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 December 31, 2003

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

     For the transition period from _________ to _________

                        Commission File Number 333-111219
                                               ----------

                          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
---         ---

         As of  December  31,  2003,  there  were no shares of the  Registrant's
common stock, par value $.10 per share, outstanding.

         Transitional Small Business Issuer Disclosure Format (check one):
    Yes      X    No
---         ---
                                   * * * * * *

NOTE: On February 11, 2004, the Registrant's Registration Statement on Form SB-2
was  declared  effective  by  the  Securities  and  Exchange   Commission.   The
Registration  Statement and the related  Prospectus  which formed a part thereof
related to the offering of the Registrant's  common stock in connection with the
mutual holding company  reorganization (the  "Reorganization")  of Osage Federal
Savings  and  Loan   Association   (the  "Bank").   Upon   consummation  of  the
Reorganization,   the  Bank  will  become  a  wholly  owned  subsidiary  of  the
Registrant,  and the  Registrant  will close the public  offering  of its common
stock.  The Registrant has not engaged in any business prior to the consummation
of the  Reorganization.  The  Registrant  will not have any  material  assets or
liabilities  prior  to the  consummation  of  the  Conversion.  The  information
presented in this Form 10-QSB therefore relates solely to the business conducted
by the Bank.

<PAGE>

                   OSAGE FEDERAL SAVINGS AND LOAN ASSOCIATION

                               PAWHUSKA, OKLAHOMA

                                      INDEX

                                                                            Page
                                                                            ----

PART I.  FINANCIAL INFORMATION
------

Item 1.  Financial Statements

Balance Sheet as of December 31, 2003  (Unaudited)  and June 30, 2003          3
Statements of Income - (Unaudited) for the three and six months ended
         December 31, 2003 and 2002                                            4
Statements of Cash Flows - (Unaudited) for the Six months ended
         December 31, 2003 and 2002                                            5
Notes to Financial Statements (Unaudited)                                      7

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

Item 3.  Controls and Procedures                                              14

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

Item 5.  Other Information                                                    15

Item 6.  Exhibits and Reports on Form 8-K                                     15

Signatures                                                                    16


                                       2
<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

                   OSAGE FEDERAL SAVINGS AND LOAN ASSOCIATION
                                 Balance Sheets

<TABLE>
<CAPTION>
                                                      December 31, 2003  June 30, 2003
                                                      -----------------  -------------
                                                                 (Unaudited)
<S>                                                    <C>             <C>

Assets
    Cash and due from banks                              $    545,304    $    450,313
    Interest bearing deposits with banks                    2,267,375       9,663,687
                                                         ------------    ------------

        Cash and cash equivalents                           2,812,679      10,114,000

    Available-for-sale securities                          11,433,456       9,375,361
    Held-to-maturity securities                            11,627,424       8,598,852
    Mortgage loans held for sale                                   --       1,280,600
    Loans, net                                             48,433,849      46,342,323
    Premises and equipment                                  1,352,668       1,386,294
    Foreclosed assets held for sale, net                      144,236         117,938
    Interest receivable                                       288,633         292,190
    Federal Home Loan Bank stock, at cost                     673,300         667,500
    Income taxes refundable                                    35,003           9,629
    Other                                                   2,307,458         338,211
                                                         ------------    ------------

               Total assets                              $ 79,108,706    $ 78,522,898
                                                         ============    ============

 Liabilities and Retained Earnings
    Liabilities
        Deposits                                         $ 58,181,792    $ 58,833,435
        Federal Home Loan Bank advances                    12,500,000      11,000,000
        Advances from borrowers held in escrow                374,850         795,604
        Accrued interest and other liabilities                218,102         154,818
        Deferred income taxes                                 158,931         198,380
                                                         ------------    ------------

               Total liabilities                           71,433,675      70,982,237
                                                         ------------    ------------

    Commitments and Contingencies                                  --              --

    Retained Earnings
        Retained earnings                                   7,710,097       7,541,946
        Accumulated other comprehensive income (loss)         (35,066)         (1,285)
                                                         ------------    ------------

               Total retained earnings                      7,675,031       7,540,661
                                                         ------------    ------------

               Total liabilities and retained earnings   $ 79,108,706    $ 78,522,898
                                                         ============    ============
</TABLE>

See Notes to Financial Statements

                                       3
<PAGE>

                   OSAGE FEDERAL SAVINGS AND LOAN ASSOCIATION
                              Statements of Income
<TABLE>
<CAPTION>
                                               Three Months Ended            Six Months Ended
                                                  December 31,                 December 31,
                                            -------------------------    -------------------------
                                               2003          2002           2003          2002
                                            -----------   -----------    -----------   -----------
                                                  (Unaudited)                   (Unaudited)
<S>                                       <C>           <C>            <C>           <C>
    Interest Income
        Loans                               $   830,233   $   948,431    $ 1,678,250   $ 1,987,818
        Available-for-sale securities            61,467        57,104        112,581       117,914
        Held-to-maturity securities              90,302       112,148        174,992       234,370
        Deposits with other financial
          institutions                            9,728        27,003         26,849        52,827
        Other                                     5,889         6,309         11,777        14,301
                                            -----------   -----------    -----------   -----------
                Total interest income           997,619     1,150,995      2,004,449     2,407,230
                                            -----------   -----------    -----------   -----------

    Interest Expense
        Deposits                                333,619       440,647        687,961       926,283
        Advances from Federal Home Loan Bank    144,453       174,930        294,874       345,091
                                            -----------   -----------    -----------   -----------
                Total interest expense          478,072       615,577        982,835     1,271,374
                                            -----------   -----------    -----------   -----------

    Net Interest Income                         519,547       535,418      1,021,614     1,135,856

    Provision for loan losses                        --            --             --            --
                                            -----------   -----------    -----------   -----------
    Net interest income after provision
       for loan losses                          519,547       535,418      1,021,614     1,135,856
                                            -----------   -----------    -----------   -----------
    Noninterest Income
        Service charges on deposit
          accounts                               92,580        90,481        180,991       184,962
        Other service charges and fees           17,983        14,558         34,253        31,602
        Gain on sale of mortgage loans           17,862       180,330        143,605       285,686
        Net loan servicing fees                   6,965        (8,860)         7,800        (2,743)
        Other income                              5,478        11,030         11,592        18,971
                                            -----------   -----------    -----------   -----------
                Total noninterest income        140,868       287,539        378,241       518,478
                                            -----------   -----------    -----------   -----------

    Noninterest Expense
        Salaries and employee benefits          312,260       301,310        629,739       601,886
        Net occupancy expense                    74,098        66,008        146,524       170,063
        Deposit insurance premium                 2,226         2,487          4,629         4,999
        Other operating expenses                177,219       152,855        346,981       308,313
                                            -----------   -----------    -----------   -----------
                Total noninterest expense       565,803       522,660      1,127,873     1,085,261
                                            -----------   -----------    -----------   -----------

    Income Before Income Taxes                   94,612       300,297        271,982       569,073
    Provision for Income Taxes                   36,334       113,587        103,831       216,145
                                            -----------   -----------    -----------   -----------
    Net Income                              $    58,278   $   186,710    $   168,151   $   352,928
                                            ===========   ===========    ===========   ===========
</TABLE>

See Notes to Financial Statements

                                       4
<PAGE>

                   OSAGE FEDERAL SAVINGS AND LOAN ASSOCIATION
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                    Six Months Ended
                                                                                       December 31,
                                                                               ----------------------------
                                                                                    2003            2002
                                                                               ------------    ------------
                                                                                       (Unaudited)
<S>                                                                          <C>             <C>
    Operating Activities
        Net income                                                             $    168,151    $    352,928
        Items not requiring (providing) cash
           Depreciation                                                              67,361          95,573
           Amortization                                                              69,472          62,781
           Deferred income taxes                                                    (17,386)         20,411
           Gain on sale of mortgage loans                                          (143,605)       (285,686)
           Gain on sale of foreclosed assets held for sale                             (178)         (3,608)
           Gain on disposal of premises and equipment                                (4,200)             --
           Dividends on available-for-sale mutual funds                            (112,581)       (117,914)
              Stock dividends from Federal Home Loan Bank                            (5,800)             --
        Originations of loans held for delivery against commitments              (8,583,042)    (15,045,442)
        Proceeds from nonrecourse sale of loans held for delivery against
          commitments                                                             9,992,359      15,431,053
        Changes in
           Interest receivable                                                        3,557          57,103
           Other assets                                                            (143,740)        (48,810)
           Accrued interest and other liabilities                                    71,555          23,915
                                                                               ------------    ------------
               Net cash provided by operating activities                          1,361,923         542,304
                                                                               ------------    ------------

    Investing Activities
        Net change in loans                                                      (2,128,746)      4,185,057
        Purchases of premises and equipment                                         (33,735)        (23,140)
        Proceeds from sale of premises and equipment                                  4,200              --
        Proceeds from sale of foreclosed assets                                      11,100         103,151
        Purchases of available-for-sale securities                               (2,000,000)     (1,000,000)
        Proceeds from maturities and paydowns of held-to-maturity securities      4,874,369       3,596,173
        Purchases of held-to-maturity securities                                 (7,918,035)     (2,992,709)

            Purchase of bank-owned life insurance                                (1,900,000)             --
                                                                               ------------    ------------
               Net cash provided by (used in) investing activities               (9,090,847)      3,868,532
                                                                               ------------    ------------
</TABLE>

See Notes to Financial Statements

                                       5
<PAGE>

                   OSAGE FEDERAL SAVINGS AND LOAN ASSOCIATION
                            Statements of Cash Flows
                                   (Continued)

<TABLE>
<CAPTION>
                                                                                 Six Months Ended
                                                                                    December 31,
                                                                            ----------------------------
                                                                                 2003            2002
                                                                            ------------    ------------
                                                                                    (Unaudited)
<S>                                                                       <C>             <C>
    Financing Activities
        Net increase in demand, money market, NOW and savings deposits      $  1,871,475    $    342,317
        Net decrease in certificates of deposit                               (2,523,118)        (34,201)
        Net increase in Federal Home Loan Bank advances                        1,500,000       1,000,000
        Net increase (decrease) in advances from borrowers held in escrow       (420,754)        176,592
                                                                            ------------    ------------
               Net cash provided by financing activities                         427,603       1,484,708
                                                                            ------------    ------------

    Increase (Decrease) in Cash and Cash Equivalents                          (7,301,321)      5,895,544

    Cash and Cash Equivalents, Beginning of Period                            10,114,000       7,318,030
                                                                            ------------    ------------

    Cash and Cash Equivalents, End of Period                                $  2,812,679    $ 13,213,574
                                                                            ============    ============

    Supplemental Cash Flows Information

        Real estate and other assets acquired in settlement of loans        $     37,220    $     10,155

        Interest paid                                                       $    979,928    $  1,272,323

        Income taxes paid                                                   $    147,949    $    209,221

        Mutual fund dividends reinvested                                    $    112,581    $    117,914
</TABLE>

    See Notes to Financial Statements

                                       6
<PAGE>

                   OSAGE FEDERAL SAVINGS AND LOAN ASSOCIATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1.       OSAGE FEDERAL FINANCIAL, INC.

         Osage Federal Financial,  Inc. (the "Company") is being incorporated as
         a federally  chartered  corporation  for the  purpose of  becoming  the
         holding  company of Osage  Federal  Savings and Loan  Association  (the
         "Bank")  in  connection   with  the  Bank's  mutual   holding   company
         reorganization.   On  February  20,  2004,  the  Company   commenced  a
         subscription   offering   of  its   shares  in   connection   with  the
         reorganization.  The Company's  offering and the Bank's  reorganization
         are expected to close on March 31, 2004. A total of 684,394 shares were
         sold at $10.00 per share. Prior to consummation of the conversion,  the
         Company had no assets or  liabilities,  and as of December 31, 2003, no
         shares had been issued.

2.       BASIS OF PRESENTATION

         The  accompanying  unaudited  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 Bank
         as of June 30, 2003 has been derived from the audited  balance sheet of
         the Bank as of that date. The statement of income for periods presented
         is 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
         generally  accepted  accounting   principles  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  registration  statement  filed with the  Securities  and
         Exchange Commission.

3.       EARNINGS PER SHARE

         As of  December  31,  2003,  neither  the  Company nor the Bank had any
         shares of common stock outstanding. As such the statements of income do
         not disclose earnings per share as would otherwise be required.

4.       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  is  the  incorporation  of  a  federally
         chartered  stock holding  company.

                                       7
<PAGE>

         The Bank  will  become  a wholly  owned  subsidiary  of a  concurrently
         formed  holding  company.  The  Plan provides that the holding  company
         will offer  nontransferable  subscription  rights  to  purchase  common
         stock of the  holding  company.  The rights  will  be offered  first to
         eligible account  holders,  the  tax-qualified  employee  stock benefit
         plans,  supplemental  eligible account holders and other  members.  Any
         shares remaining may then be offered to the general public.

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

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

         Offering  costs will be deferred and deducted  from the proceeds of the
         shares sold in the stock  offering.  If the offering is not  completed,
         all costs will be charged to expense.  At December 31, 2003, $98,500 in
         such costs have been incurred.


5.       OTHER COMPREHENSIVE INCOME

         Other comprehensive income is comprised of the following:

<TABLE>
<CAPTION>
                                        Three Months Ended      Six Months Ended
                                            December 31,           December 31,
                                      ---------------------   ----------------------
                                         2003        2002        2003         2002
                                      ---------   ---------   ---------    ---------
                                          (Unaudited)              (Unaudited)
<S>                                 <C>         <C>         <C>          <C>
Net Income                            $  58,278   $ 186,710   $ 168,151    $ 352,928
                                      ---------   ---------   ---------    ---------
Other Comprehensive Income (Loss)
    Unrealized gain (loss) on
      available-for-sale securities          25          34     (33,781)       4,492
                                      ---------   ---------   ---------    ---------
Comprehensive Income                  $  58,303   $ 186,744   $ 134,370    $ 357,420
                                      =========   =========   =========    =========
</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 Bank.

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 Bank 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 Bank's  actual  results  for future
periods to differ materially from those anticipated or projected.  The Bank 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.

Comparison of Financial Condition at December 31, 2003 and June 30, 2003

         Our total assets increased by $586,000 to $79.1 million at December 31,
2003 from $78.5 million at June 30, 2003  primarily  due to a $2.1  million,  or
4.5% increase in loans receivable, net. Loans receivable, net increased to $48.4
million at December 31, 2003 from $46.3 million at June 30, 2003.  This increase
in loans  receivable,  net  primarily  resulted  from a $1.7  million,  or 5.0%,
increase in one- to four-family mortgages.  Partially offsetting the increase in
loans  receivable,  net was a 100%  decrease  in  loans  held  for sale to $0 at
December  31,  2003 from $1.3  million at June 30,  2003.  The  decline in loans
held-for-sale  reflects a strategic change. We are now retaining all of our one-
to  four-family  loans in order to strengthen  our net interest  margin.  A $7.3
million,  or 72.2%,  decrease in cash and cash  equivalents was offset by a $5.1
million, or 28.3%, increase in securities and the $2.1 million, or 4.5% increase
in loans  receivable,  net. Cash and cash equivalents  decreased to $2.8 million
(consisting  primarily  of our FHLB demand  account)  at December  31, 2003 from
$10.1  million  at June 30,  2003.  Securities  increased  to $23.1  million  at
December 31, 2003 from $18.0  million at June 30, 2003,  reflecting  primarily a
35.2%  increase  in  collateralized  mortgage  obligations  and  mortgage-backed
securities because of additional purchases.  We have made a $1.9 million premium
deposit for a bank-owned life insurance  policy.  The policy took effect January
1, 2004.

         Our total  liabilities  increased  slightly  due to an increase in FHLB
advances to $12.5  million at December 31, 2003,  from $11.0 million at June 30,
2003,  partly offset by a decline in total deposits to $58.2 million at December
31, 2003 from $58.8  million at June 30, 2003, a $652,000,  or 1.1%  decline.  A
$2.5 million,  or 6.7%, decrease in certificates of deposit was partially offset
by a $1.9 million,  or 23.6% increase in money market accounts.  The increase in
advances represents a borrowing on our line of credit at the FHLB. The borrowing
rate for that advance was 1.15% which was below the rates on alternative sources
of funds.  The decline in  certificates  of deposits  resulted from decreases in
public unit deposits,  as well as customers  opting for money market accounts in
lieu of locking in longer-term rates.

                                        9
<PAGE>

         Equity  increased  $134,000 to $7.7  million at December  31, 2003 from
$7.5 million at June 30, 2003,  reflecting income of $168,000 for the six months
ended December 31, 2003, despite unrealized after-tax loss on available-for-sale
securities increasing $34,000.

Comparison of Operating Results for the Three Months Ended December 31, 2003 and
2002

         General.  Net income for the three months  ended  December 31, 2003 was
$58,000, a $129,000,  or 69.0%,  decrease compared to net income of $187,000 for
the three months ended  December 31, 2002.  The decrease in net income  resulted
mainly from a decrease in noninterest income.

         Interest Income. Total interest income decreased by $154,000, or 13.4%,
to $997,000 for the three  months ended  December 31, 2003 from $1.2 million for
the same period in 2002  primarily  due to a 57 basis  point  decline in average
yield on interest-earning assets, reflecting the decline in overall market rates
between the periods and a shift in the  composition of  interest-earning  assets
towards  lower-yielding  investment  securities.   This  shift  occurred  as  we
previously  had been selling most of our originated  one- to  four-family  loans
instead of retaining  them in our  portfolio.  Excess  liquidity was invested in
lower yielding investment  securities and cash equivalents.  The average balance
of total  interest-earning  assets decreased by $2.7 million,  or 3.5%, to $75.3
million  for the 2003  period  from $78.0  million  for the three  months  ended
December 31, 2002.

         The primary factor for the decrease in interest  income was a $118,000,
or 12.5%,  decrease in interest  from loans,  due to a 68 basis point decline in
the  average  yield on loans to 6.87% for the 2003 period from 7.55% in the 2002
period,  reflecting  decreased market rates of interest and repayments of higher
yielding mortgages. Also contributing to the decrease in interest on loans was a
$1.9 million, or 3.8%,  decrease in the average balance of loans receivable,  to
$48.0  million for the three months ended  December 31, 2003 from $49.9  million
for the three months ended December 31, 2002.

         Interest  income on securities  and cash  investments  decreased as the
result of the 58 basis point  decrease in the average  yield on  securities,  to
2.36% for the 2003 period from 2.94% for the 2002 period.  This decline was also
reflective of decreased  market rates of interest  resulting in  prepayments  of
mortgage-backed securities and collateralized mortgage obligations.  The decline
in yield more than offset an $803,000,  or 2.9% increase in the average  balance
of  securities  and cash and cash  equivalents  to $28.2  million  for the three
months  ended  December  31, 2003 from $27.4  million for the three months ended
December 31, 2002.

         Interest Expense.  Total interest expense decreased $137,000, or 22.3%,
to $478,000 for the three months ended  December 31, 2003 from  $615,000 for the
three months ended December 31, 2002. The decrease in interest  expense resulted
from  a 68  basis  point  decrease  in  the  average  cost  of  interest-bearing
liabilities  as well as from a $2.6  million,  or 3.7%,  decrease in the average
balance,  to $66.4 million for the 2003 period compared to $69.0 million for the
2002 period.  The decrease in the average cost of  interest-bearing  liabilities
was a result of the  continued  decline in market rates of interest  during 2002
and 2003 and was also  attributable in part to a $3.8 million,  or 9.8% decrease
in the average balance of certificates of deposit, to $35.0 million for the 2003
period  from $38.8  million  for the 2002  period.  The  decrease in the average
balance of  certificates  of  deposit  was offset by  increases  in the  average
balances  of  all  other  deposit  categories,  with  the  primary  increase  in
interest-bearing  NOW accounts,  for which the average  balance  increased  $2.0
million,  or 14.0%,  to $15.8 million for the 2003 period from $13.8 million for
the 2002 period.  The concentration of the increase in average  interest-bearing
liabilities  in  the  NOW  accounts,  which  are  lower  cost  liabilities  than
certificates of deposit,  resulted in a change in the mix of the deposit base to
favor a lower  cost of funds.  Money  market  savings  accounts  increased  $1.0
million,  or 12.8%,  during  the same  period.  Consumers  have  generally

                                       10
<PAGE>

been reluctant to lock in current rates on certificates of deposit,  and in many
cases have chosen the liquidity of money market savings accounts instead.

         Interest  expense on Federal Home Loan Bank  advances  fell $30,000 for
the three months ended December 31, 2003, or 17.4%, compared to the three months
ended  December  31,  2002,  reflecting  a decrease  in the  average  balance of
advances to $11.4  million  for the 2003 period from $12.5  million for the 2002
period, and a 51 basis point decrease in the average cost.

         Net Interest Income. Net interest income decreased by $17,000, or 3.2%,
to $519,000 for the three months ended  December 31, 2003 from  $536,000 for the
three months ended December 31, 2002. The net interest rate spread  increased to
2.39% for the 2003 period from 2.28% for the 2002 period, while the net interest
margin increased to 2.73% from 2.71%. The increases in spread and margin reflect
our retention of one- to four-family  mortgages,  instead of selling them in the
secondary  market.  Near  the end of the  quarter,  we used  some of our  highly
liquid, low-yielding assets, namely cash investments, to purchase collateralized
mortgage obligations, in order to improve our yield on our securities.

         Provision for Loan Losses. There were no provisions for loan losses for
either the three  months ended  December 31, 2003 or 2002.  There were $6,000 of
charge-offs  and $1,000 of  recoveries  in the three months  ended  December 31,
2003,  and no  charge-offs  or recoveries in the three months ended December 31,
2002. 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 $404,000 at December 31, 2003 and
$409,000 at December 31, 2002,  and as a percentage  of total loans  outstanding
was 0.80% and 0.84% at December  31, 2003 and 2002,  respectively.  The ratio is
mainly reflective of the increase in total loans outstanding.

         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
December 31, 2003 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 $141,000 for the
three  months ended  December 31, 2003 from  $287,000 for the three months ended
December  31,  2002.  Net loan  servicing  fees  increased  $16,000  for the two
periods,  due to lower amortization of mortgage  servicing rights.  Gains on the
sale of mortgages  declined to $18,000 for the three  months ended  December 31,
2003,  from  $180,000 for the three  months ended  December 31, 2002, a $162,000
decrease. We anticipate that these gains from the sale of mortgages will further
decline  because  refinancing  activity  has slowed,  and because we have made a
strategic  decision to retain most of our  originated  mortgages.  By  retaining
mortgages,  we intend to increase our net interest margins, which should benefit
future periods' net interest income.

         Noninterest  Expense.  Noninterest  expense was  $566,000 for the three
months ended December 31, 2003,  increasing  $44,000 from $522,000 for the three
months ended  December 31, 2002.  Salaries and

                                       11
<PAGE>

benefits  increased  $11,000,  or 3.6%,  mainly due to raises.  Other  operating
expenses  increased $24,000 primarily as a result of $20,000 of losses resulting
from fraudulent activities of customers. The Bank is pursuing its legal remedies
to recover these losses.  Loan expenses  increased  $7,000 due to the payment to
Freddie Mac of loan fees we collected from the customers.

         Management  expects increased expenses in the future as a result of the
establishment  of the employee  stock  ownership  plan and the  potential  stock
benefit plans, as well as increased costs associated with being a public company
such as periodic  reporting,  annual meeting materials,  retention of a transfer
agent, and professional fees.

         Provision  for Income Taxes.  The provision for income taxes  decreased
$78,000,  or 68.4%,  reflecting a decrease in pretax  income.  The effective tax
rate was 38% for the three months ended December 31, 2003 and 2002.

Comparison of Operating  Results for the Six Months Ended  December 31, 2003 and
2002

         General.  Net income for the six months  ended  December  31,  2003 was
$168,000,  a $185,000 or 52.4%,  decrease compared to net income of $353,000 for
the six months  ended  December 31,  2002.  The decrease in net income  resulted
mainly from a decrease in noninterest income.

         Interest Income. Total interest income decreased by $403,000, or 16.7%,
to $2.0 million for the six months ended December 31, 2003 from $2.4 million for
the same period in 2002  primarily  due to a 89 basis  point  decline in average
yield on interest-earning  assets reflecting the decline in overall market rates
between the periods and a shift in the  composition of  interest-earning  assets
towards  lower-yielding  investment  securities.  The  average  balance of total
interest-earning assets decreased by $1.8 million, or 2.3%, to $75.7 million for
the 2003 period from $77.5 million for the 2002 period.

         The primary factor for the decrease in interest  income was a $310,000,
or 15.6%,  decrease in interest from loans,  due to an 89 basis point decline in
the  average  yield on loans to 6.83% for the 2003 period from 7.72% in the 2002
period,  reflecting  decreased market rates of interest and repayments of higher
yielding mortgages. Also contributing to the decrease in interest on loans was a
$2.4 million, or 4.6%,  decrease in the average balance of loans receivable,  to
$48.7 million for the six months ended  December 31, 2003 from $51.1 million for
the six months ended December 31, 2002.

         Interest  income on securities  and cash  investments  decreased as the
result of the 82 basis point  decrease in the average  yield on  securities,  to
2.33% for the 2003 period from 3.15% for the 2002 period.  This decline was also
reflective of decreased  market rates of interest  resulting in  prepayments  of
mortgage-backed securities and collateralized mortgage obligations.  The decline
in yield  more than  offset a $1.4  million,  or 5.4%  increase  in the  average
balance of securities  and cash  investments to $27.8 million for the six months
ended December 31, 2003 from $26.4 million for the six months ended December 31,
2002.

         Interest Expense.  Total interest expense decreased $288,000, or 22.7%,
to $983,000 for the six months ended December 31, 2003 from $1.3 million for the
six months ended  December 31, 2002. The decrease in interest  expense  resulted
from  a 74  basis  point  decrease  in  the  average  cost  of  interest-bearing
liabilities  as well as from a $2.2  million,  or 3.2%,  decrease in the average
balance,  to $66.4 million for the 2003 period compared to $68.6 million for the
2002 period.  The decrease in the average cost of  interest-bearing  liabilities
was a result of the  continued  decline in market rates of interest  during 2002
and 2003 and was also  attributable in part to a $3.2 million,  or 8.3% decrease
in the average balance of certificates of deposit, to $35.7 million for the 2003
period  from $38.9  million  for the 2002  period.  The  decrease in the average
balance of  certificates  of  deposit  was offset by  increases  in the  average
balances

                                       12
<PAGE>

of all other deposit  categories,  with the primary increase in interest-bearing
NOW accounts, for which the average balance increased $1.7 million, or 10.1%, to
$18.5  million for the 2003 period from $16.8  million for the 2002 period.  The
concentration  of the increase in average  interest-bearing  liabilities  in the
interest-bearing   NOW  accounts,   which  are  lower  cost   liabilities   than
certificates of deposit,  resulted in a change in the mix of the deposit base to
favor a lower cost of funds. Money market savings accounts  increased  $600,000,
or 7.1%, in the same time period.  Consumers  have  generally  been reluctant to
lock in rates on  certificates  of  deposit,  and in many cases have  chosen the
liquidity of money market savings accounts instead.

         Interest  expense on Federal Home Loan Bank  advances  fell $50,000 for
the six months ended  December 31,  2003,  or 14.6%,  compared to the six months
ended  December  31,  2002,  reflecting  a decrease  in the  average  balance of
advances to $11.2  million  for the 2003 period from $12.0  million for the 2002
period, and a 48 basis point decrease in the average cost.

         Net Interest  Income.  Net interest  income  decreased by $115,000,  or
10.1%,  to $1.0  million for the six months  ended  December  31, 2003 from $1.1
million for the six months ended December 31, 2002. The net interest rate spread
decreased to 2.30% for the 2003 period from 2.46% for the 2002 period, while the
net interest margin  decreased to 2.67% from 2.90%.  The decreases in spread and
margin  were  reflective  of  faster  repricing  of  short-term  assets  such as
mortgage-related  securities,  payoffs of higher  yielding  longer-term  assets,
especially one- to four-family  mortgage loans and  reinvestment of the proceeds
in short-term lower yielding securities.

         Provision for Loan Losses. There were no provisions for loan losses for
either the six months  ended  December  31,  2003 or 2002.  There were $6,000 of
charge-offs and $1,000 of recoveries for the six months ended December 31, 2003,
and no  charge-offs  or  recoveries  in the six months ended  December 31, 2002.
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.

         Noninterest  Income.  Noninterest  income decreased to $378,000 for the
six months  ended  December  31,  2003 from  $518,000  for the six months  ended
December 31, 2002.  Service charges were down slightly,  by $4,000, due to lower
average  overdraft  activity.  Net loan servicing fees increased $11,000 for the
two periods,  due to lower amortization of mortgage  servicing rights.  Gains on
the sale of mortgages  decreased  to $144,000 for the six months ended  December
31, 2003,  from $286,000 for the six months ended  December 31, 2002, a $142,000
decrease. We anticipate that these gains from the sale of mortgages will further
decline  because  refinancing  activity  has slowed,  and because we have made a
strategic  decision to retain most of our  originated  mortgages.  By  retaining
mortgages,  we intend to increase our net interest margins, which should benefit
future periods' net interest income.

         Noninterest  Expense.  Noninterest  expense  of $1.1  million  remained
almost constant for the six months ended December 31, 2003,  increasing  $43,000
from $1.1  million for the six months  ended  December  31,  2002.  Salaries and
benefits  increased  $28,000,  or 4.6%,  mainly  due to  raises.  Furniture  and
equipment  depreciation  decreased  $29,000,  or 45.2%,  reflecting  accelerated
writeoffs of computer  equipment  in the six months  ended  December 31, 2002 in
connection  with an upgrade of our data  processing  equipment.  Other operating
expenses  increased  $40,000  as a result of $20,000  of losses  resulting  from
fraudulent  activities by customers.  The Bank is pursuing its legal remedies to
recover these losses.  Loan expense  increased $9,000 due the payment to Freddie
Mac of loan fees we collected from the customers.

         Management  expects increased expenses in the future as a result of the
establishment  of the employee  stock  ownership  plan and the  potential  stock
benefit plans, as well as increased costs associated

                                       13
<PAGE>

with  being  a  public  company  such  as  periodic  reporting,  annual  meeting
materials, retention of a transfer agent, and professional fees.

         Provision  for Income Taxes.  The provision for income taxes  decreased
$113,000,  or 52.3%,  reflecting a decrease in pretax income.  The effective tax
rate was 38% for the six months ended December 31, 2003 and 2002.

Liquidity and Commitments

         We are  required  to have  enough  investments  that  qualify as liquid
assets  in order to  maintain  sufficient  liquidity  to ensure a safe and sound
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 Federal Home Loan Bank advances to leverage
our  capital  base and  provide a 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 December 31, 2003, the total approved
loan origination  commitments  outstanding amounted to $2.8 million. At the same
date,  construction loans in process were $1.7 million.  Certificates of deposit
scheduled  to mature in one year or less at December  31,  2003,  totaled  $18.4
million.  Although  the average  cost of  deposits  decreased  throughout  2003,
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 December 31,
2003, our total collateralized borrowing limit was $29.4 million of which we had
$12.5 million outstanding,  giving us the ability at December 31, 2003 to borrow
an  additional  $16.9  million  from the  Federal  Home Loan Bank 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

                                       14
<PAGE>

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.

Part II

                                OTHER INFORMATION

ITEM 5.  OTHER INFORMATION
         -----------------

         On February 11, 2004, the Securities and Exchange  Commission  declared
the  registrant's  Registration  Statement  on Form  SB-2  (Commission  File No.
333-111219)  effective.  The  Registration  Statement  covered  the  sale by the
registrant  of up to 684,394  shares of its  common  stock,  $.10 par value,  in
connection  with the mutual  holding  company  reorganization  of Osage  Federal
Savings and Loan Association,  Pawhuska, Oklahoma (the "Bank"). The offering was
commenced  on  February  20,  2004  and   terminated  on  March  12,  2004.  The
reorganization  was approved by the Bank's members at a special  meeting held on
March 24,  2004.  The OTS has approved an increase in the number of shares to be
sold to 684,394 shares.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

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

      Number   Description
       3(i)    Articles of Incorporation *
       3(ii)   Bylaws *
       4       Form of Common Stock Certificate *
      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 Registration Statement
           on Form SB-2 (File No. 333-111219).



         (b) During the quarter ended  December 31, 2003, the Registrant did not
             file any current reports on Form 8-K.

                                       15
<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: March 26, 2004                        /s/Mark S. White
                                            ------------------------------------
                                            Mark S. White, President
                                            (Duly Authorized Representative)


Date: March 26, 2004                        /s/Sue Allen Smith
                                            ------------------------------------
                                            Sue Allen Smith, Vice President
                                            (Chief Financial Officer)