SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                   FORM 10-QSB

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

                  For the quarterly period ended March 31, 1997

                                       OR

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

              For the transition period from _________ to _________

                           Commission File No. 0-28934

                          Empire Federal Bancorp, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

       Delaware                                       81-0512374
-------------------------------         ------------------------------------
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
incorporation or organization)

                123 South Main Street, Livingston, Montana 59047
                ------------------------------------------------
                    (Address of principal executive offices)

                                (406) 222-1981
              ---------------------------------------------------
              (Registrant's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by
Sections 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 
    ---    ---

State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.

         Class:     Common Stock, par value $.01 per share
                    Outstanding at May 5, 1997: 2,592,100

Transitional Small Business Disclosure Format (check one):   YES ___   NO _X_



<PAGE>
<PAGE>
                          EMPIRE FEDERAL BANCORP, INC.

                              INDEX TO FORM 10-QSB


                                                                              
                                                                    Page
PART I            FINANCIAL INFORMATION                             ----
                  ---------------------
Item 1.           Financial Statements

                      Consolidated Statements of Financial 
                      Condition at March 31, 1997 and
                      December 31, 1996 (unaudited)..............     1

                      Consolidated Statements of Income for
                      the Three Months Ended March 31,
                      1997 and 1996 (unaudited)..................     2

                      Consolidated Statements of Cash Flows for 
                      the Three Months Ended March
                      31, 1997 and 1996 (unaudited)..............     3

                      Notes to Unaudited Interim Consolidated
                      Financial Statements.......................     4

Item 2.           Management's Discussion and Analysis of 
                  Financial Condition and Results of
                  Operations.....................................     7


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

Item 1.           Legal Proceedings..............................    10

Item 2.           Changes in Securities..........................    10

Item 3.           Defaults upon Senior Securities................    10

Item 4.           Submission of Matters to a Vote of Security                 
                  Holders........................................    10

Item 5.           Other Information..............................    10

Item 6.           Exhibits and Reports on Form 8-K...............    10


SIGNATURES.......................................................    11



<PAGE>

<PAGE>
Part I, Item 1 - Financial Statements
-------------------------------------

                  EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                      March 31, 1997 and December 31, 1996

                                     March 31,           December 31,
      Assets                            1997                  1996
      ------                        ------------         --------------
                                     (unaudited)          (unaudited)

Cash and cash equivalents          $   1,079,353           1,165,164
Interest-bearing deposits              5,906,002          29,824,391
Investment and mortgage-backed 
 securities available-for-sale        30,245,851          13,767,773
Investment and mortgage-backed 
 securities held-to-maturity 
 (estimated market value of 
 $24,677,081 at March 31, 1997
 and $26,385,527 at December 
 31, 1996)                            24,658,677          26,187,821
Loans receivable, net                 42,808,072          41,703,590
Stock in Federal Home Loan Bank 
 of Seattle, at cost                   1,189,600           1,168,800
Accrued interest receivable              408,272             330,927
Premises and equipment, net            1,308,770           1,276,818
Prepaid expenses and other assets        333,576             448,473
                                    ------------         -----------
   Total assets                     $107,938,173         115,873,757
                                    ============         ===========

   Liabilities and Stockholders' Equity
   ------------------------------------

Liabilities:
  Deposits                          $ 67,040,922          67,697,866
    Stock oversubscription funds          -                6,987,070
    Advances from borrowers for 
      taxes and insurance                350,035             169,872
    Accrued expenses and other 
      liabilities                        768,750           1,409,312
                                    ------------         -----------
   Total liabilities                  68,159,707          76,264,120

Stockholders' equity:
  Preferred stock, par value $.01
   per share, 250,000 shares
   authorized, none issued and
   outstanding                            -                    -
  Common stock, par value $.01 per
   share, 4,000,000 shares
   authorized, 2,592,100 issued           25,921              25,921
  Additional paid-in capital          25,156,750          25,142,356
  Unearned ESOP compensation          (2,028,836)         (2,073,680)
  Retained earnings, substan-
   tially restricted                  16,141,951          15,762,582
  Unrealized gain on securities 
   available-for-sale, net               482,680             752,458
                                    ------------         -----------
   Total stockholders' equity         39,778,466          39,609,637
                                    ------------         -----------          
   Total liabilities and 
     stockholders' equity           $107,938,173         115,873,757
                                    ============         ===========          

See accompanying notes to unaudited interim consolidated financial
statements.

                                     1
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<PAGE>
               EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES

                     Consolidated Statements of Income

                Three Months Ended March 31, 1997 and 1996

                                                                              
                                           Three Months Ended
                                                March 31,
                                        --------------------------
                                           1997           1996
                                           ----           ----
                                        (unaudited)    (unaudited)
Interest income:
  Loans receivable                    $   920,453         900,903
  Mortgage-backed securities              604,006         649,379
  Investment securities                    86,613          47,249
  Other                                   262,061          31,233
                                      -----------     -----------
    Total interest income               1,873,133       1,628,764
                                      -----------     -----------

Interest expense:
  Deposits                                740,119         797,398
  Advances from Federal Home 
    Loan Bank and other                    63,170          24,065
                                      -----------     -----------
    Total interest expense                803,289         821,463
                                      -----------     -----------
    Net interest income                 1,069,844         807,301

Provision for loan losses                  18,878            -

    Net interest income after 
      provision for loan losses         1,050,966         807,301

Non-interest income:
  Insurance commission income             176,956         190,624
  Customer service charges                 41,729          35,040
  Other                                     6,547           6,156
                                      -----------     -----------
    Total non-interest income             225,232         231,820

Non-interest expense:
  Compensation and benefits               389,109         390,071
  Occupancy and equipment                  79,260          93,487
  Deposit insurance premiums               29,533          54,249
  Other                                   168,654          89,556
                                      -----------     -----------
    Total non-interest expense            666,556         627,363
                                      -----------     -----------

    Income before income taxes            609,642         411,758

Income taxes                              230,273         158,544
                                      -----------     -----------
    Net income                        $   379,369         253,214
                                      ===========     ===========             

Earnings per share                    $      0.16             N/A
                                      ===========     ===========             
See accompanying notes to unaudited interim consolidated financial
statements.

                                   2

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<PAGE>
              EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES

                 Consolidated Statements of Cash Flows

                Three Months Ended March 31, 1997 and 1996


                                            Three Months Ended
                                                March 31,
                                        --------------------------
                                           1997           1996
                                           ----           ----
                                        (unaudited)    (unaudited)
                                                                         
Cash flows from operating activities:
  Net income                           $   379,369         253,214
  Adjustments to reconcile net income
   to net cash provided by operating
   activities:
     Provision for loan losses              18,878            -
     Depreciation                           52,683          52,319
     ESOP shares available for 
       allocation                           59,238            -
     Stock dividends reinvested in 
       Federal Home Loan Bank stock        (20,800)        (20,100)
     Decrease (increase) in accrued 
       interest receivable                 (77,345)         49,546
     Decrease (increase) in income 
       tax receivable                         -            104,869
     Decrease (increase) in prepaid 
       expenses and other assets            73,262          94,774
     Increase (decrease) in accrued 
       expenses and other liabilities     (206,189)       (369,760)
     Decrease (increase) in income 
       taxes payable                      (295,397)        169,307
                                      ------------    ------------

         Net cash provided (used) by 
           operating activities           (16,301)         334,169
                                      ------------    ------------
Cash flows from investing activities:
  Net change in interest-bearing 
    deposits                           23,918,389         (531,554)
  Net change in loans receivable       (1,123,360)      (1,589,265)
  Purchases of investment securities
    held-to-maturity                         -          (1,022,368)
  Proceeds from matured or called 
    investment securities held-to-
    maturity                              250,197        2,750,000
  Principal payments on mortgage-
    backed securities held-to-maturity  1,278,947        1,116,861
  Purchases of investment securities
    available-for-sale                 (6,465,707)            -
  Principal payments on mortgage-
    backed securities available-for-
    sale                                  435,114          383,897
  Purchases of mortgage-backed 
    securities available-for-sale     (10,856,239)            -
  Purchases of premises and equipment     (43,000)         (31,615)
                                      ------------    ------------

    Net cash provided by investing
      activities                        7,394,341        1,075,956
                                      ------------    ------------

Cash flows from financing activities:
  Net change in deposits                 (656,944)      (1,543,317)
  Repayment of advances from Federal
    Home Loan Bank                           -            (138,335)
  Net change in advances from 
    borrowers for taxes and insurance     180,163          148,233
  Refund of stock oversubscription     (6,987,070)            -


    Net cash used in financing 
      activities                       (7,463,851)      (1,533,419)
                                      ------------    ------------

Net decrease in cash and cash 
  equivalents                             (85,811)        (123,294)

Cash and cash equivalents, beginning 
  of period                             1,165,164        1,196,354
                                      ------------    ------------

Cash and cash equivalents, end 
  of period                           $ 1,079,353        1,073,060
                                      ===========     ============


See accompanying notes to unaudited interim consolidated financial
statements.

                                   3


<PAGE>

<PAGE>
                          EMPIRE FEDERAL BANCORP, INC.


         Notes to Unaudited Interim Consolidated Financial Statements

Note 1   Basis of Presentation
         ---------------------

         The accompanying unaudited interim consolidated financial            
         statements have been prepared in accordance with generally           
         accepted accounting principles for interim financial information.    
         Accordingly, they do not include all of the information and          
         footnotes required by generally accepted accounting principles for   
         audited financial statements. They should be read in conjunction     
         with the audited consolidated financial statements filed as part     
         of the Annual Report on Form 10-KSB for the year ended December      
         31, 1996.

         The accompanying consolidated financial statements include the       
         accounts of Empire Federal Bancorp, Inc. (the Holding Company) and   
         its wholly-owned subsidiary, Empire Federal Savings Bank (Empire)    
         and Dime Service Corporation (Dime), a wholly-owned subsidiary of    
         Empire. The Holding Company, Empire and Dime are herein referred     
         to collectively as "the Company." All significant intercompany       
         balances and transactions have been eliminated in consolidation.

         In the opinion of management, all adjustments (consisting of         
         normal recurring accruals) considered necessary for fair             
         presentations have been included. The results of operations for      
         the interim periods ended March 31, 1997 and 1996 are not            
         necessarily indicative of the results which may be expected for an   
         entire year or any other period.

Note 2   Conversion to Stock Ownership
         -----------------------------

         The Holding Company was incorporated in September 1996 to acquire    
         and hold all of the outstanding capital stock of Empire to be        
         issued as a part of Empire's conversion from a federally-chartered   
         mutual savings and loan association to a federally-chartered         
         capital stock savings bank. In connection with the conversion,       
         which was consummated on January 23, 1997, the Company issued and    
         sold 2,592,100 shares of common stock (par value $.01 per share)     
         at a price of $10 per share for net offering proceeds of             
         $25,168,277 after conversion and offering expenses of $752,723.      
         Net cash offering proceeds were $23,094,597 which is net of          
         $2,073,680 in stock issued to the Employee Stock Ownership Plan      
         (ESOP) as consideration for future charges to compensation expense   
         as ESOP shares are earned by employees. The Holding Company used     
         $9,501,000 of the net cash proceeds to purchase the newly issued     
         capital stock of Empire. Since the offering proceeds and all         
         required regulatory approvals to consummate the conversion were      
         received prior to December 31, 1996, the conversion has been         
         accounted for as being effective as of December 31, 1996, with the   
         net offering proceeds shown on the statement of stockholders'        
         equity as proceeds from the sale of common stock and the stock       
         oversubscription funds recorded as a liability. The                  
         oversubscription funds and accrued interest due were refunded as     
         of January 23, 1997. In connection with the conversion, the          
         Company adopted December 31 as its fiscal year end. Prior to         
         conversion, Empire's fiscal year ended June 30.

                                   4

<PAGE>

<PAGE>
Note 3   New Accounting Pronouncements
         -----------------------------

         In October 1995, SFAS No. 123 was issued which establishes           
         financial accounting and reporting standards for stock-based         
         employee compensation plans. SFAS No. 123 encourages all entities    
         to adopt a new method of accounting to measure compensation cost     
         of all employee stock compensation plans based on the estimated      
         fair value of the award at the date it is granted. Companies are,    
         however, allowed to continue to measure compensation cost for        
         those plans using the intrinsic value based method of accounting,    
         which generally results in compensation expense only when the        
         exercise price is less than the fair value of the underlying stock   
         at the date of grant. Companies that elect to remain with the        
         intrinsic value method are required to disclose in a footnote to     
         the financial statements pro forma net income and, if presented,     
         earnings per share, as if the fair value method of SFAS No. 123      
         had been adopted. The accounting requirements of SFAS No. 123 are    
         effective for transactions entered into by the Company beginning     
         July 1, 1996. The Company expects to utilize the intrinsic value     
         method of accounting for stock based compensation awards.

         SFAS No. 125 provides guidance on accounting for transfers and       
         servicing of financial assets, recognition and measurement of        
         servicing assets and liabilities, financial assets subject to        
         prepayment, secured borrowings and collateral, and extinguishment    
         of liabilities. SFAS No. 125 generally requires that the Company     
         recognize as separate assets the rights to service mortgage loans    
         for others, whether the servicing rights are acquired through        
         purchases or loan originations. Servicing rights are initially       
         recorded at fair value based upon the present value of estimated     
         future cash flows. Subsequently, the servicing rights are assessed   
         for impairment, which is recognized in the statement of income in    
         the period the impairment occurs. For purposes of performing the     
         impairment evaluation, the related portfolio must be stratified on   
         the basis of certain risk characteristics including loan type and    
         note rate. SFAS No. 125 also specifies that financial assets         
         subject to prepayment, including loans that can be contractually     
         prepaid or otherwise settled in such a way that the holder would     
         not recover substantially all of its recorded investment, be         
         measured like debt securities available-for-sale or trading          
         securities under SFAS No. 115, as amended by SFAS No. 125. The       
         provisions of SFAS No. 125 apply to transactions occurring after     
         December 31, 1996 and is not expected to have a material impact on   
         the Company's consolidated financial position or results of          
         operations.

         SFAS No. 128 was issued in February 1997 and will replace the        
         presentation of primary earnings per share ("EPS") with a            
         presentation of basic and diluted EPS on the face of the income      
         statement for all entities with complex capital structures. SFAS     
         No. 128 also requires a reconciliation of the numerator and          
         denominator of the basic EPS computation to the numerator and        
         denominator of the diluted EPS computation.

         Basic EPS excludes dilution and is computed by dividing income       
         available to common stockholders by the weighted average number of   
         common shares outstanding for the period. Diluted EPS reflects the   
         potential dilution that could occur if securities or other           
         contracts to issue common stock were exercised or converted into     
         common stock or resulted in the issuance of common stock that then   
         shared in the earnings of the equity.

        This statement will be effective for the Company commencing           
        February 1, 1998 and earlier application is not permitted. Once       
        effective, this statement requires restatement of all prior period    
        EPS data.

                                   5

<PAGE>

<PAGE>
Note 4   Earnings Per Share
         ------------------

         Earnings per common share is calculated by dividing net income by    
         the weighted average number of common shares and common stock        
         equivalents outstanding during the period. Shares sold in the        
         conversion from mutual to stock ownership are assumed to have been   
         outstanding for all of the quarter ended March 31, 1997, for         
         purposes of computing weighted average shares outstanding.           
         Additionally, unallocated ESOP shares are excluded from the          
         weighted average common shares outstanding calculation, while        
         allocated shares are considered to be outstanding. At March 31,      
         1997, there were no allocated ESOP shares. The weighted average      
         shares outstanding was 2,384,732, net of ESOP shares (207,368), at
         March 31, 1997.

Note 5   Cash Dividend Declared
         ----------------------

         On April 11, 1997, the Board of Directors declared a quarterly       
         cash dividend of $.075 per common share to stockholders of record    
         on May 9, 1997, payable on May 30, 1997.

Note 6   Capital Compliance
         ------------------

         The following table presents the Savings Bank's compliance with      
         its regulatory capital requirements of March 31, 1997 (dollars in    
         thousands):

                                                            Percentage
                                               Amount       of Assets

            GAAP capital(1)                  $   26,107        24.19%
                                             ==========      =======

            Tangible capital                 $   25,216        23.16%
            Tangible capital requirement          1,602         1.50%
                                             ----------       -------
                Excess                       $   23,614        22.11%
                                             ==========       =======

            Core capital                     $   25,216        23.16%
            Core capital requirements             3,205         3.00%
                                             ----------       -------

                Excess                       $   22,011        20.61%
                                             ==========       =======

            Total risk-based capital(2)      $   25,394        67.09%
            Total risk-based capital 
              requirement(2)                      3,028         8.00%
                                             ----------       -------

                Excess(1)                    $   22,366        59.09%
                                             ==========       =======

                 (1)  GAAP capital includes unrealized gains on certain       
                      available-for-sale securities of $482,000 and           
                      $409,000 of investments in Dime, which are              
                      excluded for purposes of calculating both               
                      tangible and core capital.
                 (2)  Based on risk-weighted assets of $37,851.


                                   6

<PAGE>
<PAGE>
                          EMPIRE FEDERAL BANCORP, INC.

         Notes to Unaudited Interim Consolidated Financial Statements


Part I, Item 2. - Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------------------------
                   and Results of Operations
                   -------------------------

General

Management's discussion and analysis of financial condition and results of
operations is intended to assist in understanding the financial condition and
results of operations of the Company.

Operating Strategy

The business of the Savings Bank consists principally of attracting deposits
from the general public and using such deposits to originate mortgage loans
secured primarily by one- to four-family residences. The Savings Bank also
invests in interest-bearing deposits, investment grade federal agency
securities and mortgage-backed securities. The Savings Bank plans to continue
to fund its assets primarily with deposits, although FHLB advances may be
used as a supplemental source of funds.

The Savings Bank's profitability depends primarily on its net interest
income, which is the difference between the income it receives on its loan
and investment portfolio and its cost of funds, which consists of interest
paid on deposits. Net interest income is also affected by the relative
amounts of interest-earning assets and interest-bearing liabilities. When
interest-earning assets equal or exceed interest-bearing liabilities, any
positive interest rate spread will generate net interest income. The Savings
Bank's profitability is also affected by the level of other income and
expenses. Other income consists of service charges on NOW accounts and other
fees, proceeds from the sale of available-for-sale securities, insurance
commissions and net real estate owned income. Other expenses include
compensation and employee benefits, occupancy expenses, deposit insurance
premiums, equipment and data servicing expenses, professional fees and other
operating costs. The Savings Bank's results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government legislation, and
policies concerning monetary and fiscal affairs, housing, and financial
institutions and the attendant actions of the regulatory authorities.

Financial Condition

Total assets decreased by approximately $7.9 million, or 6.9%, from $115.9
million at December 31, 1996 to $107.9 million at March 31, 1997. This
decrease was primarily attributable to the refund of $8.5 million of excess
subscription funds from the sale of Company Stock.

The comparison of the consolidated balance sheet was not materially affected
by market conditions between December 31, 1996 and March 31, 1997. The
investment of the net proceeds from the sale of Company stock during the
first quarter of 1997 resulted in significant changes in interest-bearing
deposits and investment and mortgage-backed securities available-for-sale.
Interest-bearing deposits at the FHLB decreased from $29.8 million at
December 31, 1996 to $5.9 million at March 31, 1997 primarily as the result
of reinvestment of $16.5 million of the stock sales proceeds in
mortgage-backed securities and U.S. Government agency bonds
available-for-sale coupled with the previously noted refund of excess
subscription funds. Investment and mortgage-backed securities
held-to-maturity decreased $1.5 million from $26.2 million at December 31,
1996 to $24.7 million at March 31, 1997 as the result of payments and
maturities. Net loans increased by $1.1 million, or 2.6%, and consisted
primarily of permanent and construction loans of 1-4 dwelling units.

Deposits decreased slightly by $657,000, or .97%, to $67.0 million at March
31, 1997 from $67.7 million at December 31, 1996. Stock oversubscriptions at
December 31, 1996 amounted to $7.0 million and were refunded to subscribers
as part of the $8.5 million payment made in January 1997.

                                   7
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<PAGE>
Stockholders' equity increased from $39.6 million at December 31, 1996 to
$39.8 million at March 31, 1997. The increase is the result of net income of
$379,000 and the release of ESOP shares in the amount of $59,000. Offsetting
these increases was a reduction of $270,000 related to the decline in market
value of securities available-for-sale.

Comparison of Results of Operations for the Three Months Ended March 31, 1997
and 1996

Net Income. Net income increased by $126,000, or 49.82%, to $379,000 for the
three months ended March 31, 1997 from $253,000 for the same period in 1996.
The primary cause for this change was the increase in interest income related
to the investment of the net proceeds from the sale of stock of $23.1
million. Net income for the three months ended March 31, 1997 also increased
because of the reduced cost of interest-bearing deposits and a reduction in
deposit insurance premiums. A reduction in insurance commissions for the
period ended March 31, 1997 coupled with an increase in the provision for
loan losses and other non-interest expense partially offset the
aforementioned increases in net income.

Net Interest Income. Net interest income increased $263,000, or 32.52%, to
$1.1 million for the three months ended March 31, 1997 from $807,000 for the
same period in 1996. The increase in net interest income primarily reflected
an increase in the volume of average interest earning assets attributed to
the $23.1 million of net proceeds from the sale of stock while
interest-bearing deposits remained relatively stable.

Interest Income. Total interest income increased by $244,000, or 15.00%, to
$1.9 million for the three months ended March 31, 1997 from $1.6 million for
the same period in 1996. The increase was primarily attributable to the
investment of $16.5 million in investments and mortgage-backed securities
available-for-sale with stated rates ranging from 5.5% to 7.5% and maturities
ranging from 1998 to 2024. In addition, interest-bearing deposits of $5.9
million were held at the FHLB, bearing an average interest of 5.17% for the
period. These two investments represent a majority of the proceeds from the
sale of the Company stock, most of which were received in late December 1996.

Interest income on loans increased $20,000, or 2.17%, from $901,000 for the
period ended March 31, 1996 to $921,000 for the same period in 1997. The
increase is partially attributable to the increase in the average balance of
loans outstanding from $40.8 million for the period ended March 31, 1996 to
$42.3 million for the same period in 1997. This increase in volume was offset
by a decrease in average yield from 8.84% for the three months ended March
31, 1996 to 8.71% for the same period in 1997.
 
Interest Expense. Total interest expense was $803,000 for the three months
ended March 31, 1997 as compared to $821,000 for the same period in 1996. The
$18,000, or 2.2%, decrease was the result of a $57,000 decrease in interest
on deposits offset by an increase of $39,000 in other interest expense.

The decline in deposit interest is caused by a reduction of $1.7 million in
average outstanding deposits for the period ending March 31, 1996 of $69.1
million to $67.4 million for the same period in 1997. Management attributes a
substantial portion of the decrease to depositors converting their deposits
to stock purchases. In addition to the decline in average deposits, the
average cost of deposits for the period ended March 31, 1996 was 4.62% and
for the same period in 1997, the average cost declined to 4.39%.

                                   8

<PAGE>

<PAGE>
Other interest expense of $24,000 for the period ended March 31, 1996 related
primarily to short-term borrowings from the FHLB. There were no outstanding
borrowings from the FHLB during the period ended March 31, 1997; however,
during this period, $63,000 in interest was paid to subscribers of the stock
sale on stock issuance date of January 23, 1997.

Provision for Loan Losses. The provision for loan losses was $19,000 for the
three month period ended March 31, 1997 as compared to no provision in the
same period in 1996. During the three months ended March 31, 1997, Empire
charged off $19,000 of mortgage loans. Management's analysis of the loan
portfolio determined that the reserve would be restored to $200,000. At the
end of both periods, the level of reserves was deemed to be adequate by
management. Loan loss reserves as a percentage of loans was .46% at March 31,
1997 and .34% at March 31, 1996.

Non-Interest Income. Non-interest income decreased $7,000 for the three
months ended March 31, 1997 as compared to the same period in 1996 primarily
as the result of a $14,000 decrease in insurance commission income. This
decrease was partially offset by an increase in customer service charges of
$7,000.

Insurance commissions received from Dime are the largest component of
non-interest income. Insurance commissions of $177,000 and $191,000 were
received for the three months ended March 31, 1997 and 1996, respectively.
The decrease in commission income resulted primarily from increases in
competition and reduced premiums and commissions from key companies
represented by Dime.

Non-Interest Expense. Total non-interest expense increased $39,000, or 6.25%,
for the three months ended March 31, 1997 compared to the three months ended
March 31, 1996. This increase was the result of several factors:

    o  Compensation and benefits, while remaining relatively stable for the   
       periods ending March 31, 1997 and 1996, did include a first-time       
      $59,000 charge related to the newly adopted ESOP. For the same period   
      in 1996, a bonus accrual of $34,000 and a pension accrual of $27,000    
      was recorded. For the period ending March 31, 1997, no provision for    
      the pension was made because of the fully funded status of the plan     
      and the ESOP accrual was in lieu of the previous bonus accrual.

    o  Occupancy and equipment expense decreased $14,000 from the period      
       ended March 31, 1996 to the same period in 1997 primarily because of   
       the fully depreciated status of certain assets.

    o  Deposit insurance premiums decreased by $25,000, or 45.56%, from       
       $54,000 for the three months ended March 31, 1996 to $29,000 for the   
       same period in 1997 because of the reduced premiums resulting from     
       the recapitalization of SAIF in 1997.

    o  Other non-interest expense increased $79,000, or 88.32%, from the      
       three months ended March 31, 1996 to the same period in 1997. The      
       increase includes a $24,000 increase in accounting expense caused by   
       the additional audit required for the change in fiscal year,           
       increased advertising and stationery costs of $33,000 associated       
       with being a public company and increased data processing costs of     
       $9,000.

Income Taxes. Income taxes increased $72,000 from the three month period
ended March 31, 1996 as compared to the same period in 1997 as the result of
theincrease in income before income taxes. The effective combined federal and
state tax rate was 37.77% and 38.50% for the three months ended March 31,
1997 and 1996, respectively.

                                   9

<PAGE>

<PAGE>
                          EMPIRE FEDERAL BANCORP, INC.

         Notes to Unaudited Interim Consolidated Financial Statements

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

Item 1.   Legal Proceedings

          There are no pending material legal proceedings to which the        
          registrant or its subsidiaries are a party.

Item 2.   Changes in Securities

          None.

Item 3.   Defaults on Senior Securities

          Not applicable.

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

          None.

Item 5.   Other Information

          None.

Item 6.   Exhibits and Reports on Form 8-K

          (a)   Exhibits

          3.1   Certificate of Incorporation of Empire Federal Bancorp,
                Inc. (1)

          3.2   Bylaws of Empire Federal Bancorp, Inc. (1)

         10.1   Employment Agreement with Beverly D. Harris (2)

         10.2   Employment Agreement with Ernest A. Sandberg (2)

         10.3   Employee Stock Ownership Plan (1)

         21     Subsidiaries of the Registrant (2)

         27     Financial Data Schedule

          (b)   Reports on Form 8-K

                None.
-----------------
(1)    Incorporated by reference to the Company's Registration Statement on   
       Form SB-2, as amended (File No. 333-12653).

(2)    Incorporated by reference to the Company's Annual Report on Form       
       10-KSB for the year ended December 31, 1996.

                                   10

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<PAGE>
                          EMPIRE FEDERAL BANCORP, INC.

         Notes to Unaudited Interim Consolidated Financial Statements


SIGNATURES

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


Empire Federal Bancorp, Inc.




By   /s/ Beverly D. Harris                             May 14, 1997
  ---------------------------------------              ------------
     Beverly D. Harris                                     Date           
     President & Chief Executive Officer
     (Principal Executive Officer)




By   /s/ Ernest A. Sandberg                            May 14, 1997
  ---------------------------------------              ------------
     Ernest A. Sandberg                                    Date
     Executive Vice President & Secretary
     (Principal Financial and Accounting Officer)


                                   11

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