Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934

Filed by the registrant [X]
Filed by a party other than the registrant [ ]

Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

EMPIRE FEDERAL BANCORP, INC.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

EMPIRE FEDERAL BANCORP, INC.
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:
N/A
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- ------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount previously paid:
N/A
- ------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
N/A
- ------------------------------------------------------------------------------
(3) Filing party:
N/A
- ------------------------------------------------------------------------------
(4) Date filed:
N/A
- ------------------------------------------------------------------------------

April 20, 2001

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of
Empire Federal Bancorp, Inc., the holding company for Empire Bank. The
meeting will be held at the main office of Empire Bank, 123 South Main Street,
Livingston, Montana, on Tuesday, May 22, 2001, at 12:30 p.m., Mountain
Daylight Savings Time.

The attached Notice of the Annual Meeting of Stockholders and Proxy
Statement describe the formal business to be transacted at the meeting.
During the meeting, we will also report on the operations of the Company.
Directors and officers of the Company, as well as a representative of KPMG
LLP, the Company's independent auditors, will be present to respond to
appropriate questions of stockholders.

To ensure proper representation of your shares at the meeting, the Board
of Directors requests that you sign, date and return the enclosed proxy card
in the enclosed postage-prepaid envelope as soon as possible, even if you
currently plan to attend the meeting. This will not prevent you from voting
in person, but will assure that your vote is counted if you are unable to
attend the meeting.

We look forward to seeing you at the meeting.

Sincerely,

/s/William H. Ruegamer
William H. Ruegamer
President and Chief Executive Officer

EMPIRE FEDERAL BANCORP, INC.
123 SOUTH MAIN STREET
P.O. BOX 1099
LIVINGSTON, MONTANA 59047
(406) 222-1981
- ----------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2001
- ----------------------------------------------------------------------------

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
("Meeting") of Empire Federal Bancorp, Inc. ("Company") will be held at the
main office of Empire Bank, 123 South Main Street, Livingston, Montana, on
Tuesday, May 22, 2001, at 12:30 p.m., Mountain Daylight Savings Time.

A Proxy Card and a Proxy Statement for the Meeting are enclosed.

The Meeting is for the purpose of considering and acting upon:

1. The election of three directors of the Company;

2. The approval of the appointment of KPMG LLP as the Company's
independent auditors for the fiscal year ending December 31,
2001; and

3. Such other matters as may properly come before the Meeting or any
adjournments thereof.

NOTE: The Board of Directors is not aware of any other business to come
before the Meeting.

Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Company's Bylaws, the Board of Directors has fixed the close of business on
April 13, 2001 as the record date for the determination of stockholders
entitled to notice of and to vote at the Meeting and any adjournments thereof.

You are requested to complete and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend the Meeting and
vote in person.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Ann Worthington
ANN WORTHINGTON
SECRETARY

Livingston, Montana
April 20, 2001

- ------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
- ------------------------------------------------------------------------------

PROXY STATEMENT
OF
EMPIRE FEDERAL BANCORP, INC.
123 SOUTH MAIN STREET
P.O. BOX 1099
LIVINGSTON, MONTANA 59047
(406) 222-1981
- ------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 2001
- ------------------------------------------------------------------------------

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Empire Federal Bancorp, Inc. ("Company")
to be used at the Annual Meeting of Stockholders of the Company ("Meeting").
The Meeting will be held at the main office of Empire Bank ("Bank"), 123 South
Main Street, Livingston, Montana, on Tuesday, May 22, 2001, at 12:30 p.m.,
Mountain Daylight Savings Time. The Company is the holding company for the
Bank. The accompanying Notice of Annual Meeting of Stockholders and this
Proxy Statement are being first mailed to stockholders on or about April 20,
2001.

- ------------------------------------------------------------------------------
VOTING AND PROXY PROCEDURE
- ------------------------------------------------------------------------------

Stockholders Entitled to Vote at Meeting. Only stockholders of record as
of the close of business on April 13, 2001 ("Record Date") are entitled to
vote at the Meeting, and are entitled to one vote for each share of common
stock of the Company ("Common Stock") then held. As of the Record Date, the
Company had 1,562,143 shares of Common Stock issued and outstanding. The
Common Stock is the only outstanding class of securities of the Company.

As provided in the Company's Certificate of Incorporation, record holders
of the Company's Common Stock who beneficially own, either directly or
indirectly, in excess of 10% of the Company's outstanding shares are not
entitled to any vote in respect of the shares held in excess of the 10% limit.

If you are a beneficial owner of Company Common Stock held by a broker,
bank or other nominee (i.e., in "street name"), you will need proof of
ownership to be admitted to the Meeting. A recent brokerage statement or
letter from a bank or broker are examples of proof of ownership. If you want
to vote your shares of Company Common Stock held in street name in person at
the Meeting, you will have to get a written proxy in your name from the
broker, bank or other nominee who holds your shares.

Quorum Requirement. According to the Company's Bylaws, the presence, in
person or by proxy, of at least a majority of the total number of outstanding
shares of Common Stock entitled to vote is necessary to constitute a quorum at
the Meeting. Abstentions and broker non-votes will be considered present and
will be included in determining whether a quorum is present.

Proxies; Proxy Revocation Procedures. The Board of Directors solicits
proxies so that each stockholder has the opportunity to vote on the proposals
to be considered at the Meeting. When a proxy card is returned properly
signed and dated, the shares represented thereby will be voted in accordance
with the instructions on the proxy card. Where a proxy card is properly
signed but no instructions are indicated, proxies will be voted FOR the
nominees for directors set forth in this proxy statement and FOR the approval
of the appointment of independent auditors. If a stockholder attends the
Meeting, he or she may vote by ballot.

Stockholders who execute proxies retain the right to revoke them at any
time. Proxies may be revoked by written notice delivered in person or mailed
to the Secretary of the Company or by filing a later dated proxy before a vote
being taken on a particular proposal at the Meeting. Attendance at the
Meeting will not automatically revoke a proxy, but a stockholder in attendance
may request a ballot and vote in person, thereby revoking a prior granted
proxy.

If your Company Common Stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker or bank may allow you to deliver
your voting instructions via the telephone or the Internet. Please see the
instruction form that accompanies this proxy statement. If you wish to change
your voting instructions after you have returned your voting instruction form
to your broker or bank, you must contact your broker or bank.

Participants in the Empire Bank ESOP. If a stockholder is a participant
in the Empire Bank Employee Stock Ownership Plan ("ESOP"), the proxy card
represents a voting instruction to the trustees of the ESOP as to the number
of shares in the participant's plan account. Each participant may direct the
trustees as to the manner in which shares of Common Stock allocated to the
participant's plan account are to be voted. Unallocated shares of Common
Stock held by the ESOP, and allocated shares for which no voting instructions
are received from participants, will be voted by the trustees in the same
proportion as shares for which the trustees have received voting instructions.

Vote Required. The three directors to be elected at the Meeting will be
elected by a plurality of the votes cast by stockholders present in person or
by proxy and entitled to vote. Votes may be cast for or withheld from each
nominee for election as director. Votes that are withheld and broker
non-votes will have no effect on the outcome of the election because directors
will be elected by a plurality of votes cast. The Company's Certificate of
Incorporation prohibits stockholders from cumulating their votes for the
election of directors.

Approval of the appointment of independent auditors requires the
affirmative vote of a majority of the outstanding shares of Common Stock
present in person or by proxy and entitled to vote at the Meeting. In
determining whether such proposal has received the requisite number of
affirmative votes, abstentions will be counted and will have the same effect
as a vote against the proposal; broker non-votes will be disregarded and will
have no effect on the outcome of the vote.

- ------------------------------------------------------------------------------
VOTING SECURITIES AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------------

Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, regarding such
ownership pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"). Based upon such reports, the following table sets forth, as
of the Record Date, certain information as to those persons who were
beneficial owners of more than 5% of the outstanding shares of Common Stock.
Management knows of no persons other than those set forth below who owned more
than 5% of the outstanding shares of Common Stock as of the Record Date. The
table also sets forth, as of the Record Date, information as to the shares of
Common Stock beneficially owned by each director, the "named executive
officers" of the Company, and all executive officers and directors of the
Company as a group.

Amount and Nature Percent of
of Beneficial Common Stock
Beneficial Owner Ownership(1) Outstanding
- ---------------- ----------------- ------------
Beneficial Owners of More Than 5%

Empire Bank Employee 199,914(2) 12.8%
Stock Ownership Plan Trust

Directors(3)

Walter J. Peterson, Jr. 25,968 *

(table continued next page)

Amount and Nature Percent of
of Beneficial Common Stock
Beneficial Owner Ownership(1) Outstanding
- ---------------- ----------------- ------------

John R. Boe 14,368 *
Edwin H. Doig 15,185 *
Sanroe J. Kaisler, Jr. 10,185 *
Walter R. Sales 15,185 *
Burton Wastcoat 4,142 *
Beverly D. Harris(3) 69,663 4.45

Named Executive Officers(4)

William H. Ruegamer(5) 5,484 *
Kenneth P. Cochran(5) 2,592 *

All Executive Officers and Directors 162,772 10.42
as a Group (9 persons)(3)
- -------------
* Less than 1 percent of shares outstanding.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is
deemed to be the beneficial owner, for purposes of this table, of any
shares of Common Stock if he or she has voting or investment power with
respect to such security or has a right to acquire, through the
exercise of outstanding options or otherwise, beneficial ownership at
any time within 60 days from the Record Date. The table includes
shares owned by spouses, other immediate family members in trust,
shares held in retirement accounts or funds for the benefit of the
named individuals, and other forms of ownership, over which shares the
persons named in the table may possess voting and/or investment power.
(2) Under the terms of the ESOP, the trustees will vote unallocated shares
and allocated shares for which no voting instructions are received in
the same proportion as shares for which the trustees have received
voting instructions from participants. As of April 13, 2001, 47,843
shares have been allocated to participants' accounts. The trustees
of the ESOP are First Bankers Trust Company, Quincy, Illinois.
(3) Includes vested and unvested shares in the Company's Management
Recognition and Development Plan ("MRDP"). Participants in the MRDP
exercise all rights incidental to ownership, including voting rights.
(4) Under SEC regulation, the term "named executive officer" includes the
chief executive officer, regardless of compensation level, and the four
most highly compensated executive officers, other than the chief
executive officer, whose total annual salary and bonus for the last
completed fiscal year exceeded $100,000. Messrs. Ruegamer and
Cochran were the Company's only "named executive officers" for the
fiscal year ended December 31, 2000.
(5) Messrs. Ruegamer and Cochran are also directors of the Company.

- ------------------------------------------------------------------------------
PROPOSAL I - ELECTION OF DIRECTORS
- ------------------------------------------------------------------------------

The Company's Board of Directors currently consists of nine members. In
accordance with the Company's Certificate of Incorporation, the Board is
divided into three classes with staggered three-year terms.

The Board of Directors has nominated William H. Ruegamer, Beverly D.
Harris and Edwin H. Doig for election as directors to serve for a three year
period, or until their respective successors have been elected and qualified.
All nominees are current members of the Board of Directors of the Company.
Each director of the Company is also a director of the Bank.

If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute(s) as the Board of
Directors may recommend. At this time, the Board of Directors knows of no
reason why any nominee might be unavailable to serve.

The Board of Directors recommends that stockholders vote "FOR" the
election of Messrs. Ruegamer and Doig and Mrs. Harris.

The following table sets forth certain information regarding the nominees
for election at the Meeting and the directors continuing in office after the
Meeting.

Year First
Principal Occupation Elected Term to
Name Age(1) During Last Five Years Director (2) Expire
---- ------ ---------------------- -------- -------

BOARD NOMINEES

William H. Ruegamer 56 President and Chief
Executive Officer 1999 2004(3)
of the Bank and the
Company effective
January 1999. Prior
to that, President and
Chief Executive Officer
of First Interstate Bank
and Executive Vice
President and Chief
Operating Officer of
First Interstate
BancSystem, Billings,
Montana.

Beverly D. Harris 67 Vice Chairman of the Board 1971 2004(3)
since January 1999. Prior
to that, President of the
Bank and President and
Chief Executive Officer of
the Company; President of
Dime Insurance Agency,
Livingston, Montana.

Edwin H. Doig 69 Retired pharmacist. Chairman 1979 2004(3)
of the Board of the Company
and the Bank.

DIRECTORS CONTINUING IN OFFICE AFTER MEETING

Kenneth P. Cochran 58 Senior Vice President of 2000 2002
the Bank. Prior to that,
Senior Vice President,
First Interstate Bank,
Billings, Montana, from
1989 to March 1, 2000.

John R. Boe 76 Retired junior high 1979 2002
school teacher and vice
principal.

Burton Wastcoat 61 Broker and owner of 1998 2002
Coldwell-Banker/RCI
Realty.

Walter J. 77 Former Chairman of the 1964 2003
Peterson, Jr. Board of the Company and
the Bank; Vice President
of Dime Insurance Agency,
Livingston, Montana.

(table continued on next page)

Year First
Principal Occupation Elected Term to
Name Age(1) During Last Five Years Director(2) Expire
- ---- ----- ---------------------- ---------- -------

DIRECTORS CONTINUING IN OFFICE AFTER MEETING (continued)

Sanroe J. Kaisler, Jr. 76 Retired insurance broker. 1964 2003
Director of Dime Insurance
Agency, Livingston,
Montana.

Walter R. Sales 72 Retired rancher and former 1977 2003
Montana Legislator.

- -----------------
(1) At December 31, 2000.
(2) Includes prior service on the Board of Directors of the Bank.
(3) Assuming re-election at the Meeting.

- ------------------------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- ------------------------------------------------------------------------------

The Boards of Directors of the Company and the Bank conduct their
business through meetings and committees of the Boards of Directors. During
the fiscal year ended December 31, 2000, the Board of Directors of the Company
held eight meetings and the Board of Directors of the Bank held 12 meetings.
Neither the Company nor the Bank held any special meetings. No director of
the Company or the Bank attended fewer than 75% of the total meetings of the
Boards and committees on which such Board member served during this period.

Committees of the Company's Board of Directors. The Company's Board of
Directors has established Executive, Audit and Nominating Committees, among
others.

The Executive Committee, consisting of Directors Harris, Peterson and
Kaisler, meets as needed. This Committee generally has the power and
authority to act on behalf of the Board of Directors between scheduled Board
meetings, unless specific matters are delegated to it for action by the Board.
The Executive Committee did not meet during the fiscal year ended December 31,
2000.

The Audit Committee, consisting of Directors Sales, Doig and Wastcoat,
meets as needed and is responsible for reviewing the external auditors'
reports and results of their examination. The Audit Committee met once during
the fiscal year ended December 31, 2000.

The full Board of Directors acts as a Nominating Committee to select
management's nominees for election as directors of the Company. The Board of
Directors met once in its capacity as the nominating committee during the
fiscal year ended December 31, 2000.

Committees of the Bank's Board of Directors. The Bank's Board of
Directors has established Executive, Audit and Compensation Committees, among
others.

The Executive Committee, consisting of Directors Harris, Peterson and
Kaisler, meets as needed and generally has the authority to act on behalf of
the Board of Directors between scheduled Board meetings, unless specific
matters are delegated to it for action by the Board. The Executive Committee
did not meet during the fiscal year ended December 31, 2000.

The full Board of Directors acts as the Bank's Compensation Committee.
This Committee is responsible for reviewing and recommending compensation to
be paid to executive officers. Mr. Ruegamer recuses himself from the
Committee when it considers matters regarding his compensation. The
Compensation Committee met once during the fiscal year ended December 31,
2000.

The full Board of Directors acts as a Nominating Committee to select
management's nominees for election as directors of the Bank. The Board of
Directors met once in its capacity as the nominating committee during the
fiscal year ended December 31, 2000.

The Audit Committee, consisting of Directors Sales, Doig and Wastcoat
meets as needed and is responsible for reviewing the external auditors'
reports and results of their examination. The Audit Committee met three times
during the fiscal year ended December 31, 2000.

Audit Committee Matters

Audit Committee Report. The Company's Audit Committee has issued the
following report with respect to the audited financial statements of the
Company for the fiscal year ended December 31, 2000:

The Audit Committee has reviewed and discussed with the Company's
management the Company's fiscal 2000 audited financial statements;

. The Audit Committee has discussed with the Company's independent
auditors (KPMG LLP) the matters required to be discussed by
Statement on Auditing Standards No. 61;

. The Audit Committee has received the written disclosures and letter
from the independent auditors required by Independence Standards
Board No. 1 (which relates to the auditors' independence from the
Company and its related entities) and has discussed with the
auditors their independence from the Company; and

. Based on the review and discussions referred to in the three items
above, the Audit Committee recommended to the Board of Directors
that the fiscal 2000 audited financial statements be included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2000.

Submitted by the Audit Committee of the Company's Board of Directors:

Edwin H. Doig, Chairman
Walter R. Sales
Burton Wastcoat

- ------------------------------------------------------------------------------
DIRECTORS' COMPENSATION
- ------------------------------------------------------------------------------

Directors receive a retainer of $500 per month and a fee of $250 for
attendance at regular Board meetings of the Bank and a fee of $250 per month,
payable quarterly, for service on the Company's Board of Directors. In
addition, Directors residing in Bozeman, Montana, Big Timber, Montana, and
Billings, Montana, receive $20 per meeting for travel expenses. No additional
fees are paid to Directors for attendance at committee meetings. Directors'
fees for the Bank and the Company totalled $78,540 and $27,000, respectively,
for the fiscal year ended December 31, 2000.

On April 29, 1999, the Board of Directors granted Burton Wastcoat options
under the Company's Stock Option Plan to purchase 5,184 shares of stock, at an
exercise price of $11.69. The option has a five-year term and vests in 20%
annual increments, with the first and second increments having vested on April
29, 2000 and April 29, 2001, respectively, and the remaining 60% scheduled to
vest on April 29, 2002, 2003 and 2004, respectively.

On April 29, 1999, the Board of Directors awarded Burton Wastcoat
restricted stock awards under the Company's MRDP for 2,592 shares. The award
vests over a five-year period in 20% annual increments, with the first and
second increments having vested on April 29, 2000 and April 29, 2001,
respectively, and the remaining 60% scheduled to vest on April 29, 2002, 2003
and 2004, respectively.

For information regarding stock options granted, and MRDP shares awarded
to Mr. Ruegamer, see "Executive Compensation."

- ------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- ------------------------------------------------------------------------------

Summary Compensation Table

The following information is furnished for Mr. William H. Ruegamer and
Mr. Kenneth P. Cochran. No other executive officers earned salary and bonus
in excess of $100,000 during fiscal 2000.

Long-term Compensation
Annual Compensation(1) Awards
----------------------- ----------------------
Restricted Number All
Name and Stock of Other Annual
Position Year Salary(2) Bonus Awards(3) Options(4) Compensation
- -------- ---- -------- ----- ---------- ---------- ------------

William H. Ruegamer 2000 $120,000 $ -- $ -- -- $34,722
President and Chief 1999 115,000 500 60,601 12,960 --
Executive Officer
of the Company
and the Bank

Kenneth P. Cochran 2000 105,000 500 -- -- --
Senior Vice President 1999 NM (5) -- -- 5,000 --
of the Bank

- --------------------
(1) Excludes certain additional benefits, the aggregate amounts of which
do not exceed 10% of total salary and bonus.
(2) Amount for 2000 excludes directors fees of $11,000 for Mr. Ruegamer and
$9,950 for Mr. Cochran.
(3) Represents the value of restricted stock awards at April 29, 1999 and
January 26, 2001, the dates of grant, pursuant to the MRDP. Dividends
are paid on such awards if and when declared and paid by the Company on
the Common Stock. At December 31, 2000, the value of the unvested
awards for Mr. Ruegamer (which vest pro rata over a five-year period
with the second 20% installment having vested in April 29, 2001) was
$49,246 (4,147 shares at $11.875 per share) and the value of Mr.
Cochran's unvested awards (which vest pro rata over a five-year period
with the first 20% installment not vesting until January 26, 2002) as
of January 26, 2001 was $31,428 (2,592 shares at $12.125 per
share).
(4) Represents the number of options granted on April 29, 1999, which vest
at a rate of 20% per year over a five year period. At December 31,
2000, a total of 10,368 and 4,000 options remain unvested
for Mr. Ruegamer and Mr. Cochran, respectively.
(5) Not material. Mr. Cochran was employed only for two weeks in fiscal
1999 and received stock options in connection with his employment.

Option Grants in Last Fiscal Year

No stock options were granted to the named executive officers during the
fiscal year ended December 31, 2000.

Option Exercise/Value Table

The following information with respect to options exercised during the
fiscal year ended December 31, 2000, and remaining unexercised at the end of
the fiscal year, is presented for the named executive officers.

Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year End(#) at Fiscal Year End($)
Acquired on Value ------------------------- ----------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable(1)
- ---- ----------- ----------- ----------- ------------- ----------- ----------------

William H. Ruegamer -- -- 2,592 10,368 $480 $1,918
Kenneth P. Cochran -- -- 1,000 4,000 375 1,500

- -----------
(1) Value of unexercised in-the-money stock options equals the market value
of shares covered by in-the-money options on December 31, 2000 less the
option exercise price. Options are in-the-money if the market value of
shares covered by the options is greater than the exercise price. The
exercise price on the option grant dates for Messrs. Ruegamer and
Cochran was $11.69 and $11.50, respectively. The price of the Common
Stock at December 31, 2000 was $11.875.

Employment Agreements. The Company and the Bank (collectively, the
"Employers") have entered into three year employment agreements ("Employment
Agreements") with William H. Ruegamer and Kenneth P. Cochran(together
"Employees"). Under the Employment Agreements, the current base salary for
Messrs. Ruegamer and Cochran is $120,000 and $105,000, respectively, which
amounts are paid by the Bank and may be increased at the discretion of the
Board of Directors or an authorized committee of the Board. In determining
the salary levels for Messrs. Ruegamer and Cochran, the Board will consider
compensation levels for similarly situated executives at comparable
institutions, the financial performance of the Bank, as well as Messrs.
Ruegamer's and Cochran's performance. Messrs. Ruegamer's and Cochran's
Employment Agreements provide for a term of three years, which may be extended
for an additional term. The Employment Agreements are terminable by the
Employers at any time or upon the occurrence of certain events specified by
federal regulations.

The Employment Agreements provide for severance payments and other
benefits in the event of involuntary termination of employment in connection
with any change in control of the Employers. Severance payments also are
provided on a similar basis in connection with a voluntary termination of
employment where, subsequent to a change in control, Employees are assigned
duties inconsistent with their respective position, duties, responsibilities
and status immediately prior to such change in control. The term "change in
control" is defined in the Employment Agreements as having occurred when,
among other things, (a) a person other than the Company purchases shares of
Common Stock pursuant to a tender or exchange offer for such shares, (b) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities, (c) the membership of the Board of
Directors changes as the result of a contested election, or (d) stockholders
of the Company approve a merger, consolidation, sale or disposition of all or
substantially all of the Company's assets, or a plan of partial or complete
liquidation.

The severance payments and benefits from the Employers will have a value
equal to 2.99 times the Employees' average annual compensation during the
five-year period preceding the change in control. Assuming that a change in
control had occurred at December 31, 2000, Messrs. Ruegamer and Cochran would
be entitled to severance payments and benefits with a value of approximately
$702,650 and $313,950, respectively. Section 280G of the Internal Revenue

Code states that severance payments and benefits that equal or exceed three
times the base compensation of the individual are deemed to be "excess
parachute payments" if they are contingent upon a change in control.
Individuals receiving excess parachute payments are subject to a 20% excise
tax on the amount of such excess payments, and the Employers would not be
entitled to deduct the amount of such excess payments.

The Employment Agreements restricts the Employees right to compete
against the Employers for a period of one year from the date of termination of
the agreement if it is terminated without cause, except in the event of a
change in control.

The Company has entered into similar employment and severance agreements
with other employees of the Company.

Compensation Committee Interlocks and Insider Participation

Mr. Ruegamer serves as a member of the Compensation Committee. Although
Mr. Ruegamer recommends compensation to be paid to executive officers, the
entire Board of Directors of the Bank reviews such recommendations and sets
the compensation for Mr. Ruegamer.

- ------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- ------------------------------------------------------------------------------

Section 16(a) of the Exchange Act, requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC. Executive officers, directors and greater
than 10% stockholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms it has received
and written representations provided to the Company by the above referenced
persons, the Company believes that all filing requirements applicable to its
reporting officers, directors and greater than 10% stockholders were properly
and timely complied with during the fiscal year ended December 31, 2000.

- ------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- ------------------------------------------------------------------------------

Applicable law and regulations require that all loans or extensions of
credit to executive officers and directors must be made on substantially the
same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and does not involve
more than the normal risk of repayment or present other unfavorable features,
and the Bank has adopted a policy to this effect. At December 31, 2000, the
Bank had only one outstanding loan to Mr. William Ruegamer in the amount of
$83,640.

Mr. Joseph T. Swindlehurst, General Counsel to the Bank, is a partner
with the law firm of Huppert & Swindlehurst, P.C. in Livingston, Montana. Mr.
Swindlehurst is the brother of Mrs. Harris. During the year ended December
31, 2000, Huppert & Swindlehurst, P.C. was paid approximately $3,055 in fees
and expense reimbursement for services rendered to the Company and the Bank,
which amount did not exceed 5% of the law firm's annual gross revenues.

- ------------------------------------------------------------------------------
PROPOSAL II -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------

KPMG LLP served as the Company's independent auditors for the fiscal
year ended December 31, 2000. The Board of Directors has appointed KPMG LLP
as independent auditors for the fiscal year ending December 31, 2001, subject
to approval by stockholders. A representative of KPMG LLP will be present at
the Meeting to respond to stockholders' questions and will have the
opportunity to make a statement if he so desires.

Audit Fees

The aggregate fees billed to the Company by KPMG LLP for professional
services rendered for the audit of the Company's financial statements for
fiscal 2000 and the reviews of the financial statements included in the
Company Forms 10-QSB for that year were approximately $65,000.

Financial Information Systems Design and Implementation Fees

KPMG LLP performed no financial information system design or
implementation work for the Company during the fiscal year ended December 31,
2000.

All Other Fees

Other than audit fees, the aggregate fees billed to the Company by KPMG
LLP for fiscal 2000, none of which were financial information systems design
and implementation fees, were approximately $10,000. The Audit Committee of
the Board of Directors determined that the services performed by KPMG LLP
other than audit services are not incompatible with KPMG LLP maintaining its
independence.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS OF THE COMPANY
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.

- ------------------------------------------------------------------------------
OTHER MATTERS
- ------------------------------------------------------------------------------

The Board of Directors of the Company is not aware of any business to
come before the Meeting other than the matters described in this Proxy
Statement. However, if any other matters should properly come before the
Meeting, it is intended that proxies in the accompanying form will be voted in
respect thereof according to the judgment of the person or persons voting the
proxies.

- ------------------------------------------------------------------------------
MISCELLANEOUS
- ------------------------------------------------------------------------------

The cost of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, directors, officers and regular employees
of the Company may solicit proxies personally or by telephone or telecopier
without additional compensation.

The Company's Annual Report to Stockholders, including financial
statements, has been mailed to all stockholders of record as of the close of
business on the Record Date. Any stockholder who has not received a copy of
such Annual Report may obtain a copy by writing to the Secretary of the
Company. The Annual Report is not to be treated as part of these proxy
solicitation materials or as having been incorporated herein by reference.

- ------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- ------------------------------------------------------------------------------

In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to
take action at such meeting must be received at the Company's main office at
123 South Main Street, Livingston, Montana, no later than December 23, 2001.
Any such proposals shall be subject to the requirements of the proxy
solicitation rules adopted under the Exchange Act.

The Company's Certificate of Incorporation provides that in order for a
stockholder to make nominations for the election of directors or proposals for
business to be brought before a meeting of stockholders, a stockholder must
deliver written notice of such nominations and/or proposals to the Secretary
not less than 30 nor more than 60 days prior to the date of the meeting;
provided that if less than 31 days' notice of the meeting is given to
stockholders, such notice must be delivered not later than the close of the
tenth day following the day on which notice of the meeting was mailed to
stockholders. As specified in the Certificate of Incorporation, the written
notice with respect to nominations for election of directors must set forth
certain information regarding each nominee for election as a director,
including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director, if elected, and certain information
regarding the stockholder giving such notice. The notice with respect to
business proposals to be brought before the Meeting must state the
stockholder's name, address and number of shares of Common Stock held, and
briefly discuss the business to be brought before the Meeting, the reasons for
conducting such business at the Meeting and any interest of the stockholder in
the proposal.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Ann Worthington
ANN WORTHINGTON
SECRETARY

Livingston, Montana
April 20, 2001

- ------------------------------------------------------------------------------
FORM 10-KSB
- ------------------------------------------------------------------------------

A copy of the Company's Form 10-KSB for the fiscal year ended December 31,
2000, as filed with the Securities and Exchange Commission, will be furnished
without charge to stockholders as of the record date upon written request to
Ann Worthington, Corporate Secretary, Empire Federal Bancorp, Inc., 123 South
Main Street, Livingston, Montana 59047.

- ------------------------------------------------------------------------------

[x] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS SAMPLE EMPIRE FEDERAL BANCORP, INC.
With- For All
For hold Except

1. The election as
ANNUAL MEETING OF STOCKHOLDERS directors of all [ ] [ ] [ ]
MAY 22, 2001 nominees listed
below(except as
The undersigned hereby appoints the marked to the
entire Board of Directors as the contrary below).
official Proxy Committee with full
powers of substitution, as attorneys William H. Ruegamer
and proxies for the undersigned, to Beverly D. Harris
vote all shares of common stock of Empire Edwin H. Doig
Federal Bancorp, Inc. ("Corporation")
which the undersigned is entitled to INSTRUCTION: To withhold authority
vote at the Annual Meeting of Stock- to vote for any individual nominee,
holders ("Meeting"), to be held at the mark "For All Except" and write that
main office of Empire Bank, 123 South nominee's name in the space provided
Main Street, Livingston, Montana, on below.
Tuesday, May 22, 2001, at 12:30 p.m.,
Mountain Daylight Savings Time, and at -------------------------------------
any and all adjournments thereof, as
indicated to the right: For Against Abstain
2. The approval [ ] [ ] [ ]
of the appoint-
ment of KPMG LLP
as independent
auditors for the
fiscal year ending
December 31, 2001.

3. Such other matters as may properly
come before the Meeting or any
adjournments thereof.

The Board of Directors recommends
a vote "FOR" the above proposals.

THIS PROXY WILL BE VOTED AS DIRECTED,
------------- BUT IF NO INSTRUCTIONS ARE SPECIFIED,
Please be sure to sign Date THIS PROXY WILL BE VOTED FOR THE
below and date this PROPOSITIONS STATED. IF ANY OTHER
Proxy in the box pro- BUSINESS IS PRESENTED AT SUCH
vided. MEETING, THIS PROXY WILL BE VOTED BY
- ------------------------------------- THOSE NAMED IN THIS PROXY IN THEIR
BEST JUDGMENT. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO
- ------------------------------------- OTHER BUSINESS TO BE PRESENTED AT THE
Stockholder Co-holder (if MEETING.
Sign above any) sign above THIS PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS

- ------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage-paid envelope provided

EMPIRE FEDERAL BANCORP, INC.

Should the undersigned be present and elect to vote at the Annual Meeting
of Stockholders or at any adjournment thereof and after notification to the
Secretary of the Corporation at the Meeting of the stockholder's decision to
terminate this proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect.

The abovesigned acknowledges receipt from the Corporation prior to the
execution of this proxy of the Notice of Annual Meeting of Stockholders, a
proxy statement for the Annual Meeting of Stockholders, and the 2000 Annual
Report to Stockholders.

Please sign exactly as your name appears on this proxy card. When signing
as attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder should sign.

PLEASE COMPLETE, DATE, SIGN AND MAIL THIS
PROXY PROMPTLY IN THE ENCLOSED POSTAGE- PAID ENVELOPE.
- ------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.

- -------------------------------