FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 1998

                           Commission File No. 0-24793

                           CGB&L FINANCIAL GROUP, INC.
             (Exact name of registrant as specified in its charter)

                         Delaware                      37-1374123
                State or other jurisdiction        (I.R.S. Employer
              of incorporation or organization)     Identification No.)

               229 East South Street, Cerro Gordo, Illinois 61818
              (Address of principal executive offices and Zip Code)

                                 (217) 763-2911
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                              Yes ___X___ No______

         As of February 10, 1999, the registrant had outstanding 99,000 shares
of its $.01 par value common stock.

    Transitional Small Business Disclosure Format (Check One): Yes/__/ No_X_/

                               Page 1 of 15 pages

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                                Table of Contents

Part I - FINANCIAL INFORMATION       
                                                                          Page

         Item 1.  Financial Statements                                    3-8

         Item 2.  Management's Discussion and Analysis
                  Of Financial Condition and Results of Operations          9

Part II - OTHER INFORMATION

         Item l.  Legal Proceedings                                        13

         Item 2.  Change in Securities and Use of Proceeds                 13

         Item 3.  Defaults Upon Senior Securities                          13

         Item 4.  Submission of Matters to a Vote of Security Holders      13

         Item 5.  Other Information                                        13

         Item 6.  Exhibits and Reports on Form 8-K                         13

         Signatures                                                        13

Statements contained in the Form 10-QSB which are not historical facts are
forward-looking statements, as that term is described in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risk and uncertainties that could cause actual results to differ materially from
those projected. Such risks and uncertainties include potential changes in
interest rates, competitive factors in the financial services industry, general
economic conditions, the effect of new legislation and other risks detailed in
documents filed by the Company with the Securities and Exchange Commission from
time to time.

                                       2

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<TABLE>
<CAPTION>


                           CGB&L Financial Group, Inc.
                           Consolidated Balance Sheet
                   As of December 31, 1998 and March 31, 1998

                                                      December 31      March 31
                                                          1998           1998
                                                      (unaudited)

<S>                                                <C>              <C>

Assets

  Cash and Cash Equivalents                             $816,903      $524,845
  Interest-bearing time deposits                         693,000       590,000
  Investment securities available for sale               238,161       175,329
  Loans                                                5,668,999     5,558,889
  Allowance for Loan losses                             (32,700)      (32,700)
                                                     -----------   -----------
     Net Loans                                         5,636,299     5,526,189
  Premises and equipment                                  16,529        15,726
  Federal Home Loan Bank stock                            55,100        46,200
  Other assets                                            46,160        56,692
                                                     -----------    ----------
      Total Assets                                    $7,502,152    $6,934,981
                                                     ===========    ==========

Liabilities
  Interest-bearing deposits                           $5,094,068    $5,250,307
  Long-term debt                                         600,000       600,000
  Other liabilities                                      125,983        98,660
                                                     -----------    ----------
      Total liabilities                                5,820,051     5,948,967

Stockholders' Equity
  Preferred stock,  $.01 par value
     Authorized and unissued --  100,000 shares
  Common stock, $ .01 par value
      Authorized-- 900,000  shares

      Issued--99,000 shares

      Outstanding--91,477 shares                             990

  Paid in capital                                        698,362
  Retained earnings                                      903,181       872,685
  Net unrealized gain on securities available for sale   154,798       113,329
  Less:
  Unearned ESOP shares                                   (75,230)
                                                      -----------    ----------
    Total stockholders' equity                          1,682,101      986,014
                                                      -----------    ----------
    Total liabilities and stockholders' equity         $7,502,152   $6,934,981
                                                      ===========   ===========
See note to consolidated financial statements.

</TABLE>

                                       3

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<TABLE>
<CAPTION>


                           CGB&L Financial Group, Inc.
                         Consolidated Income Statements
  For the nine months ended December 31, 1998 and December 31, 1997 (Unaudited)


                                                   1998                     1997

<S>                                          <C>                       <C>

Interest Income                                       0
  Loans receivable                             $379,527                 $350,362
  Investment securities                           3,983                    3,482
  Deposits with financial institutions           44,220                   55,879
                                               --------                 --------
      Total interest income                     427,730                  409,723

Interest Expense
  Deposits                                      209,922                  217,705
  FHLB advances                                  29,150                    8,029
                                               --------                  -------
     Total interest expense                     239,072                  225,734
                                               --------                  -------

Net Interest Income                             188,658                  183,990
   Provision for loan losses                          0                        0
                                               --------                  -------
Net Interest Income After Provision 
     for Loan Losses                            188,658                  183,990
                                               --------                  -------
Noninterest Income                                4,831                    3,827
                                               --------                  -------

Noninterest Expense
   Salaries and employee benefits               106,249                   98,229
   Net occupancy and equipment expenses           3,520                    4,121
   Deposit Insurance Expense                      2,570                    1,680
   Insurance expense                              2,468                    2,468
   Other expenses                                35,242                   25,044
                                               --------                  -------
     Total noninterest expense                  150,049                  131,542

Income Before Income Tax                         43,440                   56,275
   Income tax expense                            12,944                   13,506
                                               --------                  -------
Net Income                                      $30,496                  $42,769
                                               ========                  =======
              Per share data:
                    Basic Weighted Average          N/A                      N/A
                    Shares Outstanding              N/A                      N/A


See notes to consolidted financial statements.

</TABLE>

                                       4

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<TABLE>
<CAPTION>


                           CGB&L Financial Group, Inc.
                         Consolidated Income Statements
 For the three months ended December 31, 1998 and December 31, 1997 (Unaudited)

<S>                                          <C>                    <C>

Interest Income
  Loans receivable                           $  127,670               $  123,924
  Investment securities                           1,348                    1,296
  Deposits with financial institutions           15,267                   17,589
                                               --------                  -------
      Total interest income                     144,285                  142,809

Interest Expense
  Deposits                                       67,448                   72,888
  FHLB advances                                   9,752                    4,223
                                               --------                  -------
     Total interest expense                      77,200                   77,111
                                               --------                  -------

Net Interest Income                              67,085                   65,698
   Provision for loan losses                          0                        0
                                               --------                  -------
Net Interest Income After 
   Provision for Loan Losses                     67,085                   65,698
                                               --------                  -------
Noninterest Income                                1,575                    1,461
                                               --------                  -------

Noninterest Expense
   Salaries and employee benefits                37,638                   31,400
   Net occupancy and equipment expenses             841                    1,210
   Deposit Insurance Expense                        944                     (44)
   Insurance expense                                  0                        0
   Other expenses                                20,436                    9,443
                                               --------                  -------
     Total noninterest expense                   59,859                   42,009
                                               --------                  -------

Income Before Income Tax                          8,801                   25,150
   Income tax expense                             4,653                    6,036
                                               --------                  -------
Net Income                                     $  4,148                  $19,114
                                               ========                  =======
                   Per share data:
                        Basic Weighted Average    $0.05                      N/A
                        Shares Outstanding       91,345                      N/A


See notes to consolidated financial statements.

</TABLE>

                                       5

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<TABLE>
<CAPTION>


                           CGB&L Financial Group, Inc.
                 Consolidated Statements of Comprehensive Income

                                                 Three Months Ended              Nine Months Ended
                                                  December 31, 1998              December 31, 1998
                                                        (Unaudited)                    (Unaudited)
                                                  -----------------             ------------------

<S>                                              <C>                            <C>

Net Income                                                  $ 4,148                        $30,496

Other comprehensive income,
Net of tax 
     Unrealized gains on securities:
        Unrealized holding gain arising 
        during the period                                   $36,133                        $41,469
        Less: Reclassification adjustment 
        for gains included in net income                          0                              0
Other  comprehensive income                                  36,133                         41,469
                                                            -------                        -------

Comprehensive income                                        $40,281                        $71,965
                                                            =======                        =======


                                                 Three Months Ended              Nine Months Ended
                                                  December 31, 1997              December 31, 1997
                                                        (Unaudited)                    (Unaudited)
                                                  -----------------             ------------------

Net Income                                                  $19,114                        $42,769

Other comprehensive income,
Net of tax 
     Unrealized gains on 
     securities:
       Unrealized holding gain arising during
       the period                                           $16,313                        $35,828
       Less: Reclassification adjustment for
       gains included in net income                               0                              0
Other comprehensive income                                   16,313                         35,828
                                                            -------                        -------

Comprehensive income                                        $35,427                        $78,597
                                                            =======                        =======

See notes to consolidated financial statements

</TABLE>

                                       6

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<TABLE>
<CAPTION>


                           CGB&L Financial Group, Inc.
                      Consolidated Statement of Cash Flows
      Nine Months Ended December 30, 1998 and December 30, 1997 (Unaudited)


                                                               1998         1997

<S>                                                        <C>          <C>

Operating Activities
  Net income                                                $30,496      $42,769
  Adjustments to reconcile net income to net
    cash provided by operating activities
    Provision for loan loss                                       0            0
    Depreciation                                              1,008        1,008
    Allocation of ESOP shares                                 4,019            0
    Net change in :
       Other liabilities                                      5,960      (1,376)
       Other assets                                          10,532      (8,856)
                                                           --------      -------
       Net cash provided by operating activities             52,015       33,545
                                                           --------      -------

Investing Activities
  Net change in interest-bearing deposits                 (103,000)      293,000
  Net change in loans                                     (110,110)    (864,876)
  Purchase of premises and equipment                        (1,811)      (7,632)
  Purchase of FHLB stock                                    (8,900)      (3,200)
                                                           --------      -------
       Net cash used by investing activities              (223,821)    (582,708)
                                                           --------      -------


Financing Activities
  Net change in deposits                                  (156,239)        4,411
  Proceeds from long-term debt                                   0       600,000
  Issuance of common stock                                  620,103            0
                                                           --------      -------
       Net cash provided by financing activities            463,864      604,411
                                                           --------      -------

Net Change in Cash and Cash Equivalents                     292,058       55,248

Cash and Cash Equivalents, Beginning of Period              524,845      109,912
                                                           --------      -------
Cash and Cash Equivalents, End of Period                   $816,903     $165,160
                                                           ========     ========
Additional Cash Flows Information
   Interest paid                                           $238,904     $220,180
   Income tax paid                                           12,944       13,506


See notes to consolidated financial statements.

</TABLE>

                                       7

<PAGE>


     Notes to Consolidated Financial Statements

     1.  BACKGROUND INFORMATION

         CGB&L Financial Group, Inc. (the "Company") was incorporated on May 21,
         1998 and on September 22, 1998 acquired all of the outstanding shares
         of common stock of Cerro Gordo Building and Loan, s.b. of Cerro Gordo,
         (the "Bank") upon the Bank's conversion from a state chartered mutual
         savings bank to a state chartered savings bank. The Company purchased
         100% of the outstanding capital stock of the Bank using 50% of the net
         proceeds from the Company's initial stock offering, which was completed
         on September 22, 1998. The Company sold 99,000 shares of common stock
         in the initial offering at $10 per share, including 7,919 shares
         purchased by the Bank's Employee Stock Ownership Plan ("ESOP"). The
         Bank acquired the ESOP shares with proceeds from a Company loan
         totaling $79,190. The net proceeds of the offering totaled $699,293:
         $990,000 less $290,707 in underwriting costs and other conversion
         expenses.

         The acquisition of the Bank by the Company is being accounted for as a
         "pooling-of-interests" under generally accepted accounting principles.
         The application of the pooling-of-interests method records the assets
         and liabilities of the merged companies on a historical cost basis with
         no goodwill or other intangible assets being recorded.

     2.  STATEMENT OF INFORMATION FURNISHED

         The accompanying unaudited consolidated financial statements have been
         prepared in accordance with Form 10-QSB instructions and item 310 (b)
         of Regulations S-B. In the opinion of management these statements
         contain all adjustments necessary to present fairly the financial
         position as of December 1998 and March 1998, the results of operations
         for the nine months ended December 1998 and December 1997, the results
         of operations for the three months ended December 1998 and 1997 and the
         cash flows for the nine months ended December 1998 and 1997. All
         adjustments to the financial statements were normal and recurring in
         nature. These results have been determined on the basis of generally
         accepted accounting principles. The results of operations for the nine
         months and the three months ended December 1998 are not necessarily
         indicative of the results to be expected for the entire fiscal year.

         The consolidated financial statements are those of the Company and the
         Bank. These consolidated financial statements should be read in
         conjunction with the audited financial statements and notes thereto
         included in the Company's Prospectus dated August 10, 1998.

                                       8

<PAGE>


      PART I.  FINANCIAL INFORMATION

      ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF FINANCIAL
                   CONDITION AND RESULTS OF OPERATION

      CGB&L Financial Group, Inc. (the "Company") is the holding company for
      Cerro Gordo Building and Loan, s.b. (the "Bank"). Prior to the Company's
      acquisition of the Bank on September 22, 1998, the Company had no material
      assets or operations. Accordingly, the following information reflects
      management's discussion and analysis of the financial condition and
      results of operations for the Bank at and for the period prior to
      September 22, 1998 and the Company and its subsidiary thereafter.


                               FINANCIAL CONDITION

      Total assets increased $567,171 from March 31, 1998 to December 31, 1998
      or 8.2%. This increase was attributable primarily to increases in
      cash/cash equivalents, investments in interest-bearing time deposits, one
      investment security, Federal Home Loan Bank ("FHLB") stock and the loan
      portfolio. Cash and cash equivalents increased $292,058 and
      interest-bearing time deposits increased $103,000 due to cash generated
      from the Company's stock offering.

      The $62,832 increase in investment securities from March 31, 1998 to
      December 31,1998 was the result of an increase in the share value of
      Federal Home Loan Mortgage Corporation ("FHLMC") stock. The FHLMC stock is
      the sole investment security held by the Bank.

      The $110,110 increase in net loans from March 31, 1998 to December 31,
      1998 was the result of increase in one-to-four family residential mortgage
      loans. This growth was the result of management's continued emphasis on
      the Bank's loan portfolio.

      The decline in total deposits from March 31, 1998 to December 31, 1998 of
      $156,239 or 2.98% was due to depositors withdrawing funds to purchase the
      Company's stock. The bank's depositors purchased 24.17% of the Company's
      stock with funds previously on deposit.

      Other liabilities increased $27,323 from March 31, 1998 to December 31,
      1998, primarily due to an increase in deferred income tax liability for
      FHLMC unrealized gain.

      FHLB Stock held by the bank increased $8,900 from March 31, 1998 to
      December 31, 1998 to meet the capital stock required by statute and
      regulation.

      Total stockholders' equity increased $696,087 from March 31, 1998 to
      December 31, 1998; the increase summarized as follows:

 Stockholder's equity, March 31, 1998.........................         $ 986,014
 Gross proceeds of stock offering.............................           990,000
 Underwriting commissions & other conversion expenses.........         (290,707)
 Net income...................................................            30,496
 Increase in unrealized gain on securities available for sale.            41,469
 Total shares price of shares purchased by ESOP...............          (79,190)
 ESOP Shares allocated........................................             4,019
                                                                      ----------
 Stockholders' equity, December 31, 1998......................        $1,682,101
                                                                      ==========

                                       9

<PAGE>


                                    RESULTS OF OPERATIONS

     NINE MONTH COMPARISON

      Net income was $30,496 for the nine months ended December 31, 1998
      compared to $42,769 for the comparative period ending December 31, 1997.
      The 28.70% decrease in earnings is primarily attributable to additional
      one-time expenses related to the mutual stock conversion and higher
      salaries & employee benefit expense offset by higher net interest income.

      Net interest income increased $4,668 in the nine months ended December 31,
      1998 compared to the same period in 1997, due to a higher average balance
      of loans financed by borrowings from the Federal Home Loan Bank. The
      borrowings were invested primarily in one-to-four family loans. Interest
      expense increased due to new Federal Home Loan Bank long term borrowings.
      Interest income on deposits with financial institutions declined by
      $11,659 for this period in 1998 compared to 1997 due to lower average
      balances pertaining to interest-bearing time deposits. The provision for
      loan losses remained stable for the first nine months in 1998 compared to
      the same period in 1997. Management of the Bank believes that the
      allowance for loan losses is sufficient based on information currently
      available. No assurances can be made that future events or conditions or
      regulatory directives will not result in increased provisions for loan
      losses or additions to the Bank's allowance for loan losses which may
      adversely affect net income.

      Total noninterest expense increased $18,507or 14.07% for the first nine
      months of 1998 compared to the first nine months of 1997, due to an
      increase in employee compensation and other expenses. Employee
      compensation expense increased due to increasing employees to 4 full time
      from 3 full time and one part time. Other expenses increased due to
      additional post-conversion expenses.

      Total income tax expense was $12,944 for the nine months ended December
      31, 1998 compared to $13,506 in 1997, reflecting the decrease in earnings.
      The effective tax rate was 23.9% for 1998 as compared to 24.0% in 1997.

      THREE MONTHS COMPARISON 

      Net income was $14,966 less in the quarter ended December 31, 1998
      compared to the same quarter in 1997, due to an increase in noninterest
      expenses and employee compensation off set by an increase in net interest
      income.

      Net interest income was $1,387 higher in the three months ended December
      31, 1998 compared to the same period in 1997. Interest income was $1,476
      higher, primarily due to a higher average balance of the mortgage loan
      portfolio. Interest expense increased by $89 in the quarter ended December
      31, 1998 compared to the quarter ended December 31, 1997.

      The provision for loan losses remained stable for the first three months
      in 1998 compared to the same period in 1997. Management of the Bank
      believes that the allowance for loan losses is sufficient based on
      information currently available. No assurances can be made that future
      events or conditions or regulatory directives will not result in increased
      provisions for loan losses or additions to the Bank's allowance for loan
      losses which may adversely affect net income.

      Noninterest expense was $17,850 higher in the quarter ended December 31,
      1998 compared to the same period in 1997. This was primarily attributable
      to additional post-conversion expenses and an increase in employee
      compensation.

      Income tax expense was $1,383 less in the three months ended December 31,
      1998 compared to the three months ended the same period in 1997. The
      effective tax rate was 23.9% in 1998 compared to 24.0% in 1997.

                                       10

<PAGE>


      LIQUIDITY AND CAPITAL RESOURCES 

      The Bank's primary sources of funds are deposits, principal and interest
      payments on loans and FHLB advances. While maturities and scheduled
      amortizations of loans are predictable sources of funds, deposit flows and
      mortgage prepayments are greatly influenced by general interest rates,
      economic conditions, and competition. The Company's initial stock
      offering, which was completed on September 22, 1998, contributed
      substantially to the Company's overall liquidity levels. The Federal
      Deposit Insurance Corporation ("FDIC"), the Company's and the Bank's
      primary regulator, requires the Bank to maintain minimum levels of liquid
      assets. Currently, the required ratio is 5%. The Bank's liquidity ratios
      were 27.32% and 23.88% at December 31, 1998 and March 31, 1998,
      respectively, well above the required minimum. Currently, the proceeds
      from the stock offering are invested in the Federal Home Loan Bank
      interest bearing Daily Investment Deposit account, as the Company and the
      Bank explore other options.

      A review of the Consolidated Statement of Cash Flows included in the
      accompanying financial statement shows that the Company's cash and cash
      equivalents ("cash") increased $292,058 from March 31, 1998 to December
      31, 1998. Cash and cash equivalent increased $55,248 from March 31, 1997
      to December 31, 1997. During the first nine months of fiscal 1998, net
      proceeds from the stock offering primarily provided cash. Cash was
      primarily used in 1998 to fund loans, invest in interest bearing time
      deposits and for deposit withdrawals. The increase in cash during the
      first nine months of fiscal 1997 resulted from net cash being provided by
      deposits, proceeds from a maturing interest-bearing time deposit and FHLB
      borrowings, offset by cash used to fund loans.

      As of December 31, 1998, the Bank had outstanding commitments (including
      undisbursed loan proceeds) of $156,090. The bank anticipates that it will
      have sufficient funds available to meet its current loan origination
      commitments. Certificates of deposit, which are scheduled to mature in one
      year or less from December 31, 1998, total $2.7 million. Based upon the
      Bank's experience, Management believes that a significant portion of such
      deposits will remain with the Bank.

      Federally insured state-chartered banks are required to maintain minimum
      levels of regulatory capital. Under current FDIC regulations, insured
      state-chartered banks generally must maintain ( i) a ratio of Tier 1 
      leverage capital to total assets of at least 3.0% (4.0% to 5.0% for all 
      but the most highly rated banks) and (ii) ratio of Tier 1 capital to 
      risk weighted assets of at least 4.0% and a ratio of total capital risk 
      weighted assets of at least 8.0%. At December 31, 1998, the Bank was in
      compliance with applicable regulatory capital requirements as follows:

            Tier 1 Capital to Risk Weighted Assets               28.45 %
            Tier 1 Capital to Total Assets                       15.52 %
            Risk Based Capital to Risk Weighted Assets           29.30 %

      Recent Accounting Pronouncements

      In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share." SFAS
      No. 128 establishes standards for computing and presenting earnings per
      share ("EPS") and applies to entities with publicly held common stock or
      potential common stock. SFAS No. 128 simplifies previous standards for
      computing EPS. SFAS No. 128 became effective for financial statements
      issued for periods ending after December 15, 1997. Accordingly, the Bank
      will adopt SFAS No. 128 in computing EPS during the first full period
      beginning after the successful completion of the Conversion

      In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
      Income," which establishes standards for reporting and display of
      comprehensive income and its components in a full set of general-purpose
      financial statements. Comprehensive income is defined as "the change in
      equity of a business enterprise during a period from transactions and
      other events and circumstances from non-owner sources. It includes all
      changes in equity during a period except those resulting from investment
      by owners and distributions to owners." The comprehensive income and
      related cumulative equity impact of comprehensive income items will be
      required to be disclosed prominently as part of the notes to the financial
      statements. Only the impact of unrealized gains or 

                                       11

<PAGE>


      losses on securities available for sale is disclosed as an additional 
      component of the Bank's income under the requirements of SFAS No. 130. 
      This statement is effective for fiscal years beginning after 
      December 15, 1997. The Savings Bank adopted Statement 130 during 
      1998-1999 fiscal year.

      Also in 1997, the FASB issued Statement No. 131, "Disclosures About
      Segments of an Enterprise and Related Information," which supersedes SFAS
      14, "Financial Reporting for Segments of a Business Enterprise," and
      establishes standards for the way that public enterprises report
      information about operating segments in annual financial statements. In
      addition, it requires reporting of selected information about operating
      segments in annual financial statements issued to the public. It also
      establishes standards for disclosures regarding products and services,
      geographic area and major customers. SFAS 131 defines operating segments
      as components of an enterprise about which separate financial information
      is available that is evaluated regularly by the chief operating decision
      maker in deciding how to allocate resources and in assessing performance.
      This standard is effective for financial statements periods beginning
      after December 15, 1997 and requires comparative information for earlier
      years to be restated. There will be no impact on the bank upon adoption.

      In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
      Instruments and Hedging Activities," which establishes accounting and
      reporting standards for derivative instruments. It requires that an entity
      recognizes all derivatives as either assets or liabilities in the
      statement of financial position and measures those instruments at fair
      value. This statement is effective for all periods beginning after June
      15, 1999. The Bank will adopt Statement 133 during 2000-2001 fiscal year
      and does not anticipate any impact to its financial statement.

      In 1998, the FASB issued Statement No. 134 "Accounting for Mortgage-Backed
      Securities Retained after the Securitization of Mortgage Loans Held for
      Sale by a Mortgage Banking Enterprise. This statement establishes
      accounting standards for certain activities of mortgage banking
      enterprises and for other enterprises with similar mortgage operations.
      This Statement amends SFAS No. 65 which as previously amended by SFAS Nos.
      115 and 125, required a mortgage banking enterprise to classify a
      mortgage-backed security as a trading security following the
      securitization of the mortgage loan held for sale. This Statement further
      amends SFAS No. 65 to require that after the securitization of mortgage
      loans held for sale, an entity engaged in mortgage banking activities must
      classify the resulting mortgage-backed security or other retained
      interests based on the entity's ability and intent to sell or hold those
      investments. The determination of the appropriate classification for
      securities retained after the securitization of mortgage loans by a
      mortgage banking enterprise now conforms to SFAS No. 115. The only
      requirement the new Statement adds is that if an entity has a sales
      commitment in place, the security must be classified into trading. This
      Statement is effective for the first fiscal quarter beginning after
      December 15, 1998. There will be no impact on the bank upon adoption.

      Year 2000 Compliance 

      The Bank has completed the initial phase of its Year 2000 preparedness
      assessment. During this phase, the Bank identified those computer
      applications used to process information within the Bank including
      accounting software used for loans and deposits. Each of the companies
      providing these software programs has assured the Bank in writing that its
      programs are Year 2000 compliant. In addition, the Bank has contacted its
      principal external vendors and asked for assurance that they are
      adequately addressing system and software issues related to year 2000.
      Each vendor responded that either they are or expect to be Year 2000
      compliant prior to December 31, 1999. The Bank has procedures in place to
      confirm compliance by vendors who expect to be compliant prior to December
      31, 1999. The Bank has also completed a review of its loan portfolio and
      determined that the Bank has no significant loss exposure in the event a
      borrower's business is interrupted as a result of a Year 2000 compliance
      problem. The Bank has developed a testing schedule and anticipates
      completion of this schedule prior to March 31, 1999. The Bank has not
      incurred any material costs to date with respect to the Year 2000 and
      based on the results of its assessment does not anticipate that the costs
      to complete its Year 2000 testing schedule will be material. Although the
      Bank believes it is taking the necessary actions to address Year 2000, no
      assurances can be given that some problems will not occur or that the

                                       12

<PAGE>


      Bank will not incur significant additional expenses in the future if it 
      becomes necessary to replace computers systems, programs or equipment. 
      Such expenses could affect adversely the Company's net income and 
      financial condition.


      Part II. Other information

      Item l.    Legal Proceedings
                 Not applicable
      Item 2.   Changes in Securities and Use of Proceeds

      All as previously reported......09-30-1998 except 2 changes for 12-31-1998
                                     ----------                       ----------
        Printing, postage and mailing  $ 38,367   decreased to     $  36,875 and
        Total                          $292,199   decreased to     $ 290,707



      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
                Not applicable
      Item 6.   Exhibits and Reports on Form 8-K

        a. Exhibits

         The following exhibits are filed as part of this report:

         11.0  Computation of earnings per share
         27.   Financial Data Schedule

        b. Report on Form 8-K

         none

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

*Incorporated herein by reference into this document from Form S-2
 Registration Statement, as amended, filed on June 3, 1998 
 Registration No. 333-55953.

                                   Signatures

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

      Dated:  February 10, 1999        By: /s/  Maralyn F. Heckman
                                       (Authorized Signor)
                                       President (Principal Executive Officer)
                                       and Treasurer (Chief Financial Officer)


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