SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended June 30, 2001

                                       OR

[  ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                         Commission File Number: 0-26556

                           KLAMATH FIRST BANCORP, INC.
             (Exact name of registrant as specified in its charter)

Oregon                                                                93-1180440
State or other jurisdiction of incorporation                    (I.R.S. Employer
or organization)                                          Identification Number)

540 Main Street, Klamath Falls, Oregon                                     97601
Address of principal executive offices)                               (Zip Code)

Registrant's telephone number, including area code:               (541) 882-3444

Securities registered pursuant to Section 12(b) of the Act:                 None

Securities registered pursuant to
Section 12(g) of the Act:                 Common Stock, par value $.01 per share
                                                                (Title of Class)

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

As of July 20,  2001,  there were issued  7,174,742  shares of the  Registrant's
Common Stock.  The Registrant's  voting common stock is traded  over-the-counter
and is listed on the Nasdaq National Market under the symbol "KFBI."

<PAGE>


                   KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS

Part I.  Financial Information
-------  ----------------------
Item 1.  Financial Statements (Unaudited)                                 Page
                                                                        -------
         Condensed Consolidated Balance Sheets
         (As of June 30, 2001 and September 30, 2000)                         3

         Condensed Consolidated Statements of Earnings (For the three
         months and nine months ended June 30, 2001 and 2000)                 4

         Condensed Consolidated Statements of Shareholders' Equity
         (For the year ended September 30, 2000 and for
         the nine months ended June 30, 2001)                                 5

         Condensed Consolidated Statements of Cash Flows (For the nine
         months ended June 30, 2001 and 2000)                             6 - 7

         Notes to Condensed Consolidated Financial Statements            8 - 11

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                            12 - 18

Part II. Other Information
-------- -------------------

Item 1.  Legal Proceedings                                                   19

Item 2.  Changes in Securities                                               19

Item 3.  Defaults Upon Senior Securities                                     19

Item 4.  Submission of Matters to a Vote of Security Holders                 19

Item 5.  Other Information                                                   19

Item 6.  Exhibits and Reports on Form 8-K                                    20

Signatures                                                                   20











                                        2
<PAGE>
<TABLE>
<CAPTION>

                   KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                   AS OF JUNE 30, 2001 AND SEPTEMBER 30, 2000
                                   (Unaudited)



                                                                                June 30, 2001                September 30, 2000
ASSETS                                                                    -------------------               -------------------

<S>                                                                            <C>                                 <C>
Cash and due from banks                                                        $   19,950,903                      $ 19,998,788
Interest bearing deposits with banks                                               37,336,664                         2,077,359
Federal funds sold and securities purchased under agreements to resell             67,753,393                         7,870,453
                                                                           ------------------                ------------------
   Total cash and cash equivalents                                                125,040,960                        29,946,600

Investment securities available for sale, at fair value
  (amortized cost: $137,939,158 and $118,689,247)                                 137,385,770                       116,627,756
Investment securities held to maturity, at amortized cost (fair
  value: $594,714 and $726,889)                                                       592,528                           723,838
Mortgage backed and related securities available for sale, at fair
  value (amortized cost: $176,923,769 and $75,483,569)                            177,284,989                        75,331,311
Mortgage backed and related securities held to maturity, at amortized
  cost (fair value: $1,809,832 and $2,145,918)                                      1,785,964                         2,159,868
Loans receivable, net                                                             518,742,647                       729,036,847
Real estate owned and repossessed assets                                              583,017                           788,400
Premises and equipment, net                                                        14,420,652                        12,727,570
Stock in Federal Home Loan Bank of Seattle, at cost                                12,477,900                        11,876,500
Accrued interest receivable                                                         6,160,250                         6,432,073
Deferred income taxes                                                                      --                           230,893
Core deposit intangible                                                             6,886,156                         8,125,664
Other assets                                                                        4,062,321                         1,567,318
                                                                           ------------------                ------------------
   Total assets                                                                $1,005,423,154                      $995,574,638
                                                                           ==================                ==================

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
  Deposit liabilities                                                            $710,598,242                      $695,380,871
  Accrued interest on deposit liabilities                                           1,191,283                         1,185,076
  Advances from borrowers for taxes and insurance                                   4,855,448                         9,653,376
  Advances from Federal Home Loan Bank of Seattle                                 168,000,000                       173,000,000
  Short term borrowings                                                             1,700,000                         3,000,000
  Accrued interest on borrowings                                                      805,474                           857,163
  Pension liabilities                                                                 985,843                           887,896
  Deferred income taxes                                                               537,308                                --
  Other liabilities                                                                 2,845,137                         2,885,695
                                                                           ------------------                ------------------
    Total liabilities                                                             891,518,735                       886,850,077
                                                                           ------------------                ------------------
    Commitments and contingencies

SHAREHOLDERS' EQUITY

  Preferred stock, $.01 par value, 500,000 shares authorized; none issued                  --                                --
  Common stock, $.01 par value, 35,000,000 shares authorized,
   June 30, 2001 - 7,174,742 issued, 6,572,757 outstanding
   September 30, 2000 - 7,366,226 issued, 6,692,428 outstanding                        71,747                            73,662
  Additional paid-in capital                                                       35,649,711                        37,701,796
  Retained earnings-substantially restricted                                       83,865,301                        79,713,255
  Unearned shares issued to ESOP                                                   (4,207,313)                       (4,893,250)
  Unearned shares issued to MRDP                                                   (1,355,884)                       (2,498,378)
  Net unrealized loss on securities available for sale, net of tax                   (119,143)                       (1,372,524)
                                                                           ------------------                ------------------
    Total shareholders' equity                                                    113,904,419                       108,724,561
                                                                           ------------------                ------------------
    Total liabilities and shareholders' equity                                 $1,005,423,154                      $995,574,638
                                                                           ==================                ==================
<FN>
      See notes to condensed consolidated financial statements.
</FN>
</TABLE>

                                        3

<PAGE>
<TABLE>
<CAPTION>

                                         KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
                                        CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                                         (Unaudited)


                                                 Three Months Ended   Three Months Ended      Nine Months Ended   Nine Months Ended
                                                           June 30,             June 30,               June 30,            June 30,
                                                               2001                 2000                   2001                2000
                                                     --------------       --------------         --------------      --------------
INTEREST INCOME
<S>                                                  <C>                  <C>                    <C>                 <C>
Loans receivable ................................... $  10,638,837        $   14,406,305         $   36,810,139      $  42,935,817
  Mortgage backed and related securities ...........     3,384,061             1,366,483              7,856,997          3,717,088
  Investment securities ............................     2,040,965             2,387,046              6,013,399          7,378,404
  Federal funds sold ...............................       502,589                 9,351                906,197            155,795
  Interest bearing deposits ........................       215,959                65,921                462,241            239,627
                                                     -------------        --------------         --------------      -------------
    Total interest income ..........................    16,782,411            18,235,106             52,048,973         54,426,731
                                                     -------------        --------------         --------------      -------------

INTEREST EXPENSE
  Deposit liabilities ..............................     7,398,017             7,006,675             22,492,867         21,066,552
  FHLB advances ....................................     2,460,082             3,340,109              7,602,852          9,293,290
  Other ............................................        58,006                67,160                311,994            105,618
                                                     -------------        --------------         --------------      -------------
    Total interest expense .........................     9,916,105            10,413,944             30,407,713         30,465,460
                                                     -------------        --------------         --------------      -------------
    Net interest income ............................     6,866,306             7,821,162             21,641,260         23,961,271

Provision for loan losses ..........................         3,000               228,000                384,000            536,000

                                                     -------------        --------------         --------------      -------------
    Net interest income after provision for
      loan losses ..................................     6,863,306             7,593,162             21,257,260         23,425,271
                                                     -------------        --------------         --------------      -------------

NON-INTEREST INCOME
  Fees and service charges .........................     1,208,271               812,006              3,014,285          2,338,893
  Gain on sale of investments ......................     1,681,584                  --                4,191,377              6,836
  Gain on sale of real estate owned ................        33,415                  --                   49,843            118,315
  Other income .....................................       276,456               223,761                765,073            530,112
                                                     -------------        --------------         --------------      -------------
    Total non-interest income ......................     3,199,726             1,035,767              8,020,578          2,994,156
                                                     -------------        --------------         --------------      -------------
NON-INTEREST EXPENSE
  Compensation, employee benefits
     and related expense ...........................     3,423,610             2,855,907              9,453,880          8,488,034
  Occupancy expense ................................       682,389               621,536              1,908,358          1,757,259
  Data processing expense ..........................       252,267               226,263                740,776            690,595
  Insurance premium expense ........................        32,285                36,685                100,955            150,571
  Loss on sale of investments ......................          --                    --                   30,632               --
  Loss on sale of real estate owned ................        15,850                  --                   15,850               --
  Amortization of core deposit intangible ..........       413,169               413,169              1,239,508          1,239,508
  Other expense ....................................     2,042,378             1,505,225              5,363,275          4,769,566
                                                     -------------        --------------         --------------      -------------
    Total non-interest expense .....................     6,861,948             5,658,785             18,853,234         17,095,533
                                                     -------------        --------------         --------------      -------------

Earnings before income taxes .......................     3,201,084             2,970,144             10,424,604          9,323,894

Provision for income tax ...........................     1,085,447             1,043,681              3,669,120          3,494,680
                                                     -------------        --------------         --------------      -------------

Net earnings ....................................... $   2,115,637        $    1,926,463         $    6,755,484      $   5,829,214
                                                     =============        ==============         ==============      =============

Earnings per common share - basic .................. $        0.32        $         0.28         $         1.02      $        0.85
Earnings per common share - fully diluted .......... $        0.31        $         0.28         $         1.02      $        0.85
Weighted average common shares
   outstanding - basic .............................     6,629,275             6,773,138              6,616,551          6,855,374
Weighted average common shares
   outstanding -  with dilution ....................     6,732,583             6,773,138              6,641,484          6,855,374


<FN>

     See notes to condensed consolidated financial statements.
</FN>
</TABLE>

                                        4
<PAGE>
<TABLE>
<CAPTION>

                                         KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
                                  CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                        FOR THE YEAR ENDED SEPTEMBER 30, 2000 AND THE NINE MONTHS ENDED JUNE 30, 2001
                                                         (Unaudited)


                                                                                Unearned     Unearned
                                  Common   Common   Additional                    shares       shares           Other          Total
                                   stock    stock      paid-in     Retained       issued       issued   comprehensive  shareholders'
                                  shares   amount      capital     earnings      to ESOP      to MRDP   income (loss)         equity
                               ---------  -------  -----------  -----------    ----------    ----------      --------   -----------
<S>                            <C>        <C>      <C>          <C>          <C>           <C>           <C>           <C>
Balance at October 1, 1999 ... 7,062,092  $79,084  $43,794,535  $76,866,452  ($ 5,871,900) ($ 3,519,296) ($ 1,763,412) $109,585,463

Cash dividends ...............      --       --           --     (3,579,349)         --            --            --      (3,579,349)

Stock repurchased and retired   (542,151)  (5,422)  (6,249,273)        --            --            --            --      (6,254,695)

ESOP contribution ............    97,865     --        142,826         --         978,650          --            --       1,121,476

MRDP contribution ............    74,622     --         13,708         --            --       1,020,918          --       1,034,626
                               ---------  -------  -----------  -----------    ----------    ----------      --------   -----------
                               6,692,428   73,662   37,701,796   73,287,103    (4,893,250)   (2,498,378)   (1,763,412)  101,907,521

Comprehensive income
     Net earnings                                                 6,426,152                                               6,426,152
     Other comprehensive income:
          Unrealized gain on securities, net of tax
          and reclassification adjustment   (1)                                                               390,888       390,888
                                                                                                                       ------------
          Total comprehensive income                                                                                      6,817,040
                               ---------  -------  -----------  -----------    ----------    ----------      --------   -----------
Balance at September 30, 2000  6,692,428   73,662   37,701,796   79,713,255    (4,893,250)   (2,498,378)   (1,372,524)  108,724,561

Cash dividends ...............      --       --           --     (2,603,438)         --            --            --      (2,603,438)

Stock repurchased and retired   (191,484)  (1,915)  (2,282,301)        --            --            --            --      (2,284,216)

ESOP contribution ............    (4,805)    --        219,935         --         685,937          --            --         905,872

MRDP contribution ............    76,618     --         10,281         --            --       1,142,494          --       1,152,775
                               ---------  -------  -----------  -----------    ----------    ----------      --------   -----------

                               6,572,757   71,747   35,649,711   77,109,817    (4,207,313)   (1,355,884)   (1,372,524)  105,895,554

Comprehensive income
     Net earnings                                                 6,755,484                                               6,755,484
     Other comprehensive income:
          Unrealized gain on securities, net of tax
          and reclassification adjustment   (2)                                                             1,253,381     1,253,381
                                                                                                                         ----------
          Total comprehensive income                                                                                      8,008,865
                               ---------  -------  -----------  -----------    ----------    ----------      --------   -----------
Balance at June 30, 2001       6,572,757  $71,747  $35,649,711  $83,865,301   ($4,207,313)  ($1,355,884)    ($119,413) $113,904,419
                               =========  =======  ===========  ===========    ==========    ==========      ========   ===========
<FN>

(1)      Net unrealized holding gain on securities of $440,870 (net of $270,211 tax expense) less reclassification adjustment for
         gains included in net earnings of $49,982 (net of $30,634 tax expense).
(2)      Net unrealized holding gain on securities of $3,045,242 (net of $1,866,440 tax expense) less reclassification adjustment
         for gains included in net earnings of $1,791,861 (net of $1,098,238 tax expense).


  See notes to condensed consolidated financial statements.
</FN>
</TABLE>

                                        5
<PAGE>
<TABLE>
<CAPTION>

                                               KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
                                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            FOR THE Nine MONTHS ENDED June 30, 2001 AND 2000
                                                               (Unaudited)


                                                                       Nine Months Ended                        Nine Months Ended
                                                                                June 30,                                 June 30,
                                                                                    2001                                     2000
                                                                          --------------                           --------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                          <C>                                      <C>
    Net earnings                                                              $6,755,484                               $5,829,214

ADJUSTMENTS TO RECONCILE NET EARNINGS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
    Depreciation and amortization                                              2,198,018                                2,206,667
    Provision for deferred taxes                                                      --                                  438,069
    Provision for loan losses                                                    384,000                                  536,000
    Disposition of allowance for loan losses                                    (231,842)                                      --
    Provision for loss on real estate owned                                           --                                  120,000
    Compensation expense related to ESOP benefit                                 905,872                                  829,994
    Compensation expense related to MRDP Trust                                 1,152,775                                1,023,667
    Net amortization of premiums (discounts)  paid on
      investment and mortgage backed and related securities                      207,990                                  213,468
    Decrease in deferred loan fees, net of amortization                       (2,670,625)                                (373,730)
    Accretion of discounts on purchased loans                                      6,737                                    1,541
    Net (gain) loss on sale of real estate owned and
      premises and equipment                                                       8,499                                 (138,814)
    Net gain on sale of investment and mortgage
      backed and related securities                                           (4,160,745)                                  (6,836)
    FHLB stock dividend                                                         (601,400)                                (567,400)
CHANGES IN ASSETS AND LIABILITIES
    Accrued interest receivable                                                  271,823                                 (235,201)
    Other assets                                                              (2,615,003)                                (737,607)
    Accrued interest on deposit liabilities                                        6,207                                  (77,630)
    Accrued interest on borrowings                                               (51,689)                                 912,056
    Pension liabilities                                                           97,947                                   97,947
    Other liabilities                                                            207,271                                   41,650
                                                                          --------------                           --------------
Net cash provided by operating activities                                      1,871,319                               10,113,055
                                                                          --------------                           --------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Proceeds from maturity of investment securities
      available for sale                                                         130,000                                  120,000
    Proceeds from maturity of investment securities
      available for sale                                                      33,000,000                                8,000,000
    Principal repayments received on mortgage
       backed and related securities held to maturity                            368,568                                  298,361
    Principal repayments received on mortgage
       backed and related securities available for sale                       33,027,344                               13,242,770
    Principal repayments received on loans                                    84,457,547                               73,047,471
    Loan originations                                                        (81,303,592)                             (77,154,728)
    Loans sold                                                                18,834,094                                5,347,283
    Purchase of investment securities held to maturity                                --                                 (457,000)
    Purchase of investment securities available
      for sale                                                               (62,725,695)                              (1,110,000)
    Purchase of mortgage backed and related
      securities available for sale                                          (84,359,568)                             (29,396,069)
    Purchase of FHLB stock                                                            --                                 (160,900)
    Proceeds from sale of investment securities
      available for sale                                                      10,367,746                               10,051,563
    Proceeds from sale of mortgage backed and related
      securities available for sale                                          144,259,981                                       --
    Proceeds from sale of real estate owned and
      premises and equipment                                                     801,610                                1,415,866
    Investment in real estate owned                                              (86,741)                                      --
    Purchases of premises and equipment                                       (2,532,213)                              (1,853,652)
                                                                          --------------                           --------------
Net cash provided by investing activities                                     94,239,081                                1,390,965
                                                                          --------------                           --------------
</TABLE>


                                        6

<PAGE>
<TABLE>
<CAPTION>

                                               KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
                                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            FOR THE Nine MONTHS ENDED June 30, 2001 AND 2000
                                                               (Unaudited)
                                                               (Continued)

                                                                        Nine Months Ended                         Nine Months Ended
                                                                                  June 30,                                 June 30,
                                                                                      2001                                     2000
                                                                             -------------                            -------------
<S>                                                                          <C>                                      <C>
CASH FLOWS FROM FINANCING ACTIVITIES
    Increase(decrease) in deposit liabilities,
      net of withdrawals ................................................... $  15,217,371                            ($ 24,175,925)
    Proceeds from FHLB advances ............................................     2,000,000                              585,250,000
    Repayments of FHLB advances ............................................    (7,000,000)                            (560,500,000)
    Proceeds from short term borrowings ....................................     3,400,000                                2,000,000
    Repayments of short term borrowings ....................................    (4,700,000)                                    --
    Stock repurchase and retirement ........................................    (2,284,216)                              (5,084,070)
    Advances from borrowers for taxes and insurance ........................    (4,797,928)                              (2,884,515)
    Dividends paid .........................................................    (2,851,267)                              (2,969,761)
                                                                             -------------                            -------------
Net cash used in financing activities ......................................    (1,016,040)                              (8,364,271)
                                                                             -------------                            -------------
Net increase in cash and cash
  equivalents ..............................................................    95,094,360                                3,139,749

Cash and cash equivalents at beginning
  of period ................................................................    29,946,600                               24,522,589

                                                                             -------------                            -------------
Cash and cash equivalents at end of period ................................. $ 125,040,960                            $  27,662,338
                                                                             =============                            =============
SUPPLEMENTAL SCHEDULE OF INTEREST AND
INCOME
  TAXES PAID
    Interest paid .......................................................... $  30,453,195                            $  29,631,034
    Income taxes paid ......................................................     3,930,000                                3,815,000

SUPPLEMENTAL SCHEDULE OF NONCASH
  INVESTING ACTIVITIES
    Mortgage loans securitized and classified as mortgage-
      backed securities available for sale ................................. $ 190,300,518                            $        --
    Net unrealized gain (loss) on securities
      available for sale ...................................................      (119,143)                                (397,440)
    Dividends declared and accrued in other
      liabilities ..........................................................       932,716                                  970,609


<FN>

    See notes to condensed consolidated financial statements
</FN>
</TABLE>


                                        7
<PAGE>
                   KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.       BASIS OF PRESENTATION

In the opinion of Management,  the accompanying unaudited condensed consolidated
financial  statements contain all adjustments  necessary for a fair presentation
of Klamath First Bancorp,  Inc.'s (the "Company") financial condition as of June
30, 2001 and  September 30, 2000,  the results of  operations  for the three and
nine  months  ended June 30,  2001 and 2000 and cash  flows for the nine  months
ended June 30, 2001 and 2000. Certain information and note disclosures  normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally accepted in the United States of America have been omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
These consolidated  financial  statements should be read in conjunction with the
consolidated  financial  statements and notes thereto  included in the Company's
Annual  Report on Form 10-K.  The results of  operations  for the three and nine
months ended June 30, 2001 are not  necessarily  indicative of the results which
may be expected for the entire fiscal year.

2.       COMPREHENSIVE INCOME

For the three months  ended June 30, 2001,  the  Company's  total  comprehensive
income was $454,666 compared to $1.9 million for the three months ended June 30,
2000.  Total  comprehensive  income for the three months ended June 30, 2001 was
comprised  of net income of $2.1  million and other  comprehensive  loss of $1.7
million,  net of tax. Total comprehensive income for the three months ended June
30, 2000 was  comprised  of net income of $1.9  million and other  comprehensive
loss of $21,607, net of tax.

For the nine months  ended June 30,  2001,  the  Company's  total  comprehensive
income was $8.0 million  compared to $5.4 million for the nine months ended June
30, 2000. Total comprehensive income for the nine months ended June 30, 2001 was
comprised of net income of $6.8 million and other  comprehensive  income of $1.2
million,  net of tax. Total comprehensive  income for the nine months ended June
30, 2000 was  comprised  of net income of $5.8  million and other  comprehensive
loss of $397,440, net of tax.

3.        ALLOWANCE FOR LOAN LOSSES



Activity in the allowance for loan losses is summarized as
follows:
<TABLE>
<CAPTION>
                                                                  Nine Months Ended                          Year Ended
                                                                           June 30,                       September 30,
                                                                               2001                                2000
                                                                     --------------                      --------------
<S>                                                                      <C>                                 <C>
Balance, beginning of period                                             $4,082,265                          $2,483,625
Charge-offs                                                                 (75,594)                           (606,999)
Recoveries                                                                   42,406                             441,639
Provision for loss                                                          384,000                           1,764,000
Dispositions                                                               (231,842)                                 --
                                                                     --------------                      --------------
Balance, end of period                                                   $4,201,235                          $4,082,265
                                                                     ==============                      ==============
</TABLE>

The  disposition  of  allowance  for loan  losses  relates to general  valuation
allowances  allocated to $190.3  million in mortgages  sold to Federal  National
Mortgage  Association  ("FNMA")  during the quarter  ended March 31, 2001.  This
allowance was included in the basis of the loans for  determination of the basis
to be recorded for the resulting mortgage-backed securities ("MBS"). See Note 4.

At June  30,  2001  and  2000,  impaired  loans  totaled  $2,812  and  $478,062,
respectively.  Specifically  allocated loan loss reserves related to these loans
totaled  $2,812 and $32,500,  respectively.  The average  investment in impaired
loans for the three  months and nine  months  ended  June 30,  2001 was $937 and
$44,301,  respectively.  The average  investment in impaired loans for the three
months  and  nine  months  ended  June  30,  2000  was  $478,062  and  $696,227,
respectively.

                                        8
<PAGE>

There were no troubled debt restructurings at June 30, 2001 and 2000, or for the
nine months then ended.

4.       MORTGAGE LOAN SECURITIZATION

During the quarter  ended March 31,  2001,  the Company  sold $190.3  million in
seasoned  fixed-rate single- family loans to FNMA. The mortgages were aggregated
into 14 pools and  securitized  with the  resulting  MBS being  retained  by the
Company  and  classified  as  available  for sale.  Securitization  of the loans
provided more liquid  instruments that could be sold when the market  conditions
were considered  favorable.  Sale of the MBS will reduce the long-term assets in
the Company's portfolio,  thus improving interest rate risk. The loans were sold
with servicing retained by the Company.

Because the Company was retaining an interest in the loans by receiving the MBS,
various items associated with the loans were combined with the principal balance
of the loans to arrive at the  Company's  basis in the MBS.  These items include
deferred  origination fees,  mortgage  servicing rights,  and allowance for loan
losses.  Deferred loan  origination  fees associated with the sold loans totaled
$2.3 million.  The fair value of mortgage  servicing rights was determined using
the  Company's  model,  which  incorporates  the  expected  life  of the  loans,
estimated costs to service the loans,  servicing fees to be received,  and other
factors.  Mortgage  servicing  rights were valued at $1.7  million.  The general
valuation allowance associated with these loans was $231,842. The Company pays a
guarantee fee to FNMA as part of the  securitization and servicing of the loans,
thus  transferring all credit risk to FNMA. The final resulting basis in the MBS
recorded was $185.9  million.  As of June 30, 2001,  $140.0  million in MBS have
been sold with a gain of $4.2 million.

5.       ADVANCES FROM FEDERAL HOME LOAN BANK

Borrowings at June 30, 2001  consisted of one short term advance  totaling $10.0
million and six long term advances totaling $158.0 million from the Federal Home
Loan Bank of Seattle ("FHLB").  The advances are  collateralized in aggregate by
certain  mortgages or deeds of trust and  securities of the U.S.  Government and
agencies thereof.

Scheduled maturities of advances from the FHLB were as follows:
<TABLE>
<CAPTION>


                                               June 30, 2001                                      September 30, 2000
                            --------------------------------------------------     ------------------------------------------------
                                                    Range of          Weighted                            Range of         Weighted
                                                    interest           average                            interest          average
                                    Amount             rates     interest rate             Amount            rates    interest rate
                            -------------------------------- -----------------     --------------   --------------  ---------------
<S>                           <C>                <C>                     <C>         <C>               <C>                    <C>
Due within one year            $10,000,000             4.08%             4.08%         $5,000,000            5.70%            5.70%

After one but within
five years                              --                --                --         10,000,000            6.65%            6.65%

After five but within
ten years                      158,000,000       4.77%-7.05%             5.86%        158,000,000      4.77%-7.05%            5.86%
                            --------------                                         --------------
                              $168,000,000                                           $173,000,000
                            ==============                                         ==============
</TABLE>



6.       SHORT TERM BORROWINGS

Short term  borrowings at June 30, 2001 consisted of $1.7 million in credit line
borrowings from a financial institution at a rate of 6.01%.

                                        9
<PAGE>

7.       COMMITMENTS AND CONTINGENCIES

In the  ordinary  course  of  business,  the  Company  has  various  outstanding
commitments  and  contingencies  that  are  not  reflected  in the  accompanying
consolidated  financial statements.  In addition,  the Company is a defendant in
certain claims and legal actions arising in the ordinary course of business.  In
the opinion of management,  after consultation with legal counsel,  the ultimate
disposition  of these matters is not expected to have a material  adverse effect
on the consolidated financial condition of the Company.

8.       SHAREHOLDERS' EQUITY

In May 2000,  the Company  announced a plan to  repurchase up to five percent of
its common stock over a twelve month  period.  At  completion  of the plan,  the
Company  had  repurchased  294,200  shares,  or  78.32%  of  the  shares  to  be
repurchased, at a weighted average price per share of $11.52.

Subsequent to June 30, 2001,  the Company  issued $15.0 million of floating rate
Trust  Preferred  securities  as a  participant  in a pooled  offering.  Of this
amount,  $10 million will be contributed as capital to the  Association in order
to facilitate the pending branch acquisition (see Note 11).

9.       EARNINGS PER SHARE

Earnings per share ("EPS") is computed in accordance with Statement of Financial
Accounting  Standards ("SFAS") No. 128, "Earnings per Share." Shares held by the
Company's  Employee Stock Ownership Plan ("ESOP") that are committed for release
are considered  contingently issuable shares and are included in the computation
of basic EPS.  Diluted EPS is computed using the treasury  stock method,  giving
effect to potential  additional  common shares that were outstanding  during the
period. Potential dilutive common shares include shares awarded but not released
under the Company's  Management  Recognition and Development Plan ("MRDP"),  and
stock options granted under the Stock Option Plan. Following is a summary of the
effect of dilutive securities on weighted average number of shares (denominator)
for the basic and diluted EPS calculations.  There are no resulting  adjustments
to net earnings.
<TABLE>
<CAPTION>


                                                              For the Three Months Ended
                                                              June  30,          June 30,
                                                                   2001              2000
                                                              ---------         ---------
<S>                                                           <C>               <C>
Weighted average common shares outstanding - basic            6,629,275         6,773,138
                                                              ---------         ---------
Effect of Dilutive Securities on Number of Shares:
MRDP shares                                                      38,239                --
Stock options                                                    65,069                --
                                                              ---------         ---------
Total Dilutive Securities                                       103,308                --
                                                              ---------         ---------
 Weighted average common shares outstanding - with dilution   6,732,583         6,773,138
                                                              =========         =========
</TABLE>


                                       10

<PAGE>
<TABLE>
<CAPTION>

                                                              For the Nine  Months Ended
                                                              June  30,         June 30,
                                                                   2001             2000
                                                              ---------         ---------
<S>                                                           <C>               <C>
Weighted average common shares outstanding - basic            6,616,551         6,855,374
                                                              ---------         ---------
Effect of Dilutive Securities on Number of Shares:
MRDP shares                                                      24,933                --
                                                              ---------         ---------
Total Dilutive Securities                                        24,933                --
                                                              ---------         ---------
Weighted average common shares outstanding-with dilution      6,641,484         6,855,374
 outstanding                                                  =========         =========
</TABLE>

Options  to  purchase   1,036,258  and  916,258  shares  of  common  stock  were
outstanding at June 30, 2001 and 2000,  respectively.  For the nine months ended
June 30, 2001 and the three and nine months ended June 30,  2000,  the effect of
the  options  was not  included  in the  computation  of diluted EPS because the
options'  exercise  prices were  greater  than the average  market  price of the
common shares.

10.      REGULATORY CAPITAL

The following table  illustrates the compliance by Klamath First Federal Savings
and Loan Association (the  "Association") with currently  applicable  regulatory
capital requirements at June 30, 2001:

<TABLE>
<CAPTION>

                                                                                               Categorized as "Well
                                                                                                Capitalized" Under
                                                                     For Capital                 Prompt Corrective
                                         Actual                Adequacy Purposes                 Action Provision
                                ---------------  --------  --------------------- --------- --------------------- ---------

                                         Amount     Ratio                 Amount     Ratio                Amount     Ratio
As of June 30, 2001:               ------------  ----------         ------------ ----------         ------------ ---------
<S>                                <C>              <C>              <C>              <C>            <C>             <C>
 Total Capital:                    $107,361,266     20.7%            $41,548,560      8.0%           $51,935,700     10.0%
  (To Risk Weighted Assets)
 Tier I Capital:                    103,250,296     19.9%                    N/A       N/A            31,161,420      6.0%
  (To Risk Weighted Assets)
 Tier I Capital:                    103,250,296     10.4%             39,765,909      4.0%            49,707,386      5.0%
  (To Total Assets)
 Tangible Capital:                  103,250,296     10.4%             14,912,216      1.5%                   N/A       N/A
  (To Tangible Assets)
</TABLE>

11.      BRANCH ACQUISITION

On May 29, 2001,  the Company  announced,  subject to regulatory  approval,  its
intent to purchase 13 branches from  Washington  Mutual.  Twelve of the branches
are from Western Bank, a division of Washington Mutual. These branches include a
commercial  bank mix of deposits and loans.  The  transaction  also includes one
branch  of  Washington   Mutual  which  included  deposits  and  no  loans.  The
transaction  is scheduled to close in September  2001. The  transaction  will be
accounted for as a purchase under generally accepted accounting principles.  The
purchase  includes  assumption  of  approximately   $416.2  million  in  deposit
liabilities  and purchase of $190.2 million of loans and the branch  facilities.
All current  employees at the  acquired  branches  will become  employees of the
Company.   The  acquired  branches  are  primarily  located  in  coastal  Oregon
communities  with two  branches  in rural  northeastern  Oregon,  extending  the
Association's  market to 26 counties  throughout the state. The Company received
conditional   approval  from  its  primary  regulator,   the  Office  of  Thrift
Supervision, on August 1, 2001.
                                       11
<PAGE>

12.      RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In September 2000, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 140,  "Accounting  for  Transfers  and  Servicing  of  Financial  Assets and
Extinguishments  of  Liabilities."  This  pronouncement  replaces  SFAS No. 125,
issued in June 1996.  SFAS No. 140 is effective  for transfers  occurring  after
March 31, 2001 and for disclosures  relating to securitization  transactions and
collateral for fiscal years ending after December 15, 2000. The adoption of SFAS
No. 140 did not have a material  impact on its financial  position or results of
operations.

In July  2001,  the FASB  issued  SFAS No.  141,  "Business  Combinations."  The
statement  discontinues  the use of the pooling of interest method of accounting
for  business  combinations.   The  statement  is  effective  for  all  business
combinations  initiated  after  June  30,  2001.  Management  has  completed  an
evaluation  of the effects of this  statement  and does not believe that it will
have a material effect on the Company's consolidated financial statements.

In July 2001,  the FASB  issued  SFAS No. 142,  "Goodwill  and Other  Intangible
Assets." The statement  requires  discontinuing the amortization of goodwill and
other intangible assets with indefinite useful lives. Instead, these assets will
be tested  periodically  for  impairment  and written  down to their fair market
value as necessary. This statement is effective for fiscal years beginning after
December 15, 2001,  however,  early  adoption is allowed for companies that have
not  issued  first  quarter  financial   statements.   Management  is  currently
evaluating the impact and the timing of implementation of SFAS No. 140.



                                       12
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations and other portions of this report  contain  certain  "forward-looking
statements" concerning the future operations of Klamath First Bancorp, Inc. (the
"Company") and its subsidiary Klamath First Federal Savings and Loan Association
(the  "Association").  Management desires to take advantage of the "safe harbor"
provisions  of the  Private  Securities  Litigation  Reform  Act of 1995  and is
including this statement for the express  purpose of availing the Company of the
protections  of  such  safe  harbor  with  respect  to  all  "forward-   looking
statements"  contained in this quarterly report.  We have used  "forward-looking
statements" to describe future plans and strategies,  including our expectations
of the  Company's  future  financial  results.  Management's  ability to predict
results or the effect of future plans or  strategies  is  inherently  uncertain.
Factors  which could affect actual  results  include  interest rate trends,  the
general economic climate in the Company's market area and the country as a whole
which could affect the collectibility of loan balances,  the ability to increase
non-interest  income through expansion of new lines of business,  the ability of
the Company to control  costs and  expenses,  competitive  products and pricing,
loan  delinquency  rates,  and  changes in federal and state  regulation.  These
factors should be considered in evaluating the "forward-looking statements," and
undue reliance should not be placed on such statements.

General

The  Company,  an Oregon  corporation,  is the unitary  savings and loan holding
company  for  Klamath  First   Federal   Savings  and  Loan   Association   (the
"Association").  At June 30, 2001, the Company had total consolidated  assets of
$1.0  billion  and  consolidated  shareholders'  equity of $113.9  million.  The
Company is currently not engaged in any business activity other than holding the
stock of the Association. Accordingly, the information set forth in this report,
including  financial  statements  and related  data,  relates  primarily  to the
Association.

The   Association  is  a  progressive,   community-oriented   savings  and  loan
association  that focuses on customer  service  within its primary  market area.
Accordingly,  the Association is primarily  engaged in attracting  deposits from
the general  public  through  its  offices  and using those and other  available
sources of funds to originate  permanent  residential  one- to four-family  real
estate  loans and loans on  commercial  real  estate,  multi-family  residential
properties,  and to consumers and small businesses within its market area. While
the Association has historically  emphasized fixed rate mortgage lending, it has
been  diversifying  its loan  portfolio by focusing on increasing  the number of
originations  of  commercial  real  estate,   multi-family   residential  loans,
residential  construction loans, small business loans and non-mortgage  consumer
loans.  A  significant  portion of these newer loan  products  carry  adjustable
rates,  higher  yields,  or  shorter  terms  than  the  traditional  fixed  rate
mortgages.  This  lending  strategy  is  designed  to enhance  earnings,  reduce
interest rate risk, and provide a more complete  range of financial  services to
customers and the local communities served by the Association.

The Company has announced the acquisition of 13 branches from Washington Mutual.
These branches are in Oregon  locations  which  complement  the existing  branch
network.  The loans and deposits acquired with these branches will help move the
Company  towards  a  more  bank-like  profile,   with  a  higher  percentage  of
non-interest bearing deposits and commercial loans.

Net  interest  income,  which is the  difference  between  interest and dividend
income on interest-earning  assets,  primarily loans and investment  securities,
and interest expense on interest-bearing  deposits and borrowings,  is the major
source of profit for the Company.  Because the Company depends  primarily on net
interest  income for its earnings,  the focus of the Company's  management is to
create and  implement  strategies  that will provide  stable,  positive  spreads
between the yield on  interest-earning  assets and the cost of  interest-bearing
liabilities. Such strategies include the Association's expansion of its consumer
and  commercial  loan  products.  To a lesser  degree,  the net  earnings of the
Company  rely  on  the  level  of  its  non-interest   income.  The  Company  is
aggressively  pursuing  strategies to improve its service charge and fee income,
and control its non-interest  expense,  which includes employee compensation and
benefits,  occupancy  and  equipment  expense,  deposit  insurance  premiums and
miscellaneous other expenses.

                                       13

<PAGE>

As part of the strategy to reduce  interest rate risk,  the Company  securitized
$190.3  million  of  single  family  loans  through  Federal  National  Mortgage
Association  ("FNMA")  during the quarter  ended March 31, 2001.  The  resulting
mortgage-backed  securities  ("MBS") were retained by the Company and classified
as available for sale.  As of June 30, 2001,  $140.0  million of the  securities
were sold with a gain of $4.2 million.

The Association is regulated by the Office of Thrift Supervision ("OTS") and its
deposits  are insured up to  applicable  limits  under the  Savings  Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation ("FDIC").

The Association is a member of the Federal Home Loan Bank of Seattle, conducting
its  business  through 36 office  facilities,  with the main  office  located in
Klamath  Falls,  Oregon.  A new branch was opened in Redmond,  Oregon during the
third  quarter.  The Company has also announced its agreement with retailer Wal-
Mart to place  branches  in  certain  of the  Wal-Mart  locations  in Oregon and
Washington  state. The first of these branches,  in Pendleton,  Oregon opened in
June 2001 with another in Ontario,  Oregon  scheduled to be in operation  before
the  fiscal  year end.  Two more  in-store  branches  are  scheduled  to open in
Washington  state  before  December 31,  2001.  The primary  market areas of the
Association  are the state of  Oregon  and  adjoining  areas of  California  and
Washington.

Market Risk and Asset/Liability Management

Because  the  majority of the  Company's  assets  have  historically  been 15 to
30-year fixed rate mortgages which were funded by shorter term liabilities,  the
Company's  interest rate risk sensitivity has been high. In order to reduce that
sensitivity,  the Company completed a loan  securitization,  as discussed above.
The  impact  of this  transaction  can be seen in the  following  comparison  of
interest rate sensitivity at September 30, 2000 and June 30, 2001. Subsequent to
June 30,  2001,  additional  MBS were  sold,  which  should  result  in  further
reductions in interest rate sensitivity.

<TABLE>
<CAPTION>
         PROJECTED CHANGES IN NET PORTFOLIO VALUE
         as of September 30, 2000

         Change in                          NPV               Sensitivity
         Interest Rates                     Ratio             Measure
                                                              (Basis points)
         -----------------------------      ----------        --------------
<S>      <C>                                    <C>                    <C>
         200 basis point rise                   10.79%                 (352)
         100 basis point rise                   12.61%                 (170)
         Base Rate Scenario                     14.31%                   --
         100 basis point decline                15.20%                   89
         200 basis point decline                14.81%                   50
<CAPTION>

         PROJECTED CHANGES IN NET PORTFOLIO VALUE
         as of June 30, 2001

         Change in                          NPV               Sensitivity
         Interest Rates                     Ratio             Measure
                                                              (Basis points)
         -----------------------------      ----------        --------------
<S>      <C>                                    <C>                    <C>
         200 basis point rise                    9.58%                 (177)
         100 basis point rise                   10.93%                  (41)
         Base Rate Scenario                     11.34%                   --
         100 basis point decline                11.85%                   50
         200 basis point decline                10.81%                  (54)

</TABLE>





                                       14
<PAGE>

Changes in Financial Condition

At June 30, 2001, the  consolidated  assets of the Company totaled $1.0 billion,
up slightly from $995.6 million at September 30, 2000.

Net loans  receivable  decreased by $210.3 million to $518.7 million at June 30,
2001, from $729.0 million at September 30, 2000.  During the quarter ended March
30,  2001,  the Company  converted  $190.3  million in fixed rate single  family
mortgages to MBS through a  securitization  transaction  with FNMA. In addition,
the Company has sold $18.8 million in single family  mortgage  loans to FNMA and
other lenders during the nine months ended June 30, 2001, further reducing loans
receivable.

Investment  securities increased $20.6 million, or 17.58% from $117.4 million at
September  30,  2000 to $138.0  million  at June 30,  2001.  This  increase  was
primarily the result of purchase of investment securities available for sale.

During the nine  months  ended June 30,  2001,  the Company  securitized  $190.3
million of loans,  with the  resulting  retained MBS  recorded as available  for
sale.  Of these MBS,  $140.0  million were sold during the period.  In addition,
$84.4 million of MBS were  purchased and $33.4 million was received in principal
repayments on MBS,  resulting in an overall  increase in the balance of MBS from
$77.5 million at September 30, 2000 to $179.1 million at June 30, 2001.

Other  assets  increased  by $2.5  million,  or  159.19%,  from $1.6  million at
September  30, 2000 to $4.1 million at June 30, 2001.  The increase is primarily
due to the recording of $1.7 million in mortgage servicing rights related to the
loans sold to FNMA during the period.

Deposit  liabilities  increased $15.2 million,  or 2.19%, from $695.4 million at
September 30, 2000 to $710.6 million at June 30, 2001. The increase reflects the
Company's  marketing  efforts and the public's  movement of funds to investments
more secure than the volatile equity markets.

Advances  from  borrowers for taxes and  insurance  decreased  $4.8 million from
September  30, 2000 to June 30,  2001.  The  decrease is the result of using the
reserves to pay the required  real estate taxes due on the  Association's  loans
receivable portfolio in November.

The Company's total borrowings decreased $6.3 million from September 30, 2000 to
June 30, 2001.  Borrowings  from the FHLB and borrowings on  correspondent  bank
credit lines were reduced with proceeds from the sale of MBS.

Total shareholders' equity increased $5.2 million, or 4.76%, from $108.7 million
at  September  30, 2000 to $113.9  million at June 30, 2001.  This  increase was
primarily the result of earnings of $6.8 million and a $1.3 million  increase in
the unrealized gains on securities  available for sale, partially offset by $2.3
million reduction due to repurchase and retirement of shares and payment of $2.6
million in common stock dividends for the nine month period.


                                       15

<PAGE>

Results of Operations

         Comparison of Nine Months Ended June 30, 2001 and 2000

General.  The FNMA loan  securitization  and sale of a portion of the MBS helped
increase  net  earnings to $6.8  million for the nine months ended June 30, 2001
compared to $5.8 million for the same period of 2000.

Interest  Income.  Interest income  decreased by $2.4 million as the result of a
$46.8  million  decrease in average  interest  earning  assets.  Yield on assets
remained  consistent  from June 30, 2000 to June 30,  2001.  Interest  income on
loans receivable  decreased $6.1 million,  or 14.27%, from $42.9 million for the
nine months  ended June 30,  2000 to $36.8  million for the same period of 2001.
This  decrease  was a result of the $122.0  million  decrease  in average  loans
receivable due to the loan  securitization  in February 2001.  Since these loans
were converted to MBS, a corresponding  $4.1 million increase in interest income
on MBS is noted for the period. Investments matured and funds were reinvested in
federal  funds and were also used to reduce  borrowings.  The  average  yield on
interest  earning  assets  increased 2 basis points to 7.22% for the nine months
ended June 30, 2001  compared to 7.20% for the same period  ended June 30, 2000.
Interest  rate  spread  (the  difference  between  the rates  earned on interest
earning  assets and the rates paid on interest  bearing  liabilities)  decreased
from 2.54% to 2.29% and interest  rate margin (net  interest  income  divided by
average  interest  earning  assets)  decreased from 3.17% to 3.00% comparing the
nine month periods.

Interest Expense.  Total interest expense remained consistent comparing the nine
months ended June 30, 2001 to the same period in 2000. While the average balance
of  deposits  decreased  by $10.7  million,  the  average  rate paid on deposits
increased  by 37 basis points  resulting in a $1.4 million  increase in interest
expense on deposit  liabilities.  The average  balance of  borrowings  decreased
$39.0  million  from $214.2  million for the nine months  ended June 30, 2000 to
$175.2 million for the same period ended June 30, 2001.  However,  the rate paid
on borrowings  increased by 15 basis points from 5.82% for the nine months ended
June 30, 2000 to 5.97% for the same period in 2001.

Provision for Loan Losses.  The provision for loan losses was $384,000 and there
were  $75,594 of charge  offs and $42,406 of  recoveries  during the nine months
ended June 30, 2001  compared to a $536,000  provision  with  $389,267 of charge
offs and  $347,424 of  recoveries  during the nine months  ended June 30,  2000.
During  the  quarter  ended  March  31,  2001,  the  allowance  for loan  losses
associated  with  the  mortgage  loans  sold to  FNMA,  totaling  $231,842,  was
transferred  from the  allowance  accounts  as a  disposition.  The  balance  of
non-performing loans has decreased during the current fiscal year as the Company
has foreclosed on properties and sold them. The Company is not  anticipating any
material loss on the remaining non-performing loans at this time.

Non-Interest Income.  Non-interest income increased $5.0 million, or 167.87%, to
$8.0  million for the nine months  ended June 30, 2001 from $3.0 million for the
nine months ended June 30, 2000.  The most  significant  factor in this increase
was the sale of MBS  resulting  from the loan  securitization  at a gain of $4.2
million.  However,  even  ignoring the effect of the gain on sale,  non-interest
income increased  $841,881,  or 28.18%, over the same period last year. Fees and
service charges continued to improve,  increasing by 28.88% over the same period
last year due to an increase in deposit  accounts subject to service charges and
increased loan servicing  income.  Income from sale of mortgage loans and retail
investment  activities can be seen in the 44.32% increase in other  non-interest
income from $530,112 for the nine months ended June 30, 2000 to $765,073 for the
nine months ended June 30, 2001.

                                       16
<PAGE>

Non-Interest Expense. Non-interest expense increased $1.8 million, or 10.28%, to
$18.9  million for the nine months ended June 30, 2001,  from $17.1  million for
the comparable  period in 2000.  Compensation,  employee  benefits,  and related
expense  increased  $965,846,  or 11.38%  from $8.5  million for the nine months
ended June 30, 2000 to $9.5  million for the same period in 2001.  The  increase
primarily  relates to modest  salary  increases and the addition of employees as
new corporate  initiatives  were enacted.  The ratio of non-interest  expense to
average total assets was 2.51% and 2.17% for the nine months ended June 30, 2001
and 2000, respectively.

Income Taxes.  The provision  for income taxes  increased  $174,440 for the nine
months ended June 30, 2001 compared with the prior year.  The effective tax rate
was 35.20% for the nine months  ended June 30,  2001  compared to 37.48% for the
same period of 2000.  The decrease in effective  tax rate is primarily due to an
increase  in income on  tax-exempt  municipal  securities  and  $270,000  in tax
refunds  received  during this fiscal year  related to amended tax returns for a
prior year.


                                       17
<PAGE>

         Comparison of Three Months Ended June 30, 2001 and 2000

General.  Basic  earnings per share  increased  from $0.28 for the quarter ended
June 30,  2000 to $0.32  for the same  period  of  2001.  Net  income  increased
$189,174,  or 9.82%,  from $1.9 million for the three months ended June 30, 2000
to $2.1 million for the three months ended June 30, 2001.  This increase was the
combined result of a $1.7 million gain on sale of MBS and a $482,375 increase in
other  non-interest  income  offset by a decrease in net interest  income and an
increase in non-interest expense.

Interest Income.  The Company  recorded  interest income of $16.8 million in the
third  quarter  ended June 30, 2001, a decrease of 7.97% from $18.2  million for
the same period last year.  Average  interest  earning assets decreased by $46.1
million and yield  decreased  from 7.24% for the quarter  ended June 30, 2000 to
6.98%  for the same  period of 2001.  Yields  increased  on both  loans and MBS,
comparing the quarter ended June 30, 2001 to the same period last year.

Interest  Expense.  Total interest expense  decreased from $10.4 million for the
quarter ended June 30, 2000 to $9.9 million for the same period of 2001. Average
deposits  increased  by $6.2 million  comparing  the three months ended June 30,
2000 to 2001,  while the  average  interest  paid on  interest-bearing  deposits
increased 22 basis points from 4.34% for the three months ended June 30, 2000 to
4.56% for the same period  ended June 30,  2001.  These  factors  resulted in an
increase of $391,342,  or 5.59%, in interest on deposit  liabilities,  comparing
the quarter  ended June 30,  2000 to 2001.  The  average  balance of  borrowings
decreased $52.2 million, from $222.0 million for the three months ended June 30,
2000 to $169.8  million for the same period ended June 30, 2001,  resulting in a
decrease in interest on  borrowings  of $880,027 for the three months ended June
30, 2001  compared  with the same period ended June 30,  2000.  The rate paid on
borrowings  decreased by 24 basis  points from 6.10% for the quarter  ended June
30, 2000 to 5.86% for the same period in 2001.

Provision  for Loan Losses.  The  provision for loan losses was $3,000 and there
were $28,347 of charge offs,  and $7,540 of  recoveries  during the three months
ended June 30, 2001  compared to a $228,000  provision  with  $238,300 of charge
offs and $755 of  recoveries  during the three months  ended June 30,  2000.  As
noted above,  the $231,842 of the allowance for loan losses was  transferred out
as part of the basis of loans  sold to FNMA and  securitized  during  the second
quarter ended March 31, 2001.  The Company's  analysis of the allowance for loan
losses  shows  the  reserves  to  be  adequate  without  significant  additional
provision at this time.

Non-Interest Income.  Non-interest income increased $2.2 million, or 208.92%, to
$3.2  million for the three months ended June 30, 2001 from $1.0 million for the
three months ended June 30, 2000. Again, the $1.7 million gain on sale of MBS is
the primary cause of the increase. However, income from fees and service charges
continues to show  growth,  increasing  by 48.80% from  $812,006 for the quarter
ended June 30, 2000 to $1.2 million for the current quarter.

Non-Interest Expense. Non-interest expense increased $1.2 million, or 21.26%, to
$6.9 million for the three months ended June 30, 2001,  from $5.7 million in the
comparable  period  in  2000.  The  most  significant  increases  were  noted in
compensation,   employee  benefits  and  related  expense,  and  other  expense.
Compensation  expense  increased due to annual salary increases and the addition
of staff at three new  branches,  Central  Point in August 2000,  Redmond in May
2001,  and the  Pendleton  Wal Mart  branch in June  2001.  There have also been
additions of management  personnel to help  implement  the  Company's  strategic
initiatives.  Other  expense  increased  due to increases  in general  operating
expenses  and  approximately  $34,000 in one-time  expenses for  consulting  and
executive search fees. The ratio of non-interest expense to average total assets
was  2.73%  and  2.16%  for the  three  months  ended  June 30,  2001 and  2000,
respectively.

Income Taxes.  The provision  for income taxes  increased  $41,766 for the three
months ended June 30, 2001 compared with the prior year.  The effective tax rate
was 33.91% for the quarter  ended June 30, 2001  compared to 35.14% for the same
period of 2000.  The  decrease  in  effective  tax rate is  primarily  due to an
increase in income on tax-exempt municipal securities.

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<PAGE>

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

          The Company is involved in various claims and legal actions arising in
          the  normal  course  of  business.   Management  believes  that  these
          proceedings will not result in a material loss to the Company.


Item 2.  Changes in Securities

         Not applicable.


Item 3.  Defaults Upon Senior Securities

         Not applicable.


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

         Not applicable.

Item 5.  Other Information

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         a)  Not applicable.

         b) During the  quarter  ended  June 30, 2001  the  Company  filed  the
                following Current Reports on Form 8-K:
                Form 8-K dated April 25, 2001 describing the Company's corporate
                        vision
                Form 8-K dated May 31, 2001 announcing the Company's  intent  to
                        purchase 13 branches from Washington Mutual.




                                       19
<PAGE>

                                   SIGNATURES


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

                                                    KLAMATH FIRST BANCORP, INC.

Date:    August 14, 2001                             By:   /s/ Kermit K. Houser
                                                -------------------------------
                                                Kermit K. Houser, President and
                                                        Chief Executive Officer


Date:    August 14, 2001                       By:   /s/ Marshall Jay Alexander
                                                -------------------------------
                               Marshall Jay Alexander, Executive Vice President
                                                    and Chief Financial Officer



                                       20