Equitable Financial 10QSB 2008 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________

FORM 10-QSB

(Mark One)

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

For the quarterly period ended March 31, 2008

OR

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

For the transition period from ______________ to _____________

Commission file number: 0-51514

EQUITABLE FINANCIAL CORP.

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

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

113 North Locust Street, Grand Island, Nebraska 68801

(Address of principal executive offices)

(308) 382-3136

(Issuer’s telephone number)

Not Applicable

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

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

Yes x No o

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

Yes o   No x 

As of May 1, 2008 there were 3,238,154 shares of the registrant’s common stock outstanding.

Transitional Small Business Disclosure Format (Check one): 

Yes o No x

EQUITABLE FINANCIAL CORP.

FORM 10-QSB

Index

			Page No.
PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	1
		Consolidated Statements of Financial Condition at March 31, 2008 (Unaudited) and June 30, 2007	1
		Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2008 and 2007 (Unaudited)	2
		Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the Nine Months Ended March 31, 2008 and 2007 (Unaudited)	3
		Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2008 and 2007 (Unaudited)	4
		Notes to Unaudited Consolidated Financial Statements	5
	Item 2.	Management’s Discussion and Analysis or Plan of Operation	10
	Item 3.	Controls and Procedures	15
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	16
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
	Item 3.	Defaults Upon Senior Securities	16
	Item 4.	Submission of Matters to a Vote of Security Holders	16
	Item 5.	Other Information	16
	Item 6.	Exhibits	17
Signatures

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EQUITABLE FINANCIAL CORP.

Statements of Financial Condition

		March 31,			June 30,
		2008			2007
		(Unaudited)
ASSETS
Cash and due from financial institutions	$	10,804,768		$	2,382,234
Federal funds sold		5,300,000			7,100,000
Cash and cash equivalents		16,104,768			9,482,234
Time deposits with financial institutions		11,287,000			-
Securities available-for-sale, at fair value		6,449,163			6,584,274
Securities held-to-maturity, fair value at March 31, 2008 -		628,478			702,030
$635,574; and June 30, 2007 - $684,464
Federal Home Loan Bank stock, at cost		3,098,100			2,447,500
Loans, net of allowance for loan losses of $1,241,009 at March 31,		164,805,256			153,329,552
2008 and $1,056,873 at June 30, 2007
Premises and equipment, net		6,604,577			6,850,891
Foreclosed assets, net		3,581			82,900
Accrued interest receivable		1,358,480			1,235,278
Other assets		2,659,283			2,119,652
Total assets	$	212,998,686		$	182,834,311
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits
Noninterest-bearing deposits	$	8,287,976		$	6,465,861
Interest-bearing deposits		121,800,236			121,279,000
Total deposits		130,088,212			127,744,861
Federal Home Loan Bank borrowings		58,823,000			30,599,626
Advance payments from borrowers for taxes and insurance		1,094,112			794,930
Accrued interest payable and other liabilities		849,690			528,952
Common stock in ESOP subject to contingent repurchase obligation		202,779			151,679
Total liabilities		191,057,793			159,820,048
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value per share; authorized 1,000,000 shares,
no shares outstanding at March 31, 2008 and June 30, 2007.		-			-
Common stock, $0.01 par value, 14,000,000 shares authorized; 3,297,509
shares issued at March 31, 2008 and June 30, 2007.		32,975			32,975
Additional paid-in capital		13,611,771			13,619,515
Retained earnings		10,797,844			11,421,576
Unearned ESOP shares		(1,067,310	)		(1,135,440	)
Treasury stock, at cost; 123,986 and 64,631 shares at March 31, 2008
and June 30, 2007, respectively		(1,232,579	)		(694,783	)
Accumulated other comprehensive gain (loss), net		971			(77,901	)
Reclassification of ESOP shares		(202,779	)		(151,679	)
Total stockholders’ equity		21,940,893			23,014,263
Total liabilities and stockholders’ equity	$	212,998,686		$	182,834,311
See Notes to the Unaudited Consolidated Financial Statements

1

EQUITABLE FINANCIAL CORP.

Statements of Operations

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2008			2007			2008			2007
Interest Income
Loans	$	2,640,773		$	2,484,792		$	7,701,394		$	7,358,838
Securities		116,154			115,688			319,770			378,466
Other		77,272			39,273			199,214			66,141
Total interest income		2,834,199			2,639,753			8,220,378			7,803,445
Interest Expense
Deposits		1,227,171			1,211,931			3,850,759			3,471,030
Federal Home Loan Bank borrowings		481,854			481,702			1,223,242			1,445,165
Total interest expense		1,709,025			1,693,633			5,074,001			4,916,195
Net interest income		1,125,174			946,120			3,146,377			2,887,250
Provision for loan losses		104,470			128,231			224,470			188,231
Net interest income after provision for loan losses		1,020,704			817,889			2,921,907			2,699,019
Non-interest income
Service charges on deposit accounts		134,039			92,129			441,313			251,878
Brokerage fee income		327,197			264,174			780,860			606,244
Gain (loss) on sale of loans		49,030			(99,282	)		121,115			(44,390	)
Other loan fees		7,381			9,141			20,681			49,714
Other income		21,011			25,786			137,385			76,041
Total non-interest income		538,658			291,948			1,501,354			939,487
Non-interest expenses
Salaries and employee benefits		1,097,470			1,107,720			3,204,367			3,096,476
Director and committee fees		26,450			27,300			74,850			76,200
Data processing fees		144,581			105,781			411,632			243,037
Occupancy and equipment		237,581			250,266			692,251			758,841
Regulatory fees and deposit insurance premium		30,781			17,402			62,729			51,319
(Gain) loss on sale of foreclosed assets		(2,885	)		15,249			(29,425	)		9,881
Loss on investment in low income housing partnerships		14,015			5,059			28,580			21,059
Advertising and public relations		26,581			36,944			107,437			183,696
Contributions and donations		12,202			17,451			38,674			56,754
Insurance and surety bond premiums		43,676			15,631			150,845			67,212
Professional fees		66,988			92,140			300,134			325,378
Supplies, telephone, postage		56,770			57,520			161,587			201,980
ATM expenses		2,847			8,789			17,187			25,693
Dues and subscriptions		7,332			7,779			25,422			29,844
Other expenses		63,719			48,940			152,676			204,712
Total non-interest expenses		1,828,108			1,813,971			5,398,946			5,352,082
Income (loss) before income taxes		(268,746	)		(704,134	)		(975,685	)		(1,713,576	)
Income tax expense (benefit)		(75,268	)		(292,631	)		(351,953	)		(676,923	)
Net income (loss)	$	(193,478	)	$	(411,503	)	$	(623,732	)	$	(1,036,653	)
Basic and diluted earnings (loss) per share	$	(0.06	)	$	(0.13	)	$	(0.20	)	$	(0.33	)
See Notes to the Unaudited Consolidated Financial Statements

2

EQUITABLE FINANCIAL CORP.

Consolidated Statements of Stockholders’ Equity and Comprehensive Income

Nine Months Ended March 31, 2008 and 2007

(Unaudited)

	Common Stock		Additional Paid-In Capital			Retained Earnings			Unearned ESOP Shares			Treasury Stock			Accumulated Other Comprehensive Income			Amount Reclassified on ESOP Shares			Total
Balance at June 30, 2006	$	32,975	$	13,617,427		$	12,820,516		$	(1,226,280	)	$	-		$	(149,962	)	$	(61,033	)	$	25,033,643
Comprehensive loss:
Net loss		-		-			(1,036,653	)		-			-			-			-			(1,036,653	)
Change in net unrealized gain (loss) on securities
available-for-sale, net of income taxes		-		-			-			-			-			95,942			-			95,942
Total comprehensive loss, net																						(940,711	)
Release of 6,813 unearned ESOP shares		-		2,883			-			68,130			-			-			-			71,013
Reclassification due to release and changes in fair
value of common stock in ESOP subject to
contingent repurchase obligation of ESOP shares		-		-			-			-			-			-			(77,471	)		(77,471	)
Balance at March 31, 2007	$	32,975	$	13,620,310		$	11,783,863		$	(1,158,150	)	$	-		$	(54,020	)	$	(138,504	)	$	24,086,474
Balance at June 30, 2007		32,975		13,619,515			11,421,576			(1,135,440	)		(694,783	)		(77,901	)		(151,679	)		23,014,263
Comprehensive loss:
Net loss		-		-			(623,732	)		-			-			-			-			(623,732	)
Change in net unrealized gain (loss) on securities
available-for-sale, net of income taxes		-		-			-			-			-			78,872			-			78,872
Total comprehensive loss, net																						(544,860	)
Release of 6,813 unearned ESOP shares		-		(7,744	)		-			68,130			-			-			-			60,386
Purchase of 59,355 of treasury stock, at cost		-		-			-			-			(537,796	)		-			-			(537,796	)
Reclassification due to release and changes in fair
value of common stock in ESOP subject to
contingent repurchase obligation of ESOP shares		-		-			-			-			-			-			(51,100	)		(51,100	)
Balance at March 31, 2008	$	32,975	$	13,611,771		$	10,797,844		$	(1,067,310	)	$	(1,232,579	)	$	971		$	(202,779	)	$	21,940,893
See Notes to the Unaudited Consolidated Financial Statements

3

EQUITABLE FINANCIAL CORP.

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	March 31,
	2008			2007
Cash flows from operating activities:
Net loss	$	(623,732	)	$	(1,036,653	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation		283,376			305,600
Amortization of premiums and discounts		(29,898	)		10,218
Federal Home Loan Bank stock dividends		(96,600	)		(101,800	)
ESOP expense		60,386			71,013
Deferred loan origination costs, net		(68,852	)		(23,914	)
Provision for loan losses		224,470			188,231
(Gain) loss on sale of loans		(121,115	)		44,390
Loss on disposal of premises and equipment		-			21,009
Deferred taxes		(351,953	)		(675,597	)
Loans originated for sale		(8,973,070	)		(6,218,624	)
Proceeds from sale of loans		9,001,044			6,268,051
(Gain) loss on sale of foreclosed asset		(29,425	)		9,881
Loss on investment from low income housing		28,580			21,059
Change in:
Accrued interest receivable		(123,202	)		(61,719	)
Other assets		(235,833	)		(70,216	)
Accrued interest payable and other liabilities		320,738			365,294
Net cash from operating activities		(735,086	)		(883,777	)
Cash flows from investing activities:
Net change in loans		(11,627,522	)		(5,680,698	)
Proceeds from sale of loans		-			8,079,625
Proceeds from sale of foreclosed asset		177,028			-
Principal repayments from securities available-for-sale		5,218,039			2,884,437
Purchases of securities available-for-sale		(4,932,333	)		-
Principal repayments from securities held-to-maturity		72,359			165,066
Time deposits placed with financial institutions		(11,287,000	)		-
Purchase of Federal Home Loan Bank Stock		(554,000	)		-
Purchases of premises and equipment		(37,062	)		(1,207,022	)
Net cash from investing activities		(22,970,491	)		4,241,408
Cash flows from financing activities:
Net change in deposits		2,343,351			469,426
Proceeds from Federal Home Loan Bank borrowings		34,500,000			55,100,000
Repayments of Federal Home Loan Bank borrowings		(6,276,626	)		(50,571,976	)
Net change in advance payments from borrowers for taxes and insurance		299,182			371,928
Purchase of treasury stock		(537,796	)		-
Net cash from financing activities		30,328,111			5,369,378
Increase in cash and cash equivalents		6,622,534			8,727,009
Cash and cash equivalents, beginning of period		9,482,234			4,092,931
Cash and cash equivalents, end of period	$	16,104,768		$	12,819,940
Supplemental cash flow information:
Interest paid on deposits and borrowings	$	5,022,959		$	4,750,103
Income taxes (refunded) paid	$	-		$	(34,497	)
Supplemental noncash disclosure:
Common stock in ESOP subject to contingent repurchase obligation	$	202,779		$	138,504
Transfer of loans to foreclosed real estate	$	68,284		$	291,900
See Notes to the Unaudited Consolidated Financial Statements

4

EQUITABLE FINANCIAL CORP.

Notes to the Unaudited Consolidated Financial Statements

March 31, 2008

(1) Basis of Presentation

The unaudited consolidated financial statements as of and for the period ended March 31, 2008 include the accounts of Equitable Financial Corp. (“Equitable Financial” or the “Company”) and its wholly owned subsidiary, Equitable Bank (the “Bank”). The Company, through the Bank, operates in a single business segment, providing traditional banking services through its office network.

The accompanying consolidated financial statements have not been audited by independent auditors. All significant intercompany accounts and transactions have been eliminated in consolidation. All adjustments that are, in the opinion of management, necessary for the fair presentation of the interim financial statements have been included. Such adjustments were of a normal recurring nature. The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information in accordance with instructions to Form 10-QSB and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission and, therefore, do not include all of the information and notes required for complete audited financial statements. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-KSB for the year ended June 30, 2007, which was filed with the Securities and Exchange Commission on September 28, 2007. The results of operations for the three and nine month periods ended March 31, 2008 are not necessarily indicative of the results that may be expected for the entire year or any other interim period.

In preparing financial statements in conformity with U.S. generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for loan losses, deferred tax valuation and the fair values of financial instruments.

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

(2) Critical Accounting Policies

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

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

5

(3) Earnings Per Share

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

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2008			2007			2008			2007
Net (loss)	$	(193,478	)	$	(411,503	)	$	(623,732	)	$	(1,036,653	)
Weighted average shares outstanding for the period		3,098,456			3,179,423			3,113,185			3,177,135
(Loss) per share	$	(0.06	)	$	(0.13	)	$	(0.20	)	$	(0.33	)

(4) Investment and Mortgage-backed Securities

The carrying value, gross unrealized gains and losses and fair value of investment and mortgage-backed securities by major security category at March 31, 2008, and June 30, 2007 are as follows:

	March 31, 2008
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale:
Mortgage-backed securities		1,479,849		8,132		(6,661	)		1,481,320
U.S. government-sponsored entity securities		4,967,843		-		-			4,967,843
Municipal obligations		-		-		-			-
Total investment and mortgage-backed securities, available for sale	$	6,447,692	$	8,132	$	(6,661	)	$	6,449,163
	June 30, 2007
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale:
Mortgage-backed securities		1,724,293		10,494		(64,497	)		1,670,290
U.S. government-sponsored entity securities		3,985,000		-		(43,736	)		3,941,264
Municipal obligations		993,012		-		(20,292	)		972,720
Total investment and mortgage-backed securities, available for sale	$	6,702,305	$	10,494	$	(128,525	)	$	6,584,274

Management believes that all unrealized losses as of March 31, 2008, were market-related, with no impairments. The unrealized losses are believed to be due to movements in interest rates and temporary in nature. As of March 31, 2008, we had the ability and intent to hold these securities until a market price recovery or maturity.

6

(5) Loan Portfolio Composition

We originate commercial (including agriculture), consumer, one-to four-family residential, multi-family and non-residential real estate and construction loans. The Company currently places emphasis on originating non-residential real estate, construction and commercial loans.

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

	March 31, 2008						June 30, 2007
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Real estate-mortgage:
One-to four-family	$	60,924			36.8	%	$	65,266			42.4	%
Multi-family		9,657			5.8	%		6,874			4.4	%
Nonresidential		43,680			26.4	%		37,019			24.1	%
Total real estate-mortgage loans		114,261			69.0	%		109,159			70.9	%
Construction		5,353			3.2	%		4,810			3.1	%
Commercial		28,572			17.3	%		24,154			15.7	%
Consumer:
Home equity		13,366			8.1	%		12,323			8.0	%
Other consumer		3,998			2.4	%		3,513			2.3	%
Total consumer loans		17,364			10.5	%		15,836			10.3	%
Total loans		165,550			100.0	%		153,959			100.0	%
Deferred loan origination costs, net		496						428
Allowance for loan losses		(1,241	)					(1,057	)
Loans, net	$	164,805					$	153,330

(6) Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable incurred credit losses in the loan portfolio. We evaluate the allowance for loan losses on a quarterly basis. When additional allowances are necessary, a provision for loan losses is charged to earnings. Although the Company did experience an increase in non-performing loans during the quarter the amount is comprised of three loans, none of which the Company anticipates any loss.

The following table summarizes the activity in the provision for loan losses for the three and nine months ended March 31, 2008 and 2007.

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2008			2007			2008			2007
	(Dollars in thousands)						(Dollars in thousands)
Allowance at beginning of period	$	1,140		$	928		$	1,057		$	926
Provision for loan losses		104			128			224			188
Charge-offs		(5	)		(67	)		(55	)		(125	)
Recoveries		2			1			15			1
Allowance at end of period	$	1,241		$	990		$	1,241		$	990
Allowance to nonaccrual loans		168.2	%		253.2	%		168.2	%		253.2	%
Allowance to total loans outstanding at the end of the period		0.7	%		0.7	%		0.7	%		0.7	%
Net charge-offs to average loans outstanding during the period		0.0	%		0.0	%		0.0	%		0.1	%

7

(7) Deposits

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

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

	March 31, 2008					June 30, 2007
	Amount		Percent			Amount		Percent
	(Dollars in thousands)
Noninterest-bearing accounts	$	8,288		6.4	%	$	6,466		5.1	%
Interest-bearing NOW		14,189		10.9	%		12,424		9.7	%
Money market		18,848		14.5	%		14,317		11.2	%
Savings accounts		4,302		3.3	%		4,398		3.4	%
Certificates of deposit		84,461		64.9	%		90,140		70.6	%
Total	$	130,088		100.0	%	$	127,745		100.0	%

(8) Employee Stock Ownership Plan

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

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

We account for our ESOP in accordance with Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership Plans. Accordingly, as shares are committed to be released from collateral, we report employee compensation expense equal to the average market price of the shares and the shares become outstanding for earnings per share (“EPS”) computations. Dividends on allocated ESOP shares reduce retained earnings; dividends on unearned ESOP shares reduce accrued interest.

Because participants may require the Company to purchase their ESOP shares upon termination of their employment, the appraised fair value of all earned and allocated ESOP shares may become a liability.

	For the Three Months				For the Nine Months
	Ended March 31,				Ended March 31,
	2008		2007		2008		2007
ESOP compensation expense	$	20,439	$	23,391	$	60,386	$	71,013
ESOP shares allocated to employees		2,271		2,271		6,813		6,813
ESOP shares allocated in prior periods		20,260		11,176		15,718		6,634
ESOP shares unallocated		106,731		115,815		106,731		115,815
Fair value of ESOP shares unallocated	$	960,579	$	1,192,895	$	960,579	$	1,192,895

(9) Equity Incentive Plan

In November 2006, the Company’s stockholders approved the Equitable Financial Corp. 2006 Equity Incentive Plan (the “Plan”). The Plan provides for the grant of options and stock awards to directors, officers, and employees of the Company. Under the terms of the Plan, 226,208 shares of the Company’s common stock were reserved for issuance. Of the 226,208 shares of common stock, 161,577 shares were reserved for issuance upon the exercise of stock options and 64,631 shares were registered for restricted stock awards. As of March 31, 2008 no options or stock awards had been granted.

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When the Company commences the restricted stock award program, compensation expense will be recognized over the vesting period of the shares based on the market value of the Company’s common stock at the issue date. The unamortized cost of shares not yet vested is reported as a reduction of stockholders’ equity. No compensation expense had been recorded pertaining to the Plan as of March 31, 2008 as the Company had not implemented the stock award program. At March 31, 2008, the Company had funded a trust that purchased 64,631 shares of stock for the restricted stock awards program for approximately $695,000.

(10) Income Taxes

The Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), effective July 1, 2007. FIN 48 provides clarification on accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result of the Company’s evaluation of the implementation of FIN 48, no significant income tax uncertainties were identified. Therefore, the Company recognized no adjustment for unrecognized income tax benefits during the three and nine months ended March 31, 2008. Corporate tax returns for the years 2004 through 2007 remain open to examination by taxing authorities.

(11) Recent Accounting Pronouncements

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

In September 2006, the Emerging Issues Task Force (“EITF”) reached a final consensus on 06-04 “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements.” The consensus stipulates that an agreement by an employer to share a portion of the proceeds of a life insurance policy with an employee during the postretirement period is a postretirement benefit arrangement required to be accounted for under SFAS No. 106 or Accounting Principles Board Opinion (“APB”) No. 12, “Omnibus Opinion - 1967.” The consensus concludes that the purchase of a split-dollar life insurance policy does not constitute a settlement under SFAS No. 106 and, therefore, a liability for the postretirement obligation must be recognized under SFAS No. 106 if the benefit is offered under an arrangement that constitutes a plan or under APB No. 12 if it is not part of a plan. Issue 06-04 is effective for annual or interim reporting periods beginning after December 15, 2007. The Company does not feel EITF 06-04 will have any impact on its financial condition because their split-dollar life insurance policy ends upon retirement of the covered employee.

In February 2007, FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115” (“SFAS 159”).  SFAS 159 expands the use of fair value accounting but does not affect existing standards which require assets and liabilities to be carried at fair value.  Under SFAS 159, a company may elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees, issued debt and other eligible financial instruments.  SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is in the process of determining the effects if any this statement will have on its financial condition, results of operations and liquidity.

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In March 2007, the Emerging Issues Task Force (“EITF”) reached a final conclusion on Issue 06-10, “Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangement.” The consensus concludes that a liability must be recognized for the postretirement obligation related to a collateral assignment split-dollar life insurance arrangement in accordance with SFAS No. 106 or APB No. 12. Any assets should be recognized and measured based on the nature and substance of the collateral assignment split-dollar life insurance arrangement. The effective date of EITF 06-10 is for fiscal years beginning after December 15, 2007. The Company does not feel EITF06-10 will have a financial statement impact because its split-dollar life insurance agreement ends upon retirement or termination of the covered employee.

In December 2007, the FASB issued SFAS No. 141(revised), “Business Combinations”. The Statement establishes principles and requirements for how an acquirer recognizes and measures tangible assets acquired, liabilities assumed, goodwill and any noncontrolling interests and identifies related disclosure requirements for business combinations. Measurement requirements will result in all assets, liabilities, contingencies and contingent consideration being recorded at fair value on the acquisition date, with limited exceptions. Acquisition costs and restructuring costs will generally be expensed as incurred. This Statement is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51”. The Statement establishes accounting and reporting standards for noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. Minority interests will be recharacterized as noncontrolling interests and classified as a component of equity. It also establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary and requires expanded disclosures. This Statement is effective for fiscal years beginning on or after December 15, 2008. The Company does not expect the adoption of this Statement will have a material impact on its financial position, results of operations, and liquidity.

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

Management’s discussion and analysis of the Company’s financial condition and results of operations at and for the three and nine months ended March 31, 2008 and 2007 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes and tables thereto, appearing in Part I, Item 1 of this report.

Forward-Looking Statements

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

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

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

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General

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

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

Statement of Financial Condition Analysis

Overview. Total assets at March 31, 2008 were $213.0 million, an increase of $30.2 million or 16.5% from total assets of $182.8 million at June 30, 2007. Total liabilities at March 31, 2008 were $191.1 million, compared to $159.8 million at June 30, 2007, an increase of $31.3 million or 19.6%. Stockholders’ equity at March 31, 2008 was $21.9 million compared to $23.0 million at June 30, 2007, a decrease of $1.1 million or 4.8%.

Loans. We originate commercial (including agriculture), consumer, one-to four-family residential, multi-family and non-residential real estate and construction loans. The Company places heightened emphasis on originating non-residential real estate, construction and commercial loans. Loans, net increased $11.5 million, or 7.5%, to $164.8 million at March 31, 2008 compared to $153.3 million at June 30, 2007. This increase was primarily due to commercial loans increasing $4.4 million, nonresidential real estate loans increasing $6.7 million, multi-family real estate loans increasing $2.8 million, and consumer home equity loans increasing $1.0 million. This activity is in line with our continued emphasis on originating non-residential real estate, construction and commercial loans. These increases were offset by a decrease in 1-4 family residential real estate of $4.3 million.

Non-performing Assets. The following table provides information with respect to our non-performing assets at the dates indicated. The Company had no troubled debt restructurings during the quarter ended March 31, 2008. There was one loan 90 days or more past due that was accruing interest at March 31, 2008.

	March 31,			June 30,
	2008			2007
	(Dollars in thousands)
Non-accrual loans:
Real estate-mortgage	$	353		$	466
Construction		220			-
Commercial		37	��		-
Consumer		128			3
Total non-accrual loans		738			469
Loans 90 days, still on accrual		25			-
Foreclosed assets, net		4			83
Total non-performing assets	$	767		$	552
Total non-accrual loans to total loans		0.4	%		0.3	%
Total non-accrual loans to total assets		0.3	%		0.3	%
Total non-performing assets to total assets		0.4	%		0.3	%

Non-accrual loans increased $269,000 to $738,000 at March 31, 2008, compared to $469,000 at June 30, 2007. The increase in construction loans is due to one loan that is backed by 1-4 family residential real estate. During April 2008, the customers sold the house and the Company received the full value of the principal balance of the loan. The increase in consumer loans is primarily due to one customer with a loan balance of $122,000. This loan is a home equity loan that is secured by two residential real estate properties. The customer is awaiting approval to sell the house. In the event the customer does not sell the house, the Bank will foreclose. The Company believes based on recent appraisals the property will be sufficient to cover the principal balance of the loan when sold.

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During the nine months ended March 31, 2008 we sold two homes that were foreclosed on for $177,000. The book value of these assets was $148,000. One house was foreclosed on prior to June 30, 2007 with a book value of $83,000 and the other house was foreclosed on during the nine month period ended March 31, 2008 with a book value of $65,000.

Investments and Mortgage-backed Securities. Our securities portfolio consists primarily of U.S. Government-sponsored entity securities and mortgage-backed securities. Securities available-for-sale decreased $135,000, or 2.1%, between June 30, 2007 and March 31, 2008. The decrease was the result of net maturities and repayments in the portfolio of $286,000 and an increase in the market value of the portfolio of $120,000. Securities held-to-maturity decreased $74,000 between June 30, 2007 and March 31, 2008. This decrease was due to repayments. The Company evaluates its securities with significant declines in fair value on a quarterly basis to determine whether they should be considered temporarily or other than temporarily impaired. The unrealized losses on investments is attributable to changes in interest rates, rather than credit quality, and the Company has the ability and management intent to hold these securities until a market price recovery or maturity. The Company purchased $11.3 million in time deposits with financial institutions during the quarter ended March 31, 2008. All of the time deposits will mature at 90 days or longer.

Deposits. Our primary source of funds is our deposit accounts, which are comprised of non-interest-bearing accounts, interest-bearing NOW accounts, money market accounts, savings accounts and certificates of deposit. Total deposits increased to $130.1 million from $127.7 million during the nine months ended March 31, 2008, an increase of $2.4 million or 1.9%. The increase was partially due to an increase in core deposits of $8.0 million resulting from an increase in non-interest bearing checking accounts of $1.8 million and an increase in the Company’s interest bearing checking accounts of $1.8 million with higher yields from new customers. Also contributing was an increase in money market accounts of $4.4 million. The increase in money market accounts was primarily due to one existing customer depositing funds with the Bank due to the sale of a business venture. This deposit is highly volatile and not likely to remain with the Company for an extended period of time as we anticipate the money will be transferred into investments with greater returns. Additionally, the increase in money market accounts is also partially due to new customers. Offsetting the increase in core deposits was a decrease in certificates of deposit of $6.0 million. This decrease in certificates was primarily due to a decrease in brokered certificates of $5.5 million. We continue to utilize brokered certificates to reduce the overall cost-of-funds.

Borrowings. We utilize borrowings from the Federal Home Loan Bank of Topeka to supplement our supply of funds for loans and investments. Federal Home Loan Bank borrowings increased $28.2 million to $58.8 million at March 31, 2008 from $30.6 million at June 30, 2007. The Company advanced additional funds during the nine months ended March 31, 2008, to mitigate interest rate risk by using long-term low-cost funds due to the declining rate environment. The funding from these advances was used to purchase multiple time deposits with various financial instituions. The advances outstanding at March 31, 2008 mature in 2008 through 2018.

Results of Operations for the Three and Nine Months Ended March 31, 2008 and 2007

Overview. We recorded a net loss of $193,000 during the three months ended March 31, 2008, compared to a net loss of $412,000 during the three months ended March 31, 2007, a decrease of $219,000. Our net loss for the nine months ended March 31, 2008 was $624,000 compared to $1,037,000 at March 31, 2007, a decrease of $413,000. The decrease in our net loss is largely due to an increase in net interest income of $150,000 and $200,000 for the three and nine month periods ended March 31, 2008, respectively. Also contributing significantly is the sale of loans during the three month period ended March 31, 2007 with a gross loss of $183,000. There was not a similar transaction that occurred during the period ended March 31, 2008. Additionally, the Company experienced an increase in service charges on deposit accounts of $42,000 and $189,000 for the three and nine month periods ended March 31, 2008, respectively and an increase in brokerage fee income of $63,000 and $175,000 for the three and nine month periods ended March 31, 2008, respectively. Offsetting these decreases in the net loss was an additional $39,000 of data processing fees for the three month period and $169,000 for the nine month period. Additionally, the income tax benefit recognized during the three months ended March 31 decreased by $217,000 and during the nine months ended March 31 decreased by $325,000.

Net Interest Income. Net interest income is the most significant component of our earnings and consists of interest income on interest-earning assets offset by interest expense on interest-bearing liabilities. Changes in net interest income result from changes in volume, net interest spread and net interest margin. Volume relates to the level of interest-earning assets and interest-bearing liabilities. Net interest spread refers to the difference between the yield on interest-earning assets and the rate paid on interest-bearing liabilities. Net interest margin refers to net interest income divided by total interest-earning assets and is influenced by the level and mix of interest-earning assets and interest-bearing liabilities.

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Net interest income before provision for loan losses totaled $1.1 million for the three months ended March 31, 2008, an increase of $150,000, compared to $946,000 for the three months ended March 31, 2007. The increase in net interest income was primarily attributable to a $29.0 million increase in the average balance of commercial loans which hold a higher interest rate than the one-to four family residential real estate loans that were typically on our portfolio. For the nine months ended March 31, 2008, our net interest income before provision for loan losses totaled $3.1 million, an increase of $200,000, compared to $2.9 million for the nine months ended March 31, 2007. This increase in net interest income is also attributable to the increase in average balance of commercial loans, which we continue to emphasize and which on average carry a higher interest rate than mortgage loans. However, this increase was partially offset by an increase in interest expense from deposit accounts due to an increase in the average balance of high yield money market accounts of $6.6 million.

The following table summarizes average balances and average yield and costs for the three months ended March 31, 2008 and 2007.

	Three Months Ended March 31,
	2008							2007
	Average Balance		Interest Income		Yield/ Cost			Average Balance		Interest Income		Yield/ Cost
	(Dollars in thousands)
Loans, net	$	164,644	$	2,641		6.42	%	$	160,002	$	2,485		6.21	%
Securities and other		19,326		193		3.99	%		12,942		155		4.79	%
Total interest-bearing assets		183,970		2,834		6.16	%		172,944		2,640		6.11	%
Total interest-bearing deposits		123,555		1,227		3.97	%		121,602		1,212		3.99	%
FHLB borrowings		41,418		482		4.65	%		36,559		482		5.27	%
Total interest-bearing liabilities	$	164,973	$	1,709		4.14	%	$	158,161	$	1,694		4.28	%
Interest rate spread						2.02	%						1.83	%
Net interest margin						2.45	%						2.19	%

Interest rate spread increased during the three months ended March 31, 2008 by 19 basis points from 1.83% to 2.02%. This is primarily due to an increase of 21 basis points in the average yield for loans. The increase in yield on loans is due to our continuing emphasis on the non-residential real estate, commercial, and construction loans, which generally are based on higher rate indices than one-to four-family loans. The increases in these loan categories resulted in an increase in our net interest margin of 26 basis points.

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	Nine Months Ended March 31,
	2008							2007
	Average Balance		Interest Income		Yield/ Cost			Average Balance		Interest Income		Yield/ Cost
	(Dollars in thousands)
Loans, net	$	158,068	$	7,701		6.50	%	$	157,644	$	7,359		6.22	%
Securities and other		15,706		519		4.41	%		12,327		444		4.80	%
Total interest-bearing assets		173,774		8,220		6.31	%		169,971		7,803		6.12	%
Total interest-bearing deposits		122,698		3,851		4.18	%		118,795		3,471		3.90	%
FHLB borrowings		32,194		1,223		5.07	%		36,190		1,445		5.32	%
Total interest-bearing liabilities	$	154,892	$	5,074		4.37	%	$	154,985	$	4,916		4.23	%
Interest rate spread						1.94	%						1.89	%
Net interest margin						2.41	%						2.26	%

Interest rate spread increased during the nine months ended March 31, 2008 by 5 basis points from 1.89% to 1.94%. This is primarily due to an increase of 28 basis points in the average yield for loans. The increase in yield on loans is due to our continuing emphasis on the non-residential real estate, commercial, and construction loans. The increase in the average yield on loans was offset by an increase in the average cost of funds for deposit accounts of 28 basis points. The increase in cost of funds was due to an increase in the average balance of high yield money market accounts. These changes resulted in an increase in our net interest margin of 15 basis points.

Provision for Loan Losses. The allowance for loan losses is a valuation allowance for probable incurred credit losses in the loan portfolio. We evaluate the allowance for loan losses on a quarterly basis. When additional allowances are necessary, a provision for loan loss is charged to earnings. During the quarter ended March 31, 2008 our evaluation resulted in a provision of $104,000 compared to $128,000 for the three months ended March 31, 2007. For the nine months ended March 31, 2008 the provision increased $36,000 to $224,000 compared to $188,000 at the nine months ended March 31, 2007. The increased provisions are a result of the continuing shift in the composition of the Bank’s loan portfolio from residential real estate loans to non-residential real estate and commercial loans and continuing deteriorations in economic indicators.

Non-interest Income. During the quarter ended March 31, 2008 non-interest income increased $247,000 from the comparable period in 2007. Service charges on deposit accounts increased by $42,000 as a result of our focus on increasing service charge fees. Brokerage fee income increased $63,000 as a result of increased productivity in our investment departments. Gain on sale of loans increased $148,000 due to a sale occurring during the three months ended March 31, 2007 with a gross loss of $183,000. There was no similar transaction during the three months ended March 31, 2008. For the nine months ended March 31, 2008, non-interest income increased $562,000 from $939,000 to $1,501,000. This increase is also due to an increase in service charges on deposit accounts of $189,000 and brokerage fee income of $175,000. For the nine months ended March 31, 2008 the gain on sale of loans increased $166,000 due to no like kind sale of loans resulting in a loss during the nine months ended March 31, 2008. Additionally, other income increased by $66,000. The primary reason for this increase was a referral fee of $60,000 received for one loan.

Non-interest Expenses. Total non-interest expenses increased $14,000 for the three months ended March 31, 2008, from the prior three month period ended March 31, 2007. This increase was primarily due to an increase in data processing fees of $38,000 Offsetting this increase was a decrease in professional fees of $25,000. While the Company did not experience significant differences in most of the non-interest expenses, the Company did experience slight decreases in salaries and employee benefits, advertising and public relations, and professional fees as a result of its efforts to address non-interest expense.

For the nine months ended March 31, 2008 non-interest expenses increased $47,000 from the nine months ended March 31, 2007. During the nine month period we incurred increases in salaries and employee benefits of $108,000, data processing fees of $169,000 and insurance and surety bond premiums of $84,000. These increases were the result of ongoing operational expense incurred in the continuing expansion of the Company’s products, services and locations. These increases were offset by decreases of $67,000 in occupancy and equipment, $76,000 in advertising and public relations, professional fees of $25,000, $40,000 in supplies, telephone and postage, $18,000 in contributions and donations and other expenses of $52,000. Also offsetting the increases was the net proceeds of $40,000 on the sale of foreclosed assets.

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Income Taxes. The Company recorded a tax benefit of $75,000 during the three months ended March 31, 2008 compared to a tax benefit of $293,000 during the three months ended March 31, 2007. For the nine months ended March 31, 2008, the Company recorded a tax benefit of $352,000 compared to a tax benefit of $677,000 during the nine months ended March 31, 2007. The tax benefit at March 31, 2008 and 2007 were calculated based on the tax items and the operating loss or income recorded during the respective quarters.

Liquidity and Capital Management

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

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

Our most liquid assets are cash and cash equivalents. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At March 31, 2008, cash and cash equivalents totaled $16.1 million, an increase of $6.6 million from June 30, 2007. Securities classified as available-for-sale whose market value exceeds or equaled our cost, which provide additional sources of liquidity, totaled $5.5 million at March 31, 2008. Total securities classified as available-for-sale were $6.4 million at March 31, 2008. Of this amount, $701,000 was pledged to secure certain depository relationships, such as certificates of deposit and checking accounts held by various municipal entities and a charitable organization. In addition, at March 31, 2008, we had the ability to borrow a total of approximately $74.6 million from the Federal Home Loan Bank of Topeka. On March 31, 2008, we had $58.8 million of borrowings outstanding. It is our intention to hold these advances to maturity. Additionally, the Company has the ability to borrow $5.0 million from Wells Fargo and $4.4 million from Bankers Bank of the West. The balance in both of these lines of credit is zero at March 31, 2008. Future growth of our loan portfolio resulting from our expansion efforts may require us to borrow additional funds.

At March 31, 2008, we had $16.2 million in loan commitments outstanding, which consisted of $884,000 million in mortgage loan commitments, $3.3 million in unused home equity lines of credit, $204,000 in personal lines of credit and $11.8 million in commercial lines of credit. Certificates of deposit due within one year of March 31, 2008 totaled $69.1 million, or 81.8%, of certificates of deposit. We believe the large percentage of certificates of deposit that mature within one year reflects the flat yield curve. If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before March 31, 2009. We believe, however, based on past experience that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Capital Management. We are subject to various regulatory capital requirements administered by the Office of Thrift Supervision, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At March 31, 2008, we exceeded all of our regulatory capital requirements. We are considered “well capitalized” under regulatory guidelines.

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

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On February 28, 2008, the Company announced the completion of its previously disclosed stock repurchase program under which the Company acquired 59,355 shares of its common stock. The average share price of the shares was $9.06 per share and the aggregate repurchase price was approximately $538,000.

On March 20, 2008, the Company issued a press release announcing that the Company’s Board of Directors approved the repurchase of up to 71,226 shares of the Company’s outstanding common stock, which is 5.0% of the outstanding shares not held by Equitable Financial MHC.

Off-Balance Sheet Arrangements

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

For the nine months ended March 31, 2008 and the year ended June 30, 2007, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

Commitments

We currently lease our initial location in Omaha for $120,000 annually.

Item 3. Controls and Procedures

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purposes of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

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

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

The following table sets forth information regarding the Company’s repurchases of its common stock during the quarter ended March 31, 2008.

Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number Of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2008 through January 31, 2008 (1)	6,718	$7.11	6,718	52,637
February 1, 2008 through February 29, 2008	52,637	$9.31	52,637	_
March 1, 2008 through March 31, 2008 (2)	_	_	_	71,226

(1) On October 17, 2007, the Company announced that its Board of Directors had approved its first stock repurchase program authorizing the Company to purchase up to 59,355 shares of the Company’s common stock. This repurchase program was completed on February 27, 2008.

(2) On March 20, 2008, the Company announced that its Board of Directors had approved its second stock repurchase program authorizing the Company to purchase up to 71,226 shares of the Company’s common stock.

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Item 3.Defaults upon Senior Securities

Not Applicable.

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

Not Applicable.

Item 5.Other Information

None.

Item 6.Exhibits

 

3.1 Charter of Equitable Financial Corp. (1)

3.2 Bylaws of Equitable Financial Corp. (1)

4.0 Stock Certificate of Equitable Financial Corp. (2)

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

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

32.0 Section 1350 Certification

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

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

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SIGNATURES

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

	EQUITABLE FINANCIAL CORP.
Dated: May 14, 2008	By:	/s/ Richard L. Harbaugh
		Richard L. Harbaugh President and Chief Executive Officer (principal executive officer)
		Title

Dated: May 14, 2008	By:	/s/ Kim E. Marco
		Kim E. Marco Executive Vice President and Chief Financial Officer (principal financial and accounting officer)