**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**










**FORM
      10-QSB**




(Mark
      One)





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      quarterly period ended December 31, 2006





OR





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For
      the
      transition period from ______________ to _____________




Commission
      file number: 0-51514




**EQUITABLE
      FINANCIAL CORP.**


(Exact
      name of small business issuer as specified in its charter)


**United
                States**
            
            **14-1941649**(State or other jurisdiction of
                incorporation or organization)
            
            (I.R.S. Employer Identification
                No.)




**113
      North Locust Street, Grand Island, Nebraska 68801**


(Address
      of principal executive offices)





**(308)
      382-3136**


(Issuer’s
      telephone number)




**Not
      Applicable**


(Former
      name, former address and former fiscal year, if changed since last
      report)





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.




Yes
x  No
o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).




Yes
o No
x





As
      of
      February 13, 2007 there were 3,297,509 shares of the registrant’s common stock
      outstanding.





Transitional
      Small Business Disclosure Format (Check one):




Yes
o  No
x







**EQUITABLE
      FINANCIAL CORP.**





**FORM
      10-QSB**





**Index**


***Page
                  No.*****PART
                  I. FINANCIAL INFORMATION**Item
                  1. Financial Statements
              1Consolidated
                  Statements of Financial Condition at December 31, 2006(Unaudited)
                  and year ended June 30, 2006
              1Consolidated
                  Statements of Operations for the three and six months
                  endedDecember
                  31, 2006 and 2005 (Unaudited)
              2Consolidated
                  Statements of Stockholders’ Equity and Comprehensive
                  Incomefor
                  the six months ended December 31, 2006 and 2005
                  (Unaudited)
              3Consolidated
                  Statements of Cash Flows for the six months endedDecember
                  31, 2006 and 2005 (Unaudited)
              4Notes
                  to Consolidated Unaudited Financial Statements
              5Item
                  2. Management’s Discussion and Analysis
              11Item
                  3. Quantitative and Qualitative Disclosures About Market
                  Risk
              19Item
                  4. Controls and Procedures
              20**PART
                  II. OTHER INFORMATION**Item
                  1. Legal Proceedings
              21Item
                  1a. Risk Factors
              21Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              23Item
                  3. Defaults upon Senior Securities
              23Item
                  4. Submission of Matters to a Vote of Security Holders
              23Item
                  5. Other Information
              24Item
                  6. Exhibits
              24**Signatures**
              25


i


**PART
      I. FINANCIAL INFORMATION**





**Item
      1. Financial Statements**




E QUITABLE
      FINANCIAL CORP.


Statements
      of Financial Condition


(Unaudited)





**December
                31, 2006**
            
            **June
                30,**
              **2006****ASSETS**Cash
                and due from financial institutions
            
            $
            3,254,960
            
            $
            2,392,931Federal
                funds sold
            
            
            -
            
            
            1,700,000Cash
                and cash equivalents
            
            
            3,254,960
            
            
            4,092,931Securities
                available-for-sale, at fair value
            
            
            7,290,357
            
            
            9,429,663Securities
                held-to-maturity, fair value at December 31, 2006 -$811,189;
                and June 30, 2006-$888,342
            
            
            818,674
            
            
            915,184Federal
                Home Loan Bank stock, at cost
            
            
            2,379,000
            
            
            2,311,800Loans,
                net of allowance for loan losses of $927,911 at December 31,2006
                and $926,312 at June 30, 2006
            
            
            161,870,996
            
            
            153,408,146Premises
                and equipment, net
            
            
            6,977,645
            
            
            6,067,331Foreclosed
                assets, net
            
            
            82,900
            
            
            -Accrued
                interest receivable
            
            
            1,225,315
            
            
            1,153,751Other
                assets
            
            
            2,057,833
            
            
            1,382,255Total
                assets
            
            $
            185,957,680
            
            $
            178,761,061**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**LiabilitiesDepositsNoninterest-bearing
                deposits
            
            $
            5,881,248
            
            $
            5,748,057Interest-bearing
                deposits
            
            
            116,354,005
            
            
            116,173,516Total
                deposits
            
            
            122,235,253
            
            
            121,921,573Federal
                Home Loan Bank borrowings
            
            
            37,775,054
            
            
            30,604,426Advance
                payments from borrowers for taxes and insurance
            
            
            947,494
            
            
            893,846Accrued
                interest payable and other liabilities
            
            
            403,626
            
            
            246,540Common
                stock in ESOP subject to contingent repurchase obligation
            
            
            131,318
            
            
            61,033Commitments
                and contingencies
            
            
            -
            
            
            -Total
                liabilities
            
            
            161,492,745
            
            
            153,727,418Stockholders’
                equity:Preferred
                stock, $0.01 par value per share; authorized 1,000,000 shares, noshares
                are outstanding
            
            
            -
            
            
            -Common
                stock, $0.01 par value, 14,000,000 shares authorized; 3,297,509shares
                issued and outstanding at December 31, 2006 and June 30,
                2006.
            
            
            32,975
            
            
            32,975Additional
                paid-in capital
            
            
            13,619,629
            
            
            13,617,427Retained
                earnings
            
            
            12,195,366
            
            
            12,820,516Accumulated
                other comprehensive loss, net
            
            
            (70,857
            )
            
            (149,962
            )Unearned
                ESOP shares
            
            
            (1,180,860
            )
            
            (1,226,280
            )Reclassification
                of ESOP shares
            
            
            (131,318
            )
            
            (61,033
            )Total
                stockholders’ equity
            
            
            24,464,935
            
            
            25,033,643Total
                liabilities and stockholders’ equity
            
            $
            185,957,680
            
            $
            178,761,061




*See
      Notes to the Unaudited Consolidated Financial Statements.*


1


EQUITABLE
      FINANCIAL CORP.


Statements
      of Operations


(Unaudited)




**Three
                Months Ended**
              **December
                31,**
            
            **Six
                Months Ended**
              **December
                31,****2006**
            
            **2005**
            
            **2006**
            
            **2005****Interest
                Income**Loans
            
            $
            2,494,152
            
            $
            2,082,999
            
            $
            4,874,046
            
            $
            3,909,747Securities
            
            
            125,860
            
            
            158,428
            
            
            262,778
            
            
            314,126Other
            
            
            12,113
            
            
            12,190
            
            
            26,868
            
            
            21,223Total
                interest income
            
            
            2,632,125
            
            
            2,253,617
            
            
            5,163,692
            
            
            4,245,096**Interest
                Expense**Deposits
            
            
            1,172,571
            
            
            826,431
            
            
            2,259,099
            
            
            1,519,888Federal
                Home Loan Bank borrowings
            
            
            504,189
            
            
            436,163
            
            
            963,463
            
            
            867,663****Total
                interest expense
            
            
            1,676,760
            
            
            1,262,594
            
            
            3,222,562
            
            
            2,387,551**Net
                interest income**
            
            
            955,365
            
            
            991,023
            
            
            1,941,130
            
            
            1,857,545Provision
                for loan losses
            
            
            30,000
            
            
            30,000
            
            
            60,000
            
            
            60,000**Net
                interest income after provision for loan losses**
            
            
            925,365
            
            
            961,023
            
            
            1,881,130
            
            
            1,797,545**Non-interest
                income**Service
                charges on deposit accounts
            
            
            83,935
            
            
            58,099
            
            
            159,749
            
            
            111,442Gain
                on sale of investments
            
            
            -
            
            
            340,394
            
            
            -
            
            
            340,394Brokerage
                fee income
            
            
            189,786
            
            
            162,836
            
            
            342,070
            
            
            366,614Gain
                (loss) on sale of loans
            
            
            35,563
            
            
            (142,992
            )
            
            54,892
            
            
            (142,992
            )Other
                loan fees
            
            
            20,768
            
            
            43,997
            
            
            40,573
            
            
            109,456Other
                income
            
            
            25,566
            
            
            24,218
            
            
            50,255
            
            
            59,496Total
                non-interest income
            
            
            355,618
            
            
            486,552
            
            
            647,539
            
            
            844,410**Non-interest
                expenses******Salaries
                and employee benefits
            
            
            1,086,650
            
            
            881,752
            
            
            1,988,756
            
            
            1,597,047Director
                and committee fees
            
            
            24,450
            
            
            24,450
            
            
            48,900
            
            
            48,900Data
                processing fees
            
            
            64,883
            
            
            80,855
            
            
            137,256
            
            
            184,883Occupancy
                and equipment
            
            
            269,303
            
            
            202,685
            
            
            508,575
            
            
            408,411Regulatory
                fees and deposit insurance premium
            
            
            19,011
            
            
            14,434
            
            
            33,917
            
            
            29,021Advertising
                and public relations
            
            
            64,310
            
            
            68,704
            
            
            146,752
            
            
            157,211Contributions
                and donations
            
            
            17,784
            
            
            782,240
            
            
            39,303
            
            
            804,205Insurance
                and surety bond premiums
            
            
            26,417
            
            
            21,673
            
            
            51,581
            
            
            42,835Professional
                fees
            
            
            123,899
            
            
            52,559
            
            
            233,238
            
            
            109,451Supplies,
                telephone, postage
            
            
            75,305
            
            
            60,913
            
            
            144,460
            
            
            115,795ATM
                expenses
            
            
            7,235
            
            
            9,087
            
            
            16,904
            
            
            17,247Dues
                and subscriptions
            
            
            8,700
            
            
            11,671
            
            
            22,065
            
            
            29,258Other
                expenses
            
            
            100,259
            
            
            64,964
            
            
            166,404
            
            
            121,108Total
                non-interest expenses
            
            
            1,888,206
            
            
            2,275,987
            
            
            3,538,111
            
            
            3,665,372**(Loss)
                before income taxes**
            
            
            (607,233
            )
            
            (828,412
            )
            
            (1,009,442
            )
            
            (1,023,417
            )Income
                tax benefit
            
            
            (255,296
            )
            
            (316,618
            )
            
            (384,292
            )
            
            (399,217
            )**Net
                loss**
            
            $
            (351,927
            )
            $
            (511,794
            )
            $
            (625,150
            )
            $
            (624,200
            )**Basic
                and diluted loss per share**
            
            $
            (0.11
            )
            $
            (0.16
            )
            $
            (0.20
            )
            $
            (0.20
            )





*See
      Notes to the Unaudited Consolidated Financial Statements* *.*


2


EQUITABLE
      FINANCIAL CORP.


Consolidated
      Statements of Stockholders’ Equity and Comprehensive Income


Six
      Months Ended December 31, 2006 and 2005


(Unaudited)





**Common**
              **Stock**
            
            **Additional**
              **Paid-In**
              **Capital**
            
            **Retained**
              **Earnings**
            
            **Unearned**
              **ESOP
                Shares**
            
            **Accumulated**
              **Other**
              **Comprehensive**
              **Income
                (Loss)**
            
            **Amount**
              **Reclassified**
              **On
                ESOP**
              **Shares**
            
            **Total**Balance
                at June 30, 2005
            
            $
            -
            
            $
            -
            
            $
            13,889,317
            
            $
            -
            
            $
            473,301
            
            $
            -
            
            $
            14,362,618Distribution
                to Capitalize Equitable FinancialMHC
            
            
            -
            
            
            -
            
            
            (100,000
            )
            
            -
            
            
            -
            
            
            -
            
            
            (100,000
            )Issuance
                of common stock, net of offering costs
            
            
            32,348
            
            
            13,106,839
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            13,139,187Purchase
                of 129,262 shares of ESOP
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,292,620
            )
            
            -
            
            
            -
            
            
            (1,292,620
            )Donation
                of 62,653 shares to Equitable CharitableFoundation
            
            
            627
            
            
            625,903
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            626,530Comprehensive
                income (loss):Net
                income loss
            
            
            -
            
            
            -
            
            
            (624,200
            )
            
            -
            
            
            -
            
            
            -
            
            
            (624,200
            )Net
                decrease in fair value of securitiesclassified
                as available-for-sale, netof
                income taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (333,219
            )
            
            -
            
            
            (333,219
            )Total
                comprehensive loss, net
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (957,419
            )Release
                of 2,092 unearned ESOP shares
            
            
            -
            
            
            -
            
            
            -
            
            
            20,920
            
            
            -
            
            
            -
            
            
            20,920Reclassification
                due to release and change in fairvalue
                of common stock in ESOP subject tocontingent
                repurchase obligation of ESOP shares
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (19,874
            )
            
            (19,874
            )Balance
                at December 31, 2005
            
            $
            32,975
            
            $
            13,732,742
            
            $
            13,165,117
            
            $
            (1,271,700
            )
            $
            140,082
            
            $
            (19,874
            )
            $
            25,799,216Balance
                at June 30, 2006
            
            
            32,975
            
            
            13,617,427
            
            
            12,820,516
            
            
            (1,226,280
            )
            
            (149,962
            )
            
            (61,033
            )
            
            25,033,643Comprehensive
                income (loss):Net
                income loss
            
            
            -
            
            
            -
            
            
            (625,150
            )
            
            -
            
            
            -
            
            
            -
            
            
            (625,150
            )Net
                increase in fair value of securitiesclassified
                as available-for-sale, net of incometaxes
                and reclassification adjustments
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            79,105
            
            
            -
            
            
            79,105Total
                comprehensive loss, net
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (546,045
            )Release
                of 4,542 unearned ESOP shares
            
            
            -
            
            
            2,202
            
            
            -
            
            
            45,420
            
            
            -
            
            
            -
            
            
            47,622Reclassification
                due to release and change in fairvalue
                of common stock in ESOP subject tocontingent
                repurchase obligation of ESOP shares
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (70,285
            )
            
            (70,285
            )Balance
                at December 31, 2006
            
            $
            32,975
            
            $
            13,619,629
            
            $
            12,195,366
            
            $
            (1,180,860
            )
            $
            (70,857
            )
            $
            (131,318
            )
            $
            24,464,935




*See
      Notes to the Unaudited Consolidated Financial
      Statements.*


3


EQUITABLE
      FINANCIAL CORP.


Consolidated
      Statements of Cash Flows


(Unaudited)





**Six
                Months Ended**
              **December
                31,****2006**
            
            **2005****Cash
                flows from operating activities:**Net
                loss
            
            $
            (625,150
            )
            $
            (624,200
            )Adjustments
                to reconcile net loss to net cash from operating activities:Depreciation
            
            
            192,598
            
            
            109,630Amortization
                of premiums and discounts
            
            
            7,078
            
            
            18,333Federal
                Home Loan Bank stock dividends
            
            
            (67,200
            )
            
            (50,354
            )Charitable
                Foundation donation
            
            
            -
            
            
            626,530ESOP
                expense
            
            
            47,622
            
            
            20,920Deferred
                loan origination costs, net
            
            
            (20,699
            )
            
            143,016Provision
                for loan losses
            
            
            60,000
            
            
            60,000Gain
                on sale of loans
            
            
            (54,892
            )
            
            142,972Loans
                originated for sale
            
            
            (3,925,324
            )
            
            -Proceeds
                from sale of loans
            
            
            4,086,243
            
            
            -Gain
                on sale of stock
            
            
            -
            
            
            (340,394
            )Loss
                on transfer of foreclosed asset
            
            
            (51,673
            )
            
            -Change
                in:Accrued
                interest receivable
            
            
            (71,564
            )
            
            (169,307
            )Other
                assets
            
            
            (653,543
            )
            
            (356,988
            )Accrued
                interest payable and other liabilities
            
            
            157,086
            
            
            (68,984
            )Net
                cash from operating activities
            
            
            (919,418
            )
            
            (488,626
            )**Cash
                flows from investing activities:**Net
                change in loans
            
            
            (8,661,210
            )
            
            (30,047,761
            )Proceeds
                from sale of loans
            
            
            -
            
            
            6,328,580Proceeds
                from sale of stock
            
            
            -
            
            
            346,076Securities
                available-for-saleProceeds
                from principal repayments
            
            
            2,218,411
            
            
            1,110,665Securities
                held-to-maturityProceeds
                from principal repayments
            
            
            89,202
            
            
            194,823Purchases
                of Federal Home Loan Bank stock
            
            
            -
            
            
            (214,046
            )Purchase
                of premises and equipment
            
            
            (1,102,912
            )
            
            (366,573
            )Net
                cash from investing activities
            
            
            (7,456,509
            )
            
            (22,648,236
            )**Cash
                flows from financing activities:**Net
                change in deposits
            
            
            313,680
            
            
            15,765,939Proceeds
                from Federal Home Loan Bank borrowings
            
            
            34,100,000
            
            
            51,200,000Repayments
                of Federal Home Loan Bank borrowings
            
            
            (26,929,372
            )
            
            (52,017,988
            )Net
                change in advance payments from borrowers for taxes and
                insurance
            
            
            53,648
            
            
            115,693Net
                proceeds from initial stock offering
            
            
            -
            
            
            13,139,187Purchase
                of ESOP shares
            
            
            -
            
            
            (1,292,620
            )Distribution
                to capitalize Equitable Financial MHC
            
            
            -
            
            
            (100,000
            )Net
                cash from financing activities
            
            
            7,537,956
            
            
            26,810,211Increase/decrease
                in cash and cash equivalents
            
            
            (837,971
            )
            
            3,673,149Cash
                and cash equivalents, beginning of period
            
            
            4,092,931
            
            
            2,159,699Cash
                and cash equivalents, end of period
            
            $
            3,254,960
            
            $
            5,832,848**Supplemental
                cash flow information:**Interest
                paid on deposits and borrowings
            
            $
            3,155,253
            
            $
            2,373,605Income
                taxes paid
            
            
            -
            
            
            80,133**Supplemental
                noncash disclosure:**Common
                stock in ESOP subject to contingent repurchase obligation
            
            $
            131,318
            
            $
            19,874Transfer
                of loan to foreclosed real estate
            
            
            82,900
            
            
            -





*See
      notes to the Unaudited Consolidated Financial
      Statements*


4


**EQUITABLE
      FINANCIAL CORP.**


**Notes
      to the Unaudited Consolidated Financial Statements**


**December
      31, 2006**





**(1)**  **Basis
      of Presentation**





Equitable
      Financial Corp. (“Equitable Financial” or the “Company”) was organized as a
      federal corporation at the direction of Equitable Bank (the “Bank”) in
      connection with the mutual holding company reorganization of the Bank. The
      reorganization was completed on November 8, 2005. In the reorganization,
      Equitable Financial sold 43.1% of its outstanding shares of common stock
      (1,421,226 shares) to the public, contributed 1.9% of its outstanding shares
      of
      common stock (62,653 shares) plus $100,000 in cash to the Equitable Bank
      Charitable Foundation and issued 55% of its outstanding shares of common stock
      (1,813,630 shares) to Equitable Financial MHC, the mutual holding company of
      the
      Bank. In addition, a contribution of $100,000 was made to capitalize Equitable
      Financial MHC. In connection with the reorganization, the Bank changed its
      name
      to Equitable Bank from Equitable Savings Bank of Grand Island. Costs incurred
      in
      connection with the common stock offering (approximately $1.2 million) were
      recorded as a reduction of the proceeds from the offering. Net proceeds from
      the
      common stock offering amounted to approximately $13.0 million.





The
      unaudited consolidated financial statements as of and for the period ended
      December 31, 2006 include the accounts of Equitable Financial and its wholly
      owned subsidiary, the Bank. The Company, through the Bank, operates in a single
      business segment, providing traditional banking services through its office
      network. The financial statements for the periods prior to November 8, 2005
      include only the accounts of the Bank, as the Company was not in existence
      during such period.





The
      accompanying unaudited consolidated financial statements have not been audited
      by independent auditors. All significant intercompany accounts and transactions
      have been eliminated in consolidation. All adjustments that are, in the opinion
      of management, necessary for the fair presentation of the interim financial
      statements have been included. Such adjustments were of a normal recurring
      nature. The unaudited consolidated financial statements have been prepared
      in
      accordance with U.S. generally accepted accounting principles for interim
      financial information in accordance with instructions to Form 10-QSB and Article
      10 of Regulation S-X promulgated by the Securities and Exchange Commission
      and,
      therefore, do not include all of the information and notes required for a
      complete audited financial statements. The unaudited consolidated financial
      statements should be read in conjunction with the audited consolidated financial
      statements and notes thereto included in our Annual Report on Form 10-KSB for
      the year ended June 30, 2006. The results of operations for the three and
      six-month periods ended December 31, 2006 are not necessarily indicative of
      the
      results that may be expected for the entire year or any other interim period.





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 and the disclosure
      of
      contingent assets and liabilities at the date of the financial statements and
      income and expenses during the reporting period. Actual results could differ
      significantly from those estimates. Material estimates that are particularly
      susceptible to significant change in the near term relate to determination
      of
      the allowance for loan losses, deferred tax valuation and the fair values of
      financial instruments.





Certain
      prior period amounts have been reclassified to correspond with the current
      period presentations.




5




**(2)**  **Critical
      Accounting Policies**





*Allowance
      for loan losses* .
      The
      allowance for loan losses is the amount estimated by management as necessary
      to
      cover probable incurred credit losses in the loan portfolio at the statement
      of
      financial condition date. The allowance is established through the provision
      for
      loan losses, which is charged to income. Determining the amount of the allowance
      for loan losses necessarily involves a high degree of judgment. Among the
      material estimates required to establish the allowance are the following: loss
      exposure at default; the amount and timing of future cash flows on impacted
      loans; value of collateral; and determination of loss factors to be applied
      to
      the various elements of the portfolio. All of these estimates are susceptible
      to
      significant change. Management reviews the level of the allowance on a quarterly
      basis and establishes the provision for loan losses based upon an evaluation
      of
      the portfolio, past loss experience, current economic conditions and other
      factors related to the collectibility of the loan portfolio. Although we believe
      that we use the best information available to establish the allowance for loan
      losses, future adjustments to the allowance may be necessary if economic
      conditions differ substantially from the assumptions used in making the
      evaluation. In addition, the Office of Thrift Supervision, as an integral part
      of its examination process, periodically reviews our allowance for loan losses.
      Such agency may require us to recognize adjustments to the allowance based
      on
      its judgments about information available to it at the time of its examination.
      A large loss could deplete the allowance and require increased provisions to
      replenish the allowance, which would negatively affect earnings.





*Mortgage
      Servicing Rights.* The
      estimated value of mortgage servicing rights are capitalized upon the sale
      of
      loans. The estimated value takes into consideration contractually known amounts,
      such as loan balance, term and interest rate. These estimates are impacted
      by
      loan prepayment speeds, servicing costs, and discount rates used to compute
      a
      present value of the cash flow stream. Changes in these estimates impact fair
      value and could require the creation of a valuation allowance or recovery.
      The
      fair value of mortgage servicing rights is highly sensitive to changes in
      assumptions. Changes in prepayment speed assumptions have the most significant
      impact on the fair value of mortgage servicing rights. Generally, as interest
      rates decline, prepayments accelerate with increased refinance activity, which
      results in a decrease in the fair value of mortgage servicing rights. As
      interest rates rise, prepayments generally slow, which results in an increase
      in
      the fair value of mortgage servicing rights. All estimates are reviewed for
      reasonableness on a quarterly basis and adjusted as necessary to reflect current
      and anticipated market conditions. Thus, any measurement of fair value is
      limited by the conditions existing and the assumptions utilized as of a
      particular point in time, and those assumptions may not be appropriate if
      applied at a different point in time.





**(3)**  **Earnings
      Per Share**





Basic
      earnings (loss) per share are computed by dividing income available to common
      stockholders by the weighted average number of common stock outstanding for
      the
      period. Weighted
      average common shares outstanding during the period includes allocated and
      committed-to-be-released employee stock ownership plan shares. D iluted
      earnings (loss) per share shows the dilutive effect, if any, of additional
      common shares issuable under stock options. The Company has no common stock
      equivalents; consequently, basic and diluted earnings (loss) per share are
      the
      same.




**Three
                Months**
              **Ended
                December 31,**
            
            **Six
                Months Ended**
              **December
                31,****2006**
            
            **2005**
            
            **2006**
            
            **2005****(Dollars
                in thousands)**Net
                loss
            
            $
            (351,927
            )
            $
            (511,794
            )
            $
            (625,150
            )
            $
            (624,200
            )Weighted
                average sharesoutstanding
                for the quarter
            
            
            3,177,152
            
            
            3,168,247
            
            
            3,176,017
            
            
            3,168,247Loss
                per share
            
            $
            (0.11
            )
            $
            (0.16
            )
            $
            (0.20
            )
            $
            (0.20
            )




6




The
      2005
      earnings per share calculation is based on the earnings of the Company from
      November 8, 2005, the date of the initial public offering of the Company,
      through December 31, 2005.





**(4)**  **Loan
      Portfolio Composition**





We
      originate commercial business (including agriculture), consumer, one-to
      four-family residential, multi-family and non-residential real estate and
      construction loans. Recently, we have increased our emphasis on originating
      non-residential real estate, construction and commercial business
      loans.





The
      following table sets forth the composition of our loan portfolio at the dates
      indicated.





**December
                31, 2006**
            
            **June
                30, 2006****Amount**
            
            **Percent**
            
            **Amount**
            
            **Percent****(Dollars
                in thousands)**Real
                estate-mortgage:One-
                to four-family
            
            $
            76,217
            
            
            46.9
            %
            $
            80,031
            
            
            52.0
            %Multi-family
            
            
            6,935
            
            
            4.3
            
            
            7,480
            
            
            4.9Nonresidential
            
            
            36,208
            
            
            22.3
            
            
            30,169
            
            
            19.6Total
                real estate-mortgage loans
            
            
            119,360
            
            
            73.5
            
            
            117,680
            
            
            76.5Construction
            
            
            5,904
            
            
            3.6
            
            
            3,790
            
            
            2.5Commercial
            
            
            22,237
            
            
            13.7
            
            
            17,480
            
            
            11.3Consumer:Home
                equity
            
            
            11,845
            
            
            7.3
            
            
            12,287
            
            
            8.0Other
                consumer
            
            
            3,061
            
            
            1.9
            
            
            2,726
            
            
            1.7Total
                consumer loans
            
            
            14,906
            
            
            9.2
            
            
            15,013
            
            
            9.7Total
                loans
            
            
            162,407
            
            
            100.0
            %
            
            153,963
            
            
            100.0
            %Deferred
                loan origination costs, net
            
            
            392
            
            
            
            
            
            371Allowance
                for loan losses
            
            
            (928
            )
            
            
            
            
            (926
            )Loans,
                net
            
            $
            161,871
            
            
            
            
            $
            153,408





**(5)**  **Allowance
      for Loan Losses**





The
      allowance for loan losses is a valuation allowance for probable incurred credit
      losses in the loan portfolio. We evaluate the allowance for loan losses on
      a
      quarterly basis. When additional allowances are necessary, a provision for
      loan
      losses is charged to earnings.




7




The
      following table summarizes the activity in the provision for loan losses for
      the
      three and six months ended December 31, 2006 and 2005.




**Three
                months ended**
              **December
                31,**
            
            **Six
                months ended December 31,****2006**
            
            **2005**
            
            **2006**
            
            **2005****(Dollars
                in thousands)**Allowance
                at beginning of period
            
            $
            955
            
            $
            887
            
            $
            926
            
            $
            786Provision
                for loan losses
            
            
            30
            
            
            30
            
            
            60
            
            
            60Charge-offs
            
            
            (57
            )
            
            (5
            )
            
            (58
            )
            
            (14
            )Recoveries
            
            
            ─
            
            
            1
            
            
            ─
            
            
            81Allowance
                at end of period
            
            $
            928
            
            $
            913
            
            $
            928
            
            $
            913Allowance
                to nonaccrual loans
            
            
            416.1
            %
            
            186.3
            %
            
            416.1
            %
            
            186.3
            %Allowance
                to total loans outstanding at the end of the period
            
            
            0.6
            
            
            0.6
            
            
            0.6
            
            
            0.6Net
                charge-offs to average loans outstanding during the period
            
            
            0.0
            
            
            0.0
            
            
            0.0
            
            
            0.0





**(6)**  **Deposits**





Our
      primary source of funds is our deposit accounts, which are comprised of
      noninterest-bearing accounts, interest-bearing NOW accounts, money market
      accounts, savings accounts and certificates of deposit.





The
      following table sets forth the balances of our deposit products at the dates
      indicated.





**December
                31, 2006**
            
            **June
                30, 2006****Amount**
            
            %
            
            **Amount**
            
            %**(Dollars
                in thousands)**Noninterest-bearing
                accounts
            
            $
            5,881
            
            
            4.8
            %
            $
            5,748
            
            
            4.7
            %Interest-bearing
                NOW
            
            
            12,338
            
            
            10.1
            
            
            11,542
            
            
            9.5Money
                market
            
            
            8,288
            
            
            6.8
            
            
            5,878
            
            
            4.8Savings
                accounts
            
            
            4,256
            
            
            3.5
            
            
            4,445
            
            
            3.6Certificates
                of deposit
            
            
            91,472
            
            
            74.8
            
            
            94,309
            
            
            77.4Total
            
            $
            122,235
            
            
            100.0
            %
            $
            121,922
            
            
            100.0
            %




**(7)** **Investment
        and mortgage-backed securities**





The
      carrying value, gross unrealized gains and losses and fair value of investment
      and mortgage-backed securities by major security category at December 31, 2006,
      and June 30, 2006 are as follows:





**December
                31, 2006****Amortized
                Cost**
            
            **Gross
                Unrealized Gains**
            
            **Gross
                Unrealized Losses**
            
            **Fair
                Value**Available-for-sale:Mortgage-backed
                securities
            
            $
            1,864,613
            
            $
            12,520
            
            $
            41,681
            
            $
            1,835,452U.S.
                government securities andagency
                obligations
            
            
            4,540,222
            
            
            -
            
            
            69,694
            
            
            4,470,528Municipal
                obligations
            
            
            992,879
            
            
            257
            
            
            8,759
            
            
            984,377Total
                investment and mortgage-backed
                securities, available-for-sale
            
            $
            7,397,714
            
            $
            12,777
            
            $
            120,134
            
            $
            7,290,357




8




**June
                30, 2006****Amortized
                Cost**
            
            **Gross
                Unrealized Gains**
            
            **Gross
                Unrealized Losses**
            
            **Fair
                Value**Available-for-sale:Mortgage-backed
                securities
            
            $
            2,068,332
            
            $
            12,486
            
            $
            78,697
            
            $
            2,002,121U.S.
                government securities andagency
                obligations
            
            
            6,595,797
            
            
            -
            
            
            133,577
            
            
            6,462,220Municipal
                obligations
            
            
            992,748
            
            
            -
            
            
            27,426
            
            
            965,322Total
                investment and mortgage-backed
                securities, available-for-sale
            
            $
            9,656,877
            
            $
            12,486
            
            $
            239,699
            
            $
            9,429,663





Management
      believes that all unrealized losses as of December 31, 2006, are market-related,
      with no impairments. The unrealized losses are believed to be due to movements
      in interest rates and temporary in nature. As of December 31, 2006, we have
      the
      ability and intent to hold these securities to maturity. ****





**(8)**  **Employee
      Stock Ownership Plan**





On
      November 8, 2005, the Company adopted an employee stock ownership plan (the
      “ESOP”) for the benefit of substantially all employees. The ESOP borrowed
      approximately $1.3 million from the Company and used those funds to acquire
      129,262 shares of the Company’s stock in connection with the reorganization at a
      price of $10.00 per share.





Shares
      purchased by the ESOP with the loan proceeds are held in a suspense account
      and
      are allocated to ESOP participants on a pro rata basis as principal and interest
      payments are made by the ESOP to the Company. The loan is secured by shares
      purchased with the loan proceeds and will be repaid by the ESOP with funds
      from
      the Company’s discretionary contributions to the ESOP and earnings on ESOP
      assets. Annual principal and interest payments of approximately $145,000 are
      to
      be made by the ESOP.





We
      account for our ESOP in accordance with Statement of Position 93-6, *Employers’
      Accounting for Employee Stock Ownership Plans* .
      Accordingly, as shares are committed to be released from collateral, we report
      employee compensation expense equal to the average market price of the shares
      and the shares become outstanding for earnings per share (“EPS”)
      computations. Divi dends
      on
      allocated ESOP shares reduce retained earnings; dividends on unearned ESOP
      shares reduce accrued interest. Because participants may require the Company
      to
      purchase their ESOP shares upon termination of their employment, the appraised
      fair value of all earned and allocated ESOP shares may become a
      liability.




9




**For
                the Three Months Ended December 31,**
            
            **For
                the Six Months Ended December 31,****2006**
            
            **2005**
            
            **2006**
            
            **2005**ESOP
                compensation expense
            
            $
            26,684
            
            $
            19,351
            
            $
            47,622
            
            $
            19,351ESOP
                shares allocated to employees
            
            
            2,271
            
            
            2,092
            
            
            4,542
            
            
            2,092ESOP
                shares unallocated
            
            
            118,086
            
            
            127,170
            
            
            118,086
            
            
            127,170Fair
                value of ESOP shares unallocated
            
            $
            1,387,511
            
            $
            1,208,115
            
            $
            1,387,511
            
            $
            1,208,115





**(9)**  **Equity
      Incentive Plan**





In
      November 2006, the Company’s stockholders approved the Equitable Financial Corp.
      Equity Incentive Plan. The plan provides for the grant of options and stock
      awards to directors, officers, and employees of the Company. Under the terms
      of
      the Plan, 226,208 shares of the Company’s common stock were reserved for
      issuance. Of the 226,208 shares of common stock, 161,577 shares were reserved
      for issuance upon the exercise of stock options and 64,631 shares were
      registered for restricted stock awards. As of December 31, 2006 no options
      or
      shares have been granted.





When
      the
      Company commences the restricted stock award program, compensation expense
      will
      be recognized over the vesting period of the shares based on the market value
      of
      the Company’s common stock at the issue date. The unamortized cost of shares not
      yet vested is reported as a reduction of stockholders’ equity. No compensation
      expense has been recorded pertaining to this Plan as of December 31, 2006 as
      the
      Company has not implemented the stock award program.





**(10)**  **Recent
      Accounting Pronouncements**





In
      June
      2006, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”),
      which was issued to require that all tax positions be evaluated using consistent
      criteria and measurement and further supplemented by enhanced disclosure. FIN
      48, an interpretation of FASB Statement No. 109, “Accounting for Income Taxes,”
prescribes the minimum recognition threshold a tax position is required to
      meet
      before being recognized in the financial statements. This interpretation
      provides clear criteria for subsequently recognizing, derecognizing and
      measuring such tax positions for financial statement purposes, as well as
      provides guidance on accrual of interest and penalties, accounting in interim
      periods, disclosure and transition. FIN 48 is effective for fiscal years
      beginning after December 15, 2006 or January 1, 2007 for calendar year-end
      companies. Differences between the amounts recognized in the statements of
      financial position prior to the adoption of FIN 48 and the amounts reported
      after adoption would be accounted for as a cumulative-effect adjustment recorded
      to the beginning balance of retained earnings. The cumulative-effect adjustment
      would not apply to those items that would not have been recognized in earnings,
      such as the effect of adopting FIN 48 on tax positions related to business
      combinations. The Company is currently evaluating the impact of the statement
      on
      its financial position, results of operations and liquidity.





In
      September 2006, the FASB issued FASB Statement No. 157, “Fair Value
      Measurements,” to provide guidance on how to measure fair value, which would
      apply broadly to financial and non-financial assets and liabilities that are
      measured at fair value under other authoritative accounting pronouncements.
      The
      statement defines fair value, provides a hierarchy that prioritizes inputs
      that
      should be used in valuation techniques used to measure fair value, and expands
      current disclosures about the use of fair value to measure assets and
      liabilities. The disclosures focus on the methods used for the measurements
      and
      their effect on earnings and would apply whether the assets were measured at
      fair value in all periods, such as trading securities, or in only some periods,
      such as for impaired assets. A transition adjustment would be recognized as
      a
      cumulative-effect adjustment to beginning retained earnings for the fiscal
      year
      in which the statement is initially adopted. This adjustment is measured as
      the
      difference between the carrying amounts and the fair values of those financial
      instruments at the date of adoption. The statement is effective for fiscal
      years
      beginning after November 15, 2007 (or January 1, 2008 for calendar-year
      companies) and interim periods within those fiscal years. The Company will
      adopt
      the statement on January 1, 2008. The fair value disclosures required by this
      statement will be effective for the first interim period in which the statement
      is adopted. The Company is currently evaluating the impact of the statement
      on
      its financial position, results of operations and liquidity.




10




In
      September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) 108, which was
      issued to address the diversity in practice in quantifying financial statement
      misstatements and the potential under current practices for the build up of
      improper amounts on the balance sheet. The Company is in the process of
      evaluating the potential impact of the standard for future periods.





Also
      in
      September 2006, under EITF 06-5: Accounting for Purchases of Life Insurance
      -
      Determining the Amount That Could be Realized in Accordance with FASB Technical
      Bulletin No. 85-4, “Accounting for Purchases of Life Insurance,” the task force
      reached a consensus that a policyholder should consider any additional amounts
      included in the contractual terms of the policy in determining the amount that
      could be realized under the insurance contract. The task force agreed that
      contractual limitations should be considered when determining the realizable
      amounts. Those amounts that are recoverable by the policyholder at the
      discretion of the insurance company should be excluded from the amount that
      could be realized. The task force also agreed that fixed amounts that are
      recoverable by the policyholder in future periods in excess of one year from
      the
      surrender of the policy should be recognized at their present value. The task
      force also reached a consensus that a policyholder should determine the amount
      that could be realized under the life insurance contract assuming the surrender
      of an individual-life by individual life policy. The task force also noted
      that
      any amount ultimately realized by the policyholder upon the assumed surrender
      of
      the final policy shall be included in the amount that could be realized under
      the insurance contract. The issue should be effective for fiscal years beginning
      after December 15, 2006, but early adoption is permitted. The Company is
      currently evaluating the impact of this interpretation on its financial
      condition and results of operations.





**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation**





Management’s
      discussion and analysis of the financial condition and results of operations
      at
      and for the three and six months ended December 31, 2006 and 2005 is intended
      to
      assist in understanding the financial condition and results of operations of
      the
      Company. The information contained in this section should be read in conjunction
      with the Unaudited Consolidated Financial Statements and the notes and tables
      thereto, appearing in Part I, Item 1 of this document.





**Forward-Looking
      Statements**





This
      quarterly report contains forward-looking statements that are based on
      assumptions and may describe future plans, strategies and expectations of
      Equitable Financial MHC, Equitable Financial and Equitable Bank. These
      forward-looking statements are generally identified by use of the words
“believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar
      expressions.





Equitable
      Financial MHC, Equitable Financial and Equitable Bank’s ability to predict
      results or the actual effect of future plans or strategies is inherently
      uncertain. Factors which could have a material adverse effect on the operations
      of Equitable Financial and its subsidiary include, but are not limited to,
      changes in interest rates, national and regional economic conditions,
      legislative and regulatory changes, monetary and fiscal policies of the U.S.
      government, including policies of the U.S. Treasury and the Federal Reserve
      Board, the quality and composition of the loan or investment portfolios, demand
      for loan products, deposit flows, competition, demand for financial services
      in
      Equitable Financial and Equitable Bank’s market area, changes in real estate
      market values in Equitable Financial and Equitable Bank’s market area, changes
      in relevant accounting principles and guidelines and inability of third party
      service providers to perform.




11




These
      risks and uncertainties should be considered in evaluating forward-looking
      statements and undue reliance should not be placed on such statements. Except
      as
      required by applicable law or regulation, Equitable Financial does not
      undertake, and specifically disclaims any obligation, to release publicly the
      result of any revisions that may be made to any forward-looking statements
      to
      reflect events or circumstances after the date of the statements or to reflect
      the occurrence of anticipated or unanticipated events.





**General**





Equitable
      Financial was organized on November 8, 2005 in connection with the Bank’s mutual
      holding company reorganization. The information as of and for the three and
      six
      months ended December 31, 2006 includes Equitable Financial’s information. The
      information in this report for the periods prior to November 8, 2005 and
      including the financial statements and related financial data, relates to the
      Bank only.





The
      Company is headquartered in Grand Island, Nebraska and is a community-oriented
      financial institution dedicated to serving the financial services needs of
      consumers and businesses within our market areas, including North Platte and
      Omaha. The Bank is engaged primarily in the business of attracting deposits
      from
      the general public and using such funds to originate one-to four-family
      residential real estate loans. To a lesser extent, we originate multi-family
      and
      nonresidential real estate loans, construction loans, commercial loans and
      consumer loans.





The
      Federal Deposit Insurance Corporation, through the Deposit Insurance Fund,
      insures the Bank’s savings accounts up to the applicable legal limits. The Bank
      is a member of the Federal Home Loan Bank System.





**Statement
      of Financial Condition Analysis**





***Overview*** **.** Total
      assets at December 31, 2006 were $186.0 million, an increase of $7.2 million
      or
      4.0% from total assets of $178.8 million at June 30, 2006. Total liabilities
      at
      December 31, 2006 were $161.5 million, compared to $153.7 million at June 30,
      2006, an increase of $8.3 million or 5.4%. Stockholders’ equity at December 31,
      2006 was $24.5 million compared to $25.0 million at June 30, 2006, a decrease
      of
      $500,000 or 2.0%.





***Loans.*** ** We
      originate commercial business (including agriculture), consumer, one-to
      four-family residential, multi-family and non-residential real estate and
      construction loans. Recently, we have increased our emphasis on originating
      non-residential real estate, construction and commercial business loans. Loans,
      net increased $8.5 million, or 5.5%, to $161.9 million at December 31, 2006
      compared to $153.4 million at June 30, 2006. The increase was primarily the
      result of loan originations generated in our expanded branch network in Grand
      Island, North Platte and Omaha, Nebraska.




12




***Non-performing
      Assets.*** The
      following table provides information with respect to our non-performing assets
      at the dates indicated. The Company had no troubled debt restructurings during
      the quarter ended December 31, 2006. There were no accruing loans past due
      90
      days or more for the period ended December 31, 2006.





**December
                31, 2006**
            
            **June
                30,**
              **2006****(Dollars
                in thousands)**Non-accrual
                loans:Real
                estate-mortgage
            
            $
            223
            
            $
            452Consumer
            
            
            ─
            
            
            38Total
                non-accrual loans
            
            
            223
            
            
            490Loans
                90 days, still on accrual
            
            
            ─
            
            
            65Foreclosed
                assets, net
            
            
            83
            
            
            ─Total
                non-performing assets
            
            $
            306
            
            $
            555Total
                non-performing loans to total loans
            
            
            0.1
            %
            
            0.3
            %Total
                non-performing loans to total assets
            
            
            0.1
            
            
            0.3Total
                non-performing assets to total assets
            
            
            0.2
            
            
            0.3





Non-accrual
      loans decreased $267,000 to $223,000 at December 31, 2006, compared to $490,000
      at June 30, 2006.





Foreclosed
      assets increased $83,000 during the period ended December 31, 2006 which
      represented one real estate foreclosure.





***Securities.*** Our
      securities portfolio consists primarily of U.S. Government-sponsored entity
      securities and mortgage-backed securities. Securities available-for-sale
      decreased $2.1 million, or 22.7%, between June 30, 2006 and December 31, 2006.
      The decrease was the result of maturities in the portfolio of $2.0 million
      and a
      decrease in the market value of the portfolio of $96,000. Securities
      held-to-maturity decreased $97,000, or 10.5%, between June 30, 2006 and December
      31, 2006. This decrease was the result of repayments of $95,000 and net
      amortization of $2,000. The Company evaluates its securities with significant
      declines in fair value on a quarterly basis to determine whether they should
      be
      considered temporarily or other than temporarily impaired. The unrealized losses
      on investments is attributable to changes in interest rates, rather than credit
      quality, and the Company has the ability and management intent to hold these
      securities until a market price recovery or maturity.





***Deposits.*** Our
      primary source of funds is our deposit accounts, which are comprised of
      noninterest-bearing accounts, interest-bearing NOW accounts, money market
      accounts, savings accounts and certificates of deposit. Total deposits increased
      to $122.2 million from $121.9 million during the six months ended December
      31,
      2006, an increase of $313,000 or 0.3%. Although core deposits increased $3.2
      million, or 11.4%, certificates decreased $2.8 million or 3.0%. The decreased
      in
      certificates was primarily the result of a decrease in brokered certificates
      from $17.4 million at June 30, 2006 to $12.0 million at December 31, 2006,
      partially offset by an increase in certificates due to new branch
      locations.





***Borrowings*** .
      We
      utilize borrowings from the Federal Home Loan Bank of Topeka to supplement
      our
      supply of funds for loans and investments. **** Federal
      Home Loan Bank borrowings increased **** $7.2
      million to $37.8 million at December 31, 2006 from $30.6 million at June 30,
      2006. The increase was in floating rate advances, which the Company believes
      is
      the most favorable funding product that coincides with its interest rate
      projections. The advances outstanding at December 31, 2006 mature in 2006
      through 2015.




13




**Results
      of Operations for the Three Months Ended December 31, 2006 and
      2005**





***Overview.*** We
      recorded a net loss of $352,000 during the three months ended December 31,
      2006,
      compared to a net loss of $512,000 during the three months ended December 31,
      2005. The loss was due primarily to **** the
      additional expenses incurred from our new facilities in Grand Island, North
      Platte and Omaha, and increases in professional fees due to the conversion
      to
      stock ownership of our Company.





***Net
      Interest Income.*** The
      following table summarizes changes in interest income and expense for the three
      months ended December 31, 2006 and 2005.





**Three
                Months**
              **Ended
                December 31,****2006**
            
            **2005**
            
            **%
                Change****(Dollars
                in Thousands)****Interest
                Income:**Loans
            
            $
            2,494
            
            $
            2,083
            
            
            19.7
            %Securities
            
            
            126
            
            
            159
            
            
            (20.8
            )Other
            
            
            12
            
            
            12
            
            
            ─Total
                interest income
            
            
            2,632
            
            
            2,254
            
            
            16.8**Interest
                Expense:**Deposits
            
            
            1,173
            
            
            827
            
            
            41.8Federal
                Home Loan Bankborrowings
            
            
            504
            
            
            436
            
            
            15.6Total
                interest expense
            
            
            1,677
            
            
            1,263
            
            
            32.8Net
                interest income
            
            $
            955
            
            $
            991
            
            
            (3.6
            )%




The
      following table summarizes average balances and average yield and costs for
      the
      three months ended December 31, 2006 and 2005.





**Three
                months ended December 31,****2006**
            
            **2005****Average**
              **Balance**
            
            **Interest
                Income**
            
            **Yield/**
              **Cost**
            
            **Average**
              **Balance**
            
            **Interest
                Income**
            
            **Yield/**
              **Cost****(Dollars
                in thousands)**Loans,
                net
            
            $
            159,077
            
            $
            2,494
            
            
            6.3
            %
            $
            146,648
            
            $
            2,083
            
            
            5.7
            %Securities
                and other
            
            
            11,114
            
            
            138
            
            
            5.0
            
            
            15,548
            
            
            171
            
            
            4.4Total
                interest-bearing assets
            
            
            170,191
            
            
            2,632
            
            
            6.2
            
            
            162,196
            
            
            2,254
            
            
            5.6Total
                interest-bearing deposits
            
            
            113,960
            
            
            1,173
            
            
            4.1
            
            
            113,657
            
            
            827
            
            
            2.9FHLB
                borrowings
            
            
            36,972
            
            
            504
            
            
            5.5
            
            
            35,013
            
            
            436
            
            
            5.0Total
                interest-bearing liabilities
            
            
            150,932
            
            
            1,677
            
            
            4.4
            
            
            148,670
            
            
            1,263
            
            
            3.4Interest
                rate spread
            
            
            
            
            
            
            
            
            1.8
            
            
            
            
            
            
            
            
            2.2Net
                interest margin
            
            
            
            
            
            
            
            
            2.3
            
            
            
            
            
            
            
            
            2.4




14




Net
      interest income for the three months ended December 31, 2006 decreased $36,000,
      or 3.6%, compared to the same period last year, as a result of a decrease in
      the
      interest rate spread of 0.4% and a decrease in net interest margin of 0.1%.
      The
      decrease in interest rate spread is due to the rising rate environment causing
      the Company’s cost of funds to increase.





***Provision
      for Loan Losses.*** The
      allowance for loan losses is a valuation allowance for probable incurred credit
      losses in the loan portfolio. We evaluate the allowance for loan losses on
      a
      quarterly basis. When additional allowances are necessary, a provision for
      loan
      losses is charged to earnings. The charge-offs for the three months ended
      December 31, 2006 represented the write off of real estate loans relating to
      one
      customer. This charge-off of $57,000 was recorded to arrive at the net
      realizable value of $83,000 for the foreclosed asset.





***Non-interest
      Income.***   During
      the quarter ended December 31, 2006 non-interest income decreased $131,000
      from
      the comparable period in 2005. For the three months ended December 31, 2005,
      a
      gain of $340,000 was recorded on the sale of Freddie Mac common stock; no such
      sales were made during the same period of 2006. This loss of non-interest income
      was offset by a gain on sale of loans of $36,000 during the period ended 2006
      compared to a loss during 2005 of $143,000. In addition the bank had an increase
      of $26,000 in service charges on deposit accounts for the period ended December
      31, 2006. These increases were the result of the Banks recent decision to sell
      substantially all fixed rate mortgage loans when originated and the increased
      deposit activity created by our new branches.





***Non-interest
      Expenses.***  Total
      non-interest expenses decreased **** $388,000,
      or 17.0%, for the three months ended December 31, 2006, from the three months
      ended December 31, 2005. During 2005, a contribution expense of $726,000 was
      recorded in connection with the establishment of the Equitable Charitable
      Foundation, no comparable expenditures were made in 2006. Increases in salaries
      and employee benefits of $205,000 and in occupancy and equipment of $67,000
      occurred during the period ended December 31, 2006. These increases were the
      result of operating three recently added facilities in Omaha, North Platte
      and
      Grand Island. The Company also recorded increases in professional fees of
      $71,000 and supplies, telephone and postage of $14,000 due to the public
      ownership of the Company. Additionally, an increase in state sales and use
      tax
      expense, due to an audit by the Nebraska Department of Revenue, contributed
      $21,000 to the increase in other expense.





***Income
      Taxes.*** The
      Company recorded a tax benefit of $255,000 during the three months ended
      December 31, 2006 compared to a tax benefit of $317,000 during the three months
      ended December 31, 2005. The tax benefits at December 31, 2006 and 2005 were
      calculated based on the tax items and the operating loss recorded during the
      respective quarters.





**Results
      of Operations for the Six Months Ended December 31, 2006 and
      2005**





***Overview.*** We
      recorded a net loss of $625,000 during the six months ended December 31, 2006,
      compared to a net loss of $624,000 during the six months ended December 31,
      2005. The loss was due primarily to **** the
      additional expenses incurred from our new facilities in Grand Island, North
      Platte and Omaha, and increases in professional fees due to the conversion
      to
      stock ownership of our Company.





***Net
      Interest Income.*** The
      following table summarizes changes in interest income and expense for the six
      months ended December 31, 2006 and 2005.





15




**Six
                Months**
              **Ended
                December 31,****2006**
            
            **2005**
            
            **%
                Change****(Dollars
                in Thousands)****Interest
                Income:**Loans
            
            $
            4,874
            
            $
            3,910
            
            
            24.7
            %Securities
            
            
            263
            
            
            314
            
            
            (16.2
            )Other
            
            
            27
            
            
            21
            
            
            28.6Total
                interest income
            
            $
            5,164
            
            $
            4,245
            
            
            21.6
            %**Interest
                Expense:**Deposits
            
            $
            2,259
            
            $
            1,519
            
            
            48.7
            %Federal
                Home Loan BankBorrowings
            
            
            963
            
            
            868
            
            
            10.9Total
                interest expense
            
            $
            3,222
            
            $
            2,387
            
            
            35.0
            %Net
                interest income
            
            $
            1,942
            
            $
            1,858
            
            
            4.5
            %





The
      following table summarizes average balances and average yield and costs for
      the
      six months ended December 31, 2006 and 2005.





**Six
                months ended December 31,****2006**
            
            **2005****Average**
              **Balance**
            
            **Interest
                Income**
            
            **Yield/**
              **Cost**
            
            **Average**
              **Balance**
            
            **Interest
                Income**
            
            **Yield/**
              **Cost****(Dollars
                in thousands)**Loans,
                net
            
            $
            156,496
            
            $
            4,874
            
            
            6.2
            %
            $
            138,213
            
            $
            3,910
            
            
            5.7
            %Securities
                and other
            
            
            11,933
            
            
            290
            
            
            4.9
            
            
            15,825
            
            
            335
            
            
            4.4Total
                interest-bearing assets
            
            
            168,429
            
            
            5,164
            
            
            6.1
            
            
            154,038
            
            
            4,245
            
            
            5.5Total
                interest-bearing deposits
            
            
            112,668
            
            
            2,259
            
            
            4.0
            
            
            105,437
            
            
            1,519
            
            
            2.9FHLB
                borrowings
            
            
            36,010
            
            
            963
            
            
            5.4
            
            
            35,235
            
            
            868
            
            
            5.0Total
                interest-bearing liabilities
            
            
            148,678
            
            
            3,222
            
            
            4.3
            
            
            140,672
            
            
            2,387
            
            
            3.4Interest
                rate spread
            
            
            
            
            
            
            
            
            1.8
            
            
            
            
            
            
            
            
            2.1Net
                interest margin
            
            
            
            
            
            
            
            
            2.3
            
            
            
            
            
            
            
            
            2.4




Net
      interest income for the six months ended December 31, 2006 increased $84,000,
      or
      4.5%, compared to the same period last year, as a result of an increase in
      average interest-bearing assets of $14.4 million, while interest-bearing
      liabilities increased $8.0 million. This increase was offset by a decrease
      in
      the interest rate spread of 0.3% and a decrease in net interest margin of 0.1%.
      The decrease in interest rate spread is due to the rising rate environment
      causing the Company’s cost of funds to increase.





***Provision
      for Loan Losses.*** The
      allowance for loan losses is a valuation allowance for probable incurred credit
      losses in the loan portfolio. We evaluate the allowance for loan losses on
      a
      quarterly basis. When additional allowances are necessary, a provision for
      loan
      losses is charged to earnings. The higher recovery amount in 2005 was due to
      the
      Company’s charge off of a commercial property early in 2005 and then a
      subsequent recovery of $80,000 in the quarter ended September 30, 2005 on the
      same property. The charge-offs for the six months ended December 31, 2006
      represented the write off of real estate loans relating to one customer. This
      charge-off of $57,000 was recorded to arrive at the net realizable value of
      $83,000 for the foreclosed asset.




16




***Non-interest
      Income.***   The
      $197,000 decrease in non-interest income was primarily due to a gain of $340,000
      recorded for the six months ended December 31, 2005 on the sale of Freddie
      Mac
      common stock, no such sales were made during the same period of 2006. In
      addition, other loan fees decreased $69,000 during the period ended 2006 due
      to
      accounting standards in effect. These decreases of non-interest income were
      offset by a gain on sale of loans of $55,000 during the period ended 2006
      compared to a loss during 2005 of $143,000. In addition, the bank had an
      increase of $48,000 in service charges on deposit accounts for the period ended
      December 31, 2006. These increases were the result of the Bank’s recent decision
      to sell substantially all fixed rate mortgage loans when originated and the
      increased deposit activity created by our new branches.





***Non-interest
      Expenses.***  Total
      non-interest expenses decreased **** $127,000,
      or 3.5%, for the six months ended December 31, 2006, from the six months ended
      December 31, 2005. During 2005, a contribution expense of $726,000 was recorded
      in connection with the establishment of the Equitable Charitable Foundation,
      no
      comparable expenditures were made in 2006. Increases in salaries and employee
      benefits of $392,000 and occupancy and equipment of $100,000 occurred during
      the
      six month period ended December 31, 2006. These increases were the result of
      operating three recently added facilities in Omaha, North Platte and Grand
      Island. The Company also recorded increases in professional fees of $124,000
      and
      supplies, telephone and postage of $27,000 due to the public ownership of the
      Company. Additionally, an increase in state sales and use tax expense, due
      to an
      audit by the Nebraska Department of Revenue, contributed $21,000 to the increase
      in other expense. Our non-interest expenses are likely to continue to increase
      as a result of recognizing additional annual employee compensation and benefit
      expenses stemming from the shares purchased or granted to employees and
      executives under new benefit plans.





***Income
      Taxes.*** The Bank
      recorded a tax benefit of $384,000 during the six months ended December 31,
      2006
      compared to a tax benefit of $399,000 during the six months ended December
      31,
      2005. The tax benefits at December 31, 2006 and 2005 were calculated based
      on
      the tax items and the operating loss recorded during the respective
      periods.





**Liquidity
      and Capital Management**





***Liquidity
      Management.*** Liquidity is the ability to meet current and future financial obligations of
      a
      short-term nature. Our primary sources of funds consist of deposit in-flows,
      loan repayments, maturities and sales of securities, and Federal Home Loan
      Bank
      borrowings. While maturities and scheduled amortization of loans and securities
      are predictable sources of funds, deposit flows and loan prepayments are greatly
      influenced by general interest rates, economic conditions and
      competition.





We
      regularly adjust our investments in liquid assets based upon our assessment
      of
      (1) expected loan demand, (2) expected deposit flows, (3) yields available
      on
      interest-earning deposits and securities and (4) the objectives of our
      asset/liability management policy.





Our
      most
      liquid assets are cash and cash equivalents. The levels of these assets depend
      on our operating, financing, lending and investing activities during any given
      period. At December 31, 2006, cash and cash equivalents totaled $3.3 million.
      Securities classified as available-for-sale whose market value exceeds our
      cost,
      which provide additional sources of liquidity, totaled $774,000 at December
      31,
      2006. Total securities classified as available-for-sale were $7.3 million at
      December 31, 2006. Of this amount, $5.5 million were pledged to secure certain
      depository relationships, such as certificates of deposit and checking accounts
      held by various municipal entities and a charitable organization. In addition,
      at December 31, 2006, we had the ability to borrow a total of approximately
      $72.3 million from the Federal Home Loan Bank of Topeka. On December 31, 2006,
      we had $37.8 million of borrowings outstanding. It is our intention to hold
      these advances to maturity. Future growth of our loan portfolio resulting from
      our expansion efforts may require us to borrow additional funds.




17




At
      December 31, 2006, we had $15.2 million in loan commitments outstanding, which
      consisted of $1.5 million of mortgage loan commitments, $4.9 million in unused
      home equity lines of credit, and $165,000 in personal lines of credit and $8.7
      million in commercial lines of credit. Certificates of deposit due within one
      year of December 31, 2006 totaled $72.0 million, or 78.7%, of certificates
      of
      deposit. We believe the large percentage of certificates of deposit that mature
      within one year reflects customers’ hesitancy to invest their funds for long
      periods in the current interest rate environment. If these maturing deposits
      do
      not remain with us, we will be required to seek other sources of funds,
      including other certificates of deposit and borrowings. Depending on market
      conditions, we may be required to pay higher rates on such deposits or other
      borrowings than we currently pay on the certificates of deposit due on or before
      December 31, 2007. We believe, however, based on past experience that a
      significant portion of our certificates of deposit will remain with us. We
      have
      the ability to attract and retain deposits by adjusting the interest rates
      offered.





***Capital
      Management.*** We
      are
      subject to various regulatory capital requirements administered by the Office
      of
      Thrift Supervision, including a risk-based capital measure. The risk-based
      capital guidelines include both a definition of capital and a framework for
      calculating risk-weighted assets by assigning balance sheet assets and
      off-balance sheet items to broad risk categories. At December 31, 2006, we
      exceeded all of our regulatory capital requirements. We are considered “well
      capitalized” under regulatory guidelines .





We
      also
      manage our capital for maximum stockholder benefit. The capital from our
      recently completed stock offering significantly increased our liquidity and
      capital resources. Over time, the initial level of liquidity will be reduced,
      as
      net proceeds from the stock offering are used for general corporate purposes,
      including the funding of lending activities. We may use capital management
      tools
      such as cash dividends and common stock repurchases.





**Off-Balance
      Sheet Arrangements**





In
      the
      normal course of operations, we engage in a variety of financial transactions
      that, in accordance with U.S. generally accepted accounting principles, are
      not
      recorded in our financial statements. These transactions involve, to varying
      degrees, elements of credit, interest rate and liquidity risk. Such transactions
      are used primarily to manage customers’ requests for funding and take the form
      of loan commitments and lines of credit. We currently have no plans to engage
      in
      hedging activities in the future.





For
      the
      six months ended December 31, 2006 and the year ended June 30, 2006, we did
      not
      engage in any off-balance sheet transactions reasonably likely to have a
      material effect on our financial condition, results of operations or cash flows.





**Commitments**





Since
      March 31, 2005, we have opened the following new offices: a full-service branch
      in Grand Island; a full-service branch in North Platte; and a full-service
      branch in Omaha. The construction for the new Grand Island and North Platte
      locations has been completed and all costs have been capitalized as of December
      31, 2006. We currently lease our initial location in Omaha with the annual
      lease
      expenses of $120,000.




18




**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**





Market
      risk is the risk of loss from adverse changes in market prices and interest
      rates. Our market risk arises primarily from the interest rate risk that is
      inherent in our lending and deposit taking activities. The results of operations
      for financial institutions may be materially and adversely affected by changes
      in economic conditions, including rapid changes in interest rates, declines
      in
      real estate market values and the monetary and fiscal policies of the federal
      government. Our net interest income and the net present value of our assets
      and
      liabilities are subject to fluctuations in interest rates. When
      interest-earnings assets such as loans are funded by interest-bearing
      liabilities such as deposits, FHLBank advances and other borrowings, a changing
      interest rate environment may have a significant effect on our financial
      condition and results of operations. To that end, we actively manage our
      interest rate risk exposure. Additionally, our loan portfolio is subject to
      credit risk. We manage credit risk primarily through our loan underwriting
      and
      oversight policies.




The
      principal objectives of our interest rate risk management function are to
      evaluate the interest rate risk inherent in certain balance sheet accounts,
      determine the level of risk appropriate given our business strategy, operating
      environment, capital and liquidity requirements and performance objectives
      and
      manage the risk consistent with guidelines approved by our Board of Directors.
      Through such management, we seek to reduce the vulnerability of our operations
      to changes in interest rates. The extent of the movement in interest rates
      is an
      uncertainty that could have a negative impact on our future earnings. Our Board
      of Directors is responsible for development and oversight of our asset/liability
      policies and monitoring our interest rate risk position. Management reports
      trends and interest rate risk positions to our Board of Directors on a quarterly
      basis.




We
      utilize the following strategies to manage interest rate risk: (a) emphasizing
      the origination for portfolio retention of loans with relatively higher yields,
      adjustable interest rates and/or shorter terms to maturity; (b) holding shorter
      term and/or adjustable-rate investment and mortgage-backed securities; (c)
      attempting to reduce the overall interest rate sensitivity of liabilities by
      emphasizing core and longer-term deposits; and (d) extending the maturities
      on
      borrowings. Additionally, we generally sell originated fixed-rate, one-to-four
      family residential loans into the secondary market with servicing retained.




Our
      interest rate sensitivity is monitored by management through the use of
      financial modeling software which estimates the change in our net portfolio
      value (“NPV”) over a range of interest rate scenarios. NPV is the present value
      of expected cash flows from assets, liabilities and off-balance sheet contracts.
      The NPV ratio, under any interest rate scenario, is defined as the NPV in that
      scenario divided by the fair value of assets in the same scenario. The OTS
      produces a similar analysis using its own model, based upon data submitted
      in
      our quarterly Thrift Financial Reports, the results of which may vary from
      our
      internal model primarily due to differences in assumptions utilized, including
      estimated loan prepayment speeds, reinvestment rates and deposit turnover rates.




Due
      to
      our recognition of the need to control our interest rate exposure, we have
      focused on loans with relatively higher yields, adjustable interest rates and
      shorter terms to maturity which are less subject to interest rate risk and
      primarily consist of second mortgage residential, multi-family residential,
      commercial real estate and land, construction, agricultural, business, warehouse
      mortgage lines of credit and consumer loans.




Certain
      shortcomings are inherent in the methodology used in the above interest rate
      risk measurements. Modeling changes in NPV require the making of certain
      assumptions which may or may not reflect the manner in which actual yields
      and
      costs respond to changes in market interest rates. In this regard, the NPV
      model
      presented assumes that the composition of our interest sensitive assets and
      liabilities existing at the beginning of a period remains constant over the
      period being measured and also assumes that a particular change in the interest
      rates is reflected uniformly across the yield curve regardless of the duration
      to maturity or repricing of specific assets and liabilities. Accordingly,
      although the NPV measurements and net interest income models provide an
      indication of our interest rate risk exposure at a particular point in time,
      such measurements are not intended to and do not provide a precise forecast
      of
      the effect of changes in market interest rates on our net interest income and
      will differ from actual results.




19




The
      financial statements, accompanying notes, and related financial data presented
      in Item 1. Financial Statements in Part I of this Form 10-QSB have been prepared
      in accordance with GAAP, which require the measurement of financial position
      and
      operating results in terms of historical dollars without considering the changes
      in purchasing power of money over time due to inflation. The impact of inflation
      is reflected in increased cost of our operations. Most of our assets and
      liabilities are monetary in nature; therefore, the impact of interest rates
      has
      a greater impact on its performance than the effects of general levels of
      inflation. Interest rates do not necessarily move in the same direction or
      to
      the same extent as the prices of goods and services.





**Item
      4. Controls and Procedures**





The
      Company’s management, including the Company’s principal executive officer and
      principal financial officer, have evaluated the effectiveness of the Company’s
“disclosure controls and procedures,” as such term is defined in Rule 13a-15(e)
      promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”). Based upon their evaluation, and based on the material weakness in the
      Company’s internal control over financial reporting set forth below, the
      principal executive officer and principal financial officer concluded that,
      as
      of the end of the period covered by this report, the Company’s disclosure
      controls and procedures were not effective for the purposes of ensuring that
      the
      information required to be disclosed in the reports that the Company files
      or
      submits under the Exchange Act with the Securities and Exchange Commission
      (the
“SEC”) (1) is recorded, processed, summarized and reported within the time
      periods specified in the SEC’s rules and forms, and (2) is accumulated and
      communicated to the Company’s management, including its principal executive and
      principal financial officers, as appropriate to allow timely decisions regarding
      required disclosure.





In
      connection with its audit of the Company’s consolidated financial statements for
      the year ended June 30, 2006, Crowe Chizek and Company LLC (“Crowe Chizek”), the
      Company’s independent registered public accounting firm, advised the
      Board
      of Directors, the Audit Committee and management of
      certain significant internal control deficiencies that they considered to be,
      in
      the aggregate, a material weakness. A material weakness is a significant
      deficiency, or combination of significant deficiencies, that results in more
      than a remote likelihood that a material misstatement of the annual or interim
      financial statements will not be prevented or detected.





In
      particular, in connection with the audit for the year ended June 30, 2006,
      Crowe
      Chizek identified several adjustments and corrections that had to be
      incorporated into the consolidated financial statements as a result of Crowe
      Chizek’s audit. These adjustments encompassed various areas, including real
      estate taxes, income taxes, compensation, rent and capitalized interest.
      According to Crowe Chizek, these adjustments and corrections indicated that
      management’s internal review process over financial reporting was not
      appropriately designed and implemented. Specifically, Crowe Chizek advised
      the
      Board of Directors, the Audit Committee and management that: (a) a formal
      procedure was not in place to ensure that entries were recorded in accordance
      with U.S. generally accepted accounting principles and that the posting of
      these
      entries was appropriately reviewed; and (b) when there were departures from
      U.S.
      generally accepted accounting principles, a formal procedure was not in place
      to
      ensure that an analysis of the potential differences was completed, conclusions
      as to materiality documented and remediation steps determined on a quarterly
      and
      annual basis.




20




In
      order
      to remediate this material weakness identified by Crowe Chizek and to improve
      the effectiveness of the Company’s disclosure controls, management is in the
      process of designing, implementing and continuing to enhance disclosure controls
      to correct the material weakness set forth above. During the quarter ended
      December 31, 2006, the Company employed an internal auditor to further enhance
      its internal control environment. Management will continue to monitor, evaluate
      and test the operating effectiveness of these controls.





**PART
      II. OTHER INFORMATION**





**Item
      1.**  **Legal Proceedings**





Equitable
      Financial is not involved in any pending legal proceedings. Equitable Bank
      is
      not involved in any pending legal proceedings other than routine legal
      proceedings occurring in the ordinary course of business. Such routine legal
      proceedings, in the aggregate, are believed by management to be immaterial
      to
      its financial condition, results of operations or cash flows.





**Item
      1a. Risk Factors**




In
      addition to other information contained in this Form 10-QSB, the following
      risk
      factors should be considered in evaluating our business. Additional risks and
      uncertainties not currently known to us or that we currently deem to be
      immaterial also may adversely affect our business, financial condition and/or
      results of operations.




***If
      the interest payments on our interest-bearing liabilities increase relative
      to
      the interest we earn on our interest-earning assets, our net interest income
      may
      decline.*** When
      interest-bearing liabilities mature or reprice more quickly than
      interest-earning assets, a significant increase in market interest rates could
      adversely affect net interest income. Conversely, a significant decrease in
      market interest rates could result in increased net interest income. We seek
      to
      manage our exposure to interest rate fluctuations, however, changes in market
      interest rates are neither predictable or controllable and may have an adverse
      impact on our earnings and financial condition.




Prevailing
      interest rates may significantly affect the overall demand for loans and could
      also impact the extent to which borrowers repay and refinance loans. Loan
      prepayments and refinancings, as well as prepayments of mortgage-backed
      securities, may increase in a declining interest rate environment. Call
      provisions associated with our investment in U.S. government securities and
      agency obligations and corporate securities may also negatively impact net
      interest income in a declining interest rate environment. Such prepayment,
      refinancing and security call activity may negatively impact the yield of our
      loan portfolio and investment and mortgage-backed security portfolios as we
      would reinvest the prepaid funds in a lower interest rate environment.
      Additionally, adjustable-rate mortgage loans and mortgage-backed securities
      generally contain interim and lifetime caps that limit the amount interest
      rates
      can increase or decrease at repricing dates.




In
      a low interest rate environment, our level of core deposits may decline if
      our
      depositors seek higher yielding instruments or other investment products we
      are
      unable to offer. This may increase our cost of funds and decrease our net
      interest margin to the extent that alternative funding sources are utilized
      to
      fund our business activities. In an increasing interest rate environment,
      depositors tend to prefer longer term, higher costing time deposits which could
      adversely affect our net interest income if rates were to subsequently decline.




21




***Our
      focus on loans with relatively higher yields, adjustable interest rates and/or
      shorter terms to maturity increases our exposure to credit
      risk.*** These
      loans include second mortgage residential, multi-family residential, commercial
      real estate and land, construction, business, agricultural, warehouse mortgage
      lines of credit and consumer loans. These loans generally involve a greater
      degree of risk than fully-underwritten one-to-four family residential loans
      and
      typically have higher principal payments. Repayment of multi-family residential,
      commercial real estate and land, construction and agricultural loans generally
      is dependent upon sufficient income from the property to cover operating
      expenses and debt service. Our investment in construction loans significantly
      increased during the periods ended December 31, 2006 and June 30, 2006. Risk
      of
      loss on construction loans is dependent largely upon the accuracy of the initial
      estimate of the property’s value when completed or developed compared to the
      projected cost (including interest) of the construction and other assumptions,
      including the approximate time to sell or lease the properties. Additionally,
      changes in the local economies in which loan collateral resides, which is
      outside of the control of the lender and borrower, could also affect the value
      of the collateral for the loan or the future cash flow of the affected property
      and result in a higher level of nonperforming loans.




An
      inadequate allowance for loan losses could adversely affect our results of
      operations. We are exposed to the risk that our customers may be unable to
      repay
      their loans according to their terms and that any collateral securing the
      payment of their loans may not be sufficient to assure full repayment. We
      evaluate the collectibility of our loan portfolio and provide an allowance
      for
      loan losses which is based on our historical loan loss experience for each
      group
      of loans as further adjusted for specific factors, including the following:




·
            Trends
                and levels of delinquent, nonperforming or “impaired”
                loans;




·
            Trends
                and levels of charge-offs and
                recoveries;




·
            Trends
                in volume and underwriting terms or guarantees for
                loans;




·
            Impact
                of changes in underwriting standards, risk tolerances or other changes
                in
                lending practices;




·
            Changes
                in the value of collateral securing
                loans;




·
            Total
                loans outstanding and the volume of loan
                originations;




·
            Type,
                size, terms and geographic concentration of loans
                held;




·
            Changes
                in qualifications or experience of lending
                staff;




·
            Changes
                in local or national economic or industry
                conditions;




·
            Number
                of loans requiring heightened management
                oversight;




·
            Changes
                in credit concentration; and




·
            Changes
                in regulatory requirements.




If
      our evaluation is incorrect and borrower defaults cause losses exceeding our
      allowance for loan losses, our results of operations could be significantly
      and
      adversely affected. We can make no assurances that our allowance for loan losses
      will be adequate to cover loan losses inherent in our portfolio.




22




***Competition
      could result in our loan portfolios and deposit base
      declining.*** We face
      increasing competition both in making loans and in attracting deposits. Our
      market area has a high density of financial institutions, some of which have
      greater financial resources, name recognition and market presence than us,
      and
      all of which are our competitors. Particularly intense competition exists for
      deposits and in all of the lending products we currently offer. Our competition
      for loans comes primarily from commercial banks, savings banks, savings and
      loan
      associations, mortgage banking companies, insurance companies, finance companies
      and credit unions. Our most direct competition for deposits historically has
      come from commercial banks, savings banks, savings and loan associations and
      credit unions. In addition, we face competition for deposits from products
      offered by brokerage firms, insurance companies and other financial
      intermediaries, such as money market and other mutual funds and annuities.
      As a
      result of the competitive environment in which we operate, no assurances can
      be
      given that we will be able to continue to increase our loan portfolio and
      deposit base.




***If
      economic conditions decline, our financial condition and results of operations
      could be adversely affected.*** Our
      operating results are affected by national and local economic and competitive
      conditions, including changes in market interest rates, the strength of the
      local economy, governmental policies of the communities in which we do business
      and actions of regulatory authorities. A decline in the local or national
      economy could adversely affect our financial condition and results of
      operations, including through a decreased demand for loans or increased
      competition for loans, increased nonperforming loans and loan losses and
      resulting additional provisions for loan losses and for losses on real estate
      owned.




Negative
      conditions in the real estate markets where collateral for our mortgage loans
      are located could adversely affect our borrower’s ability to repay and the value
      of the collateral. Real estate values are affected by various factors, including
      changes in general or regional economic conditions, governmental rules or
      policies and natural disasters.




***Legislative
      and regulatory issues could adversely affect our financial condition and results
      of operations.*** We are
      subject to extensive regulation, supervision and examination by the OTS as
      our
      primary federal regulator, and by the FDIC, which insures our deposits. As
      a
      member of the FHLBank, we must also comply with applicable regulations of the
      Federal Housing Finance Board and the FHLBank. Regulation by these agencies
      is
      intended primarily for the protection of our depositors and the deposit
      insurance fund and not for the benefit of our shareholders. Our activities
      are
      also regulated under consumer protections laws applicable to our lending,
      deposit and other activities. A sufficient claim against us under these laws
      could have a material adverse affect on our financial condition and results
      of
      operations.




**Item
      2.**  **Unregistered Sales of Equity Securities and Use of
      Proceeds**





The
      Company did not repurchase any of its common stock during the quarter ended
      December 31, 2006 and at December 31, 2006, the Company had not publicly
      announced repurchase plans or programs.





**Item
      3.**  **Defaults upon Senior Securities**





Not
      Applicable.





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





The
      Annual Meeting of Stockholders of the Company was held on November 14, 2006.
      The
      results of the vote on the matters presented at the meeting are as
      follows:





1.
            The
                following individuals were elected as directors, each for a three-year
                term:





23




Votes
                  For
              
              Votes
                  WithheldPamela
                  L. Price
              
              
              3,168,606
              
              
              79,851Douglas
                  J. Redman
              
              
              3,192,811
              
              
              55,646Benedict
                  P. Wassinger, Jr.
              
              
              3,192,999
              
              
              55,458





2.
            The
                approval of the Equitable Financial Corp. 2006 Equity Incentive
                Plan:




For
              
              Against
              
              Abstain
              
              Broker
                  Non-Votes2,692,085
              
              
              247,413
              
              
              12,825
              
              
              296,134


3.
            The
                appointment of Crowe Chizek and Company LLC as the independent registered
                public accountants for the Company for the fiscal year ended June
                30, 2007
                was ratified by stockholders by the following
                vote:




For
              
              Against
              
              Abstain
              
              Broker
                  Non-Votes3,192,713
              
              
              55,669
              
              
              75
              
              
              —


**Item
      5.**  **Other Information**





None.




**Item
      6.**  **Exhibits**


3.1
                  Charter
                        of Equitable Financial Corp.
                        (1)
 3.2
                Bylaws
                      of Equitable Financial Corp.
                      (1)
 4.0
              Stock
                    Certificate of Equitable Financial Corp.
                    (2)


31.1
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Executive
                Officer




31.2
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Financial
                Officer




32.0
            Section
                1350 Certification







(1)
            Incorporated
                by reference into this document from the Exhibits filed with the
                Securities and Exchange Commission on the Quarterly Report on Form
                10-QSB
                on February 14, 2006.




(2)
            Incorporated
                by reference into this document from the Exhibits filed with the
                Securities and Exchange Commission on the Registration Statement
                on Form
                SB-2, and any amendments thereto, Registration No. 333-126617.




24


**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned thereunto duly
      authorized.




EQUITABLE
              FINANCIAL CORP.Dated:
              February 13, 2007
            By:
            /s/ Richard
              L. HarbaughRichard
                L. Harbaugh
              President
                and Chief Executive Officer
              (principal
                executive officer)


Dated:
              February 13, 2007
            By:
            /s/ Kim
              E.
              MarcoKim E. Marco
              Executive
                Vice President andChief
                Financial Officer
                (principal
                  financial and accounting
                  officer)




25