying value of the policies and is recorded as an income or expense on the consolidated statement of income.  For the years ended June 30, 2011 and 2010 there were no adjustments to fair value that were outside the normal appreciation in cash surrender value. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Foreclosed Assets |
|--------|-------------------|

|   | Assets acquired through, or in lieu of, loan foreclosure are initially recorded at fair value less estimated selling cost at the date of foreclosure.  All write-downs based on the asset’s fair value at the date of acquisition are charged to the allowance for loan losses.  After foreclosure, property held for sale is carried at fair value less cost to sell.  Impairment losses on property to be held and used are measured as the amount by which the carrying amount of a property exceeds its fair value.  Costs of significant property improvements are capitalized, whereas costs relating to holding property are expensed.  Valuations are periodically performed by management, and any subsequent write-downs are recorded as a charge to operations, if necessary, to reduce the carrying value of a property to the lower of its cost or fair value less cost to sell. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 1:  | Summary of Significant Accounting Policies – continued |
|---------------|--------------------------------------------------------------|

|   | Premises and Equipment |
|--------|------------------------|

|   | Land is carried at cost.  Property and equipment is recorded at cost less accumulated depreciation.  Depreciation is computed using the straight-line method over the expected useful lives of the assets, ranging from 3 to 35 years.  The costs of maintenance and repairs are expensed as incurred, while major expenditures for renewals and betterments are capitalized. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Income Taxes |
|--------|--------------|

|   | The Company adopted recent accounting guidance related to accounting for uncertainty in income taxes, which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company’s income tax expense consists of the following components:  current and deferred.  Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues.  The Company determines deferred income taxes using the liability (or balance sheet) method.  Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Deferred income tax expense results from changes in deferred tax assets and liabilities between periods.  Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination.  The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any.  A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information.  The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment.  Deferred tax assets are reduced by a valuation allowance if based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company recognizes interest and penalties on income taxes as a component of income tax expense. |
|--------|-----------------------------------------------------------------------------------------------------|

|   | Treasury Stock |
|--------|----------------|

|   | Treasury stock is accounted for on the cost method and consists of 164,440 shares in 2011 and no shares in 2010. |
|--------|------------------------------------------------------------------------------------------------------------------|

|   | Advertising Costs |
|--------|-------------------|

|   | The Company expenses advertising costs as they are incurred.  Advertising costs were approximately $524,000 and $438,000 for the years ended June 30, 2011 and 2010, respectively. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 1:  | Summary of Significant Accounting Policies – continued |
|---------------|--------------------------------------------------------------|

|   | Employee Stock Ownership Plan |
|--------|-------------------------------|

|   | Compensation expense recognized for the Company’s ESOP equals the fair value of shares that have been allocated or committed to be released for allocation to participants.  Any difference between the fair value of the shares at the time and the ESOP’s original acquisition cost is charged or credited to stockholders’ equity (capital surplus).  The cost of ESOP shares that have not yet been allocated or committed to be released is deducted from stockholders’ equity. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Earnings Per Share |
|--------|--------------------|

|   | Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted average number of common shares outstanding for the period.  Diluted EPS is calculated by dividing net income by the weighted average number of common shares used to compute basic EPS plus the incremental amount of potential common stock determined by the treasury stock method.  For purposes of computing EPS, outstanding common shares include all shares issued to the Mutual Holding Company but exclude ESOP shares that have not been allocated or committed to be released for allocation to participants.  Due to the conversion and related stock offering that occurred on April 5, 2010, all EPS calculations for fiscal year 2010 are prepared using a 3.8 to 1.0 exchange ratio prior to April 5, 2010. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Derivatives |
|--------|-------------|

|   | Derivatives are recognized as assets and liabilities on the consolidated balance sheet and measured at fair value.  For exchange-traded contracts, fair value is based on quoted market prices.  For nonexchange traded contracts, fair value is based on dealer quotes, pricing models, discounted cash flow methodologies, or similar techniques for which the determination of fair value may require significant management judgment or estimation. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Interest Rate Swap Agreements |
|--------|-------------------------------|

|   | For asset/liability management purposes, the Company uses interest rate swap agreements to hedge various exposures or to modify interest rate characteristics of various balance sheet accounts.  Interest rate swaps are contracts in which a series of interest rate flows are exchanged over a prescribed period.  The notional amount on which the interest payments are based is not exchanged.  These swap agreements are derivative instruments and generally convert a portion of the Company’s variable-rate debt to a fixed rate (cash flow hedge), and convert a portion of its fixed-rate loans to a variable rate (fair value hedge). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The gain or loss on a derivative designated and qualifying as a fair value hedging instrument, as well as the offsetting gain or loss on the hedged item attributable to the risk being hedged, is recognized currently in earnings in the same accounting period.  The effective portion of the gain or loss on a derivative designated and qualifying as a cash flow hedging instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.  The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 1:  | Summary of Significant Accounting Policies – continued |
|---------------|--------------------------------------------------------------|

|   | For cash flow hedges, the net settlement (upon close-out or termination) that offsets changes in the value of the hedged debt is deferred and amortized into net interest income over the life of the hedged debt.  For fair value hedges, the net settlement (upon close-out or termination) that offsets changes in the value of the loans adjusts the basis of the loans and is deferred and amortized to loan interest income over the life of the loans. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The portion, if any, of the net settlement amount that did not offset changes in the value of the hedged asset or liability is recognized immediately in noninterest income. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Interest rate derivative financial instruments receive hedge accounting treatment only if they are designated as a hedge and are expected to be, and are, effective in substantially reducing interest rate risk arising from the assets and liabilities identified as exposing the Company to risk.  Those derivative financial instruments that do not meet specified hedging criteria would be recorded at fair value with changes in fair value recorded in income.  If periodic assessment indicates derivatives no longer provide an effective hedge, the derivative contracts would be closed out and settled, or classified as a trading activity. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash flows resulting from the derivative financial instruments that are accounted for as hedges of assets and liabilities are classified in the cash flow statement in the same category as the cash flows of the items being hedged. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Derivative Loan Commitments |
|--------|-----------------------------|

|   | Mortgage loan commitments that relate to the origination of a mortgage that will be held for sale upon funding are considered derivative instruments.  Loan commitments that are derivatives are recognized at fair value on the consolidated balance sheet in other assets and other liabilities with changes in their fair values recorded in noninterest income. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company adopted the SEC’s Staff Accounting Bulletin (SAB) No. 109, “Written Loan Commitments Recorded at Fair Value Through Earnings” and began including the value associated with servicing of loans in the measurement of all written loan commitments issued after that date.  SAB No. 109 requires that the expected net future cash flows related to servicing of a loan be included in the measurement of all written loan commitments that are accounted for at fair value through earnings.  In estimating fair value, the Company assigns a probability to a loan commitment based on an expectation that it will be exercised and the loan will be funded.  The adoption of SAB No. 109 generally has resulted in higher fair values being recorded upon initial recognition of derivative loan commitments. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Forward Loan Sale Commitments |
|--------|-------------------------------|

|   | The Company carefully evaluates all loan sales agreements to determine whether they meet the definition of a derivative as facts and circumstances may differ significantly.  If agreements qualify, to protect against the price risk inherent in derivative loan commitments, the Company uses both “mandatory delivery” and “best efforts” forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the exercise of the derivative loan commitments.  Mandatory delivery contracts are accounted for as derivative instruments.  Accordingly, forward loan sale commitments are recognized at fair value on the consolidated balance sheet in other assets and liabilities with changes in their fair values recorded in other noninterest income. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 1:  | Summary of Significant Accounting Policies – continued |
|---------------|--------------------------------------------------------------|

|   | Forward Loan Sale Commitments – continued |
|--------|-------------------------------------------------|

|   | The Company estimates the fair value of its forward loan sales commitments using a methodology similar to that used for derivative loan commitments. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Transfers of Financial Assets |
|--------|-------------------------------|

|   | Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered.  Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Recent Accounting Pronouncements |
|--------|----------------------------------|

|   | In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310) – A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.”  The amendments in this ASU clarify the guidance on a creditor’s evaluation of whether it has granted a concession to a debtor.  They also clarify the guidance on a creditor’s evaluation of whether a debtor is experiencing financial difficulty.  The amendments in this ASU are effective for the first interim or annual period beginning on or after June 15, 2011.  Early adoption is permitted.  Retrospective application to the beginning of the annual period of adoption for modifications occurring on or after the beginning of the annual adoption period is required.  As a result of applying these amendments, an entity may identify receivables that are newly considered to be impaired. For purposes of measuring impairment of those receivables, an entity should apply the amendments prospectively for the first interim or annual period beginning on or after June 15, 2011. The Company does not expect that the adoption of this guidance will have a material effect on its financial position, results of operations, or cash flows. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860) – Reconsideration of Effective Control for Repurchase Agreements.” The amendments in this ASU remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee and (2) the collateral maintenance implementation guidance related to that criterion.  The amendments in this ASU are effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The Company does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 1:  | Summary of Significant Accounting Policies – continued |
|---------------|--------------------------------------------------------------|

|   | Recent Accounting Pronouncements – continued |
|--------|----------------------------------------------------|

|   | In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220) – Presentation of Comprehensive Income.”  The objective of this ASU is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity.  The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  The single statement of comprehensive income should include the components of net income, a total for net income, the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income.  In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present all the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income.  The amendments do not change the items that must be reported in other comprehensive income, the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects, or the calculation or reporting of earnings per share.  The amendments in this ASU should be applied retrospectively. The amendments are effective for fiscal years and interim periods within those years beginning after December 15, 2011. Early adoption is permitted because compliance with the amendments is already permitted. The amendments do not require transition disclosures. The Company will comply with the new standard and present a separate statement of comprehensive income when required. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Reclassifications |
|--------|-------------------|

|   | Certain 2010 amounts have been reclassified to conform to the 2011 presentation. |
|--------|----------------------------------------------------------------------------------|

| NOTE 2: | Earnings Per Share |
|---------|--------------------|

|   | The following table sets forth the computation of basic and diluted earnings per share for the years ended June 30: |
|--------|---------------------------------------------------------------------------------------------------------------------|

|                                                 |   | 2011   |      | 2010   |
|------------------------------------------------------|--------|--------|-----------|--------|
| (Dollars In Thousands, Except for Per Share Data)    |   |   |      |   |   |   |
| Weighted average shares outstanding during the       |   |   |      |   |   |   |
| year on which basic earnings per share is calculated |   |   | 3,892,141 |   |   |   | 4,035,183 |   |
| Add: weighted average of stock held in treasury      |   |   | 9,761     |   |   |   | 430,778 |   |
| Average outstanding shares on which                  |   |   |      |   |   |   |   |   |
| diluted earnings per share is calculated             |   |   | 3,901,902 |   |   |   | 4,465,961 |   |
|                                                 |   |   |      |   |   |   |   |   |
| Net income applicable to common stockholders         |   | $      | 2,410     |   |   | $ | 2,414 |   |
| Basic earnings per share                             |   | $      | 0.62      |   |   | $ | 0.60 |   |
| Diluted earnings per share                           |   | $      | 0.62      |   |   | $ | 0.54 |   |

----

| NOTE 3: | Securities |
|---------|------------|

|   | The Company’s investment policy requires that the Company purchase only high-grade investment securities.  Most municipal obligations are categorized as “A” or better by a nationally recognized statistical rating organization.  These ratings are achieved because the securities are backed by the full faith and credit of the municipality and also supported by third-party credit insurance policies.  Mortgage backed securities and collateralized mortgage obligations are issued by government sponsored corporations, including Federal Home Loan Mortgage Corporation, Fannie Mae, and the Guaranteed National Mortgage Association.  The amortized cost and estimated fair values of securities, together with unrealized gains and losses, are as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | June 30, 2011 |
|-----------------------------------------------|--------|---------------|
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |
|                                          |   |          |   |   | Gross |   |   | Gross |   |   | Estimated |   |
| (Dollars in Thousands)                        |   | Amortized     |   |   | Unrealized |   |   | Unrealized |   |   | Market |   |
| Available for Sale                            |   | Cost          |   |   | Gains |   |   | Losses |   |   | Value |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and agency                    |   | $             | 25,566 |   |   | $ | 648 |   |   | $ | (6 | ) |   | $ | 26,208 |   |
| Municipal obligations                         |   |          | 38,450 |   |   |   | 1,342 |   |   |   | (606 | ) |   |   | 39,186 |   |
| Corporate obligations                         |   |          | 5,987 |   |   |   | 230 |   |   |   | (1 | ) |   |   | 6,216 |   |
| Mortgage-backed securites - government-backed |   |          | 6,189 |   |   |   | 183 |   |   |   | - |   |   |   | 6,372 |   |
| Private lable CMOs                            |   |          | 305 |   |   |   | - |   |   |   | (14 | ) |   |   | 291 |   |
| CMOs - government backed                      |   |          | 23,458 |   |   |   | 971 |   |   |   | (2 | ) |   |   | 24,427 |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total securities available for sale           |   | $             | 99,955 |   |   | $ | 3,374 |   |   | $ | (629 | ) |   | $ | 102,700 |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   | June 30, 2010 |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |
|                                          |   |          |   |   | Gross |   |   | Gross |   |   | Estimated |   |
| (Dollars in Thousands)                        |   | Amortized     |   |   | Unrealized |   |   | Unrealized |   |   | Market |   |
| Available for Sale                            |   | Cost          |   |   | Gains |   |   | Losses |   |   | Value |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and agency                    |   | $             | 31,852 |   |   | $ | 418 |   |   | $ | (29 | ) |   | $ | 32,241 |   |
| Municipal obligations                         |   |          | 35,181 |   |   |   | 752 |   |   |   | (521 | ) |   |   | 35,412 |   |
| Corporate obligations                         |   |          | 7,110 |   |   |   | 341 |   |   |   | - |   |   |   | 7,451 |   |
| Mortgage-backed securites - government-backed |   |          | 1,690 |   |   |   | 65 |   |   |   | - |   |   |   | 1,755 |   |
| Private label CMOs                            |   |          | 957 |   |   |   | - |   |   |   | (115 | ) |   |   | 842 |   |
| CMOs - government backed                      |   |          | 35,902 |   |   |   | 963 |   |   |   | (38 | ) |   |   | 36,827 |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total securities available for sale           |   | $             | 112,692 |   |   | $ | 2,539 |   |   | $ | (703 | ) |   | $ | 114,528 |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held to Maturity                              |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipal obligations                         |   | $             | 125 |   |   | $ | - |   |   | $ | - |   |   | $ | 125 |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total securities held to maturity             |   | $             | 125 |   |   | $ | - |   |   | $ | - |   |   | $ | 125 |   |

----

| NOTE 3: | Securities – continued |
|---------|------------------------------|

|   | Beginning July 1, 2007 the Company elected to account for its FHLMC and FNMA preferred stock under FASB ASC 825, Fair Value Option for Financial Assets and Financial Liabilities, which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.  Subsequent changes in fair value of these assets are recognized in earnings when incurred.  Management elected to invoke the option to carry its preferred stock at fair value to more accurately reflect the estimated realizability of the preferred stock at each financial reporting date.  The market value of preferred stock was $0 at June 30, 2011 and 2010.  These securities were sold during the second quarter of fiscal year 2010 resulting in a loss on sale of $64,000 from their then carrying value.  The gain in market value of $84,000 for the year ending June 30, 2010 is included in noninterest income. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company has not entered into any interest rate swaps, options, or futures contracts relating to investment securities. |
|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | Gross recognized gains on securities available-for-sale were $143,000 and $250,000 for the years ended June 30, 2011 and 2010, respectively.  Gross realized losses on securities available-for-sale were $124,000, and $217,000 for the years ended June 30, 2011 and 2010, respectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The amortized cost and estimated fair value of securities at June 30, 2011 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | June 30, 2011    |
|-----------------------------------------------|--------|------------------|
|                                          |   |             |   |   |   |   |   |   |   |   |   |   |
|                                          |   | Held to Maturity |   | Available for Sale |
|                                          |   |             |   |   |   |   |   |   |   |   |   |   |
|                                          |   |             |   |   | Estimated |   |   |   |   |   | Estimated |   |
|                                          |   | Amortized        |   |   | Market |   |   | Amortized |   |   | Market |   |
| (Dollars in Thousands)                        |   | Cost             |   |   | Value |   |   | Cost |   |   | Value |   |
|                                          |   |             |   |   |   |   |   |   |   |   |   |   |
| Due in one year or less                       |   | $                |   |   |   | $ |   |   |   | $ | 9,601 |   |   | $ | 9,803 |   |
| Due from one to five years                    |   |             |   |   |   |   |   |   |   |   | 22,415 |   |   |   | 23,268 |   |
| Due from five to ten years                    |   |             |   |   |   |   |   |   |   |   | 13,626 |   |   |   | 13,911 |   |
| Due after ten years                           |   |             |   |   |   |   |   |   |   |   | 24,361 |   |   |   | 24,628 |   |
|                                          |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |             | - |   |   |   | - |   |   |   | 70,003 |   |   |   | 71,610 |   |
|                                          |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securites - government-backed |   |             |   |   |   |   |   |   |   |   | 6,189 |   |   |   | 6,372 |   |
| Private lable CMOs                            |   |             |   |   |   |   |   |   |   |   | 305 |   |   |   | 291 |   |
| CMOs - government backed                      |   |             |   |   |   |   |   |   |   |   | 23,458 |   |   |   | 24,427 |   |
| Total                                         |   | $                | - |   |   | $ | - |   |   | $ | 99,955 |   |   | $ | 102,700 |   |

|   | Maturities of securities do not reflect repricing opportunities present in adjustable rate securities. |
|--------|--------------------------------------------------------------------------------------------------------|

----

| NOTE 3: | Securities – continued |
|---------|------------------------------|

|   | At June 30, 2011 and 2010, securities with a carrying value of $30,461,000 and $35,760,000, respectively, were pledged to secure public deposits and for other purposes required or permitted by law. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The following table discloses, as of June 30, 2011 and 2010, the Company’s investment securities that have been in a continuous unrealized-loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       |   | Less than 12 months |   | 12 months or longer |
|----------------------------|--------|---------------------|--------|---------------------|
|                       |   |                |   |                |   |   |   |   |   |   |   |   |
|                       |   | June 30, 2011       |
| (Dollars in Thousands)     |   |                |   |                |   |   |   |   |   |   |   |   |
|                       |   | Estimated           |   |                | Gross |   |   | Estimated |   |   | Gross |   |
|                       |   | Market              |   |                | Unrealized |   |   | Market |   |   | Unrealized |   |
|                       |   | Value               |   |                | Losses |   |   | Value |   |   | Losses |   |
|                       |   |                |   |                |   |   |   |   |   |   |   |   |
| U.S. Government and agency |   | $                   | 916    |                |   | $ | 2 |   |   | $ | 1,789 |   |   | $ | 4 |   |
| Corporate obligations      |   |                | 944    |                |   |   | 1 |   |   |   | - |   |   |   | - |   |
| Municipal obligations      |   |                | 4,412  |                |   |   | 194 |   |   |   | 1,714 |   |   |   | 412 |   |
| Private label CMOs         |   |                | 216    |                |   |   | 14 |   |   |   | - |   |   |   | - |   |
| Mortgage-backed & CMOs |   |                | 1,151  |                |   |   | 2 |   |   |   | - |   |   |   | - |   |
|                       |   |                |   |                |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                      |   | $                   | 7,639  |                |   | $ | 213 |   |   | $ | 3,503 |   |   | $ | 416 |   |
|                       |   |                |   |                |   |   |   |   |   |   |   |   |   |   |   |   |
|                       |   | June 30, 2010       |
|                       |   |                |   |                |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and agency |   | $                   | 3,679  |                |   | $ | 27 |   |   | $ | 872 |   |   | $ | 2 |   |
| Municipal obligations      |   |                | 5,712  |                |   |   | 129 |   |   |   | 3,884 |   |   |   | 392 |   |
| Private label CMOs         |   |                | 467    |                |   |   | 14 |   |   |   | 374 |   |   |   | 101 |   |
| Mortgage-backed & CMOs |   |                | 6,729  |                |   |   | 38 |   |   |   | - |   |   |   | - |   |
|                       |   |                |   |                |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                      |   | $                   | 16,587 |                |   | $ | 208 |   |   | $ | 5,130 |   |   | $ | 495 |   |

|   | The table above shows the Company’s investment gross unrealized losses and fair values, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at June 30, 2011 and 2010.  37 and 48 securities were in an unrealized loss position as of June 30, 2011 and 2010, respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 3: | Securities – continued |
|---------|------------------------------|

|   | At June 30, 2011, 31 U.S. Government and agency securities and municipal obligations have unrealized losses with aggregate depreciation of less than 0.96% from the Company's amortized cost basis.  These unrealized losses are principally due to changes in interest rates and credit spreads.  In analyzing an issuer's financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts' reports.  Two municipal obligations have a rating below investment grade from the credit rating agencies.  The fair value of these securities represents less than 0.22% of the total fair value of all securities available for sale and their unrealized loss is of less than $1,000 as of June 30, 2011.  As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available for sale, no declines are deemed to be other than temporary. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At June 30, 2011, 5 mortgage backed and CMO securities have unrealized losses with aggregate depreciation of less than 0.06% from the Company’s cost basis. We believe these unrealized losses are principally due to the credit market’s concerns regarding the stability of the mortgage market. Management considers available evidence to assess whether it is more likely-than-not that all amounts due would not be collected. In such assessment, management considers the severity and duration of the impairment, the credit ratings of the security, the overall deal and payment structure, including the Company's position within the structure, underlying obligor, financial condition and near term prospects of the issuer, delinquencies, defaults, loss severities, recoveries, prepayments, cumulative loss projections, discounted cash flows and fair value estimates. There has been no disruption of the scheduled cash flows on any of the securities. Management’s analysis as of June 30, 2011 revealed no expected credit losses on the securities. 1 of the CMO securities is non-agency securities (backed by Alt-A collateral) which has  a rating below investment grade from the credit rating agencies. The fair value of this security represents less than 0.21% of the total fair value of all securities available for sale and its unrealized loss is $14,000 as of June 30, 2011. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At June 30, 2011, 1 corporate obligation had an unrealized loss with aggregate depreciation of less than 0.02% from the Company's cost basis.  This unrealized loss is principally due to changes in interest rates.  No credit issues have been identified that cause management to believe the declines in market value are other than temporary.  In analyzing the issuer's financial condition, management considers industry analysts' reports, financial performance and projected target prices of investment analysts within a one-year time frame.  As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available for sale, no declines are deemed to be other than temporary. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 4: | Loans |
|---------|-------|

|   | A summary of the balances of loans follows: |
|--------|---------------------------------------------|

|                              |   | June 30, |
|-----------------------------------|--------|----------|
|                              |   |     |   |   |   |   |
|                              |   | 2011     |   |   | 2010 |   |
| (Dollars in Thousands)            |   |     |   |   |   |   |
| First mortgage loans:             |   |     |   |   |   |   |
| Residential mortgage (1-4 family) |   | $        | 70,003 |   |   | $ | 73,010 |   |
| Commercial real estate            |   |     | 64,701 |   |   |   | 41,677 |   |
| Real estate construction          |   |     | 5,020 |   |   |   | 7,016 |   |
| Other loans:                      |   |     |   |   |   |   |   |   |
| Home equity                       |   |     | 27,816 |   |   |   | 29,795 |   |
| Consumer                          |   |     | 9,343 |   |   |   | 9,613 |   |
| Commercial                        |   |     | 10,564 |   |   |   | 9,452 |   |
| Subtotal                          |   |     | 187,447 |   |   |   | 170,563 |   |
| Less: Allowance for loan losses   |   |     | (1,800 | ) |   |   | (1,100 | ) |
| Deferred loan fees, net           |   |     | (176 | ) |   |   | 39 |   |
|                              |   |     |   |   |   |   |   |   |
| Total loans, net                  |   | $        | 185,471 |   |   | $ | 169,502 |   |

|   | Within the commercial real estate loan category above, $18,878,000 and $1,280,000 was guaranteed by the United States Department of Agriculture Rural Development, at June 30, 2011 and 2010, respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The following is a summary of changes in the allowance for loan losses: |
|--------|-------------------------------------------------------------------------|

|                                       |   | June 30, |
|--------------------------------------------|--------|----------|
|                                       |   |     |   |   |   |   |
|                                       |   | 2011     |   |   | 2010 |   |
| (Dollars in Thousands)                     |   |     |   |   |   |   |
| Balance at beginning of period             |   | $        | 1,100 |   |   | $ | 525 |   |
| Provision for loan losses                  |   |     | 948 |   |   |   | 715 |   |
| Loans charged off                          |   |     | (252 | ) |   |   | (143 | ) |
| Recoveries of loans previously charged off |   |     | 4 |   |   |   | 3 |   |
|                                       |   |     |   |   |   |   |   |   |
| Balance at end of period                   |   | $        | 1,800 |   |   | $ | 1,100 |   |

----

| NOTE 4: | Loans – continued |
|---------|-------------------------|

|   | Non-Performing Assets – The following table sets forth information regarding non-performing assets as of the dates indicated.  As of June 30, 2011 and 2010 the Company has no loans considered to be troubled debt restructuring within the meaning of ASC 310. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                          |   | June 30,               |   |   | June 30, |   |
|---------------------------------------------------------------|--------|------------------------|--------|--------|----------|--------|
|                                                          |   | 2011                   |   |   | 2010     |   |
|                                                          |   | (Dollars in Thousands) |   |
|                                                          |   |                   |   |   |     |   |
| Non-accrual loans                                             |   | $                      | 2,939  |   |     | $      | 2,782 |   |
| Accruing loans delinquent 90 days or more                     |   |                   | -      |   |     |   | 29 |   |
| Total nonperforming loans                                     |   |                   | 2,939  |   |     |   | 2,811 |   |
| Real estate owned and other repossessed assets, net           |   |                   | 1,181  |   |     |   | 619 |   |
| Total non-performing assets                                   |   | $                      | 4,120  |   |     | $      | 3,430 |   |
|                                                          |   |                   |   |   |     |   |   |   |
| Total non-performing assets as a percentage of total assets   |   |                   | 1.24   | %      |     |   | 1.05 | % |
|                                                          |   |                   |   |   |     |   |   |   |
| Allowance for loan losses                                     |   | $                      | 1,800  |   |     | $      | 1,100 |   |
|                                                          |   |                   |   |   |     |   |   |   |
| Percent of allowance for loan losses to non-performing loans  |   |                   | 61.2   | %      |     |   | 39.1 | % |
|                                                          |   |                   |   |   |     |   |   |   |
| Percent of allowance for loan losses to non-performing assets |   |                   | 43.7   | %      |     |   | 32.1 | % |

|   | The following table sets forth information regarding loans and non-performing assets by geographical location as of the dates indicated (dollars in thousands).  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                |   | June 30, 2011 |
|-----------------------------------------------------|--------|---------------|
|                                                |   | Helena        |   |   | Bozeman |   |   | Butte |   |   | Townsend |   |   | Total |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-accrual loans                                   |   | $             | 1,773 |   |   | $ | 1,138 |   |   | $ | - |   |   | $ | 28 |   |   | $ | 2,939 |   |
| Accruing loans delinquent 90 days or more           |   |          | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Real estate owned and other repossessed assets, net |   |          | 306 |   |   |   | 794 |   |   |   | - |   |   |   | 81 |   |   |   | 1,181 |   |
|                                                |   | $             | 2,079 |   |   | $ | 1,932 |   |   | $ | - |   |   | $ | 109 |   |   | $ | 4,120 |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans, net                                    |   | $             | 96,816 |   |   | $ | 41,916 |   |   | $ | 45,811 |   |   | $ | 928 |   |   | $ | 185,471 |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent of non-performing assets to loans           |   |          | 2.15 | % |   |   | 4.61 | % |   |   | 0.00 | % |   |   | 11.75 | % |   |   | 2.22 | % |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   | June 30, 2010 |
|                                                |   | Helena        |   |   | Bozeman |   |   | Butte |   |   | Townsend |   |   | Total |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-accrual loans                                   |   | $             | 1,094 |   |   | $ | 1,683 |   |   | $ | - |   |   | $ | 5 |   |   | $ | 2,782 |   |
| Accruing loans delinquent 90 days or more           |   |          | 29 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 29 |   |
| Real estate owned and other repossessed assets, net |   |          | - |   |   |   | 396 |   |   |   | - |   |   |   | 223 |   |   |   | 619 |   |
|                                                |   | $             | 1,123 |   |   | $ | 2,079 |   |   | $ | - |   |   | $ | 228 |   |   | $ | 3,430 |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans, net                                    |   | $             | 92,379 |   |   | $ | 43,901 |   |   | $ | 32,036 |   |   | $ | 1,186 |   |   | $ | 169,502 |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent of non-performing assets to loans           |   |          | 1.22 | % |   |   | 4.74 | % |   |   | 0.00 | % |   |   | 19.22 | % |   |   | 2.02 | % |

----

| NOTE 4: | Loans – continued |
|---------|-------------------------|

|   | The following table sets forth information regarding the activity in the allowance for loan losses for the year ended June 30, 2011 (dollars in thousands): |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | 1-4 Family  |   |   | Commercial  |   |   |         |   |   | Home   |   |   |     |   |   |       |   |   |   |   |
|---------------------------------------|--------|-------------|--------|--------|-------------|--------|--------|--------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|--------|--------|--------|
|                                  |   | Real Estate |   |   | Real Estate |   |   | Construction |   |   | Equity |   |   | Consumer |   |   | Commercial |   |   | Total  |   |
|                                  |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |
| Allowance for credit losses:          |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |
| Beginning balance, June 30, 2010      |   | $           | 391    |   |        | $      | 447    |         |   | $      | 110    |   |   | $        | 6      |   |       | $      | 78     |   |   | $ | 68 |   |   | $ | 1,100 |   |
| Charge-offs                           |   |        | (75    | )      |        |   | (130   | )            |   |   | -      |   |   |     | (30    | )      |       |   | (17    | )      |   |   | - |   |   |   | (252 | ) |
| Recoveries                            |   |        | -      |   |        |   | -      |         |   |   | -      |   |   |     | -      |   |       |   | 4      |   |   |   | - |   |   |   | 4 |   |
| Provision                             |   |        | 53     |   |        |   | 335    |         |   |   | (92    | )      |   |     | 505    |   |       |   | (8     | )      |   |   | 155 |   |   |   | 948 |   |
| Ending balance, June 30, 2011         |   | $           | 369    |   |        | $      | 652    |         |   | $      | 18     |   |   | $        | 481    |   |       | $      | 57     |   |   | $ | 223 |   |   | $ | 1,800 |   |
|                                  |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance allocated to loans     |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| individually evaluated for impairment |   | $           | 111    |   |        | $      | 260    |         |   | $      | -      |   |   | $        | 378    |   |       | $      | 14     |   |   | $ | 125 |   |   | $ | 888 |   |
|                                  |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance allocated to loans     |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| collectively evaluated for impairment |   | $           | 258    |   |        | $      | 392    |         |   | $      | 18     |   |   | $        | 103    |   |       | $      | 43     |   |   | $ | 98 |   |   | $ | 912 |   |
|                                  |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable:                     |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance June 30, 2011          |   | $           | 70,003 |   |        | $      | 64,701 |         |   | $      | 5,020  |   |   | $        | 27,816 |   |       | $      | 9,343  |   |   | $ | 10,564 |   |   | $ | 187,447 |   |
|                                  |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance of loans individually  |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| June 30, 2011                         |   | $           | 1,411  |   |        | $      | 998    |         |   | $      | 721    |   |   | $        | 611    |   |       | $      | 135    |   |   | $ | 2,025 |   |   | $ | 5,901 |   |
|                                  |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance of loans collectively  |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| June 30, 2011                         |   | $           | 68,592 |   |        | $      | 63,703 |         |   | $      | 4,299  |   |   | $        | 27,205 |   |       | $      | 9,208  |   |   | $ | 8,539 |   |   | $ | 181,546 |   |

|   | The following table sets forth information regarding the internal classification of the loan portfolio as of June 30, 2011 (dollars in thousands): |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | 1-4 Family  |   |   | Commercial  |   |   |         |   |   | Home   |   |   |     |   |   |       |   |   |   |   |
|-----------------------------------------------|--------|-------------|--------|--------|-------------|--------|--------|--------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|--------|--------|--------|
|                                          |   | Real Estate |   |   | Real Estate |   |   | Construction |   |   | Equity |   |   | Consumer |   |   | Commercial |   |   | Total  |   |
| Grade:                                        |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |
| Pass                                          |   | $           | 68,592 |   |        | $      | 63,703 |         |   | $      | 4,299  |   |   | $        | 27,205 |   |       | $      | 9,208  |   |   | $ | 8,539 |   |   | $ | 181,546 |   |
| Special mention                               |   |        | -      |   |        |   | -      |         |   |   | -      |   |   |     | -      |   |       |   | -      |   |   |   | 1,454 |   |   |   | 1,454 |   |
| Substandard                                   |   |        | 1,300  |   |        |   | 738    |         |   |   | 721    |   |   |     | 233    |   |       |   | 121    |   |   |   | 446 |   |   |   | 3,559 |   |
| Doubtful                                      |   |        | -      |   |        |   | -      |         |   |   | -      |   |   |     | -      |   |       |   | -      |   |   |   | - |   |   |   | - |   |
| Loss                                          |   |        | 111    |   |        |   | 260    |         |   |   | -      |   |   |     | 378    |   |       |   | 14     |   |   |   | 125 |   |   |   | 888 |   |
| Total                                         |   | $           | 70,003 |   |        | $      | 64,701 |         |   | $      | 5,020  |   |   | $        | 27,816 |   |       | $      | 9,343  |   |   | $ | 10,564 |   |   | $ | 187,447 |   |
|                                          |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Credit Risk Profile Based on Payment Activity |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |        |   |   |        |   |   |         |   |   |   |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Performing                                    |   | $           | 68,579 |   |        | $      | 64,515 |         |   | $      | 4,370  |   |   | $        | 27,440 |   |       | $      | 9,287  |   |   | $ | 10,317 |   |   | $ | 184,508 |   |
| Nonperforming                                 |   |        | 1,424  |   |        |   | 186    |         |   |   | 650    |   |   |     | 376    |   |       |   | 56     |   |   |   | 247 |   |   |   | 2,939 |   |
| Total                                         |   | $           | 70,003 |   |        | $      | 64,701 |         |   | $      | 5,020  |   |   | $        | 27,816 |   |       | $      | 9,343  |   |   | $ | 10,564 |   |   | $ | 187,447 |   |

----

| NOTE 4: | Loans – continued |
|---------|-------------------------|

|   | The following table sets forth information regarding impaired loans as of June 30, 2011 (dollars in thousands): |
|--------|-----------------------------------------------------------------------------------------------------------------|

|                       |   |       |   |   | Unpaid    |   |   |      |   |   | Interest   |   |
|----------------------------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|
|                       |   | Recorded   |   |   | Principal |   |   | Related   |   |   | Income     |   |
|                       |   | Investment |   |   | Balance   |   |   | Allowance |   |   | Recognized |   |
|                       |   |       |   |   |      |   |   |      |   |   |       |   |
| With no related allowance: |   |       |   |   |      |   |   |      |   |   |       |   |
| 1-4 Family                 |   | $          | -      |   |      | $      | -      |      |   | $      | -          |   |   | $ | - |   |
| Commercial real estate     |   |       | -      |   |      |   | -      |      |   |   | -          |   |   |   | - |   |
| Construction               |   |       | -      |   |      |   | -      |      |   |   | -          |   |   |   | - |   |
| Home equity                |   |       | -      |   |      |   | -      |      |   |   | -          |   |   |   | - |   |
| Consumer                   |   |       | -      |   |      |   | -      |      |   |   | -          |   |   |   | - |   |
| Commerical                 |   |       | -      |   |      |   | -      |      |   |   | -          |   |   |   | - |   |
|                       |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| With a related allowance:  |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| 1-4 Family                 |   |       | 289    |   |      |   | 400    |      |   |   | 111        |   |   |   | - |   |
| Commercial real estate     |   |       | 179    |   |      |   | 268    |      |   |   | 89         |   |   |   | - |   |
| Construction               |   |       | 479    |   |      |   | 650    |      |   |   | 171        |   |   |   | - |   |
| Home equity                |   |       | -      |   |      |   | 378    |      |   |   | 378        |   |   |   | - |   |
| Consumer                   |   |       | -      |   |      |   | 14     |      |   |   | 14         |   |   |   | - |   |
| Commerical                 |   |       | 57     |   |      |   | 182    |      |   |   | 125        |   |   |   | - |   |
|                       |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| Total:                     |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| 1-4 Family                 |   |       | 289    |   |      |   | 400    |      |   |   | 111        |   |   |   | - |   |
| Commercial real estate     |   |       | 179    |   |      |   | 268    |      |   |   | 89         |   |   |   | - |   |
| Construction               |   |       | 479    |   |      |   | 650    |      |   |   | 171        |   |   |   | - |   |
| Home equity                |   |       | -      |   |      |   | 378    |      |   |   | 378        |   |   |   | - |   |
| Consumer                   |   |       | -      |   |      |   | 14     |      |   |   | 14         |   |   |   | - |   |
| Commerical                 |   |       | 57     |   |      |   | 182    |      |   |   | 125        |   |   |   | - |   |
| Total                      |   | $          | 1,004  |   |      | $      | 1,892  |      |   | $      | 888        |   |   | $ | - |   |

|   | The following table sets forth information regarding the delinquencies within the loan portfolio as of June 30, 2011 (dollars in thousands): |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|                   |   |       |   |   |    |   |   |     |   |   |    |   |   |   |    |   | Recorded        |   |
|------------------------|--------|------------|--------|--------|---------|--------|--------|----------|--------|--------|---------|--------|--------|--------|---------|--------|-----------------|--------|
|                   |   |       |   |   | 90 Days |   |   |     |   |   |    |   |   |   |    |   | Investment      |   |
|                   |   | 30-89 Days |   |   | and     |   |   | Total    |   |   |    |   |   | Total  |    |   | >90 Days and |   |
|                   |   | Past Due   |   |   | Greater |   |   | Past Due |   |   | Current |   |   | Loans  |    |   | Still Accruing  |   |
|                   |   |       |   |   |    |   |   |     |   |   |    |   |   |   |    |   |            |   |
| 1-4 Family real estate |   | $          | 638    |   |    | $      | 1,424  |     |   | $      | 2,062   |   |   | $      | 67,941  |   |            | $      | 70,003 |   |   | $ | - |   |
| Commercial real estate |   |       | 1,501  |   |    |   | 186    |     |   |   | 1,687   |   |   |   | 63,014  |   |            |   | 64,701 |   |   |   | - |   |
| Construction           |   |       | 770    |   |    |   | 650    |     |   |   | 1,420   |   |   |   | 3,600   |   |            |   | 5,020 |   |   |   | - |   |
| Home equity            |   |       | 132    |   |    |   | 376    |     |   |   | 508     |   |   |   | 27,308  |   |            |   | 27,816 |   |   |   | - |   |
| Consumer               |   |       | 78     |   |    |   | 56     |     |   |   | 134     |   |   |   | 9,209   |   |            |   | 9,343 |   |   |   | - |   |
| Commerical             |   |       | -      |   |    |   | 247    |     |   |   | 247     |   |   |   | 10,317  |   |            |   | 10,564 |   |   |   | - |   |
| Total                  |   | $          | 3,119  |   |    | $      | 2,939  |     |   | $      | 6,058   |   |   | $      | 181,389 |   |            | $      | 187,447 |   |   | $ | - |   |

----

| NOTE 4: | Loans – continued |
|---------|-------------------------|

|   | Interest income not accrued on these loans and cash interest income was immaterial for the years ended June 30, 2011 and 2010. The allowance for loan losses on nonaccrual loans as of June 30, 2011 and 2010 was $817,000 and $380,000, respectively.  There were $1,892,000 ($1,004,000 net of loss reserves of $888,000) and $2,104,000 ($1,688,000 net of loss reserves of $416,000) of loans considered impaired at June 30, 2011 and 2010, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans are granted to directors and officers of the Company in the ordinary course of business.  Such loans are made in accordance with policies established for all loans of the Company, except that directors, officers, and employees may be eligible to receive discounts on loan origination costs. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans receivable from directors and senior officers, and their related parties, of the Company at June 30, 2011 and 2010, were $1,813,000 and $1,865,000, respectively.  During the year ended June 30, 2011, including loans serviced for others, total principal additions amounted to $868,000 and total principal payments amounted to $683,000.  Interest income from all these loans was $116,000 and $117,000 for the years ended June 30, 2011 and 2010, respectively.  The Bank serviced, for the benefit of others, $6,744,000 and $6,633,000 at June 30, 2011 and 2010, respectively, loans from directors and senior officers. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 5: | Foreclosed Assets |
|---------|-------------------|

|   | Foreclosed assets are presented net of an allowance for losses.  An analysis of the allowance for losses on foreclosed assets is as follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|                           |   | June 30, |
|--------------------------------|--------|----------|
|                           |   |     |   |   |   |   |
|                           |   | 2011     |   |   | 2010 |   |
| (Dollars in Thousands)         |   |     |   |   |   |   |
| Balance at beginning of period |   | $        | - |   |   | $ | - |   |
| Provision for losses           |   |     | 201 |   |   |   | - |   |
| Charge-offs                    |   |     | (12 | ) |   |   | - |   |
|                           |   |     |   |   |   |   |   |   |
| Balance at end of period       |   | $        | 189 |   |   | $ | - |   |

| NOTE 6: | Mortgage Servicing Rights |
|---------|---------------------------|

|   | The Company is servicing loans for the benefit of others totaling approximately $343,750,000 and $297,423,000 at June 30, 2011 and 2010, respectively.  Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors, and foreclosure processing. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in demand deposits, were approximately $2,569,000 and $2,260,000 at June 30, 2011 and 2010, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 6: | Mortgage Servicing Rights – continued |
|---------|---------------------------------------------|

|   | The following is a summary of activity in mortgage servicing rights and the valuation allowance: |
|--------|--------------------------------------------------------------------------------------------------|

|                                      |   | Years Ended June 30, |
|-------------------------------------------|--------|----------------------|
|                                      |   |                 |   |   |   |   |
|                                      |   | 2011                 |   |   | 2010 |   |
| (Dollars in Thousands)                    |   |                 |   |   |   |   |
| Mortgage servicing rights                 |   |                 |   |   |   |   |
| Balance at beginning of period            |   | $                    | 2,337 |   |   | $ | 2,208 |   |
| Mortgage servicing rights capitalized     |   |                 | 963 |   |   |   | 616 |   |
| Amortization of mortgage servicing rights |   |                 | (1,158 | ) |   |   | (487 | ) |
| Balance at end of period                  |   |                 | 2,142 |   |   |   | 2,337 |   |
| Valuation allowance                       |   |                 |   |   |   |   |   |   |
| Balance at beginning of period            |   |                 | - |   |   |   | - |   |
| Provision (credited) to operations        |   |                 | - |   |   |   | - |   |
| Balance at end of period                  |   |                 | - |   |   |   | - |   |
|                                      |   |                 |   |   |   |   |   |   |
| Net mortgage servicing rights             |   | $                    | 2,142 |   |   | $ | 2,337 |   |

|   | The fair values of these rights were $2,871,000 and $2,400,000 at June 30, 2011 and June 30, 2010, respectively.  The fair value of servicing rights was determined using discount rates ranging from 9.0% to 20.0%, prepayment speeds ranging from 140% to 324% PSA, depending on stratification of the specific right.  The fair value was also adjusted for the affect of potential past dues and foreclosures. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 7: | Premises and Equipment |
|---------|------------------------|

|   | A summary of the cost and accumulated depreciation of premises and equipment follows: |
|--------|---------------------------------------------------------------------------------------|

|                              |   | June 30, |
|-----------------------------------|--------|----------|
|                              |   |     |   |   |   |   |
|                              |   | 2011     |   |   | 2010 |   |
| (Dollars in Thousands)            |   |     |   |   |   |   |
| Land, buildings, and improvements |   | $        | 19,189 |   |   | $ | 18,504 |   |
| Furniture and equipment           |   |     | 4,246 |   |   |   | 4,369 |   |
|                              |   |     | 23,435 |   |   |   | 22,873 |   |
| Accumulated depreciation          |   |     | (7,284 | ) |   |   | (7,025 | ) |
|                              |   |     |   |   |   |   |   |   |
|                              |   | $        | 16,151 |   |   | $ | 15,848 |   |

|   | Depreciation expense totaled $739,000 and $651,000 for the years ended June 30, 2011 and 2010, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------|

----

| NOTE 8: | Deposits |
|---------|----------|

|   | The composition of deposits is summarized as follows: |
|--------|-------------------------------------------------------|

|                                        |   | June 30, |
|---------------------------------------------|--------|----------|
|                                        |   |     |   |   |   |   |
|                                        |   | 2011     |   |   | 2010 |   |
| (Dollars in Thousands)                      |   |     |   |   |   |   |
| Noninterest checking                        |   | $        | 19,052 |   |   | $ | 18,376 |   |
| Interest bearing checking (0.05%, 0.15%)    |   |     | 40,352 |   |   |   | 34,658 |   |
| Passbook savings (0.10%, 0.21%)             |   |     | 36,945 |   |   |   | 30,875 |   |
| Money market accounts (0.12%, 0.24%)        |   |     | 28,284 |   |   |   | 29,021 |   |
| Time certificates of deposits               |   |     |   |   |   |   |   |   |
| (2011 - 0.25% - 4.64%, 2010 - .50% - 4.64%) |   |     | 84,553 |   |   |   | 85,009 |   |
|                                        |   |     |   |   |   |   |   |   |
|                                        |   | $        | 209,186 |   |   | $ | 197,939 |   |

|   | The weighted average cost of deposit funds was 0.57% and 0.85% at June 30, 2011 and 2010, respectively. |
|--------|---------------------------------------------------------------------------------------------------------|

|   | At June 30, 2011, the scheduled maturities of time deposits are as follows: |
|--------|-----------------------------------------------------------------------------|

| (Dollars in Thousands) |   |   |   |
|------------------------|--------|--------|--------|
| Within one year        |   | $      | 62,313 |   |
| One to two years       |   |   | 12,460 |   |
| Two to three years     |   |   | 4,781  |   |
| Three to four years    |   |   | 4,414  |   |
| Thereafter             |   |   | 585    |   |
|                   |   |   |   |   |
| Total                  |   | $      | 84,553 |   |

|   | Interest expense on deposits is summarized as follows: |
|--------|--------------------------------------------------------|

|                          |   | Years Ended June 30, |
|-------------------------------|--------|----------------------|
|                          |   |                 |   |   |   |   |
|                          |   | 2011                 |   |   | 2010 |   |
| (Dollars in Thousands)        |   |                 |   |   |   |   |
| Checking                      |   | $                    | 28 |   |   | $ | 72 |   |
| Passbook savings              |   |                 | 48 |   |   |   | 92 |   |
| Money market accounts         |   |                 | 46 |   |   |   | 117 |   |
| Time certificates of deposits |   |                 | 1,270 |   |   |   | 1,880 |   |
|                          |   |                 |   |   |   |   |   |   |
|                          |   | $                    | 1,392 |   |   | $ | 2,161 |   |

----

| NOTE 8: | Deposits – continued |
|---------|----------------------------|

|   | As of May 20, 2009 FDIC insurance covers deposits up to $250,000 through December 31, 2013.   On July 21, 2010, this coverage was made permanent with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  At June 30, 2011 the Company held $16,754,000 in deposit accounts that included balances of $250,000 or more.  Non-interest bearing transaction accounts have unlimited deposit insurance through December 31, 2012.  At June 30, 2011 the Company held $19,052,000, in noninterest bearing accounts. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At June 30, 2011 and 2010, the Company reclassified $62,000 and $53,000, respectively, in overdrawn deposits as loans. |
|--------|------------------------------------------------------------------------------------------------------------------------|

|   | Directors’ and senior officers’ deposit accounts at June 30, 2011 and 2010, were $266,000 and $235,000, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

| NOTE 9: | Advances from the Federal Home Loan Bank and Other Borrowings |
|---------|---------------------------------------------------------------|

|   | Advances from the Federal Home Loan Bank of Seattle and other borrowings mature as follows: |
|--------|---------------------------------------------------------------------------------------------|

|                   |   | June 30, |
|------------------------|--------|----------|
|                   |   |     |   |   |   |   |
|                   |   | 2011     |   |   | 2010 |   |
| (Dollars in Thousands) |   |     |   |   |   |   |
| Within one year        |   | $        | 18,200 |   |   | $ | 13,224 |   |
| One to two years       |   |     | 16,200 |   |   |   | 18,000 |   |
| Two to three years     |   |     | 9,200 |   |   |   | 16,000 |   |
| Three to four years    |   |     | 9,200 |   |   |   | 9,000 |   |
| Four to five years     |   |     | 7,200 |   |   |   | 9,000 |   |
| Thereafter             |   |     | 896 |   |   |   | 2,000 |   |
|                   |   |     |   |   |   |   |   |   |
| Total                  |   | $        | 60,896 |   |   | $ | 67,224 |   |

|   | Federal Home Loan Advances |
|--------|----------------------------|

|   | The advances are due at maturity, with the exception of one advance, totaling, $5,000,000, that is callable at the FHLB of Seattle’s option.  The advances are subject to prepayment penalties.  The interest rates on these advances are fixed.  The advances are collateralized by investment securities pledged to the FHLB of Seattle and a blanket pledge of the Bank’s 1-4 family residential mortgage portfolio.  The carrying value of the securities collateralized for these advances was $49,000 as of June 30, 2011.  At June 30, 2011 and 2010, the Company exceeded the collateral requirements of the FHLB.  The Company’s investment in FHLB stock is also pledged as collateral on these advances.  The total FHLB funding line available to the Company at June 30, 2011, was 30% of total Bank assets, or approximately $95.7 million.  The balance of advances was $37,896,000 and $44,224,000 at June 30, 2011 and 2010, respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Other Borrowings |
|--------|------------------|

|   | The Bank had $23,000,000 in structured repurchase agreements with PNC Financial Service Group, Inc. (“PNC”) at June 30, 2011, and 2010.  These agreements are collateralized by corporate and municipal securities.  The carrying value of these securities was $26,948,000 as of June 30, 2011. These agreements include terms, under certain conditions, which allow PNC to exercise a call option. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 9: | Advances from the Federal Home Loan Bank and Other Borrowings – continued |
|---------|---------------------------------------------------------------------------------|

|   | Federal Funds Purchased |
|--------|-------------------------|

|   | The Bank has a $7,000,000 Federal Funds line of credit with PNC.  The balance was $0 as of June 30, 2011 and 2010. |
|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | The Bank has a $10,000,000 Federal Funds line of credit with Zions Bank.   The balance was $0 as of June 30, 2011 and 2010. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | Federal Reserve Bank Discount Window |
|--------|--------------------------------------|

|   | For additional liquidity sources, the Bank has a credit facility at the Federal Reserve Bank’s Discount Window.  The amount available to the Bank is limited by various collateral requirements.  The Bank has pledged one Agency security at the Federal Reserve Bank that had a total carrying value of $2,110,000 as of June 30, 2011.  The account had $0 balance as of June 30, 2011 and 2010. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For all borrowings outstanding the weighted average interest rate for advances at June 30, 2011 and 2010 was 3.79% and 3.78%, respectively.  The weighted average amount outstanding was $69,163,000 and $71,245,000 for the years ended June 30, 2011 and 2010, respectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The maximum amount outstanding at any month-end was $68,346,000 and $68,500,000 during the years ended June 30, 2011 and 2010, respectively. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 10: | Subordinated Debentures |
|----------|-------------------------|

|   | On September 28, 2005, the Company completed the private placement of $5,155,000 in subordinated debentures to Eagle Bancorp Statutory Trust I (“the Trust”).  The Trust funded the purchase of the subordinated debentures through the sale of trust preferred securities to First Tennessee Bank, N.A. with a liquidation value of $5,155,000.  Using interest payments made by the Company on the debentures, the Trust began paying quarterly dividends to preferred security holders on December 15, 2005.  The annual percentage rate of the interest payable on the subordinated debentures and distributions payable on the preferred securities was fixed at 6.02% until December 15, 2010 then became variable at 3-Month LIBOR plus 1.42%, making the rate 1.667% as of June 30, 2011.  Dividends on the preferred securities are cumulative and the Trust may defer the payments for up to five years.  The preferred securities mature in December 15, 2035 unless the Company elects and obtains regulatory approval to accelerate the maturity date to as early as December 15, 2010. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For the years ended June 30, 2011 and June 30, 2010, interest expense on the subordinated debentures was $192,000 and $309,000, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | Subordinated debt may be included in regulatory Tier 1 capital subject to a limitation that such amounts not exceed 25% of Tier 1 capital.  The remainder of subordinated debt is included in Tier II capital. There is no limitation for inclusion of subordinated debt in total risk-based capital and, as such, all subordinated debt was included in total risk-based capital. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 11: | Legal Contingencies |
|----------|---------------------|

|   | Various legal claims also arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Company’s financial statements. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 12: | Income Taxes |
|----------|--------------|

|   | The components of the Company’s income tax provision are as follows: |
|--------|----------------------------------------------------------------------------|

|                   |   | Years Ended June 30, |
|------------------------|--------|----------------------|
|                   |   |                 |   |   |   |   |
|                   |   | 2011                 |   |   | 2010 |   |
| (Dollars in Thousands) |   |                 |   |   |   |   |
| Current                |   |                 |   |   |   |   |
| U.S. federal           |   | $                    | 1,436 |   |   | $ | (894 | ) |
| Montana                |   |                 | 389 |   |   |   | (247 | ) |
|                   |   |                 | 1,825 |   |   |   | (1,141 | ) |
| Deferred               |   |                 |   |   |   |   |   |   |
| U.S. federal           |   |                 | (600 | ) |   |   | 1,697 |   |
| Montana                |   |                 | (169 | ) |   |   | 479 |   |
|                   |   |                 | (769 | ) |   |   | 2,176 |   |
|                   |   |                 |   |   |   |   |   |   |
| Total                  |   | $                    | 1,056 |   |   | $ | 1,035 |   |

|   | The nature and components of deferred tax assets and liabilities, which are a component of other liabilities in 2011 and other assets in 2010 in the accompanying statement of financial condition, are as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                             |   | June 30, |
|------------------------------------------------------------------|--------|----------|
|                                                             |   |     |   |   |   |   |
|                                                             |   | 2011     |   |   | 2010 |   |
| (Dollars in Thousands)                                           |   |     |   |   |   |   |
| Deferred tax assets:                                             |   |     |   |   |   |   |
| Deferred compensation                                            |   | $        | 345 |   |   | $ | 278 |   |
| Loans receivable                                                 |   |     | 402 |   |   |   | 130 |   |
| Deferred loan fees                                               |   |     | 69 |   |   |   | 13 |   |
| Other                                                            |   |     | 311 |   |   |   | 17 |   |
| Total deferred tax assets                                        |   |     | 1,127 |   |   |   | 438 |   |
| Deferred tax liabilities:                                        |   |     |   |   |   |   |   |   |
| Premises and equipment                                           |   |     | 852 |   |   |   | 1,017 |   |
| FHLB stock                                                       |   |     | 474 |   |   |   | 389 |   |
| Securities available-for-sale & preferred stock FASB ASC 825 |   |     | 823 |   |   |   | 551 |   |
| Unrealized gain on hedging                                       |   |     | 5 |   |   |   | 102 |   |
| Total deferred tax liabilities                                   |   |     | 2,154 |   |   |   | 2,059 |   |
|                                                             |   |     |   |   |   |   |   |   |
| Net deferred tax liability                                       |   | $        | (1,027 | ) |   | $ | (1,621 | ) |

|   | The Company believes, based upon the available evidence, that all deferred tax assets will be realized in the normal course of operations.  Accordingly, these assets have not been reduced by a valuation allowance. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 12: | Income Taxes – continued |
|----------|--------------------------------|

|   | A reconciliation of the Company’s effective income tax provision to the statutory federal income tax rate is as follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

|                                              |   | Years Ended June 30, |
|---------------------------------------------------|--------|----------------------|
|                                              |   |                 |   |   |   |   |
|                                              |   | 2011                 |   |   | 2010 |   |
| (Dollars in Thousands)                            |   |                 |   |   |   |   |
|                                              |   |                 |   |   |   |   |
| Federal income taxes at the statutory rate of 34% |   | $                    | 1,178 |   |   | $ | 1,173 |   |
| State income taxes                                |   |                 | 235 |   |   |   | 233 |   |
| Nontaxable income                                 |   |                 | (563 | ) |   |   | (541 | ) |
| Other, net                                        |   |                 | 206 |   |   |   | 170 |   |
|                                              |   |                 |   |   |   |   |   |   |
| Income tax expense                                |   | $                    | 1,056 |   |   | $ | 1,035 |   |
|                                              |   |                 |   |   |   |   |   |   |
| Effective tax rate                                |   |                 | 30.5 | % |   |   | 30.0 | % |

|   | Prior to January 1, 1987, the Company was allowed a special bad debt deduction limited generally in the current year to 32% (net of preference tax) of otherwise taxable income and subject to certain limitations based on aggregate loans and savings account balances at the end of the year.  If the amounts that qualified as deductions for federal income tax purposes are later used for purposes other than for bad debt losses, they will be subject to federal income tax at the then current corporate rate.  Retained earnings include approximately $852,000 at both June 30, 2011 and 2010, for which federal income tax has not been provided. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 13: | Comprehensive Income |
|----------|----------------------|

|   | Comprehensive income represents the sum of net income and items of “other comprehensive income” that are reported directly in stockholders’ equity, such as the change during the period in the after-tax net unrealized gain or loss on securities available-for-sale. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company’s other comprehensive income is summarized as follows for the years ended June 30: |
|--------|------------------------------------------------------------------------------------------------------|

|                                                        |   | 2011   |   |   | 2010   |   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| (Dollars in Thousands)                                      |   |   |   |   |   |   |
| Net unrealized holding gain arising during the year:        |   |   |   |   |   |   |
| Available for sale securities, net of related income        |   |   |   |   |   |   |
| tax expense of $278 and $831, respectively                  |   | $      | 648    |   |   | $      | 1,938 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Forward delivery commitments, net of related                |   |   |   |   |   |   |   |   |
| income tax (benefit) expense of ($97) and $82, respectively |   |   | (226   | )      |   |   | 191 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Reclassification adjustment for net realized gain           |   |   |   |   |   |   |   |   |
| included in net income, net of related income               |   |   |   |   |   |   |   |   |
| tax expense of $6 and $9, respectively                      |   |   | (12    | )      |   |   | (23 | ) |
|                                                        |   |   |   |   |   |   |   |   |
| Other comprehensive income                                  |   | $      | 410    |   |   | $      | 2,106 |   |

| NOTE 14: | Supplemental Cash Flow Information |
|----------|------------------------------------|

|                                                      |   | Years Ended June 30, |
|-----------------------------------------------------------|--------|----------------------|
|                                                      |   |                 |   |   |   |   |
|                                                      |   | 2011                 |   |   | 2010 |   |
| (Dollars in Thousands)                                    |   |                 |   |   |   |   |
| Supplemental Cash Flow Information                        |   |                 |   |   |   |   |
| Cash paid during the year for interest                    |   | $                    | 4,108 |   |   | $ | 5,115 |   |
| Cash paid during the year for income taxes                |   |                 | 881 |   |   |   | 603 |   |
| Non-Cash Investing Activities                             |   |                 |   |   |   |   |   |   |
| Increase in market value of securities available for sale |   | $                    | 909 |   |   | $ | 2,737 |   |
| Mortgage servicing rights capitalized                     |   |                 | 963 |   |   |   | 617 |   |
| Loans transferred to real estate and other assets         |   |                 |   |   |   |   |   |   |
| acquired in foreclosure                                   |   |                 | 930 |   |   |   | 619 |   |
| ESOP shares released                                      |   |                 | 173 |   |   |   | 151 |   |

----

| NOTE 15: | Regulatory Capital Requirements |
|----------|---------------------------------|

|   | The Bank is subject to various regulatory capital requirements administered by federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory – and possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of tangible and core capital (as defined in the regulations) to total adjusted assets (as defined), and of risk-based capital (as defined) to risk-weighted assets (as defined).  Management believes, as of June 30, 2011 and 2010, that the Bank meets all capital adequacy requirements to which it is subject. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The most recent notification from the Office of Thrift Supervision (“OTS”) (as of September 7, 2010) categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  To be categorized as well-capitalized, the Bank must maintain minimum tangible, core, and risk-based ratios as set forth in the table below.  The Bank’s actual capital amounts and ratios are presented in the table below: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 15: | Regulatory Capital Requirements – continued |
|----------|---------------------------------------------------|

|                          |   |   |   |        |   |              |    |   |              |   |   | Minimum    |
|-------------------------------|--------|--------|--------|-------------|--------|-------------------|---------|--------|-------------------|--------|--------|------------|
|                          |   |   |   |        |   |              |    |   |              |   |   | To Be Well |
|                          |   |   |   |        |   |              | Minimum |   | Capitalized Under |
|                          |   |   |   |        |   |              | Capital |   | Prompt Corrective |
| (Dollars in Thousands)        |   | Actual |   | Requirement |   | Action Provisions |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |
| June 30, 2011:                |   | Amount |   |        | Ratio  |              |    | Amount |              |   | Ratio  |       |   | Amount |   |   | Ratio |   |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |
| Total Risk-based Capital      |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |
|  to Risk Weighted Assets |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |
| Consolidated                  |   | $      | 56,462 |        |   |              | 26.19   | %      |              | $      | 17,248 |       |   |   | 8.00 | % |   | $ | N/A |   |   |   | N/A | % |
| Bank                          |   |   | 41,887 |        |   |              | 19.70   |   |              |   | 17,007 |       |   |   | 8.00 |   |   |   | 21,259 |   |   |   | 10.00 |   |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital to             |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|  Risk Weighted Assets    |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                  |   |   | 55,551 |        |   |              | 25.77   |   |              |   | 8,624  |       |   |   | 4.00 |   |   |   | N/A |   |   |   | N/A |   |
| Bank                          |   |   | 40,975 |        |   |              | 19.27   |   |              |   | 8,504  |       |   |   | 4.00 |   |   |   | 12,755 |   |   |   | 6.00 |   |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital to             |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|  Adjusted Total Assets   |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                  |   |   | 55,551 |        |   |              | 16.92   |   |              |   | 9,850  |       |   |   | 3.00 |   |   |   | N/A |   |   |   | N/A |   |
| Bank                          |   |   | 40,975 |        |   |              | 13.05   |   |              |   | 9,421  |       |   |   | 3.00 |   |   |   | 15,701 |   |   |   | 5.00 |   |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Tangible Capital to           |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|  Adjusted Total Assets   |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                  |   |   | 55,551 |        |   |              | 16.92   |   |              |   | 4,925  |       |   |   | 1.50 |   |   |   | N/A |   |   |   | N/A |   |
| Bank                          |   |   | 40,975 |        |   |              | 13.05   |   |              |   | 4,710  |       |   |   | 1.50 |   |   |   | N/A |   |   |   | N/A |   |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| June 30, 2010:                |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Risk-based Capital      |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|  to Risk Weighted Assets |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                  |   | $      | 56,591 |        |   |              | 26.47   | %      |              | $      | 17,103 |       |   |   | 8.00 | % |   | $ | N/A |   |   |   | N/A | % |
| Bank                          |   |   | 41,223 |        |   |              | 19.63   |   |              |   | 16,799 |       |   |   | 8.00 |   |   |   | 20,999 |   |   |   | 10.00 |   |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital to             |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|  Risk Weighted Assets    |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                  |   |   | 55,908 |        |   |              | 26.15   |   |              |   | 8,551  |       |   |   | 4.00 |   |   |   | N/A |   |   |   | N/A |   |
| Bank                          |   |   | 40,539 |        |   |              | 19.31   |   |              |   | 8,400  |       |   |   | 4.00 |   |   |   | 12,599 |   |   |   | 6.00 |   |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital to             |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|  Adjusted Total Assets   |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                  |   |   | 55,908 |        |   |              | 17.12   |   |              |   | 9,798  |       |   |   | 3.00 |   |   |   | N/A |   |   |   | N/A |   |
| Bank                          |   |   | 40,539 |        |   |              | 13.10   |   |              |   | 9,282  |       |   |   | 3.00 |   |   |   | 15,471 |   |   |   | 5.00 |   |
|                          |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Tangible Capital to           |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|  Adjusted Total Assets   |   |   |   |        |   |              |    |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                  |   |   | 55,908 |        |   |              | 17.12   |   |              |   | 4,899  |       |   |   | 1.50 |   |   |   | N/A |   |   |   | N/A |   |
| Bank                          |   |   | 40,539 |        |   |              | 13.10   |   |              |   | 4,641  |       |   |   | 1.50 |   |   |   | N/A |   |   |   | N/A |   |

----

| NOTE 15: | Regulatory Capital Requirements – continued |
|----------|---------------------------------------------------|

|   | A reconciliation of the Bank’s capital (in thousands) determined by generally accepted accounting principles to capital defined for regulatory purposes, is as follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | June 30, |
|---------------------------------------------------------|--------|----------|
|                                                    |   |     |   |   |   |   |
|                                                    |   | 2011     |   |   | 2010 |   |
| (Dollars in Thousands)                                  |   |     |   |   |   |   |
| Capital determined by generally                         |   |     |   |   |   |   |
| accepted accounting principles                          |   | $        | 42,744 |   |   | $ | 42,009 |   |
| Unrealized (gain) loss on securities available-for-sale |   |     | (1,757 | ) |   |   | (1,232 | ) |
| Unrealized gain on forward delivery commitments         |   |     | (12 | ) |   |   | (238 | ) |
| Tier I (core) capital                                   |   |     | 40,975 |   |   |   | 40,539 |   |
| General allowance for loan losses                       |   |     | 912 |   |   |   | 684 |   |
|                                                    |   |     |   |   |   |   |   |   |
| Total risk based capital                                |   | $        | 41,887 |   |   | $ | 41,223 |   |

|   | Dividend Limitations |
|--------|----------------------|

|   | Under OTS regulations that became effective April 1, 1999, savings associations such as the Bank generally may declare annual cash dividends up to an amount equal to net income for the current year plus net income retained for the two preceding years.  Dividends in excess of such amount require OTS approval.  The Bank has paid dividends totaling $2,053,000 and $1,000,000 to the Company during the years ended June 30, 2011, and 2010, respectively.  The Company had paid quarterly dividends of $.07 per share per quarter for the year ended June 30, 2011.    The Company had paid quarterly dividends of $.06842 per share ($.26 on a pre converted basis with regards to the conversion that occurred on April 5, 2010) to its shareholders for the year ended June 30, 2010. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Liquidation Rights |
|--------|--------------------|

|   | Eagle Bancorp Montana, Inc. holds a liquidation account for the benefit of certain depositors of American Federal Savings Bank who remain depositors of the Bank at the time of liquidation.  The liquidation account is designed to provide payments to these depositors of their liquidation interests in the event of a liquidation of Eagle and the Bank, or the Bank alone.  In the unlikely event that Eagle and the Bank were to liquidate in the future, all claims of creditors, including those of depositors, would be paid first, followed by distribution to depositors as of November 30, 2008 (who continue to be the Bank’s depositors) of the liquidation account maintained by Eagle. Also, in a complete liquidation of both entities, or of just the Bank, when Eagle has insufficient assets to fund the liquidation account distribution due to depositors and the Bank has positive net worth, the Bank would immediately pay amounts necessary to fund Eagle’s remaining obligations under the liquidation account.  If Eagle is completely liquidated or sold apart from a sale or liquidation of the Bank, then the rights of such depositors in the liquidation account maintained by Eagle would be surrendered and treated as a liquidation account in the Bank, the “bank liquidation account” and these depositors shall have an equivalent interest in the bank liquidation account and the same rights and terms as the liquidation account. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 15: | Regulatory Capital Requirements – continued |
|----------|---------------------------------------------------|

|   | Liquidation Rights – continued |
|--------|--------------------------------------|

|   | After two years from the date of conversion and upon the written request of the OTS, Eagle will eliminate or transfer the liquidation account and the interests in such account to the Bank and the liquidation account would become the liquidation account of the Bank and not subject in any manner or amount to Eagle’s creditors.  Also, under the rules and regulations of the OTS, no post-conversion merger, consolidation, or similar combination or transaction with another depository institution in which Eagle or the Bank is not the surviving institution would be considered a liquidation and, in such a transaction, the liquidation account would be assumed by the surviving institution. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 16: | Related Party Transactions |
|----------|----------------------------|

|   | The Bank has contracted with a subsidiary of a company which is partially owned by one of the Company’s directors.  The Bank paid $75,000 during the year ended June 30, 2011 for support services, and an additional $45,000 for computer hardware and software used by the Bank for its computer network.  For the year ended June 30, 2010, expenditures were $103,000 for support services and $157,000 for computer hardware and software. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In 2007, the Bank also made a construction loan, in the normal course of lending, to this same affiliated entity for the construction of an office building.  In fiscal 2008 the construction was completed and the loan was refinanced into $7,500,000 permanent financing.  On July 9, 2008, 80 percent, or $6.0 million was sold to the Montana Board of Investments.  As of June 30, 2011 this loan’s principal balance was $6,890,000 ($1,378,000 net of participation sold). The Bank maintains the servicing for this loan and the loan is current. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 17: | Employee Benefits |
|----------|-------------------|

|   | Profit Sharing Plan |
|--------|---------------------|

|   | The Company provides a noncontributory profit sharing plan for eligible employees who have completed one year of service.  The amount of the Company’s annual contribution, limited to a maximum of 15% of qualified employees’ salaries, is determined by the Board of Directors.  Profit sharing expense was $162,000 and $169,000 for the years ended June 30, 2011 and 2010, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company’s profit sharing plan includes a 401(k) feature.  At the discretion of the Board of Directors, the Company may match up to 50% of participants’ contributions up to a maximum of 4% of participants’ salaries.  For the years ended June 30, 2011 and 2010, the Company’s match totaled $53,000 and $48,000, respectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 17: | Employee Benefits – continued |
|----------|-------------------------------------|

|   | Deferred Compensation Plans |
|--------|-----------------------------|

|   | The Company has entered into deferred compensation contracts with current key employees.  The contracts provide fixed benefits payable in equal annual installments upon retirement.  The Company purchased life insurance contracts that may be used to fund the payments.  The charge to expense is based on the present value computations of anticipated liabilities.  For the years ended June 30, 2011 and 2010, the total expense was $104,000 and $106,000, respectively.    The Company has recorded a liability for the deferred compensation plan of $946,000 and $926,000 at June 30, 2011 and 2010, respectively, which is included in the balance of accrued expenses and other liabilities. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Employee Stock Ownership Plan |
|--------|-------------------------------|

|   | The Company has established an ESOP for eligible employees who meet certain age and service requirements.  At inception, in April 2000, the ESOP borrowed $368,000 from Eagle Bancorp and used the funds to purchase 46,006 shares of common stock, at $8 per share, in the initial offering.  This borrowing was fully paid on December 31, 2009.  Again, in conjunction with the subsequent offering in April 2010, the ESOP borrowed $1,971,420 from Eagle Bancorp Montana, Inc. and used the funds to purchase 197,142 shares of common stock, at $10 per share.  The Bank makes periodic contributions to the ESOP sufficient to satisfy the debt service requirements of the loan that has a twelve-year term and bears interest at 8%.  The ESOP uses these contributions, and any dividends received by the ESOP on unallocated shares, to make principal and interest payments on the loan. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Shares purchased by the ESOP are held in a suspense account by the plan trustee until allocated to participant accounts.  Shares released from the suspense account are allocated to participants on the basis of their relative compensation in the year of allocation.  Participants become vested in the allocated shares over a period not to exceed seven years.  Any forfeited shares are allocated to other participants in the same proportion as contributions. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Total ESOP expenses of $121,000 and $123,000 were recognized in fiscal 2011 and 2010, respectively. 16,616 shares were released and allocated to participants during the year ended June 30, 2011.  The cost of the 172,218 ESOP shares ($1,722,000 at June 30, 2011) that have not yet been allocated or committed to be released to participants is deducted from stockholders’ equity.  The fair value of these shares was approximately $1,841,000 at that date. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Stock Incentive Plan |
|--------|----------------------|

|   | The Company adopted the Stock Incentive Plan (“the Plan”) on October 19, 2000.  The Plan provides for different types of awards including stock options, restricted stock and performance shares.  Under the Plan, 23,000 shares of restricted stock were granted to directors and certain officers during fiscal 2001.  These shares of restricted stock vest in equal installments over five years beginning one year from the grant date. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | There were no stock options granted under the Plan as of June 30, 2011. |
|--------|-------------------------------------------------------------------------|

----

| NOTE 18: | Financial Instruments and Off-Balance-Sheet Activities |
|----------|--------------------------------------------------------|

|   | All financial instruments held or issued by the Company are held or issued for purposes other than trading.  In the ordinary course of business, the Company enters into off-balance-sheet financial instruments consisting of commitments to extend credit and forward delivery commitments for the sale of whole loans to the secondary market. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Commitments to extend credit – In response to marketplace demands, the Company routinely makes commitments to extend credit for fixed rate and variable rate loans with or without rate lock guarantees.  When rate lock guarantees are made to customers, the Company becomes subject to market risk for changes in interest rates that occur between the rate lock date and the date that a firm commitment to purchase the loan is made by a secondary market investor. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Generally, as interest rates increase, the market value of the loan commitment goes down.  The opposite effect takes place when interest rates decline. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Commitments to extend credit are agreements to lend to a customer as long as the borrower satisfies the Company’s underwriting standards and related provisions of the borrowing agreements.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  The Company uses the same credit policies in making commitments to extend credit as it does for on-balance-sheet instruments.  Collateral is required for substantially all loans, and normally consists of real property.  The Company’s experience has been that substantially all loan commitments are completed or terminated by the borrower within 3 to 12 months. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The notional amounts of the Company’s commitments to extend credit at fixed and variable interest rates were approximately $5,016,000 and $9,029,000 at June 30, 2011 and 2010, respectively.  Fixed rate commitments are extended at rates ranging from 3.75% to 6.75% and 4.00% to 8.00% at June 30, 2011 and 2010, respectively.  The Company has lines of credit representing credit risk of approximately $66,460,000 and $59,373,000 at June 30, 2011 and 2010, respectively, of which approximately $34,406,000 and $32,012,000 had been drawn at June 30, 2011 and 2010, respectively. The Company has credit cards issued representing credit risk of approximately $652,000 and $727,000 at June 30, 2011 and 2010, respectively, of which approximately $43,000 and $30,000 had been drawn at June 30, 2011 and 2010, respectively.  The Company has letters of credits issued representing credit risk of approximately $5,365,000 and $2,432,000 at June 30, 2011 and 2010, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Derivative loan commitments – Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. The Company enters into commitments to fund residential mortgage loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. A mortgage loan commitment binds the Company to lend funds to a potential borrower at a specified interest rate and within a specified period of time, generally up to 60 days after inception of the rate lock. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates.  If interest rates increase, the value of these loan commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases.  The notional amount of interest rate lock commitments was $4,076,000 and $8,205,000 at June 30, 2011 and 2010, respectively.  The fair value of such commitments was insignificant. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 18: | Financial Instruments and Off-Balance-Sheet Activities – continued |
|----------|--------------------------------------------------------------------------|

|   | Forward delivery commitments – The Company uses mandatory sell forward delivery commitments to sell whole loans.  These commitments are also used as a hedge against exposure to interest-rate risks resulting from rate locked loan origination commitments on certain mortgage loans held-for-sale.  Gains and losses in the items hedged are deferred and recognized in other comprehensive income until the commitments are completed.  At the completion of the commitments the gains and losses are recognized in the Company’s income statement. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As of June 30, 2011 and 2010, the Company had entered into commitments to deliver approximately $1,779,000 and $7,437,000 respectively, in loans to various investors, all at fixed interest rates ranging from 3.50% to 4.75 % and 2.75% to 7.125% at June 30, 2011 and 2010, respectively.  The Company had approximately $18,000 and $340,000 of gains deferred as a result of the forward delivery commitments entered into as of June 30, 2011 and 2010, respectively.  The fair value of such commitments is insignificant. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company did not have any gains or losses reclassified into earnings as a result of the ineffectiveness of its hedging activities.  The Company considers its hedging activities to be highly effective. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company did not have any gains or losses reclassified into earnings as a result of the discontinuance of cash flow hedges because it was probable that the original forecasted transaction would not occur by the end of the originally specified time frame as of June 30, 2011. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company has no other off-balance-sheet arrangements or transactions with unconsolidated, special purpose entities that would expose the Company to liability that is not reflected on the face of the financial statements. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 19: | Derivatives and Hedging Activities |
|----------|------------------------------------|

|   | The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is interest rate risk. The Company entered into an interest rate swap agreement on August 27, 2010 with a third party to manage interest rate risk associated with a fixed-rate loan.  The interest rate swap agreement effectively converted the loan’s fixed rate into a variable rate. The derivatives and hedging accounting guidance (FASB ASC 815-10) requires that the Company recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position. In accordance with this guidance, the Company designates the interest rate swap on this fixed-rate loan as a fair value hedge. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company is exposed to credit-related losses in the event of nonperformance by the counterparties to this agreement. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures, and does not expect any counterparties to fail their obligations. The Company deals only with primary dealers. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | If certain hedging criteria specified in derivatives and hedging accounting guidance are met, including testing for hedge effectiveness, hedge accounting may be applied. The hedge effectiveness assessment methodologies for similar hedges are performed in a similar manner and are used consistently throughout the hedging relationships. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 19: | Derivatives and Hedging Activities – continued |
|----------|------------------------------------------------------|

|   | The hedge documentation specifies the terms of the hedged item and the interest rate swap. The documentation also indicates that the derivative is hedging a fixed-rate item, that the hedge exposure is to the changes in the fair value of the hedged item, and that the strategy is to eliminate fair value variability by converting fixed-rate interest payments to variable-rate interest payments. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. The Company includes the gain or loss on the hedged items in the same line item—noninterest income—as the offsetting loss or gain on the related interest rate swap. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The fixed rate loan hedged has an original maturity of 20 years and is not callable.  This loan is hedged with a “pay fixed rate, receive variable rate” swap with a similar notional amount, maturity, and fixed rate coupons. The swap is not callable. At June 30, 2011, the loan had an outstanding principal balance of $11,857,000, and the interest rate swap had a notional value of $11,857,000. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       | Effect of Derivative Instruments on Statement of Financial Condition |
|----------------------------|----------------------------------------------------------------------|
|                       | Fair Value of Derivative Instruments                                 |
|                       |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       | Asset Derivatives                                                    |   | Liability Derivatives |
| (In Thousands)             |  June 30, 2011                                                  |   | June 30, 2010 |   | June 30, 2011 |   |  June 30, 2010 |
|                       | Balance                                                              |   |   |   | Balance |   |   |   | Balance |   |   |   | Balance |   |   |
|                       | Sheet                                                                |   | Fair |   | Sheet |   | Fair |   | Sheet |   | Fair |   | Sheet |   | Fair |
|                       | Location                                                             |   | Value |   | Location |   | Value |   | Location |   | Value |   | Location |   | Value |
| Derivatives designated     |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| as hedging instruments     |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| under ASC 815              | Other                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate contracts    | Assets                                                               |   |   | $ | 650 |   |   | n/a |   |   | $ | - |   |   | n/a |   |   | $ | - |   |   |  n/a/ |   |   | $ | - |   |
|                       |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in fair value of    |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| financial instrument being |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| hedged under ASC 815       |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate contracts    | Loans                                                                |   |   | $ | (452 | ) |   | n/a |   |   | $ | - |   |   | n/a |   |   | $ | - |   |   |  n/a/ |   |   | $ | - |   |

|           | Effect of Derivative Instruments on Statement of Income |
|----------------|---------------------------------------------------------|
|           | For the Twelve Months Ended June 30, 2011 and 2010      |
|           |                                                    |   |   |   |   |   |   |   |   |
| (In Thousands) |                                                    |   |   |   |   | Amount of |   |
|           |                                                    |   | Location of |   |   | Gain or (Loss) |   |
|           | Derivatives Designated                                  |   | Gain or (Loss) |   |   | Recognized in |   |
|           | as Hedging Instruments                                  |   | Recognized in |   |   | Income on Derivative |   |
|           | Under ASC 815                                           |   | Income on Derivative |   |   | 2011 |   | 2010 |   |
|           |                                                    |   |   |   |   |   |   |   |   |
|           | Interest rate contracts                                 |   | Noninterest income |   |   | $ | 198 |   | $ | - |   |

|   | Refer to Note 18 for additional information regarding the Company’s use of derivative loan commitments and forward delivery commitments.  These derivative instruments are not designated as hedging instruments. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 20: | Fair Value Disclosures |
|----------|------------------------|

|   | FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | FASB ASC 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, FASB ASC 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The fair value hierarchy is as follows: |
|--------|-----------------------------------------|

| ■       | Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
|----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ■       | Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|---------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ■       | Level 3 Inputs - Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities. |
|---------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 20: | Fair Value Disclosures – continued |
|----------|------------------------------------------|

|   | In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Available for Sale Securities – Securities classified as available for sale are reported at fair value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the bond’s terms and conditions, among other things. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Impaired Loans – Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on internally customized discounting criteria. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans Held for Sale – These loans are reported at the lower of cost or fair value. Fair value is determined based on expected proceeds based on sales contracts and commitments and are considered Level 2 inputs. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Repossessed Assets – Fair values are valued at the time the loan is foreclosed upon and the asset is transferred from loans.  The value is based upon primary third party appraisals, less costs to sell.  The appraisals are generally discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business.  Such discounts are typically significant and result in Level 3 classification of the inputs for determining fair value.  Repossessed assets are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on same or similar factors above. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loan Subject to Fair Value Hedge – The Company has one loan that is carried at fair value subject to a fair value hedge.  Fair value is determined utilizing valuation models that consider the scheduled cash flows through anticipated maturity and is considered a Level 3 input. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Derivative financial instruments – Fair values for interest rate swap agreements are based upon the amounts required to settle the contracts.  These instruments are valued using Level 3 inputs utilizing valuation models that consider: (a) time value, (b) volatility factors and (c) current market and contractual prices for the underlying instruments, as well as other relevant economic measures.  Although the Company utilizes counterparties’ valuations to assess the reasonableness of its prices and valuation techniques, there is not sufficient corroborating market evidence to support classifying these assets and liabilities as Level 2. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 20: | Fair Value Disclosures – continued |
|----------|------------------------------------------|

|   | The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2011 and 2010, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands): |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |   | June 30, 2011 |
|----------------------------------|--------|---------------|
|                             |   | Level 1       |   |   | Level 2 |   |   | Level 3 |   |   | Total Fair |   |
|                             |   | Inputs        |   |   | Inputs |   |   | Inputs |   |   | Value |   |
| Financial Assets:                |   |          |   |   |   |   |   |   |   |   |   |   |
| Available for sale securities    |   |          |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and agency       |   | $             | - |   |   |   | 26,208 |   |   | $ | - |   |   | $ | 26,208 |   |
| Municipal obligations            |   |          | - |   |   |   | 39,186 |   |   |   | - |   |   |   | 39,186 |   |
| Corporate obligations            |   |          | - |   |   |   | 6,216 |   |   |   | - |   |   |   | 6,216 |   |
| Mortgage-backed securities       |   |          | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  government backed          |   |          | - |   |   |   | 6,372 |   |   |   | - |   |   |   | 6,372 |   |
| Private lable CMOs               |   |          | - |   |   |   | 291 |   |   |   | - |   |   |   | 291 |   |
| CMOs - government backed         |   |          | - |   |   |   | 24,427 |   |   |   | - |   |   |   | 24,427 |   |
| Loan subject to fair value hedge |   |          | - |   |   |   | - |   |   |   | 11,405 |   |   |   | 11,405 |   |
| Loans held-for-sale              |   |          | - |   |   |   | 1,784 |   |   |   | - |   |   |   | 1,784 |   |
| Derivative financial instruments |   |          | - |   |   |   | - |   |   |   | 650 |   |   |   | 650 |   |
|                             |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   | June 30, 2010 |
|                             |   | Level 1       |   |   | Level 2 |   |   | Level 3 |   |   | Total Fair |   |
|                             |   | Inputs        |   |   | Inputs |   |   | Inputs |   |   | Value |   |
| Financial Assets:                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available for sale securities    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and agency       |   | $             | - |   |   | $ | 32,241 |   |   | $ | - |   |   | $ | 32,241 |   |
| Municipal obligations            |   |          | - |   |   |   | 35,412 |   |   |   | - |   |   |   | 35,412 |   |
| Corporate obligations            |   |          | - |   |   |   | 7,451 |   |   |   | - |   |   |   | 7,451 |   |
| Mortgage-backed securities       |   |          | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  government backed          |   |          | - |   |   |   | 1,755 |   |   |   | - |   |   |   | 1,755 |   |
| Private lable CMOs               |   |          | - |   |   |   | 842 |   |   |   | - |   |   |   | 842 |   |
| CMOs - government backed         |   |          | - |   |   |   | 36,827 |   |   |   | - |   |   |   | 36,827 |   |
| Loans held-for-sale              |   |          | - |   |   |   | 7,695 |   |   |   | - |   |   |   | 7,695 |   |

----

| NOTE 20: | Fair Value Disclosures – continued |
|----------|------------------------------------------|

|   | The following table presents, for the year ended June 30, 2011, the changes in Level 3 assets and liabilities that are measured at fair value on a recurring basis. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |   |           |   | Total Realized/   |   |             |   |          |
|----------------------------------|--------|----------------|--------|-------------------|--------|------------------|--------|---------------|
|                             |   |           |   | Unrealized Gains  |   | Purchases,       |   |          |
|                             |   | Balance        |   | (Losses) Included |   | Sales,           |   | Balance       |
|                             |   | as of          |   | in Noninterest    |   | Issuances, and   |   | as of         |
|                             |   | July 1, 2010   |   | Income            |   | Settlements, net |   | June 30, 2011 |
|                             |   | (In thousands) |   |
| Financial Assets:                |   |           |   |              |   |             |   |          |   |   |   |   |
| Loan subject to fair value hedge |   | $              | -      |              |   | $                | (452   | )             |   | $ | 11,857 |   |   | $ | 11,405 |   |
| Derivative financial instruments |   |           |   |              |   |             | 650    |          |   |   | - |   |   |   | 650 |   |

|   | Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The following table summarizes financial assets and financial liabilities measured at fair value on a nonrecurring basis as of June 30, 2011 and 2010, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands): |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|               |   | June 30, 2011 |
|--------------------|--------|---------------|
|               |   | Level 1       |   |   | Level 2 |   |   | Level 3 |   |   | Total Fair |   |
|               |   | Inputs        |   |   | Inputs |   |   | Inputs |   |   | Value |   |
| Impaired loans     |   | $             | - |   |   | $ | - |   |   | $ | 1,004 |   |   | $ | 1,004 |   |
| Repossessed assets |   |          | - |   |   |   | - |   |   |   | 1,181 |   |   |   | 1,181 |   |
|               |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               |   | June 30, 2010 |
|               |   | Level 1       |   |   | Level 2 |   |   | Level 3 |   |   | Total Fair |   |
|               |   | Inputs        |   |   | Inputs |   |   | Inputs |   |   | Value |   |
| Impaired loans     |   | $             | - |   |   | $ | - |   |   | $ | 1,688 |   |   | $ | 1,688 |   |
| Repossessed assets |   |          | - |   |   |   | - |   |   |   | 619 |   |   |   | 619 |   |

|   | During the year ended June 30, 2011, certain impaired loans were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for possible loan losses based upon the fair value of the underlying collateral. Impaired loans with a carrying value of $1,892,000 were reduced by specific valuation allowance allocations totaling $888,000 to a total reported fair value of $1,004,000 based on collateral valuations utilizing Level 3 valuation inputs. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Those financial instruments not subject to the implementation of FASB ASC 820 are required to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized in the statement of financial position, for which it is practicable to estimate fair value.  Below is a table that summarizes the fair market values of all financial instruments of the Company at June 30, 2011 and 2010, followed by methods and assumptions that were used by the Company in estimating the fair value of the classes of financial instruments not covered by FASB ASC 820. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 20: | Fair Value Disclosures – continued |
|----------|------------------------------------------|

|   | The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies.  However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | June 30, |
|-----------------------------------------------|--------|----------|
|                                          |   |     |   |   |   |   |   |   |
|                                          |   | 2011     |   | 2010 |
|                                          |   |     |   |   |   |   |   |   |
|                                          |   |     |   | Estimated |   |   |   | Estimated |
|                                          |   | Carrying |   | Fair |   | Carrying |   | Fair |
| (Dollars in Thousands)                        |   | Amount   |   | Value |   | Amount |   | Value |
|                                          |   |     |   |   |   |   |   |   |   |   |   |   |
| Financial Assets:                             |   |     |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                     |   | $        | 9,540 |   |   | $ | 9,540 |   |   | $ | 3,509 |   |   | $ | 3,509 |   |
| Securities held-to-maturity                   |   |     | - |   |   |   | - |   |   |   | 125 |   |   |   | 125 |   |
| FHLB stock                                    |   |     | 2,003 |   |   |   | 2,003 |   |   |   | 2,003 |   |   |   | 2,003 |   |
| Loans receivable, net                         |   |     | 185,471 |   |   |   | 192,361 |   |   |   | 169,502 |   |   |   | 176,037 |   |
| Accrued interest on dividends receivable      |   |     | 1,558 |   |   |   | 1,558 |   |   |   | 1,610 |   |   |   | 1,610 |   |
| Mortage servicing rights                      |   |     | 2,142 |   |   |   | 2,871 |   |   |   | 2,337 |   |   |   | 2,400 |   |
| Cash surrender value of life insurance        |   |     | 6,900 |   |   |   | 6,900 |   |   |   | 6,691 |   |   |   | 6,691 |   |
| Financial Liabilities:                        |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                      |   |     | 124,633 |   |   |   | 124,633 |   |   |   | 112,930 |   |   |   | 112,930 |   |
| Time certificates of deposit                  |   |     | 84,553 |   |   |   | 85,719 |   |   |   | 85,009 |   |   |   | 86,770 |   |
| Accrued expenses and other liabilities        |   |     | 3,371 |   |   |   | 3,371 |   |   |   | 2,989 |   |   |   | 2,989 |   |
| Advances from the FHLB & other borrowings |   |     | 60,896 |   |   |   | 63,612 |   |   |   | 67,224 |   |   |   | 66,117 |   |
| Subordinated debentures                       |   |     | 5,155 |   |   |   | 3,779 |   |   |   | 5,155 |   |   |   | 3,872 |   |
| Off-balance-sheet instruments                 |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forward loan sales commitments                |   |     | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commitments to extend credit                  |   |     | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Rate lock commitments                         |   |     | - |   |   |   | - |   |   |   | - |   |   |   | - |   |

|   | The following methods and assumptions were used by the Company in estimating the fair value of the following classes of financial instruments. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash, interest-bearing accounts, accrued interest and dividend receivable, and accrued expenses and other liabilities – The carrying amounts approximate fair value due to the relatively short period of time between the origination of these instruments and their expected realization. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 20: | Fair Value Disclosures – continued |
|----------|------------------------------------------|

|   | Securities held to maturity – Securities classified as held to maturity are reported at amortized cost. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the bond’s terms and conditions, among other things. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Stock in the FHLB – The fair value of stock in the FHLB approximates redemption value. |
|--------|----------------------------------------------------------------------------------------------|

|   | Loans receivable – Fair values are estimated by stratifying the loan portfolio into groups of loans with similar financial characteristics.  Loans are segregated by type such as real estate, commercial, and consumer, with each category further segmented into fixed and adjustable rate interest terms.  For mortgage loans, the Company uses the secondary market rates in effect for loans that have similar characteristics.  The fair value of other fixed rate loans is calculated by discounting scheduled cash flows through the anticipated maturities adjusted for prepayment estimates.  Adjustable interest rate loans are assumed to approximate fair value because they generally reprice within the short term. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fair values are adjusted for credit risk based on assessment of risk identified with specific loans, and risk adjustments on the remaining portfolio based on credit loss experience. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Assumptions regarding credit risk are judgmentally determined using specific borrower information, internal credit quality analysis, and historical information on segmented loan categories for non-specific borrowers. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Cash surrender value of life insurance – The carrying amount for cash surrender value of life insurance approximates fair value as policies are recorded at redemption value. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Mortgage servicing rights – The fair value of servicing rights was determined using discount rates ranging from 9.0% to 20.0%, prepayment speeds ranging from 140% to 324% PSA, depending on stratification of the specific right.  The fair value was also adjusted for the affect of potential past dues and foreclosures. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Deposits and time certificates of deposit – The fair value of deposits with no stated maturity, such as checking, passbook, and money market, is equal to the amount payable on demand.  The fair value of time certificates of deposit is based on the discounted value of contractual cash flows.  The discount rate is estimated using the rates currently offered for deposits of similar maturities. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Advances from the FHLB & Subordinated Debentures – The fair value of the Company’s advances and debentures are estimated using discounted cash flow analysis based on the interest rate that would be effective June 30, 2011 and 2010, respectively if the borrowings repriced according to their stated terms. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Off-balance-sheet instruments - Fair values for off-balance-sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.  The fair values of these financial instruments are considered insignificant.  Additionally, those financial instruments have no carrying value. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 21: | Condensed Parent Company Financial Statements |
|----------|-----------------------------------------------|

|   | Set forth below is the condensed statements of financial condition as of June 30, 2011 and 2010, of Eagle Bancorp Montana, Inc. together with the related condensed statements of income and cash flows for the years ended June 30, 2011 and 2010. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Condensed Statements of Financial Condition   |
|-----------------------------------------------|
| (Dollars in Thousands)                        |
|                                          |   | 2011 |   |   | 2010 |   |
|                                          |   |   |   |   |   |   |
| Assets                                        |   |   |   |   |   |   |
| Cash and cash equivalents                     |   | $ | 337 |   |   | $ | 301 |   |
| Securities available for sale                 |   |   | 14,230 |   |   |   | 14,892 |   |
| Investment in Eagle Bancorp Statutory Trust I |   |   | 155 |   |   |   | 155 |   |
| Investment in American Federal Savings Bank   |   |   | 42,744 |   |   |   | 42,010 |   |
| Other assets                                  |   |   | 253 |   |   |   | 242 |   |
|                                          |   |   |   |   |   |   |   |   |
| Total assets                                  |   | $ | 57,719 |   |   | $ | 57,600 |   |
|                                          |   |   |   |   |   |   |   |   |
| Liabilities and stockholders' equity          |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses         |   |   | 79 |   |   |   | 13 |   |
| Long-term subordinated debt                   |   |   | 5,155 |   |   |   | 5,155 |   |
| Stockholders' Equity                          |   |   | 52,485 |   |   |   | 52,432 |   |
|                                          |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity    |   | $ | 57,719 |   |   | $ | 57,600 |   |

| Condensed Statements of Income            |
|-------------------------------------------|
| (Dollars in Thousands)                    |
|                                      |   | 2011 |   |   | 2010 |   |
|                                      |   |   |   |   |   |   |
| Interest income                           |   | $ | 467 |   |   | $ | 387 |   |
| Interest expense                          |   |   | (191 | ) |   |   | (310 | ) |
| Noninterest expense                       |   |   | (389 | ) |   |   | (144 | ) |
| Loss before income taxes                  |   |   | (113 | ) |   |   | (67 | ) |
| Income tax benefit                        |   |   | (35 | ) |   |   | (20 | ) |
| Loss before equity in undistributed       |   |   |   |   |   |   |   |   |
| earnings of American Federal Savings Bank |   |   | (78 | ) |   |   | (47 | ) |
| Equity in undistributed earnings          |   |   |   |   |   |   |   |   |
| of American Federal Savings Bank          |   |   | 2,488 |   |   |   | 2,461 |   |
|                                      |   |   |   |   |   |   |   |   |
| Net income                                |   | $ | 2,410 |   |   | $ | 2,414 |   |

----

| NOTE 21: | Condensed Parent Company Financial Statements – continued |
|----------|-----------------------------------------------------------------|

| Condensed Statements of Cash Flow                    |
|------------------------------------------------------|
| (Dollars in Thousands)                               |
|                                                 |   | 2011 |   |   | 2010 |   |
|                                                 |   |   |   |   |   |   |
| Cash flows from operating activities                 |   |   |   |   |   |   |
| Net income                                           |   | $ | 2,410 |   |   | $ | 2,414 |   |
| Adjustments to reconcile net income                  |   |   |   |   |   |   |   |   |
|   to net cash used in operating activities:     |   |   |   |   |   |   |   |   |
| Equity in undistributed earnings                     |   |   |   |   |   |   |   |   |
|   of American Federal Savings Bank              |   |   | (2,488 | ) |   |   | (2,461 | ) |
| Other adjustments, net                               |   |   | 16 |   |   |   | (165 | ) |
| Net cash used in operating activities                |   |   | (62 | ) |   |   | (212 | ) |
|                                                 |   |   |   |   |   |   |   |   |
| Cash flows from investing activities                 |   |   |   |   |   |   |   |   |
| Cash contribution from American Federal Savings Bank |   |   | 2,053 |   |   |   | 1,000 |   |
| Cash contribution to American Federal Savings Bank   |   |   | - |   |   |   | (12,000 | ) |
| Activity in available for sale securities            |   |   |   |   |   |   |   |   |
| Sales                                                |   |   | 1,552 |   |   |   | 8 |   |
| Maturities, prepayments and calls                    |   |   | 3,581 |   |   |   | 912 |   |
| Purchases                                            |   |   | (4,311 | ) |   |   | (9,830 | ) |
| Net cash provided by (used in) investing activities  |   |   | 2,875 |   |   |   | (19,910 | ) |
|                                                 |   |   |   |   |   |   |   |   |
| Cash flows from financing activities                 |   |   |   |   |   |   |   |   |
| Common stock issued                                  |   |   | - |   |   |   | 22,574 |   |
| ESOP payments and dividends                          |   |   | 163 |   |   |   | 136 |   |
| ESOP shares purchased                                |   |   | - |   |   |   | (1,971 | ) |
| Payments to purchase treasury stock                  |   |   | (1,796 | ) |   |   | (22 | ) |
| Dividends paid                                       |   |   | (1,144 | ) |   |   | (612 | ) |
| Net cash (used in) provided by financing activities  |   |   | (2,777 | ) |   |   | 20,105 |   |
|                                                 |   |   |   |   |   |   |   |   |
| Net change in cash and cash equivalents              |   |   | 36 |   |   |   | (17 | ) |
| Cash and cash equivalents at beginning of period     |   |   | 301 |   |   |   | 318 |   |
|                                                 |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of period           |   | $ | 337 |   |   | $ | 301 |   |

----

| NOTE 22: | Quarterly Results of Operations (Unaudited) |
|----------|---------------------------------------------|

|   | The following is a condensed summary of quarterly results of operations for the years ended June 30, 2011 and 2010: |
|--------|---------------------------------------------------------------------------------------------------------------------|

|                                               |   | Year ended June 30, 2011 |
|----------------------------------------------------|--------|--------------------------|
|                                               |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                               |   | First                    |   |   | Second |   |   | Third |   |   | Fourth |   |
|                                               |   | Quarter                  |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |
| (Dollars in Thousands, except per share data)      |   |                     |   |   |   |   |   |   |   |   |   |   |
| Interest and dividend income                       |   | $                        | 3,775 |   |   | $ | 3,721 |   |   | $ | 3,773 |   |   | $ | 3,690 |   |
| Interest expense                                   |   |                     | 1,117 |   |   |   | 1,078 |   |   |   | 974 |   |   |   | 917 |   |
| Net interest income                                |   |                     | 2,658 |   |   |   | 2,643 |   |   |   | 2,799 |   |   |   | 2,773 |   |
| Loan loss provision                                |   |                     | 283 |   |   |   | 234 |   |   |   | 276 |   |   |   | 155 |   |
| Net interest income after loan loss provision |   |                     | 2,375 |   |   |   | 2,409 |   |   |   | 2,523 |   |   |   | 2,618 |   |
| Non interest income                                |   |                     | 1,496 |   |   |   | 1,397 |   |   |   | 944 |   |   |   | 786 |   |
| Non interest expense                               |   |                     | 2,626 |   |   |   | 2,880 |   |   |   | 2,863 |   |   |   | 2,713 |   |
| Income before income tax expense                   |   |                     | 1,245 |   |   |   | 926 |   |   |   | 604 |   |   |   | 691 |   |
| Income tax expense                                 |   |                     | 369 |   |   |   | 282 |   |   |   | 196 |   |   |   | 209 |   |
| Net income                                         |   | $                        | 876 |   |   | $ | 644 |   |   | $ | 408 |   |   | $ | 482 |   |
|                                               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                        |   | $                        | 1,189 |   |   | $ | (1,884 | ) |   | $ | 19 |   |   | $ | 1,086 |   |
| Basic earnings per common share                    |   | $                        | 0.22 |   |   | $ | 0.17 |   |   | $ | 0.11 |   |   | $ | 0.12 |   |
| Diluted earnings per common share                  |   | $                        | 0.22 |   |   | $ | 0.17 |   |   | $ | 0.11 |   |   | $ | 0.12 |   |
|                                               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                               |   | Year ended June 30, 2010 |
|                                               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest and dividend income                       |   | $                        | 3,724 |   |   | $ | 3,798 |   |   | $ | 3,686 |   |   | $ | 3,690 |   |
| Interest expense                                   |   |                     | 1,341 |   |   |   | 1,353 |   |   |   | 1,216 |   |   |   | 1,186 |   |
| Net interest income                                |   |                     | 2,383 |   |   |   | 2,445 |   |   |   | 2,470 |   |   |   | 2,504 |   |
| Loan loss provision                                |   |                     | 135 |   |   |   | 107 |   |   |   | 214 |   |   |   | 259 |   |
| Net interest income after loan loss provision |   |                     | 2,248 |   |   |   | 2,338 |   |   |   | 2,256 |   |   |   | 2,245 |   |
| Non interest income                                |   |                     | 1,061 |   |   |   | 937 |   |   |   | 722 |   |   |   | 873 |   |
| Non interest expense                               |   |                     | 2,103 |   |   |   | 2,485 |   |   |   | 2,254 |   |   |   | 2,389 |   |
| Income before income tax expense                   |   |                     | 1,206 |   |   |   | 790 |   |   |   | 724 |   |   |   | 729 |   |
| Income tax expense                                 |   |                     | 362 |   |   |   | 237 |   |   |   | 244 |   |   |   | 192 |   |
| Net income                                         |   | $                        | 844 |   |   | $ | 553 |   |   | $ | 480 |   |   | $ | 537 |   |
|                                               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                        |   | $                        | 1,890 |   |   | $ | (624 | ) |   | $ | 216 |   |   | $ | 624 |   |
| Basic earnings per common share *                  |   | $                        | 0.20 |   |   | $ | 0.14 |   |   | $ | 0.12 |   |   | $ | 0.14 |   |
| Diluted earnings per common share *                |   | $                        | 0.18 |   |   | $ | 0.12 |   |   | $ | 0.10 |   |   | $ | 0.14 |   |

| -48- |
|------|