UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 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 September 30, 2006

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

     For the transition period from _________ to _________

                         Commission File Number 0-50666
                                                -------

                          OSAGE FEDERAL FINANCIAL, INC.
--------------------------------------------------------------------------------
        (Exact name of Small Business Issuer as specified in its Charter)

         United States                                           27-0080039
 ------------------------------                              -------------------
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

                 239 East Main Street, Pawhuska, Oklahoma 74056
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (918) 287-2919
--------------------------------------------------------------------------------
                           (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 [ ]

         Indicate by check mark whether the  Registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ]  No [X]

         As  of  September  30,  2006,   there  were  2,287,017  shares  of  the
Registrant's common stock, par value $.10 per share, outstanding.

         Transitional Small Business Issuer Disclosure Format (check one):
Yes [ ]   No [X]

                                       1

<PAGE>

                          OSAGE FEDERAL FINANCIAL, INC.

                               PAWHUSKA, OKLAHOMA

                                      INDEX
<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
<S>                                                                                           <C>
PART I.  FINANCIAL INFORMATION
------

Item 1.  Financial Statements

Consolidated Balance Sheets as of September 30, 2006 (Unaudited) and June 30, 2006               3
Consolidated Statements of Income - (Unaudited) for the three months ended
         September 30, 2006 and 2005                                                             4
Consolidated Statements of Cash Flows - (Unaudited) for the three months ended
         September 30, 2006 and 2005                                                             5
Notes to Consolidated Financial Statements (Unaudited)                                           7

Item 2.  Management's Discussion and Analysis or Plan of Operation                               9

Item 3.  Controls and Procedures                                                                 13

PART II. OTHER INFORMATION
-------

Item 4.  Submission of Matters to a Vote of Security Holders                                     14

Item 6.  Exhibits                                                                                14

Signatures                                                                                       15
</TABLE>



                                       2

<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

                          OSAGE FEDERAL FINANCIAL, INC.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                            September 30,       June 30,
                                                                                2006             2006
                                                                            -------------    -------------
                                                                             (unaudited)
<S>                                                                       <C>              <C>
Assets
    Cash and due from banks                                                 $   2,283,160    $   1,374,110
    Interest bearing deposits with banks                                          482,113           58,906
        Federal funds sold                                                      2,425,000        1,022,000
                                                                            -------------    -------------
        Cash and cash equivalents                                               5,190,273        2,455,016

    Available-for-sale securities                                              17,365,129       17,835,601
    Held-to-maturity securities                                                 7,840,779        8,220,499
    Mortgage loans held for sale                                                        -          155,500
    Loans, net of allowance for loan losses of $395,500 and $399,701 at
       September 30, 2006 and June 30, 2006, respectively                      81,148,095       77,927,235
    Premises and equipment                                                      1,173,710        1,155,390
    Foreclosed assets held for sale, net                                           73,427           49,993
    Interest receivable                                                           471,306          430,610
    Federal Home Loan Bank stock, at cost                                       1,736,900        1,711,000
    Bank owned life insurance                                                   2,105,573        2,086,877
    Deferred income taxes                                                          31,167           47,792
    Other                                                                         322,409          161,892
                                                                            -------------    -------------
               Total assets                                                 $ 117,458,768    $ 112,237,405
                                                                            =============    =============


Liabilities and Stockholders' Equity

    Liabilities
        Deposits                                                            $  71,757,999    $  64,309,734
        Federal Home Loan Bank advances                                        30,750,000       33,350,000
        Advances from borrowers held in escrow                                  1,034,839          785,813
        Accrued interest and other liabilities                                    469,330          500,279
                                                                            -------------    -------------

               Total liabilities                                              104,012,168       98,945,826
                                                                            -------------    -------------

    Commitments and Contingencies                                                       -                -
    Equity Received from Contributions to the ESOP (13,417 shares at
       September 30, 2006 and June 30, 2006)                                      163,470          163,470
    Stockholders' Equity
        Preferred stock, $.10 par value (5,000,000 shares authorized;
          none outstanding)                                                             -                -
        Common stock, $.10 par value (20,000,000 shares authorized;
          2,287,017 shares issued and outstanding, net of 54,751
          allocated and unallocated ESOP shares at September 30, 2006 and
          June 30, 2006)                                                          223,226          223,226
        Additional paid-in capital                                              5,324,498        5,290,160
        Retained earnings                                                       7,941,828        7,872,151
        Accumulated other comprehensive loss                                     (206,422)        (257,428)
                                                                            -------------    -------------

               Total stockholders' equity                                      13,283,130       13,128,109
                                                                            -------------    -------------

               Total liabilities and stockholders' equity                   $ 117,458,768    $ 112,237,405
                                                                            =============    =============
</TABLE>

See Notes to Consolidated Financial Statements

                                       3

<PAGE>

                          OSAGE FEDERAL FINANCIAL, INC.
                        Consolidated Statements of Income


                                                         Three Months Ended
                                                           September 30,
                                                      -----------------------
                                                         2006         2005
                                                      ----------   ----------
                                                            (unaudited)
Interest Income
    Loans                                             $1,319,636   $1,084,179
    Available-for-sale securities                        209,154      149,540
    Held-to-maturity securities                           87,831      112,453
    Deposits with other financial institutions            19,329        7,292
    Other                                                 25,990       13,876
                                                      ----------   ----------
       Total interest income                           1,661,940    1,367,340
                                                      ----------   ----------

Interest Expense
    Deposits                                             471,596      361,106
    Advances from Federal Home Loan Bank                 420,960      256,231
                                                      ----------   ----------
       Total interest expense                            892,556      617,337
                                                      ----------   ----------

Net Interest Income                                      769,384      750,003
Provision for loan losses                                      -            -
                                                      ----------   ----------
Net interest income after provision for loan losses      769,384      750,003
                                                      ----------   ----------

Noninterest Income
    Service charges on deposit accounts                   99,064      101,835
    Other service charges and fees                        17,677       16,226
    Gain on sale of mortgage loans                         9,363       22,608
    Net loan servicing fees                                8,826        7,232
    Other income                                          36,041       28,275
                                                      ----------   ----------
       Total noninterest income                          170,971      176,176
                                                      ----------   ----------

Noninterest Expense
    Salaries and employee benefits                       423,321      387,984
    Net occupancy expense                                 65,113       70,553
    Deposit insurance premium                              2,003        2,204
    Other operating expenses                             189,131      202,609
                                                      ----------   ----------
       Total noninterest expense                         679,568      663,350
                                                      ----------   ----------

Income Before Income Taxes                               260,787      262,829

Provision for Income Taxes                                93,246       96,910
                                                      ----------   ----------

Net Income                                            $  167,541   $  165,919
                                                      ==========   ==========

Basic Earnings Per Share                              $     0.08   $     0.08
                                                      ==========   ==========
Fully Diluted Earnings Per Share                      $     0.07   $     0.07
                                                      ==========   ==========
Cash Dividends Paid Per Share                         $     0.15   $     0.11
                                                      ==========   ==========



See Notes to Consolidated Financial Statements


<PAGE>

                          OSAGE FEDERAL FINANCIAL, INC.
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                 Three Months Ended
                                                                                   September 30,
                                                                            --------------------------
                                                                                2006           2005
                                                                            -----------    -----------
                                                                                   (unaudited)
<S>                                                                       <C>            <C>
Operating Activities
    Net income                                                              $   167,541    $   165,919
    Items not requiring (providing) cash
       Depreciation                                                              21,041         28,790
       Amortization                                                              24,016         26,759
       Restricted stock plan and options expense                                 34,338         24,841
       Deferred income taxes                                                    (14,637)       (20,759)
       Gain on sale of mortgage loans                                            (9,363)       (22,608)
       Gain on sale of foreclosed assets held for sale                           (1,126)        (1,806)
       Dividends on available-for-sale mutual funds                            (149,743)      (108,015)
       Stock dividends on Federal Home Loan Bank stock                          (25,900)       (13,800)
       Increase in cash surrender value of bank owned life insurance            (18,696)       (19,254)
    Originations of loans held for delivery against commitments              (1,088,530)    (3,037,420)
    Proceeds from nonrecourse sale of loans held for delivery against
      commitments                                                             1,247,464      2,830,183
    Changes in
       Interest receivable                                                      (40,696)       (12,145)
       Other assets                                                            (171,529)       (37,094)
       Accrued interest and other liabilities                                   (30,949)         6,409
                                                                            -----------    -----------

           Net cash used in operating activities                                (56,769)      (190,000)
                                                                            -----------    -----------

Investing Activities
    Net change in loans                                                      (3,257,976)    (3,289,214)
    Purchases of premises and equipment                                         (39,361)          (492)
    Purchase of Federal Home Loan Bank stock                                          -       (262,500)
    Proceeds from sale of foreclosed assets                                      14,808          9,400
    Purchases of available-for-sale securities                                        -     (4,067,992)
    Proceeds from maturities and paydowns of held-to-maturity
      securities                                                                380,346      1,269,084
    Proceeds from maturities and paydowns of available-for-sale
      securities                                                                694,782        535,017
                                                                            -----------    -----------

           Net cash  used in investing activities                            (2,207,401)    (5,806,697)
                                                                            -----------    -----------
</TABLE>

See Notes to Consolidated Financial Statements

                                       5

<PAGE>

                          OSAGE FEDERAL FINANCIAL, INC.
                      Consolidated Statements of Cash Flows
                                   (Continued)

<TABLE>
<CAPTION>
                                                                               Three Months Ended
                                                                                  September 30,
                                                                            --------------------------
                                                                                2006           2005
                                                                            -----------    -----------
                                                                                   (Unaudited)
<S>                                                                       <C>            <C>
    Financing Activities
        Net increase (decrease)  in demand, money market, NOW and savings
          deposits                                                          $ 1,871,159    $   349,783
        Net increase (decrease) in certificates of deposit                    5,577,106       (228,367)
        Net increase (decrease) in Federal Home Loan Bank short-term
          borrowings                                                         (2,100,000)     3,250,000
        Proceeds from Federal Home Loan Bank advances                                 -      3,000,000
        Repayments of Federal Home Loan Bank advances                          (500,000)    (1,000,000)
        Net increase  in advances from borrowers held in escrow                 249,026        153,885
        Payment of dividends (net of restricted stock dividends)                (97,864)       (71,972)
        Purchase of shares for restricted stock plans                                 -        (13,610)
                                                                            -----------    -----------
               Net cash provided by financing activities                      4,999,427      5,439,719
                                                                            -----------    -----------

    Increase/(decrease) in Cash and Cash Equivalents                          2,735,257       (556,978)

    Cash and Cash Equivalents, Beginning of Period                            2,455,016      2,224,045
                                                                            -----------    -----------

    Cash and Cash Equivalents, End of Period                                $ 5,190,273    $ 1,667,067
                                                                            ===========    ===========

    Supplemental Cash Flows Information

        Real estate and other assets acquired in settlement of loans        $    42,116    $    66,228

        Interest paid                                                       $   887,791    $   615,256

        Income taxes paid                                                   $    72,000    $   162,860

        Mutual fund dividends reinvested                                    $   149,743    $   108,015

</TABLE>

                                       6

<PAGE>

                          OSAGE FEDERAL FINANCIAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.       OSAGE FEDERAL FINANCIAL, INC.

         Osage Federal  Financial,  Inc. (the  "Company") was  incorporated as a
         federally chartered corporation for the purpose of becoming the holding
         company  of Osage  Federal  Bank (the  "Bank") in  connection  with the
         Bank's mutual holding  company  reorganization.  On March 31, 2004, the
         Bank completed the reorganization and became a wholly-owned  subsidiary
         of the Company. The Company sold 684,394 shares to the public at $10.00
         per  share  and  issued  1,596,919  shares  to Osage  Federal  MHC.  At
         September  30,  2006,  the  consolidated  financial  statements  of the
         Company  included those of the Bank. All  intercompany  items have been
         eliminated.  Prior to consummation of the  reorganization,  the Company
         had no assets or liabilities.

         BASIS OF PRESENTATION

         The  accompanying  unaudited  consolidated  financial  statements  were
         prepared in accordance with instructions for Form 10-QSB and therefore,
         do not include all disclosures necessary for a complete presentation of
         the statement of financial condition, statement of income and statement
         of cash  flows  in  conformity  with  accounting  principles  generally
         accepted in the United States of America. However, all adjustments (all
         of which are of a normal recurring nature) which are, in the opinion of
         management,   necessary  for  the  fair  presentation  of  the  interim
         financial  statements  have been  included.  The  balance  sheet of the
         Company as of June 30, 2006 has been derived  from the audited  balance
         sheet of the  Company as of that  date.  The  statements  of income for
         periods  presented are not necessarily  indicative of the results which
         may be expected for the entire year.

         Certain  information  and note  disclosures  normally  included  in the
         Company's  annual  financial  statements  prepared in  accordance  with
         accounting  principles  generally  accepted  in the  United  States  of
         America  have been  condensed  or omitted.  These  condensed  financial
         statements should be read in conjunction with the financial  statements
         and notes  thereto  included  in the  Company's  Annual  Report on Form
         10-KSB for the year ended June 30, 2006 filed with the  Securities  and
         Exchange Commission.

2.       EARNINGS PER SHARE

         Earnings  per share (EPS) were  computed  as follows  for the  quarters
         ended September 30:

<TABLE>
<CAPTION>

                                                                          2006             2005
                                                                     -----------      ------------
<S>                                                                  <C>              <C>
                  Net income                                         $   167,541      $    165,919
                                                                     -----------      ------------

                  Average common shares outstanding                    2,208,269         2,202,441
                                                                     -----------      ------------
                  Average common diluted shares outstanding            2,242,498         2,214,072
                                                                     -----------      ------------

                  Basic earnings per share                           $      0.08      $       0.08
                                                                     ===========      ============
                  Fully diluted earnings per share                   $      0.07      $       0.07
                                                                     ===========      ============
</TABLE>

                                       7

<PAGE>

3.       PLAN OF MUTUAL HOLDING COMPANY REORGANIZATION AND STOCK ISSUANCE

         On November  24, 2003,  the Board of Directors of the Bank,  subject to
         regulatory approval,  adopted a proposed Plan of Mutual Holding Company
         Reorganization  and Stock  Issuance  (the  "Plan")  to  convert  from a
         federally   chartered  mutual  savings  association  into  a  federally
         chartered  mutual  holding  company  structure  under  the name  "Osage
         Federal MHC" (the "Mutual Holding Company") pursuant to the laws of the
         United States of America and the Rules and Regulations of the Office of
         Thrift Supervision ("OTS"). A principal part of the reorganization into
         the  Mutual  Holding  Company  was  the  incorporation  of a  federally
         chartered  stock  holding  company.  The Bank  became  a  wholly  owned
         subsidiary of a concurrently formed holding company.  The Plan provided
         that the  holding  company  would  offer  nontransferable  subscription
         rights to purchase common stock of the holding company. The rights were
         to be offered  first to eligible  account  holders,  the  tax-qualified
         employee stock benefit plans, supplemental eligible account holders and
         other  members.  Any  shares  remaining  were then to be offered to the
         general  public.  All stock was issued to eligible  account holders and
         the tax-qualified employee stock benefit plan.

         Upon completion of the reorganization, the Mutual Holding Company owned
         70% of the  outstanding  stock of the Company,  with the  remaining 30%
         held by the public.  The Company  owned 100% of the Bank.  The Bank may
         not pay dividends to the Company if the dividends  would cause the Bank
         to fall below the "well capitalized" capital threshold.

         The  Company  contributed  approximately  50%  of the  proceeds  of the
         offering  to the  Bank.  The  Company  also  lent  its  employee  stock
         ownership  plan cash to enable the plan to buy 8% of the shares  issued
         in the  offering to persons  other than the MHC.  The  balance  will be
         retained as the Company's  initial  capitalization  and may be used for
         general  business  purposes,   including  the  purchase  of  investment
         securities,   repurchasing  shares  of  its  common  stock  and  paying
         dividends.  The funds  received  by the Bank  will be used for  general
         business   purposes,   including   originating   loans  and  purchasing
         securities.

         Offering  costs were  deferred  and  deducted  from the proceeds of the
         shares  sold in the  stock  offering.  If the  offering  had  not  been
         completed,  all costs would have been charged to expense.  At September
         30, 2006, $426,900 in such costs had been incurred.

4.       OTHER COMPREHENSIVE INCOME

         Other comprehensive income is comprised of the following:

<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                           September 30,
                                                                     --------------------------
                                                                       2006              2005
                                                                     --------          --------
                                                                            (Unaudited)
<S>                                                                  <C>               <C>
    Net Income                                                       $167,541          $165,919

    Other Comprehensive Income (Loss)
        Unrealized gain (loss) on available-for-sale
          securities, net of income taxes                              51,006           (25,626)
                                                                     --------          --------

    Comprehensive Income                                             $218,547          $140,293
                                                                     ========          ========
</TABLE>

                                       8

<PAGE>

ITEM 2.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                              OR PLAN OF OPERATION

GENERAL

         The  following  discussion  and  analysis  is  intended  to  assist  in
understanding the financial condition and results of operations of the Company.

FORWARD-LOOKING STATEMENTS

         When used in this discussion and elsewhere in this Quarterly  Report on
Form 10-QSB, the words or phrases "will likely result," "are expected to," "will
continue," "is anticipated,"  "estimate,"  "project," or similar expressions are
intended  to  identify  "forward-looking  statements"  within the meaning of the
Private  Securities  Litigation Reform Act of 1995. The Company cautions readers
not to place undue reliance on any such forward-looking statements,  which speak
only as of the date made, and advises  readers that various  factors,  including
regional  and  national  economic  conditions,  substantial  changes in level of
market  interest  rates,  credit  and  other  risks of  lending  and  investment
activities and  competitive  and  regulatory  factors could affect the Company's
financial  performance  and could cause the Company's  actual results for future
periods to differ  materially from those  anticipated or projected.  The Company
does not  undertake  and  specifically  disclaims  any  obligation to update any
forward-looking statements to reflect occurrence of anticipated or unanticipated
events or circumstances after the date of such statements.


PROPOSED REORGANIZATION

         On July 21, 2006,  the Boards of Directors of Osage Federal MHC,  Osage
Federal  Financial,  Inc. and Osage Federal Bank  unanimously  adopted a Plan of
Conversion and Reorganization (the "Plan"), pursuant to which Osage Federal Bank
will reorganize  from the mutual holding company  structure to the stock holding
company  structure.  Pursuant to the terms of the Plan,  Osage  Federal MHC will
convert from the mutual form to a federal interim stock savings  association and
simultaneously  merge with and into Osage Federal Bank,  with Osage Federal Bank
as survivor.  Additionally,  Osage  Federal  Financial,  Inc.  will convert to a
federal interim stock savings association and simultaneously merge with and into
Osage Federal Bank, with Osage Federal Bank as survivor.  Osage Federal Bank has
formed a new  state-chartered  corporation,  Osage  Bancshares,  Inc., that will
acquire all of the  outstanding  shares of Osage  Federal  Bank's  common stock.
Shares of Osage Federal  Financial,  Inc. common stock, other than those held by
Osage Federal MHC, will be converted into shares of the new corporation pursuant
to an exchange ratio designed to approximate the percentage  ownership interests
of such persons.

         The Plan is  subject  to the  approval  of:  (1) the  Office  of Thrift
Supervision; (2) at least a majority of the total number of votes eligible to be
cast by members of Osage  Federal MHC; (3) the holders of at least a majority of
the outstanding shares of Osage Federal Financial, Inc. common stock; and (4) at
least a  majority  of votes cast by holders  of Osage  Federal  Financial,  Inc.
common stock other than Osage  Federal  MHC. The new holding  company will offer
shares of its common stock for sale to Osage Federal's eligible account holders,
to Osage Federal's  tax-qualified  employee  benefit plans and to members of the
general  public in a  subscription  and  community  offering  in the  manner and
subject to the priorities  set forth in the Plan.  The highest  priority will be
depositors with qualifying deposits as of June 30, 2005.

                                       9

<PAGE>

Comparison of Financial Condition at September 30, 2006 and June 30, 2006

         Our  total  assets  increased  by $5.3  million  to $117.5  million  at
September 30, 2006 from $112.2  million at June 30, 2006 primarily due to a $3.2
million,  or 4.1%,  increase in loans  receivable,  net. Loans  receivable,  net
increased to $81.1  million at September 30, 2006 from $77.9 million at June 30,
2006.  This increase in loans  receivable,  net  primarily  resulted from a $1.8
million,  24.6%,  increase in loans secured by nonresidential real estate. There
were  increases in several  other  categories of loans,  including  construction
loans (a $751,000  increase),  one- to four-family loans (a $368,000  increase),
and other  consumer  loans (a $177,000  increase).  There were no loans held for
sale at  September  30,  2006,  compared to $156,000  at June 30,  2006.  We are
selling most of the fixed-rate, one- to four-family loans that we originate with
terms  in  excess  of  fifteen  years  in the  secondary  market.  Cash and cash
equivalents increased to $5.2 million (consisting primarily of The Bankers' Bank
demand account) at September 30, 2006 from $2.5 million at June 30, 2006.  Total
securities  decreased to $25.2  million at September 30, 2006 from $26.1 million
at June 30, 2006.

         Our total liabilities  increased $5.1 million, or 5.1% mostly due to an
increase in deposits to $71.8 million at September 30, 2006,  from $64.3 million
at June 30, 2006, a $ 7.4 million,  or 11.6%  increase.  Certificates of deposit
increased  $5.6 million from June 30, 2006.  Approximately  $2.0 million of this
increase was from  additional  public  funds  deposits.  In  addition,  our rate
promotion  for  shorter-term  certificates  of  deposit  has been  effective  in
attracting these types of deposits.  Money market accounts,  NOW and noninterest
bearing accounts, and passbook savings increased $896,000, $894,000 and $82,000,
respectively,  for the same periods.  Because of our impending stock conversion,
which will be voted upon by shareholders in December 2006,  potential  investors
have  opened  accounts  with us. We expect  these  deposits to be  temporary  in
nature.  Federal Home Loan Bank advances were $30.8  million,  a decline of $2.6
million, or 7.8%, from $33.4 million at June 30, 2006. Advances used to fund our
investment  program  comprised  $5.2 million of the total  advances,  decreasing
$600,000 from program advances at June 30, 2006.

         Stockholders'  equity increased  $155,000 to $13.3 million at September
30, 2006 from $13.1  million at June 30,  2006,  primarily  due to net income of
$168,000 for the quarter.  The Company paid regular cash  dividends of $0.15 per
share  to  stockholders  other  than  Osage  Federal  MHC,  or  $98,000  (net of
restricted stock dividends of $6,000),  in the period ending September 30, 2006.
Expenses  of  the  stock  option  plan  and  restricted   stock  plan  increased
stockholders' equity by $34,000.

Comparison  of Operating  Results for the Three Months Ended  September 30, 2006
and 2005

         General.  Net income for the three months ended  September 30, 2006 was
$168,000 ($.07 per diluted share), a $2,000,  or 1.0%,  increase compared to net
income  of  $166,000  ($0.07  per  diluted  share)  for the three  months  ended
September 30, 2005. The increase in net income  resulted mainly from an increase
in net interest income, partly offset by a decrease in noninterest income and an
increase in noninterest expense. Earnings per diluted share remained flat due to
an increase in common stock equivalents.

         Interest Income. Total interest income increased by $295,000, or 21.5%,
to $1.7 million for the three months ended  September 30, 2006 from $1.4 million
for the same  period  in 2005  primarily  due to a 41 basis  point  increase  in
average yield on  interest-earning  assets,  The yield on earning assets for the
period was 5.99%  compared to a yield of 5.58% in the same  period in 2005.  The
average balance of total  interest-earning  assets  increased $12.8 million from
the three months ended September 30, 2005.

         The primary factor for the increase in interest  income was a $235,000,
or 21.7% increase in interest from loans. Average loans increased $12.4 million,
or 18.5%,  from $67.3 million in 2005 to

                                       10

<PAGE>

$79.7 million in 2006.  There was a 17 basis point increase in the average yield
on loans to 6.57% for the 2006 period from 6.40% in the 2005 period,  reflecting
slightly higher long-term interest rates.

         Our average  investment  portfolio and cash  investments  totaled $28.7
million  for the three  months  ended  September  30,  2006,  a $111,000  or .4%
decrease from the same period in 2005. The yield on these  investments  improved
to 4.37%  compared  to 3.71% in 2005.  This yield  increase is  attributable  to
general  short-term  interest  rate  increases  as well as repricing on existing
adjustable-rate securities.

         Interest Expense.  Total interest expense increased  $276,000,or 44.6%,
to $893,000 for the three months ended  September 30, 2006 from $617,000 for the
three months ended September 30, 2005. The increase in interest expense resulted
from  a 77  basis  point  increase  in  the  average  cost  of  interest-bearing
liabilities  combined with a $12.1  million,  or 14.8%,  increase in the average
balance,  to $93.9 million for the 2006 period compared to $81.8 million for the
2005 period.  The increase in the average cost of  interest-bearing  liabilities
was most notably due to short-term  market rate increases.  We had $18.8 million
of short-term advances at September 30, 2006 which are subject to rate increases
every 30 days or more frequently. Average interest-bearing deposits were up $2.7
million between the two quarters,  with certificates of deposit accounting for a
$6.3 million increase.  For the same time periods,  money market savings account
balances dropped $1.7 million. Interest-bearing checking balances decreased $1.4
million.  We are  seeing  transfers  of funds  from  checking  and money  market
accounts  into  higher-yielding  certificates  of deposits.  We instituted a new
advertising campaign called "You Pick `Em", which allows our customers to choose
a certificate at a specific rate, with a term from 6 to 15 months. Average rates
on certificates are up 70 basis points between the two periods.

         Interest  expense on FHLB  advances  increased  $165,000  for the three
months ended  September 30, 2006,  or 64.3%,  compared to the three months ended
September 30, 2005, reflecting an increase in the average balance of advances to
$33.0 million for the 2006 period from $23.6 million for the 2005 period,  and a
75 basis point increase in the average cost.  These rates have increased  mainly
because of higher rates on our short-term advances.

         Net Interest Income. Net interest income increased by $19,000, or 2.6%,
to $769,000 for the three months ended  September 30, 2006 from $750,000 for the
three months ended September 30, 2005. The net interest rate spread decreased to
2.22% for the 2006 period from 2.58% for the 2005 period, while the net interest
margin  decreased  to 2.77% from 3.06% for the same  periods.  The  decreases in
spread and margin  reflect the  inversion of the yield  curve,  which means that
short-term  market  rates are at or above  long-term  rates.  We  anticipate  an
eventual  decline in  short-term  rates,  which  should  reduce our  deposit and
borrowing costs.

         Provision for Loan Losses. There were no provisions for loan losses for
either the three months ended  September 30, 2006 or 2005.  There were $4,000 of
net  charge-offs in the three months ended September 30, 2006 and $10,000 in the
same period in 2005.  Based on our  stratification  of the loan portfolios using
historical  loss factors and other data,  management  believes that the recorded
allowance  would cover both known and inherent losses in the portfolio that were
both probable and estimable.

         The  evaluation  of the  level of loan  loss  allowance  is  inherently
subjective as it requires estimates that are susceptible to significant revision
as more information  becomes available or as future events change.  The level of
the allowance is based on estimates and the ultimate  losses may vary from these
estimates.  The allowance for loan losses was $396,000 at September 30, 2006 and
$384,000 at September 30, 2005,  and as a percentage of total loans  outstanding
was .49% and 0.56% at September 30, 2006 and 2005, respectively. The decrease in
this ratio is mainly reflective of the increase in total loans outstanding.

                                       11

<PAGE>

         Management  assesses  the  allowance  for loan  losses  monthly.  While
management  uses available  information to estimate  losses on loans,  loan loss
provisions  may be  necessary  based  on  changes  in  economic  conditions.  In
addition, regulatory agencies, as an integral part of their examination process,
periodically  review the  allowance  for loan losses and may require the Bank to
recognize additional provisions based on their judgment of information available
to them at the time of their  examination.  The  allowance for loan losses as of
September 30, 2006 was maintained at a level that represented  management's best
estimate of losses in the loan  portfolio to the extent they were both  probable
and reasonably estimable.  However,  there can be no assurance that the level of
loan losses will be sufficient to offset any future loan losses.

         Noninterest  Income.  Noninterest  income decreased to $171,000 for the
three months ended  September  30, 2006 from $176,000 for the three months ended
September  30, 2005.  Gains on sales of mortgage  loans were down $13,000 due to
lower loan volumes sold, and all other  noninterest  income  categories  changed
only slightly.

         Noninterest  Expense.  Noninterest  expense was  $679,000 for the three
months ended September 30, 2006,  increasing $16,000 from $663,000 for the three
months ended September 30, 2005.  Salaries and benefits  increased  $35,000,  or
9.1%.  Regular salaries  increased  $8,000,  reflecting normal salary increases.
Expense for the employee stock option plan (ESOP) increased  $9,000,  which is a
function of the average price of our stock. Other operating expenses decreased $
13,000  primarily  as a result of an $8,000  decrease in supplies  expense and a
$9,000 decrease in audit and other SEC filing  expenses.  The FDIC has adopted a
new  risk-based  deposit  insurance  assessment  system  that will  require  all
FDIC-insured  institutions to pay quarterly  premiums  beginning in 2007. Annual
premiums  will range from 5 and 7 basis points for  well-capitalized  banks with
the highest  examination  ratings to up to 43 basis points for  undercapitalized
institutions.  The Bank will be able to offset  the  premium  with an  estimated
assessment credit of $82,000 for premiums paid prior to 1996.

         Provision  for Income Taxes.  The provision for income taxes  decreased
$4,000,  or 3.8%,  reflecting  an increase in  nontaxable  income on loans.  The
effective tax rate was 36% for the three months ended  September  30, 2006,  and
37% for the three months ended September 30, 2005.


Liquidity and Capital Resources

         We are  required  to have  enough  investments  that  qualify as liquid
assets  in order to  maintain  sufficient  liquidity  to ensure a safe and sound
banking  operation.  Liquidity  may  increase  or  decrease  depending  upon the
availability of funds and  comparative  yields on investments in relation to the
return on loans.  Historically,  we have  maintained  liquid assets above levels
believed to be adequate to meet the requirements of normal operations, including
potential  deposit  outflows.  Cash flow projections are regularly  reviewed and
updated to assure that adequate liquidity is maintained.

         Our liquidity,  represented by cash and cash equivalents,  is a product
of our operating,  investing and financing  activities.  Our primary  sources of
funds  are  deposits,   scheduled   payments,   prepayments  and  maturities  of
outstanding  loans and  mortgage-backed  securities,  maturities  of  investment
securities and other short-term  investments and funds provided from operations.
While  scheduled  payments from the  amortization  of loans and  mortgage-backed
securities and maturing  investment  securities and short-term  investments  are
relatively  predictable sources of funds, deposit flows and loan prepayments are
greatly   influenced  by  general  interest  rates,   economic   conditions  and
competition.  In addition, we invest excess funds in short-term interest-earning
assets, which provide liquidity to meet lending  requirements.  We also generate
cash through  borrowings.  We utilize FHLB advances to leverage our capital base
and provide a

                                       12

<PAGE>

portion of the funding  needed to manage the interest rate risk presented by our
core business of attracting and retaining  retail  deposits to fund mortgage and
consumer loans.

           Liquidity  management  is  both a daily  and  long-term  function  of
business  management.  Excess  liquidity  is  generally  invested in  short-term
investments  such  as  overnight  deposits,  mutual  funds,  and  collateralized
mortgage  obligations.  On a longer  term  basis,  we  maintain  a  strategy  of
investing in various  loan  products.  We use our sources of funds  primarily to
meet our  ongoing  commitments,  to pay  maturing  certificates  of deposit  and
savings  withdrawals,  to fund loan commitments and to maintain our portfolio of
mortgage-backed securities and investment securities. At September 30, 2006, the
total  approved  loan  origination  commitments  outstanding  amounted  to  $5.4
million. At the same date,  construction loans in process were $992,000. We also
had  $740,000 of unfunded  commitments  on lines of credit on that date.  We had
commitments to sell loans to Freddie Mac and others of $966,000. Certificates of
deposit  scheduled to mature in one year or less at September 30, 2006,  totaled
$33.3 million.  Management's  policy is to maintain deposit rates at levels that
are  competitive  with  other  local  financial   institutions.   Based  on  the
competitive  rates and on  historical  experience,  management  believes  that a
significant  portion of maturing  deposits  will remain with Osage  Federal.  In
addition,  at September 30, 2006, our total  collateralized  borrowing limit was
$46.6 million of which we had $30.8 million  outstanding,  giving us the ability
at September  30, 2006 to borrow an  additional  $15.8  million from the FHLB of
Topeka as a funding source to meet commitments and for liquidity purposes.

ITEM 3.  CONTROLS AND PROCEDURES

The Company's  management  evaluated,  with the  participation  of the Company's
Chief Executive  Officer and Chief Financial  Officer,  the effectiveness of the
Company's  disclosure  controls  and  procedures,  as of the  end of the  period
covered by this report.  Based on that evaluation,  the Chief Executive  Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that information  required to be disclosed by
the  Company  in the  reports  that it files or  submits  under  the  Securities
Exchange Act of 1934 is recorded, processed,  summarized and reported within the
time periods  specified in the  Securities and Exchange  Commission's  rules and
forms.

There were no changes in the Company's internal control over financial reporting
that occurred  during the  Company's  last fiscal  quarter that have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

                                       13

<PAGE>

                           PART II. OTHER INFORMATION

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

         On  November  8,  2006,   the  Company  held  its  annual   meeting  of
stockholders at which the following items were voted on.

          (1)  Election of Directors

                    Nominee               For              Withheld
               ------------------     --------------     --------------

               Mark S. White            2,113,164            8,999
               Harvey Payne             2,111,164           10,999

There were no abstentions or broker non-votes in the election of Directors.

(2) Ratification of Auditors.
                                                                        Broker
         For                        Against          Abstain           Non-Vote
         ---                        -------          -------           --------

         2,113,129                   9,034              0                  0

ITEM 6.  EXHIBITS
         --------

         The following  exhibits are either being filed with or  incorporated by
reference in this quarterly report on Form 10-QSB:

        Number   Description
        ------   -----------

         2     Plan of Conversion and Reorganization *
         3(i)  Articles of Incorporation **
         3(ii) Bylaws **
         4     Form of Common Stock Certificate **
         10.1  Executive  Salary  Continuation Plan and Split Dollar  Agreements
               with Mark S. White***
         10.2  Executive  Salary Continuation  Plan and Split Dollar  Agreements
               with Richard Trolinger***
         10.3  Executive Salary Continuation  Plan and Split Dollar  Agreements
               with Martha Hayes***
         10.4  Executive  Salary Continuation  Plan and Split Dollar  Agreements
               with Sue Allen Smith***
         10.5  Director  Supplemental  Income Plan and Split  Dollar  Agreements
               with Mark A. Formby***
         10.6  Director  Supplemental  Income Plan and Split  Dollar  Agreements
               with Harvey Payne***
         10.7  Director  Supplemental  Income Plan and Split  Dollar  Agreements
               with Gary Strahan***
         10.8  Osage Federal Financial, Inc. 2004 Stock Option Plan****
         10.9  Osage Federal Bank 2004 Restricted Stock Plan****
         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    Section 1350  Certification

          _______________
          *    Incorporated  by  reference  from the  Registrant's Annual Report
               on Form 10-KSB for the fiscal year ended June 30, 2006.
          **   Incorporated  by  reference  from the  Registrant's  Registration
               Statement on Form SB-2 (File No. 333-111219).
          ***  Incorporated  by  reference  from the  Quarterly  Report  on Form
               10-QSB for the Quarter Ended March 31, 2005.
          **** Incorporated  by  reference  to  the   Registrant's  Registration
               Statement on Form S-8 (File No. 333-121866).

                                       14

<PAGE>

                                   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.


                                            OSAGE FEDERAL FINANCIAL, INC.



Date: November 14, 2006                     /s/Mark S. White
                                            ------------------------------------
                                            Mark S. White, President
                                            (Duly Authorized Representative)


Date: November 14, 2006                     /s/Sue Allen Smith
                                            ------------------------------------
                                            Sue Allen Smith, Vice President
                                            (Principal Financial Officer)


                                       15