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 June 30, 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 July 30, 1997: 2,592,100

Transitional Small Business Disclosure Format (check one): YES  [ ]  NO [X]


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                          EMPIRE FEDERAL BANCORP, INC.

                              INDEX TO FORM 10-QSB

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

               Consolidated Statements of Financial Condition at
               June 30, 1997 and December 31, 1996 (unaudited).........   1

               Consolidated Statements of Income for the Three
               and Six Months Ended June 30, 1997 and 1996
               (unaudited).............................................   2

               Consolidated Statements of Cash Flows for the Six
               Months Ended June 30, 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.....................   8


PART II     OTHER INFORMATION
            -----------------
Item 1.     Legal Proceedings..........................................  14

Item 2.     Changes in Securities......................................  14

Item 3.     Defaults upon Senior Securities............................  14

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

Item 5.     Other Information..........................................  14

Item 6.     Exhibits and Reports on Form 8-K...........................  14


SIGNATURES    ...........................................................15


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PART I, ITEM 1 - FINANCIAL STATEMENTS

               EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES

                         Consolidated Balance Sheets

                     June 30, 1997 and December 31, 1996

                                                       June 30,     December 31,
                    Assets                                1997           1996
                                                      (unaudited)    (unaudited)
                                                        ---------     ---------
Cash and cash equivalents                           $   1,172,582     1,165,164
Interest-bearing deposits                                 821,477    29,824,391
Investment and mortgage-backed securities
   available-for-sale                                  35,723,510    13,767,773
Investment and mortgage-backed securities
   held-to-maturity (estimated market value of
   $23,983,309 at June 30, 1997 and $26,385,527
   at December 31, 1996)                               23,846,428    26,187,821
Loans receivable, net                                  43,613,844    41,703,590
Stock in Federal Home Loan Bank of Seattle, at cost     1,211,800     1,168,800
Accrued interest receivable                               549,734       330,927
Premises and equipment, net                             1,308,283     1,276,818
Prepaid expenses and other assets                         317,856       448,473
                                                     ------------   -----------

      Total assets                                 $  108,565,514   115,873,757
                                                     ============   ===========

     Liabilities and Stockholders' Equity

Liabilities:

   Passbook Accounts                               $   13,473,689    14,521,391
   NOW Accounts                                        13,778,955    14,629,406
   Certificates of Deposit                             38,454,047    38,547,069
                                                     ------------   -----------
   Total Deposits                                  $   65,706,691    67,697,866
   Stock oversubscription funds                                -      6,987,070
   Advances from Federal Home Loan Bank of
     Seattle                                            1,000,000             -
   Advances from borrowers for taxes and
     insurance                                            218,607       169,872
   Accrued expenses and other liabilities               1,075,482     1,409,312
                                                     ------------   -----------
      Total liabilities                                68,000,780    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                          25,169,117    25,142,356
   Unearned ESOP compensation                          (1,994,320)   (2,073,680)
   Retained earnings, substantially restricted         16,379,223    15,762,582
   Unrealized gain on securities
      available-for-sale, net                             984,793       752,458
                                                     ------------   -----------
      Total stockholders' equity                       40,564,734    39,609,637
                                                     ------------   -----------

      Total liabilities and stockholders' equity   $  108,565,514   115,873,757
                                                     ============   ===========

See accompanying notes to unaudited interim consolidated financial statements.

                                    1

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                  EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES
                  Consolidated Statements of Income (Unaudited)

                Three and Six Months Ended June 30, 1997 and 1996

                                         Three Months          Six Months
                                         Ended                 Ended
                                         June 30               June 30
                                         ------------          ----------
                                      1997        1996         1997        1996
                                     ------      ------       ------      ------
Interest Income:
  Loan receivable                   906,903     868,287    1,827,356  $1,769,190
  Mortgage-backed securities        773,104     610,547    1,377,110   1,259,926
  Investment securities             186,020      38,002      272,633      85,251
  Other                              64,447      41,903      326,508      73,136
                                     ------      ------       ------      ------
 Total Interest Income            1,930,474   1,558,739    3,803,607   3,187,503

Interest Expense:
  Deposits                          744,148     789,439    1,484,267   1,586,837
  Advances from Federal Home Loan     1,183      22,584       64,353      46,649
    Bank and other
                                     ------      ------       ------      ------
  Total Interest Expense            745,331     812,023    1,548,620   1,633,486
                                     ------      ------       ------      ------
  Net Interest Income             1,185,143     746,716    2,254,987   1,554,017
Provision for loan losses             1,017      55,000       19,895      55,000
                                     ------      ------       ------      ------
  Net Interest Income after       1,184,126     691,716    2,235,092   1,499,017
    Provision for Loan Losses

Non-Interest Income
  Insurance commission income       131,615     138,662      308,571     329,286
  Customer service charges           43,375      41,705       85,104      76,745
  Other                               2,155       5,306        8,702      11,462
                                     ------      ------       ------      ------
  Total Non-Interest Income         177,145     185,673      402,377     417,493

Non-Interest Expense:
  Compensation and benefits         365,852     389,423      754,961     779,494
  Occupancy and equipment           117,147     150,179      196,407     243,666
  Deposit insurance premiums         10,525      39,128       40,058      93,377
  Other                             155,938     108,592      324,592     198,148
                                     ------      ------       ------      ------
  Total Non-Interest Expense        649,462     687,322    1,316,018   1,314,685
                                     ------      ------       ------      ------
  Income Before Income Taxes        711,809     190,067    1,321,451     601,825
Income Taxes                        295,682      95,585      525,955     254,129
                                     ------      ------       ------      ------
  Net Income                      $ 416,127   $  94,482    $ 795,496   $ 347,696
                                    =======      ======      =======     =======

Earnings Per Share                $    0.17       N/A      $    0.33       N/A
                                    =======      ======      =======     =======

See accompanying notes to unaudited interim consolidated financial statements.




                                    2

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                  EMPIRE FEDERAL BANCORP, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                     Six Months Ended June 30, 1997 and 1996

                                                           Six Months Ended
                                                               June 30,
                                                           1997          1996
                                                     (unaudited)   (unaudited)
Cash flows from operating activities:                    -------       -------
   Net income                                        $   795,496       347,696
   Adjustments to reconcile net income to net cash
      provided by operating activities:
         Provision for loan losses                        19,895        55,000
         Depreciation                                     71,557       130,553
         ESOP shares available for allocation            106,121             -
         Stock dividends reinvested in Federal
            Home Loan Bank stock                         (43,000)      (41,400)
         Decrease (increase) in accrued interest
            receivable                                  (218,807)       56,256
         Decrease in prepaid expenses and other
            assets                                       130,618       142,289
         Decrease in accrued expenses and other
            liabilities                                 (453,520)     (199,590)
                                                        --------      --------
   Net cash provided (used) by operating activities      408,360       490,804
                                                        --------      --------
Cash flows from investing activities:
   Net change in interest-bearing deposits            29,002,914      (790,477)
   Net change in loans receivable                     (1,930,149)   (1,953,947)
   Purchases of investment securities
      held-to-maturity                                        -     (1,772,368)
   Proceeds from matured or called investment
      securities held-to-maturity                        248,750     3,023,368
   Principal payments on mortgage-backed
      securities held-to maturity                      2,092,643     2,717,295
   Purchases of investment securities
      available-for-sale                              (8,364,494)           -
   Principal payments on mortgage-backed
      securities available-for sale                    1,165,286     1,017,361
   Purchases of mortgage-backed securities
      available-for-sale                             (14,404,505)          -
   Purchases of premises and equipment                  (103,022)      (31,413)
   Purchase of mortgage-backed securities held to
      maturity                                                -     (1,000,000)
   Net cash provided by investing activities           7,707,423     1,209,819
                                                       ---------    ----------
Cash flows from financing activities:
   Net change in deposits                             (1,991,175)   (1,311,744)
   Repayment of advances from Federal Home Loan
      Bank                                                     -      (426,796)
   Net change in advances from borrowers for
      taxes and insurance                                 48,735         2,323
   Refund of stock oversubscription                   (6,987,070)           -
   Dividends paid                                       (178,855)           -
   Proceeds from advances from Federal Home
      Loan Bank                                        1,000,000            -
   Net cash used in financing activities              (8,108,365)   (1,736,217)
                                                       ---------     ---------
Net increase (decrease) in cash and cash equivalents       7,418       (35,594)
Cash and cash equivalents, beginning of period         1,165,164     1,196,354
                                                       ---------     ---------
Cash and cash equivalents, end of period             $ 1,172,582     1,160,760
                                                       =========     =========


See accompanying notes to unaudited interim consolidated financial statements.


                                     3

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                          EMPIRE FEDERAL BANCORP, INC.

          Notes to Unaudited Interim Consolidated Financial Statements

                                  June 30, 1997

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 three and six months
         ended June 30, 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

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<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

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<PAGE>
         In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
         Income" (the "Statement"). The Statement establishes standards for
         reporting and display of comprehensive income and its components in a
         full set of general purpose financial statements. The term
         "comprehensive income" is used in the Statement to describe the total
         of all components of comprehensive income including net income. The
         Statement requires all items that are required to be recognized under
         accounting standards as components of comprehensive income to be
         reported in a financial statement that is displayed in equal prominence
         with other financial statements. It does not require a specific format
         for that financial statement but requires that an enterprise display an
         amount representing total comprehensive income for the period in that
         financial statement. Enterprises are required to classify items of
         "other comprehensive income" by their nature in the financial statement
         and display the balance of other comprehensive income separately in the
         equity section of a statement of financial position. "Other
         comprehensive income' refers to revenues, expenses, gains and losses
         that are included in comprehensive income but excluded from earnings
         (net income) under current accounting standards (GAAP).

         The statement is applicable to all entities that provide a full set of
         financial statements consisting of a statement of financial position,
         results of operations and cash flows. The Statement is effective for
         both interim and annual periods beginning after December 15, 1997.
         Earlier application is permitted. Comparative financial statements
         provided for earlier periods are required to be reclassified to reflect
         the provisions of this Statement.




                                    6

<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 the
         three and six months ended June 30, 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 and shares committed to be released
         are considered to be outstanding

Note 5   Cash Dividend Declared
         ----------------------
         On August 1, 1997, the Board of Directors declared a quarterly cash
         dividend of $.075 per common share to stockholders of record on August
         15, 1997, payable on August 29, 1997.

Note 6   Capital Compliance
         ------------------
         The following table presents the Savings Bank's compliance with its
         regulatory capital requirements of June 30, 1997 (dollars in
         thousands):

                                                                      Percentage
                                                         Amount        of Assets
                                                         ------         -------
            GAAP capital(1)                            $ 26,921          24.80%
                                                         ======         ======

            Tangible capital                           $ 25,533          23.94%
            Tangible capital requirement                  1,600           1.50%
                                                         ------         ------

               Excess                                  $ 23,933          22.44%
                                                         ======         ======

            Core capital                               $ 25,533          23.94%
            Core capital requirements                     3,200           3.00%
                                                         ------         ------

               Excess                                  $ 22,333          20.94%
                                                         ======         ======

            Total risk-based capital(2)                $ 25,711          66.91%
            Total risk-based capital
               requirement(2)                             3,074           8.00%
                                                         ------         ------

               Excess(1)                               $ 22,637          58.91%
                                                         ======         ======

                  (1)  GAAP capital includes unrealized gains on certain
                       available-for-sale securities of $984,000 and $404,000 of
                       investments in Dime, which are excluded for purposes of
                       calculating both tangible and core capital.

                  (2)  Based on risk-weighted assets of $38,426.

Note 7   Subsequent Event
         ----------------
         The Savings Bank's main office was owned by the president, her sister,
         who is married to the executive vice president and their brother and
         was leased by the Savings Bank through June 30, 1997. As previously
         disclosed, the Board of Directors negotiated the purchase of the
         building, which has been approved by the OTS. Effective July 1, 1997,
         the property was purchased for $750,000. The negotiated price was based
         on independent appraisals. The sellers accepted a 10-year 9% note as
         payment.

                                     7

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                          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

Consolidated assets decreased by approximately $7.3 million, or 6.3%, from
$115.9 million at December 31, 1996 to $108.6 million at June 30, 1997. This
decrease was primarily attributable to the refund of $8.5 million of excess
subscription funds from the sale of Company Stock.


                                    8


<PAGE>
<PAGE>

The comparison of the consolidated balance sheet was not materially affected by
market conditions between December 31, 1996 and June 30, 1997. The investment of
the net proceeds from the sale of Company stock during the first half 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 $821,000 at June 30,
1997 primarily as the result of the net reinvestment of $21.6 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 $2.4 million from $26.2 million at December 31, 1996 to $23.8 million
at June 30, 1997 as the result of payments and maturities. Net loans increased
by $1.9 million, or 4.6%, and consisted primarily of permanent and construction
loans of 1-4 dwelling units.

Deposits decreased by $2.0 million, or 2.9%, to $65.7 million at June 30, 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.

Stockholders' equity increased from $39.6 million at December 31, 1996 to $40.6
million at June 30, 1997. The increase is the result of net income of $795,000,
the release of ESOP shares in the amount of $106,000 and an increase of $232,000
related to the increase in market value of securities available-for-sale.
Offsetting these increases was the payment of a dividend of $179,000.

ASSET QUALITY

At June 30, 1997 and December 31, 1996, the Savings Bank did not have any
nonaccrual loans or troubled debt restructuring. At June 30, 1997, the Savings
Bank had five loans delinquent over 30 days amounting to $201,000 of which
$64,000 were delinquent over 90 days. The Savings Bank has no real estate
acquired through foreclosure.

COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
1996

Net Income. Net income increased by $448,000, or 128.79%, to $795,000 for the
six months ended June 30, 1997 from $348,000 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 six months ended June 30, 1997 also increased because of the
reduced cost of interest-bearing deposits and a reduction in deposit insurance
premiums. Dime incurred a reduction in profit sharing contingencies from
insurance companies for the period ended June 30, 1997 coupled with an increase
in other non-interest expense partially offset the aforementioned increases in
net income.

Net Interest Income. Net interest income increased $701,000, or 45.11%, to $2.2
million for the six months ended June 30, 1997 from $1.6 million 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 declined by $2.0 million.



                                    9

<PAGE>
<PAGE>
Interest Income. Total interest income increased by $616,000, or 19.33%, to $3.8
million for the six months ended June 30, 1997 from $3.2 million for the same
period in 1996. The increase was primarily attributable to the net investment of
$21.6 million in investments and mortgage-backed securities available-for-sale
with stated rates ranging from 5.5% to 8.05% and maturities ranging from 1998 to
2024. These 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 $58,000, or 3.29%, from $1.7 million for the
period ended June 30, 1996 to $1.8 million for the same period in 1997. The
increase is partially attributable to the increase in the average balance of
loans outstanding from $41.1 million for the period ended June 30, 1996 to $42.7
million for the same period in 1997. This increase in volume was offset by a
decrease in average yield from 8.60% for the six months ended June 30, 1996 to
8.56% for the same period in 1997.

Interest Expense. Total interest expense was $1.5 million for the six months
ended June 30, 1997 as compared to $1.6 million for the same period in 1996. The
$85,000, or 5.2%, decrease was the result of a $103,000 decrease in interest on
deposits offset by an increase of $18,000 in other interest expense.

The decline in deposit interest is caused by a reduction of $2.1 million in
average outstanding deposits for the period ending June 30, 1996 of $68.9
million to $66.8 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 June 30, 1996 was 4.61% and for the same
period in 1997, the average cost declined to 4.44%.

Other interest expense of $47,000 for the period ended June 30, 1996 related
primarily to short-term borrowings from the FHLB. There were only nominal
borrowings from the FHLB during the period ended June 30, 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 $20,000 for the six
month period ended June 30, 1997 as compared to a $55,000 provision in the same
period in 1996. During the six months ended June 30, 1997, Empire charged off
$20,000 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 June 30, 1997 and .48% at
June 30, 1996.

Non-Interest Income. Non-interest income decreased $15,000 for the six months
ended June 30, 1997 as compared to the same period in 1996 primarily as the
result of a $21,000 decrease in profit sharing contingencies from insurance
companies. This decrease was partially offset by an increase in customer service
charges of $8,000.

Insurance commissions received from Dime are the largest component of
non-interest income. Insurance commissions of $309,000 and $329,000 were
received for the six months ended June 30, 



                                    10

<PAGE>
<PAGE>
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 $1,000 for the six
months ended June 30, 1997 compared to the six months ended June 30, 1996.

This net change was the result of several factors:

   *  Compensation and benefits, while remaining relatively stable for the
      periods ending June 30, 1997 and 1996, did include a $106,000 charge for
      1997 related to the newly adopted ESOP. For the same period in 1996, a
      bonus accrual of $68,000 and a pension accrual of $54,000 was recorded.
      For the period ending June 30, 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.

   *  Occupancy and equipment expense decreased $47,000 from the period ended
      June 30, 1996 to the same period in 1997 primarily because of the fully
      depreciated status of certain assets.

   *  Deposit insurance premiums decreased by $53,000, or 57.1%, from $93,000
      for the six months ended June 30, 1996 to $40,000 for the same period in
      1997 because of the reduced premiums resulting from the recapitalization
      of SAIF in 1996.

   *  Other non-interest expense increased $126,000, or 63.81%, from the six
      months ended June 30, 1996 to the same period in 1997. The increase
      includes a $27,000 increase in accounting expense caused by the additional
      audit required for the change in fiscal year, increased advertising and
      stationery costs of $33,000 and legal costs of $28,000 associated with
      being a public company.

Income Taxes. Income taxes increased $272,000 from the six month period ended
June 30, 1996 as compared to the same period in 1997 as the result of the
increase in income before income taxes. The effective combined federal and state
tax rate was 39.80% and 42.23% for the six months ended June 30, 1997 and 1996,
respectively.

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997
AND 1996

Net Income. Net income increased by $322,000, or 342.55%, to $416,000 for the
three months ended June 30, 1997 from $94,000 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 June 30, 1997 also increased because of the
reduced cost of interest-bearing deposits and interest paid on advances from the
Federal Home Loan Bank. A reduction in the provision for loan losses and
non-interest expense also contributed to the increase in net income.

Net Interest Income. Net interest income increased $438,000, or 58.63%, to $1.2
million for the three months ended June 30, 1997 from $747,000 for the same
period in 1996. The increase in net 



                                    11

<PAGE>
<PAGE>
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 average interest-bearing deposits declined by $2.0 million
for the comparable periods.

Interest Income. Total interest income increased by $372,000, or 23.85%, to $1.9
million for the three months ended June 30, 1997 from $1.5 million for the same
period in 1996. The increase was primarily attributable to the net investment of
$21.6 million in investments and mortgage-backed securities available-for-sale
with stated rates ranging from 5.5% to 8.05% and maturities ranging from 1998 to
2024. $16.5 million of the $21.6 million was invested during the three months
ended March 31, 1997, and the remaining $5.1 million was invested during the
quarter ended June 30, 1997. These 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 $39,000, or 4.45%, from $868,000 for the
three months ended June 30, 1996 to $907,000 for the same period in 1997. The
increase is partially attributable to the increase in the average balance of
loans outstanding from $41.7 million for the three months ended June 30, 1996 to
$43.2 million for the same period in 1997. The average yield was 8.32% for the
three months ended June 30, 1996 and 8.40% for the same period in 1997.

Interest Expense. Total interest expense was $745,000 for the three months ended
June 30, 1997 as compared to $812,000 for the same period in 1996. The $67,000,
or 8.21%, decrease was the result of a $45,000 decrease in interest on deposits
and $22,000 in other interest expense.

The decline in deposit interest is caused by a reduction of $2.0 million in
average outstanding deposits for the three months ending June 30, 1996 of $68.4
million to $66.4 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 three months ended June 30, 1996 was 4.61% and for the
same period in 1997, the average cost declined to 4.48%.

Other interest expense of $22,000 for the three months ended June 30, 1996
related primarily to short-term borrowings from the FHLB. There were only
nominal borrowings from the FHLB during the period ended June 30, 1997.

Provision for Loan Losses. The provision for loan losses was $1,000 for the
three month period ended June 30, 1997 as compared to a $55,000 provision in the
same period in 1996. During the three months ended June 30, 1997, Empire charged
off $1,000 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 June 30, 1997 and .48% at
June 30, 1996.

Non-Interest Income. Non-interest income decreased $9,000 for the three months
ended June 30, 1997 as compared to the same period in 1996 primarily as the
result of a $7,000 decrease in insurance commission income.



                                    12

<PAGE>
<PAGE>
Insurance commissions received from Dime are the largest component of
non-interest income. Insurance commissions of $132,000 and $139,000 were
received for the three months ended June 30, 1997 and 1996, respectively. The
decrease in commission income resulted primarily from increases in competition
and reduced premiums and profit sharing contingencies from insurance companies
represented by Dime.

Non-Interest Expense. Total non-interest expense decreased $39,000 for the three
months ended June 30, 1997 compared to the three months ended June 30, 1996.
This net change was the result of several factors:

   *  Compensation and benefits, while remaining relatively stable for the three
      months ending June 30, 1997 and 1996, did include a $47,000 charge for
      1997 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 June 30, 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.

   *  Occupancy and equipment expense decreased $33,000 from the three months
      ended June 30, 1996 to the same period in 1997 primarily because of the
      fully depreciated status of certain assets.

   *  Deposit insurance premiums decreased by $28,000, or 73.10%, from $39,000
      for the three months ended June 30, 1996 to $11,000 for the same period in
      1997 because of the reduced premiums resulting from the recapitalization
      of SAIF in 1996.

   *  Other non-interest expense increased $47,000, or 43.60%, from the three
      months ended June 30, 1996 to the same period in 1997. The primary reason
      for the increase is additional auditing, legal, advertising and stationery
      costs associated with being a public company.

Income Taxes. Income taxes increased $200,000 from the three month period ended
June 30, 1996 as compared to the same period in 1997 as the result of the
increase in income before income taxes. The effective combined federal and state
tax rate was 41.54% and 50.29% for the three months ended June 30, 1997 and
1996, respectively.



                                    13

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<PAGE>
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

------------------------------------------
(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.



                                     14

<PAGE>
<PAGE>

SIGNATURES

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

Empire Federal Bancorp, Inc.

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


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


<PAGE>
<PAGE>
                                                                EXHIBIT 27

                             FINANCIAL DATA SCHEDULE

This schedule contains financial information extracted from the unaudited
consolidated financial statements of Empire Federal Bancorp., Inc. for the six
months ended June 30, 1997 and is qualified in its entirety by reference to such
financial statements.

                 Financial Data as of
                 or for the six months

Item Number       ended June 30, 1997      Item Description

9-03(1)            $    1,172,582         Cash and due from banks
9-03(2)                   821,477         Interest-bearing deposits
9-03(3)                        -          Federal funds sold - purchased

                                             securities for resale

9-03(4)                        -          Trading account assets
9-03(6)                35,723,510         Investment and mortgage-backed

                                             securities held-for-sale

9-03(6)                23,846,428         Investment and mortgage-backed
                                             securities held to maturity -
                                             carrying value
9-03(6)                23,983,309         Investment and mortgage-backed
                                             securities held to maturity -
                                             market value
9-03(7)                43,813,844         Loans
9-03(7)(2)                200,000         Allowance for losses
9-03(11)              108,565,514         Total assets
9-03(12)               65,706,691         Deposits
9-03(13)                1,000,000         Short-term borrowings
9-03(15)                1,294,089         Other liabilities
9-03(16)                       -          Long-term debt
9-03(19)                       -          Preferred stock - mandatory redemption
9-03(20)                       -          Preferred stock - no mandatory
                                             redemption

9-03(21)                   25,921         Common stocks
9-03(22)               40,538,815         Other stockholders' equity
9-03(23)              108,565,514         Total liabilities and stockholders'
                                             equity

9-04(1)                 1,827,356         Interest and fees on loans
9-04(2)                 1,649,743         Interest and dividends on investments
9-04(4)                   326,508         Other interest income
9-04(5)                 3,803,607         Total interest income
9-04(6)                 1,484,267         Interest on deposits
9-04(9)                 1,548,620         Total interest expense
9-04(10)                2,254,987         Net interest income
9-04(11)                   19,895         Provisions for loan losses
9-04(13)(h)                    -          Investment securities gains (losses)
9-04(14)                1,316,018         Other expenses
9-04(15)                1,321,451         Income/loss before income tax
9-04(17)                1,321,451         Income/loss before extraordinary items
9-04(18)                       -          Extraordinary items, less tax
9-04(19)                       -          Cumulative change in accounting
                                             principles

9-04(20)                  795,496         Net income of loss
9-04(21)                      .33         Earnings per share - primary
9-04(21)                      N/A         Earnings per share - fully diluted
                                                            EXHIBIT 27,
CONTINUED

                             FINANCIAL DATA SCHEDULE

                 Financial Data as of
                 or for the six months

Item Number       ended June 30, 1997      Item Description

I.B.5                        4.31%        Net yield - interest earning assets -
                                             actual

III.C.1.(a)                  None         Loans on nonaccrual
III.C.1.(b)                62,422         Accruing loans past due 90 days or
                                      more

III.C.2.(c)                  None         Troubled debt restructuring
III.C.2                      None         Potential problem loans
IV.A.1                    200,000         Allowance for loan loss - beginning

                                             of period

IV.A.2                     19,895         Total charge-offs
IV.A.3                       None         Total recoveries
IV.A.4                    200,000         Allowance for loan loss - end of
                                             period

IV.B.1                    200,000         Loan loss allowance to allocated to
                                             domestic loans
IV.B.2                       None         Loan loss allowance to foreign loans

IV.B.3                       None         Loan loss allowance - unallocated


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