UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

                    For the fiscal year ended March 31, 1999
                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 For the transition period from to

                         Commission file number 0-26560

                              HARDIN BANCORP, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                      43-1719104
---------------------------------       ----------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

 2nd and Elm Streets, Hardin, Missouri               64035
--------------------------------------------------------------------------------
(Address of principal executive offices)                (Zip Code)


Registrant's telephone number, including area code:           (660) 398-4312


           Securities Registered Pursuant to Section 12(b) of the Act:

                                      None
                                      ----

           Securities Registered Pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                     --------------------------------------
                                (Title of class)

         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
requirements for the past 90 days. YES X . NO ___.

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB.

[X]  The  registrant's  revenues  for the fiscal  year ended March 31, 1999 were
     $8.1 million.

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant,  computed by reference to the closing bid price of such stock on
the  Nasdaq  Small Cap  Market as of March 31,  1999,  was $11.9  million.  (The
exclusion from such amount of the market value of the shares owned by any person
shall  not be deemed  an  admission  by the  registrant  that such  person is an
affiliate of the registrant.)

         As of March 31, 1999,  there were  1,058,000  shares issued and 734,753
shares outstanding of the registrant's Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Parts II and III of Form  10-KSB -  Portions  of the  Annual  Report to
Stockholders for the fiscal year ended March 31, 1999.

         Part III of Form  10-KSB -  Portions  of the Proxy  Statement  for 1999
Annual Meeting of Stockholders.

                                        1
<PAGE>
                                     PART I

Item 1.   Description of Business

General

         Hardin Bancorp,  Inc. ("Hardin Bancorp" and with its subsidiaries,  the
"Company")  was formed in June 1995 at the direction of Hardin  Federal  Savings
Bank  ("Hardin  Federal"  or the  "Bank")  for the  purpose of owning all of the
outstanding  stock of the Bank issued upon the  conversion  of the Bank from the
mutual to stock form (the  "Conversion").  On September 28, 1995, Hardin Bancorp
acquired all of the shares of the Bank in connection  with the completion of the
Conversion.  All references to the Company,  unless otherwise  indicated,  at or
before September 28, 1995 refer to the Bank and its subsidiary on a consolidated
basis. The Company's common stock is quoted on the Nasdaq Small Cap Market under
the symbol "HFSA."

         Hardin   Federal  is  a  federally   chartered   stock   savings   bank
headquartered in Hardin, Missouri. Hardin Federal was originally chartered under
the laws of the State of Missouri in 1914,  converted  to a federally  chartered
mutual  savings bank in March 1995 and  consummated  its  conversion  to a stock
savings bank on September  28, 1995.  Its deposits are insured up to the maximum
allowable  amount by the  Savings  Association  Insurance  Fund  ("SAIF") of the
Federal Deposit Insurance Corporation (the "FDIC").  Through its main office and
two branch offices,  Hardin Federal serves  communities  located in Ray and Clay
Counties,  and in surrounding  counties,  in the State of Missouri. At March 31,
1999, the Company had total assets of $137.1 million,  deposits of $83.3 million
and total equity of $12.6 million.

         Hardin   Federal   has  been,   and   intends  to  continue  to  be,  a
community-oriented financial institution offering selected financial services to
meet the needs of the communities it serves. The Bank attracts deposits from the
general  public and  historically  has used such  deposits,  together with other
funds,  primarily to originate one- to four-family  residential  mortgage loans.
The Bank also originates  consumer loans, and, to a lesser extent,  construction
and land loans and commercial real estate loans. See "- Lending Activities." The
Bank also invests in mortgage-backed securities, which are insured or guaranteed
by  federal  agencies,  and  other  investment  securities.   See  "--Investment
Activities."

         The  executive  office  of the Bank is  located  at 201  Northeast  Elm
Street,  Hardin,  Missouri 64035.  Its telephone number at that address is (660)
398-4312.

Market Area

     Hardin Federal serves primarily Ray and Clay Counties,  Missouri.  The Bank
currently has three offices.  Its main office and Richmond branch are located in
Ray County, Missouri and its Excelsior Springs branch is located in Clay County,
Missouri.  On March 31, 1998, the Bank opened its new branch office in Richmond,
Missouri  and  vacated  its old  branch  office.  See  "Item 2.  Description  of
Property."

         Ray and Clay Counties, Missouri are located approximately 40 miles east
of Kansas City, Missouri. Ray County, Missouri has a population of approximately
22,000 and Clay County,  Missouri has a population of approximately 153,000. The
major  employers in the Bank's primary market area are engaged in  agricultural,
light  industry,  medical  services and  education,  and include Ford Motor Co.,
Orbseal,  Inc.,  American  Italian  Pasta  Co.,  Ray County  Memorial  Hospital,
Excelsior Springs Community Hospital, and the Richmond RXVI Public Schools.

                                        2
<PAGE>
Lending Activities

         General.  The Bank's loan portfolio consists primarily of conventional,
first mortgage loans secured by one- to four-family  residences and, to a lesser
extent, consumer, construction,  commercial business and land acquisition loans.
At March  31,  1999,  the  Bank's  gross  loans and  mortgage-backed  securities
outstanding  totalled  $84.5 of  which  $54.1  million  or  64.0%  were  one- to
four-family  residential  mortgage  loans.  Of the one- to four-family  mortgage
loans  outstanding at that date,  43.3% were  fixed-rate  loans,  and 20.8% were
adjustable-rate  loans. At that same date,  consumer loans totalled $8.6 million
or 10.1% of the Bank's total loan  portfolio,  construction  loans totalled $2.4
million  or  2.8%  of the  Bank's  total  loan  and  mortgage-backed  securities
portfolio,  commercial  real estate loans  totalled  $3.0 million or 3.6% of the
Bank's total loan and mortgage-backed  securities portfolio and land acquisition
loans   totalled   $3.0   million  or  3.61%  of  the  Bank's   total  loan  and
mortgage-backed securities portfolio.

         The Bank also  invests  in  mortgage-backed  securities.  At March 31,
1999,  mortgage-backed  securities  totalled  $12.6 million.  See  "--Investment
Activities."

         The Bank's  loans-to-one  borrower  limit is  generally  limited to the
greater of 15% of unimpaired capital and surplus or $500,000.  See "Regulation -
Federal  Regulation  of Savings  Associations."  At March 31, 1999,  the maximum
amount  which the Bank could have lent under this limit to any one  borrower and
the borrower's  related entities was  approximately  $1.7 million.  At March 31,
1999,  the Bank  had no loans or  groups  of  loans to  related  borrowers  with
outstanding  balances  in excess of this  amount.  The  Bank's  largest  lending
relationship in loans to one borrower at March 31, 1999 was $1.4 million secured
by a loan to develop  raw land into  residential  lots  located in Clay  County,
Missouri.  At March 31, 1999,  these loans were  performing in  accordance  with
their terms.

                                        3
<PAGE>
         Loan Portfolio  Composition.  The following  information sets forth the
composition of the Bank's loan portfolio (including mortgage-backed  securities)
in dollar  amounts and in percentages  (before  deductions for loans in process,
deferred fees and discounts and allowances for losses) at the dates indicated.
<TABLE>
<CAPTION>
                                                                                At March 31,
                                                          1999                      1998                      1997
                                                 ----------------------    ----------------------    ---------------------
                                                  Amount      Percent           Amount    Percent      Amount      Percent
                                                                           (Dollars in Thousands)
Real Estate Loans:
<S>                                              <C>            <C>        <C>            <C>        <C>            <C>
  One- to four-family..........................  $  54,122      64.04%     $  50,646      60.65%     $  47,473      63.09%
  Land.........................................      3,048       3.61            810        .98            328       0.43
  Commercial...................................      3,031       3.59          2,356       2.82          1,045       1.39
  Construction.................................      2,380       2.81          3,967       4.75          1,619      2.151
                                                 ---------    -------      ---------    -------      ---------     ------
     Total real estate loans...................     62,581      74.05         57,779      69.20         50,465      67.06
                                                 ---------    -------      ---------    -------      ---------     ------
Consumer Loans:
  Consumer Loans:
   Secured by deposits.........................        976       1.15            635        .76            570       0.76
   Automobile..................................      2,008       2.38          1,631       1.95          1,438       1.91
   Home equity.................................      4,338       5.13          3,193       3.82          2,363       3.14
   Home improvement............................        303       0.36            521        .62            689       0.92
   Other consumer loans........................        945       1.12            725        .88            511       0.68
                                                 ---------    -------      ---------    -------      ---------     ------
     Total consumer loans......................      8,570      10.14          6,705       8.03          5,571       7.41
                                                 ---------    -------      ---------    -------      ---------     ------
  Commercial business loans....................        781       0.92             --         --             --         --
                                                 ---------    -------      ---------    -------      ---------     ------
   Total loans receivable......................     71,932      85.11         64,484      77.23         56,036      74.47
                                                 ---------    -------      ---------    -------       --------     ------

Mortgage-Backed Securities:
  GNMA.........................................      1,118       1.32          4,446       5.32          1,815       2.41
  FHLMC........................................      4,158       4.92          5,425       6.50          6,591       8.76
  FNMA.........................................      7,308       8.65          9,144      10.95         10,808      14.36
                                                 ---------    -------      ---------    -------      ---------     ------
     Total mortgage-backed securities..........     12,584      14.89         19,015      22.77         19,214      25.53
                                                 ---------    -------      ---------    -------      ---------     ------
     Total loan and mortgage-backed
       securities portfolio....................     84,516     100.00%        83,499     100.00%        75,250     100.00%
                                                               ======                   =======                    ======

Less:
Loans in process...............................     (2,195)                   (3,022)                   (1,353)
Deferred fees and discounts....................         79                        60                        43
Allowance for loan losses......................       (311)                     (248)                     (158)
                                                 ---------                 ---------                 ---------
     Total loan and mortgage-backed
       securities portfolio, net...............  $  82,089                 $  80,289                 $  73,782
                                                 =========                 =========                 =========
</TABLE>
                                        4
<PAGE>
         The  following  table  shows the  composition  of the  Bank's  loan and
mortgage-backed  securities portfolio by fixed- and adjustable-rate at the dates
indicated.
<TABLE>
<CAPTION>
                                                                                At March 31,
                                                          1999                      1998                      1997
                                                 ----------------------    ----------------------    -------------
                                                  Amount      Percent        Amount     Percent        Amount      Percent
                                                                           (Dollars in Thousands)
Fixed-Rate Loans:
Real estate:
<S>                                              <C>            <C>        <C>            <C>        <C>            <C>
  One- to four-family.......................     $  36,589      43.29%     $  30,623      36.67%     $  26,019      34.58%
  Land......................................           512       0.61            426        .51            255       0.34
  Commercial................................           624       0.74            529        .64             64       0.09
  Construction..............................         1,711       2.02          3,298       3.95          1,527       2.03
                                                 ---------    -------      ---------    -------      ---------     ------
   Total real estate loans..................        39,436      46.66         34,876      41.77         27,865      37.04
Consumer....................................         5,829       6.90          5,062       6.06          5,035       6.69
Mortgage-backed securities..................            --         --             --         --             35       0.04
                                                 ---------    -------      ---------    -------      ---------     ------
   Total fixed-rate.........................        45,265      53.56         39,938      47.83         32,935      43.77
                                                 ---------    -------      ---------    -------      ---------     ------
Adjustable-Rate Loans:
Real estate:
  One- to four-family.......................        17,533      20.75         20,023      23.98         21,454      28.51
  Land......................................         2,536       3.00            384        .46             73       0.10
  Commercial................................         2,407       2.85          1,827       2.19            981       1.30
  Construction..............................           669       0.79            669        .80             92       0.12
                                                 ---------    -------      ---------    -------      ---------     ------
   Total real estate loans..................        23,145      27.39         22,903      27.43         22,600      30.03
Consumer....................................         2,741       3.24          1,643       1.97            536       0.71
Commercial business loans...................           781       0.92             --         --             --         --
Mortgage-backed securities..................        12,584      14.89         19,015      22.77         19,179      25.49
                                                 ---------    -------      ---------    -------      ---------     ------
   Total adjustable rate....................        39,251      46.44         43,561      52.17         42,315      56.23
                                                 ---------    -------      ---------    -------      ---------     ------
   Total loan and mortgage-backed
    securities portfolio....................        84,516     100.00%     83,499        100.00%        75,250     100.00%
                                                               ======                   =======                    ======

Less:
  Loans in process..........................        (2,195)                   (3,022)                   (1,353)
  Deferred loan fees and discounts..........            79                        60                        43
  Allowance for loan losses.................          (311)                     (248)                     (158)
                                                 ---------                 ----------                ---------
   Total loans and mortgage-backed
    securities portfolio, net...............     $  82,089                 $  80,289                 $  73,782
                                                 =========                 =========                 =========
</TABLE>
                                                                 5
<PAGE>
         The  following  schedule   illustrates  the  contractual  maturity  and
weighted average rates of the Bank's loan portfolio at March 31, 1999. Mortgages
which have  adjustable or  renegotiable  interest rates are shown as maturing in
the period  during which the contract is due. The schedule  does not reflect the
effects  of  scheduled   payments,   possible   prepayments  or  enforcement  of
due-on-sale clauses.
<PAGE>
<TABLE>
<CAPTION>
                                                                     Commercial Real
                       One-to Four-Family       Construction           EstateLand
                      --------------------  --------------------  --------------------
Due During                        Weighted              Weighted              Weighted
Year Ending                        Average               Average               Average
March 31,               Amount      Rate      Amount      Rate      Amount      Rate
------------          ---------  ---------  ---------  ---------  ---------  ---------
                                                                 (Dollars in Thousands)
<S>                   <C>          <C>      <C>           <C>     <C>           <C>
2000(1).............  $     50     10.62%   $  2,118      8.13%   $       1     9.75%
2001................       339      8.46          69      8.50          475     8.38
2002................       812      8.48          --        --           11     9.38
2003 and 2004.......       522      8.13          --        --           --       --
2005 to 2009........     5,358      7.77          --        --          569     8.53
2010 to 2024........    31,702      7.81         193      7.09        1,975     8.60
2025 and following..    15,339      8.47          --        --           --       --
                      --------              --------              ---------

 ....................  $ 54,122              $  2,380              $   3,031
                      ========              ========              =========
</TABLE>
-----------------------
<PAGE>

<TABLE>
<CAPTION>
                               Land               Consumer          Commercial Business         Total
                       ---------------------  -------------------  --------------------   -------------------
Due During                        Weighted               Weighted              Weighted              Weighted
Year Ending                         Average               Average               Average               Average
March 31,                Amount      Rate      Amount      Rate      Amount      Rate      Amount        Rate
------------           ---------  ---------  ---------  ---------  ---------  ---------  ---------   ---------
<S>                    <C>           <C>     <C>           <C>     <C>           <C>     <C>           <C>
2000(1).............   $     700     8.25%   $   1,660     8.37%   $      27     8.38%   $  4,556      8.27%
2001................       1,400     7.75          531    10.65          454     8.25       3,268      8.47
2002................          --       --          721    10.14           --       --       1,544      9.13
2003 and 2004.......         128     8.25        1,624     9.43          300     8.25       2,574      8.97
2005 to 2009........         316     8.43        1,147     9.57           --       --       7,390      8.14
2010 to 2024........         504     8.57        2,887     8.67           --       --      37,261      7.93
2025 and following..          --       --           --       --           --       --      15,339      7.92
                       ---------             ---------             ---------             --------

 ....................   $   3,048             $   8,570             $     781             $ 71,932
                       =========             =========             =========             ========
</TABLE>
-----------------------
(Continued)

(1)  The total amount of loans due after March 31, 2000 which have predetermined
     interest  rates is $42.0  million while the total amount of loans due after
     such  date  which  have  floating  or  adjustable  interest  rates is $25.3
     million.

                                        6
<PAGE>
         All of the  Bank's  lending  is  subject  to its  written  underwriting
standards and loan origination  procedures.  Decisions on loan  applications are
made  on  the  basis  of  detailed  applications  and  property  valuations,  if
applicable.  Properties  securing  real estate loans made by Hardin  Federal are
generally appraised by Board-approved independent appraisers. All appraisals are
subsequently reviewed by the Bank's Loan Committee,  as applicable.  In the loan
approval  process,  Hardin Federal assesses the borrower's  ability to repay the
loan, the adequacy of the proposed  security,  the  employment  stability of the
borrower and the credit-worthiness of the borrower.

         The Bank  requires  evidence of  marketable  title and lien position or
appropriate title insurance on all loans secured by real property. The Bank also
requires fire and extended coverage casualty insurance in amounts at least equal
to the lesser of the principal  amount of the loan or the value of  improvements
on the  property,  depending  on the  type  of  loan.  As  required  by  federal
regulations,  the Bank also  requires  flood  insurance  to protect the property
securing its interest if such property is located in a designated flood area.

         Management  reserves  the right to change the amount or type of lending
in which it engages to adjust to market or other factors.

         One- to Four-Family  Residential  Mortgage  Lending.  Residential  loan
originations  are  generated  by  the  Bank's  marketing  efforts,  its  present
customers,  walk-in  customers and referrals from real estate brokers.  The Bank
has focused its lending efforts primarily on the origination of loans secured by
first mortgages on owner-occupied,  single-family residences in its market area.
At March 31, 1999,  the Bank's one- to  four-family  residential  mortgage loans
totalled $54.1 million,  or 64.0%, of the Bank's gross loan and  mortgage-backed
securities  portfolio.  The Bank experienced  significant  growth in its one- to
four-family  residential mortgage loan portfolio during the year ended March 31,
1999 as a result of  increased  demand for such loans  within the Bank's  market
area and increased  purchases by the Bank of such loans. It is the Bank's policy
to purchase only those loans which meet its own underwriting criteria.

         The Bank  currently  offers  fixed-rate  and  adjustable-rate  mortgage
loans.  For the year ended March 31, 1999,  the Bank  originated  $15.1  million
fixed-rate one- to four-family  loans,  which constituted 93.4% of total one- to
four-family  loans  originated  and  $1.1  million  of  adjustable-rate  one- to
four-family  loans  or  6.6% of  total  one- to  four-family  loans  originated.
Substantially  all  of the  Bank's  one-  to  four-family  residential  mortgage
originations are secured by properties located in its market area.

         The Bank offers  adjustable-rate  mortgage  loans at rates and on terms
determined in accordance with market and competitive factors. The Bank currently
originates  adjustable-rate  mortgage  loans with a term of up to 30 years.  The
Bank currently  offers  one-year and three-year  adjustable-rate  mortgage loans
(where the terms are fixed for the first one-year and three-years, respectively,
and  thereafter  adjust  every one or three years) with a stated  interest  rate
margin over the one and three year U.S.  Treasury  Index  adjusted to a constant
maturity.   Increases  or   decreases  in  the  interest   rate  of  the  Bank's
adjustable-rate  loans are generally  limited to 1.0% at any adjustment date and
5.0% over the life of the loan.  As a  consequence  of using caps,  the interest
rates on these  loans  may not be as rate  sensitive  as is the  Bank's  cost of
funds.  Currently,  all adjustable-rate  mortgage loans originated provide for a
minimum interest rate. The Bank qualifies  borrowers for  adjustable-rate  loans
based on a current  interest rate plus the first  adjustment.  As a result,  the
risk of default on these  loans may  increase as interest  rates  increase.  See
"--Asset Quality--Non-  Performing Assets." At March 31, 1999, the total balance
of one-to  four-family  adjustable-rate  loans was $17.5 million or 20.8% of the
Bank's gross loan and mortgage-backed securities portfolio. See "--Originations,
Purchases and Sales of Loans."
                                        7
<PAGE>
         Adjustable-rate  loans  decrease  the risk  associated  with changes in
interest  rates but involve  other risks,  primarily  because as interest  rates
rise, the payment by the borrowers may rise to the extent permitted by the terms
of the loan, thereby increasing the potential for default. Also, adjustable-rate
loans have features  which  restrict  changes in interest  rates on a short-term
basis and over the life of the loan.  At the same time,  the market value of the
underlying property may be adversely affected by higher interest rates.

         The Bank also offers fixed-rate mortgage loans with maturities of up to
30 years. At March 31, 1999, the total balance of one- to four-family fixed-rate
loans was $36.6  million or 43.3% of the Bank's  gross loan and  mortgage-backed
securities portfolio. See "--Originations, Purchases and Sales of Loans."

         Hardin  Federal will lend up to 95% of the lesser of the sales price or
appraised  value of the security  property on owner occupied one- to four-family
loans,  provided  that  private  mortgage  insurance  is  obtained  in an amount
sufficient  to reduce the Bank's  exposure to not more than 80% of the appraised
value or sales price, as applicable. Residential loans do not include prepayment
penalties,  are  non-assumable  (other  than  government-insured  or  guaranteed
loans), and do not produce negative  amortization.  Real estate loans originated
by the Bank  customarily  contain a "due on sale"  clause  allowing  the Bank to
declare  the  unpaid  principal  balance  due and  payable  upon the sale of the
security property.

         The  loans  currently  originated  by the  Bank  are  underwritten  and
documented  pursuant to the guidelines of the FHLMC.  Under current policy,  the
Bank originates these loans for its portfolio.  See  "--Originations,  Purchases
and Sales of Loans and Mortgage-Backed Securities."

         Consumer  Lending.  Hardin Federal offers a variety of consumer  loans,
including home equity lines of credit, automobile,  home improvement,  and loans
secured by deposits.  The Bank  currently  originates  substantially  all of its
consumer loans in its primary  market area generally to its existing  customers.
At March 31, 1999, the Bank's consumer loan portfolio totalled $8.6 million,  or
10.1% of its gross loan and mortgage-backed securities portfolio.

         Hardin Federal  originates home equity and home improvement loans. Home
equity and home  improvement  loans secured by second  mortgages,  together with
loans secured by all prior liens,  are  generally  limited to 80% or less of the
appraised  value.  If  the  Bank  originates  loans  with  greater  than  an 80%
loan-to-value  ratio,  it  requires  the  borrower  to obtain  private  mortgage
insurance in an amount equal to 100% of the loan-to-value ratio. Generally, such
loans have a maximum term of up to 10 years.  As of March 31, 1999,  home equity
and home improvement loans amounted to $4.3 million and $303,000,  respectively,
which  represented  5.1% and 0.4%,  respectively,  of the Bank's  gross loan and
mortgage-backed securities portfolio.

         The Bank also recently began originating equity lines of credit.  These
loans  are  generally  limited  to 90% or less  of the  appraised  value  of the
property securing the loan. These loans are all  adjustable-rate  loans and have
maximum terms of up to 15 years.
<PAGE>
         Another  component of the Bank's  consumer loan  portfolio  consists of
automobile loans. The Bank originates  automobile loans on a direct basis, where
the Bank extends  credit  directly to the borrower.  These loans  generally have
terms  that do not  exceed  five  years  and  carry a  fixed-rate  of  interest.
Generally,  loans on new  vehicles  are made in amounts up to 90% of dealer cost
and loans on used vehicles are made in amounts up to its published  value,  less
certain  adjustments.  At March 31, 1999, the Bank's  automobile  loans totalled
$2.0  million or 2.4% of the Bank's  gross loan and  mortgage-backed  securities
portfolio.

         Consumer loan terms vary according to the type and value of collateral,
length of  contract  and  creditworthiness  of the  borrower.  The  underwriting
standards employed by the Bank for consumer loans

                                       8
<PAGE>
include an application,  a determination  of the applicant's  payment history on
other  debts and an  assessment  of ability  to meet  existing  obligations  and
payments on the proposed loan.  Although  creditworthiness of the applicant is a
primary  consideration,  the underwriting  process also includes a comparison of
the value of the security, if any, in relation to the proposed loan amount.

         Consumer  loans may  entail  greater  credit  risk than do  residential
mortgage  loans,  particularly in the case of consumer loans which are unsecured
or are secured by rapidly depreciable assets, such as automobiles.  Further, any
repossessed collateral for a defaulted consumer loan may not provide an adequate
source of repayment of the  outstanding  loan balance as a result of the greater
likelihood  of  damage,  loss  or  depreciation.   In  addition,  consumer  loan
collections are dependent on the borrower's continuing financial stability,  and
thus  are  more  likely  to  be  affected  by  adverse  personal  circumstances.
Furthermore,  the  application  of various  federal  and state  laws,  including
bankruptcy and  insolvency  laws, may limit the amount which can be recovered on
such  loans.  At March 31,  1999,  $25,000  of the  Bank's  consumer  loans were
non-performing.  See "-- Non-Performing Assets and Classified Assets." There can
be no assurances, however, that delinquencies will not occur in the future.

         Construction  Lending.  At March 31, 1999, the Bank had $2.4 million of
construction loans. Hardin Federal offers loans to both builders and individuals
for the construction of one- to four-family  residences.  Currently,  such loans
are offered with fixed- or adjustable-rates of interest.  At March 31, 1999, the
Bank  had  $1.7  million  and  $669,000  of   fixed-rate   and   adjustable-rate
construction   loans,   respectively,   which   represented   2.02%  and  0.79%,
respectively, of the Bank's gross loan and mortgage-backed securities portfolio.
From  time to  time  the  Bank  may  purchase  construction  loans,  but no such
purchases  were made  during  fiscal  1999.  The Bank will  purchase  only those
construction  loans  which  are  underwritten  under  guidelines  which  are  as
stringent as those employed by the Bank when it originates a construction  loan.
Following the construction  period, these loans may become permanent loans, with
terms for up to 30 years.

         Construction  lending is generally considered to involve a higher level
of credit risk than one- to  four-family  residential  lending since the risk of
loss on construction loans is dependent largely upon the accuracy of the initial
estimate of the individual  property's  value upon completion of the project and
the estimated  cost  (including  interest) of the project.  If the cost estimate
proves to be  inaccurate,  the Bank may be required to advance  funds beyond the
amount originally committed to permit completion of the project.

         Commercial  Real Estate Lending.  The Bank also  originates  commercial
real estate loans. At March 31, 1999 approximately $3.0 million,  or 3.6% of the
Bank's gross loan and  mortgage-backed  securities  portfolio,  was comprised of
commercial real estate loans of which none was  non-performing at that date. The
largest commercial real estate loan is a real estate development loan secured by
property in Clay County, Missouri.

         In underwriting  these loans, the Bank currently analyzes the financial
condition of the borrower,  the borrower's  credit history,  and the reliability
and predictability of the cash flow generated by the property securing the loan.
The Bank generally requires personal guaranties of the borrowers.  Appraisals on
properties  securing  commercial real estate loans originated by the Bank are to
the extent required by federal regulations performed by independent appraisers.
<PAGE>
         Commercial real estate loans  generally  present a higher level of risk
than loans secured by one- to four-family  residences.  This greater risk is due
to several factors, including the concentration of principal in a limited number
of loans and  borrowers,  the effect of general  economic  conditions  on income
producing  properties and the increased  difficulty of evaluating and monitoring
these types of loans. Furthermore,  the repayment of loans secured by commercial
real estate is typically dependent upon the successful operation

                                        9
<PAGE>
of the related real estate project. If the cash flow from the project is reduced
(for  example,  if leases are not  obtained or renewed,  or a  bankruptcy  court
modifies  a lease  term,  or a major  tenant  is  unable  to  fulfill  its lease
obligations), the borrower's ability to repay the loan may be impaired.

Commercial Business Loans

         At March 31,  1999,  the Bank had a total of  $781,000  outstanding  in
commercial business loans, and an additional  commitment to fund a $149,000 line
of credit. At March 31, 1999, the largest  outstanding  commercial business loan
was a $415,000 loan to a farm implement dealership in Ray County,  Missouri that
was secured by  machinery,  equipment  and accounts  receivable.  The Bank had a
total of four commercial loans at March 31, 1999.

         Commercial  business loans are  underwritten by analyzing the financial
condition of the borrower,  the borrower's  credit history,  the reliability and
predictability  of the  business  operations  and the  security  for  the  loan.
Commercial  loans and credit  lines are  continually  monitored in an attempt to
detect any  adverse  conditions  at the  earliest  possible  stages to limit the
Bank's exposure to potential losses.

         Commercial  business lending  represents a relatively new lending arena
for the Bank.  In the near term,  management  intends to limit both the size and
number of commercial loans.

         Commercial  business  lending  generally  involves  greater  risk  than
residential  mortgage  lending and involves  risks that are different from those
associated with  residential,  commercial and multi-family  real estate lending.
Real estate lending is generally  considered to be collateral based lending with
loan amounts based on predetermined loan to collateral values and liquidation of
the underlying  real estate  collateral is viewed as primary source of repayment
in the event of borrower  default.  Although  commercial  business  loans may be
collateralized  by  equipment  or other  business  assets,  the  liquidation  of
collateral in the event of borrower default is often not a sufficient  source of
repayment.  Accordingly,  the  repayment of a commercial  business  loan depends
primarily  on  the  creditworthiness  of  the  borrower,  while  liquidation  of
collateral is a secondary and often insufficient source of repayment.

Originations, Purchases and Sales of Loans

         Loan   originations   are  developed  from  continuing   business  with
depositors and borrowers,  soliciting realtors,  builders, walk-in customers and
third-party sources.

         While the Bank originates both  adjustable-rate  and fixed-rate  loans,
its  ability  to  originate  loans to a  certain  extent is  dependent  upon the
relative  customer  demand for loans in its  market,  which is  affected  by the
interest rate  environment,  among other  factors.  For the year ended March 31,
1999, the Bank originated  $29.5 million in fixed-rate loans and $7.7 million in
adjustable rate loans.

         The Bank from  time-to-time  sells fixed rate loan originations as part
of its  asset/liabilities  management  policies.  The Bank generally  followed a
policy of selling its fixed-rate loan originations  during fiscal 1994. In early
fiscal 1995, the Bank changed its policy to retain  fixed-rate loan originations
in its portfolio.  The Bank's Board of Directors has adopted an informal  policy
which is subject to change from time-to-time,  of retaining  fixed-rate loans in
order to increase the overall level of  fixed-rate  loans in its portfolio up to
60% of total loans  receivable.  At March 31, 1999,  fixed-rate  loans comprised
53.6% of gross loan and mortgage-backed  securities portfolio.  Reflecting these
policies,  during the fiscal years ended March 31, 1999, 1998 and 1997, the Bank
sold $3.5 million,  $3.7 million, and $0,  respectively,  of one- to four-family
fixed-rate real estate loans.
                                       10
<PAGE>
         During fiscal year 1999, the Bank purchased $1.7 million of real estate
loans  originated  by other  lenders  all of which were  secured  by  properties
located in Missouri. At March 31, 1999, none of these loans were included in the
Bank's  non-performing  assets.  See  "--Non-Performing  Assets  and  Classified
Assets."  As part  of the  Bank's  effort  to  increase  the  size  of its  loan
portfolio,  management  anticipates  that loan  purchases  may  increase  in the
future. It is presently  anticipated that such purchases would consist primarily
of loans  secured  by one- to  four-family  residences  located  in the State of
Missouri.  The Bank employs the same underwriting  standards for purchased loans
as for loans originated by the Bank.

         In addition, the Bank purchases mortgage-backed securities,  consistent
with its  asset/liability  management  objectives  to  complement  its  mortgage
lending activities.  The Board believes that the slightly lower yield carried by
mortgage-backed  securities is somewhat offset by the lower level of credit risk
and the lower level of overhead  required in connection  with these  assets,  as
compared to one- to four-family,  non-residential  and other types of loans. See
"--Investment Securities--Mortgage-backed Securities."

         Loan  originations  during the year ended March 31,  1999 were  greater
than the comparable period in the prior year. The Bank believes the increase was
due to an increased  emphasis on the  origination  of loans and  increased  loan
demand within the Bank's market area, plus the  availability of lower fixed-rate
interest on long-term loans.
                                       11
<PAGE>
         The  following  table  shows  the loan and  mortgage-backed  securities
origination, purchase, sale and repayment activities of the Bank for the periods
indicated.
<TABLE>
<CAPTION>
                                                                                   Year Ended March 31,
                                                                              1999        1998         1997
                                                                           ---------    ---------    ---------
                                                                                       (In Thousands)
Originations by type:
Adjustable rate:
<S>                                                                        <C>          <C>          <C>
   One- to four-family..................................................   $   1,072    $   3,367    $   1,240
   Land.................................................................       1,525          333           55
   Commercial real estate...............................................       2,215        1,140           20
   Construction.........................................................          --          669          210
   Consumer.............................................................       2,007        1,963          455
   Commercial business..................................................         930           --           --
                                                                           ---------    ---------    ---------
     Total adjustable-rate..............................................       7,749        7,462        1,980
                                                                           ---------    ---------    ---------
Fixed rate:
   One- to four-family..................................................      15,064       12,254        7,452
   Land.................................................................         292          188          180
   Commercial real estate...............................................         225           --           --
   Construction.........................................................       1,964        3,351        1,947
   Consumer.............................................................       4,247        4,398        4,659
                                                                           ---------    ---------    ---------
     Total fixed-rate...................................................      21,792       20,191       14,238
                                                                           ---------    ---------    ---------
     Total loans originated.............................................      29,541       27,653       16,218
                                                                           ---------    ---------    ---------
Purchases:
   One- to four-family..................................................       1,212        1,048        4,250
   Land.................................................................          --          184           --
   Commercial real estate...............................................         450           --          148
   Mortgage-backed securities - at cost.................................          --       10,940            --
                                                                           ---------    ---------    ----------
     Total purchased....................................................       1,662       12,172        4,398
                                                                           ---------    ---------    ---------
Sales and Repayments:
   One- to four-family..................................................       3,486        3,737           --
   Mortgage-backed securities sold - at amortized cost..................       2,769        8,176        1,016
                                                                           ---------    ---------    ---------
     Total sales........................................................       6,255       11,913        1,016
                                                                           ---------    ---------    ---------
   Principal repayments.................................................      23,893       19,630       14,467
                                                                           ---------    ---------    ---------
     Total sales and repayments.........................................      30,148       31,543       15,483
                                                                           ---------    ---------    ---------
Decrease (increase) in other items:
   Loans in process.....................................................         827       (1,669)        (587)
   Deferred fees and discounts..........................................         (19)         (17)          26
   Allowance for loan losses............................................         (63)         (89)         (27)
                                                                           ---------    ---------    ----------
     Net increase (decrease)............................................   $   1,800    $   6,507    $   4,545
                                                                           =========    =========    =========
</TABLE>
                                       12
<PAGE>
Asset Quality

         General.  When a borrower  fails to make a required  payment on a loan,
the Bank  attempts  to cause  the  delinquency  to be  cured by  contacting  the
borrower. In the case of loans secured by real estate, reminder notices are sent
to borrowers.  If payment is late,  appropriate  late charges are assessed and a
notice of late charges is sent to the  borrower.  If the loan is in excess of 90
days  delinquent,  the loan will be  referred  to the Bank's  legal  counsel for
collection.  In all cases,  if the Bank believes that its  collateral is at risk
and added  delay would  place the  collectibility  of the balance of the loan in
further question, management may refer loans for collection even sooner than the
90 days described above.

         When a loan becomes more than 90 days  delinquent,  the Bank will place
the loan on non-accrual  status and previously  accrued  interest  income on the
loan is charged against  current  income.  The loan will remain on a non-accrual
status as long as the loan is more than 90 days delinquent.

         Delinquent  consumer  loans are handled in a similar manner as to those
described  above;  however,  shorter  time frames for each step apply due to the
type of collateral  generally  associated  with such types of loans.  The Bank's
procedures  for  repossession  and sale of  consumer  collateral  are subject to
various requirements under Missouri and federal consumer protection laws.

         The following table sets forth the Bank's loan  delinquencies  by type,
by amount and by percentage of type at March 31, 1999. The amounts  presented in
the table below represent the total remaining  principal  balances of the loans,
rather than the actual payment amounts which are overdue.
<TABLE>
<CAPTION>
                                                       Loans Delinquent For
                                            60-89 Days                   90 Days and Over              Total Delinquent Loans
                                 -------------------------------  -------------------------------  --------------------------
                                                        Percent                          Percent                          Percent
                                                        of Loan                          of Loan                          of Loan
                                  Number     Amount    Category    Number     Amount    Category    Number     Amount    Category
                                 ---------   --------   -------    -------    -------    --------   -------    ------     ------
                                                                      (Dollars in Thousands)
<S>                               <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Real Estate:
  One- to four-family..........          8   $    307       .57%         5    $   252         .46%       13    $  559       1.03%
  Land.........................         --         --        --         --         --          --        --        --         --
  Commercial...................         --         --        --         --         --          --        --        --         --
  Construction.................         --         --        --         --         --          --        --        --         --
Consumer.......................          2         24       .26          6         25         .27         8        49        .53
Commercial business............         --         --        --         --         --          --        --        --         --
                                 ---------   --------   -------    -------    -------    --------   -------    ------     ------
     Total.....................         10   $    331       .83%        11    $   277         .73%       21    $  608       1.56%
                                 =========   ========   =======    =======    =======    ========   =======    ======     ======
</TABLE>
                                       13
<PAGE>
         Non-Performing  Assets.  The table  below  sets forth the  amounts  and
categories  of  non-performing  assets in the Bank's loan  portfolio.  Loans are
placed on non-accrual  status when the collection of principal  and/or  interest
become  doubtful.  For all years  presented,  the Bank has had no troubled  debt
restructurings  (which  involve  forgiving a portion of interest or principal on
any loans or making loans at a rate  materially less than that of market rates).
Foreclosed assets include assets acquired in settlement of loans.
<TABLE>
<CAPTION>
                                                                              Year Ended March 31,
                                                                         1999         1998         1997
                                                                       ---------    ---------    ---------
                                                                                 (In Thousands)
<S>                                                                    <C>          <C>          <C>
Non-accruing loans
   One- to four-family.............................................    $     205    $     220    $     274
   Land............................................................           --           --           --
   Commercial real estate..........................................           --           --           --
   Construction....................................................           --           --           --
   Consumer........................................................           25           12           --
   Commercial business.............................................           --           --           --
                                                                       ---------    ---------    ---------
     Total.........................................................          230          232          274
                                                                       ---------    ---------    ---------

Accruing loans delinquent 90 days or more
   One- to four-family.............................................           47           --           --
   Land............................................................           --           --           --
   Commercial real estate..........................................           --           --           --
   Construction....................................................           --           --           --
   Consumer........................................................           --           --            3
   Commercial business.............................................           --           --           --
                                                                       ---------    ---------    ---------
     Total.........................................................           47           --            3
                                                                       ---------    ---------    ---------
Foreclosed assets
   One- to four-family.............................................           --           --          103
   Land............................................................           --           --           --
   Commercial real estate..........................................           --           --           --
   Construction....................................................           --           --           --
   Consumer........................................................           --           --           --
   Commercial business.............................................           --           --           --
                                                                       ---------    ---------    ---------
     Total.........................................................           --           --          103
                                                                       ---------    ---------    ---------

Total non-performing assets........................................    $     277    $     232    $     380
                                                                       =========    =========    =========
Total classified assets............................................    $     336    $     501    $     545
                                                                       =========    =========    =========
Total non-performing assets as a percentage of total assets........          .20%         .19%        0.37%
                                                                       =========    =========    =========
Total non-performing loans as a percentage of total
   loans receivable................................................          .45%         .36%        0.68%
                                                                       =========    =========    =========
</TABLE>
<PAGE>
         For the year ended March 31,  1999 gross  interest  income  which would
have been recorded had the  non-accruing  loans been current in accordance  with
their  original  terms  amounted  to $24,000.  The amount  that was  included in
interest income on such loans was $18,000 for the year ended March 31, 1999.

         Classified Assets.  Federal  regulations provide for the classification
of loans and other assets, such as debt and equity securities, considered by the
OTS to be of lesser quality, as "substandard," "doubtful" or "loss." An asset is
considered  "substandard"  if it is  inadequately  protected  by the current net
worth and
                                       14
<PAGE>
paying capacity of the obligor or the collateral pledged, if any.  "Substandard"
assets  include  those  characterized  by the  "distinct  possibility"  that the
insured  institution  will  sustain  "some  loss"  if the  deficiencies  are not
corrected.  Assets classified as "doubtful" have all of the weaknesses  inherent
in  those  classified  "substandard"  with  the  added  characteristic  that the
weaknesses  present make  "collection  or  liquidation  in full" on the basis of
currently  existing  facts,  conditions  and values,  "highly  questionable  and
improbable."  Assets  classified as "loss" are those considered  "uncollectible"
and  of  such  little  value  that  their  continuance  as  assets  without  the
establishment of a specific loss reserve is not warranted.

         When  an  insured  institution  classifies  problem  assets  as  either
substandard or doubtful,  it may establish  general  allowances for losses in an
amount  deemed  prudent  by  management.   General  allowances   represent  loss
allowances which have been established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets. When an insured  institution  classifies
problem  assets as  "loss,"  it is  required  either  to  establish  a  specific
allowance for losses equal to 100% of that portion of the asset so classified or
to  charge-off  such  amount.   An   institution's   determination   as  to  the
classification  of its  assets  and the amount of its  valuation  allowances  is
subject to review by the regulatory authorities, who may order the establishment
of additional general or specific loss allowances.

         In connection with the filing of its periodic  reports with the OTS and
in accordance  with its  classification  of assets  policy,  the Bank  regularly
reviews  loans  in its  portfolio  to  determine  whether  such  assets  require
classification  in  accordance  with  applicable  regulations.  On the  basis of
management's  review of its assets, at March 31, 1999, the Bank had classified a
total of $333,000 of its assets as substandard,  none as doubtful, and $3,000 as
loss. At March 31, 1999,  total classified  assets comprised  $336,000 or .3% of
the Bank's capital, or 2.5% of the Bank's total assets.

         Other  Loans  of  Concern.   In  addition  to  the  non-performing  and
classified loans set forth in the tables above, as of March 31, 1999, there were
no other loans  classified  by the Bank with respect to which known  information
about the  possible  credit  problems of the  borrowers or the cash flows of the
security properties have caused management to have some doubts as to the ability
of the  borrowers  to comply with  present  loan  repayment  terms and which may
result  in the  future  inclusion  of such  items  in the  non-performing  asset
categories.

         Allowance for Loan Losses. The allowance for loan losses is established
through a provision for loan losses based on management's evaluation of the risk
inherent in its loan  portfolio and changes in the nature and volume of its loan
activity,  including  those  loans  which are being  specifically  monitored  by
management.  Such  evaluation,  which  includes a review of loans for which full
collectibility may not be reasonably assured, considers among other matters, the
loan classifications discussed above, the estimated fair value of the underlying
collateral, economic conditions,  historical loan loss experience, the amount of
loans outstanding and other factors that warrant recognition in providing for an
adequate loan loss allowance.
<PAGE>
         Real estate properties acquired through foreclosure are recorded at the
lower of cost or fair value minus  estimated  cost to sell. If fair value at the
date of  foreclosure  is  lower  than  the  balance  of the  related  loan,  the
difference  will be  charged-off to the allowance for loan losses at the time of
transfer.  Valuations  are  periodically  updated by management and if the value
declines,  a specific  provision for losses on such property is established by a
charge to operations.  At March 31, 1999, the Bank had no real estate properties
acquired through foreclosure.

         Although   management  believes  that  it  uses  the  best  information
available to determine the allowance,  unforeseen market conditions could result
in adjustments and net earnings could be significantly

                                       15
<PAGE>
affected if  circumstances  differ  substantially  from the assumptions  used in
making the final  determination.  Future  additions to the Bank's  allowance for
loan losses will be the result of periodic loan, property and collateral reviews
and thus  cannot be  predicted  in  advance.  In  addition,  federal  regulatory
agencies,  as an integral part of the examination  process,  periodically review
the Bank's  allowance  for loan  losses.  Such  agencies may require the Bank to
increase the allowance based upon their judgment of the information available to
them at the time of their  examination.  At March 31, 1999, the Bank had a total
allowance   for  loan  losses  of   $311,000,   representing   112.5%  of  total
non-performing  loans and .45% of the Bank's loans, net. See Note 4 of the Notes
to Consolidated Financial Statements.

                                       16
<PAGE>
         The  distribution of the Bank's  allowance for loan losses at the dates
indicated is summarized as follows:
<TABLE>
<CAPTION>
                                                                            At March 31,
                                 -------------------------------  -------------------------------  -----------------------------
                                               1999                             1998                             1997
                                 -------------------------------  -------------------------------  -----------------------------
                                                        Percent                         Percent                         Percent
                                                       of Loans                         of Loans                        of Loans
                                               Loan     in Each              Loan       in Each               Loan      in Each
                                 Amount of  Amounts    Category   Amount of  Amounts    Category   Amount of  Amounts   Category
                                 Loan Loss  by         to Total   Loan Loss    by       to Total  Loan Loss    by       to Total
                                 Allowance  Category    Loans     Allowance  Category    Loans    Allowance  Category    Loans
                                 -------    -------    -------    -------    -------    -------    -------    -------    -------
                                                                      (Dollars in Thousands)
<S>                              <C>        <C>          <C>      <C>        <C>          <C>      <C>        <C>          <C>
Real estate:
   One- to four-family.......    $   113    $54,122      75.24%   $    74    $50,646      78.54%   $    81    $47,473      84.72%
   Land......................         31      3,048       4.24          8        810       1.26          3        328       0.59
   Commercial real estate....         31      3,031       4.21         24      2,356       3.65         11      1,045       1.86
   Construction..............          7      2,380       3.31         13      3,967       6.15         10      1,619       2.89
Consumer.....................         49      9,350      13.00         32      6,705      10.40         25      5,571       9.94
Commercial business..........          8        781       1.09         --         --         --         --         --         --
Unallocated..................         72         --         --         97         --         --         28         --         --
                                 -------    -------    -------    -------    -------    -------    -------    -------    -------
     Total...................    $   311    $71,932     100.00%   $   248    $64,484     100.00%   $   158    $56,036     100.00%
                                 =======    =======    =======    =======    =======    =======    =======    =======    =======
</TABLE>
         The portion of the allowance to each loan category does not necessarily
represent the total  available  for losses within that category  since the total
allowance is applicable to the entire loan portfolio.

                                       17
<PAGE>
         The following table sets forth an analysis of the Bank's  allowance for
loan losses.
<TABLE>
<CAPTION>
                                                                                   Year Ended March 31,
                                                                             1999         1998         1997
                                                                           ----------------------------------
                                                                                        (In Thousands)
<S>                                                                        <C>          <C>          <C>
Balance at beginning of period...........................................  $   248      $   158      $   131

Charge-offs:
   One- to four-family...................................................       --           --           (7)
   Land..................................................................       --           --           --
   Commercial real estate................................................       --           --           --
   Construction..........................................................       --           --           --
   Consumer..............................................................       (3)          (4)          --
   Commercial business...................................................       --           --           --
                                                                           -------      -------      -------
                                                                                (3)          (4)          (7)
                                                                           -------      --------     --------
Recoveries:
   One- to four-family...................................................       --           --           --
   Land..................................................................       --           --           --
   Commercial real estate................................................       --           --           --
   Construction..........................................................       --           --           --
   Consumer..............................................................       --           --           --
   Commercial business...................................................       --           --           --
                                                                           -------      -------      -------
                                                                                --           --           --

Net charge-offs..........................................................       (3)          (4)          (7)
Additions charged to operations..........................................       66           94           34
                                                                           -------      -------      -------
Balance at end of period.................................................  $   311      $   248      $   158
                                                                           =======      =======      =======
Ratio of net charge-offs during the
   period to average loans outstanding during the period.................     .004%         .01%        0.01%
                                                                           =======      =======      =======
Ratio of net charge-offs during the period to
   average non-performing assets.........................................     1.13%        1.98%        1.84%
                                                                           =======      =======      =======
</TABLE>
Investment Activities

         General.  Hardin  Federal must maintain  minimum  levels of investments
that qualify as liquid assets under OTS  regulations.  Liquidity may increase or
decrease  depending upon the  availability  of funds and  comparative  yields on
investments  in  relation  to the  return on loans.  Historically,  the Bank has
generally  maintained  liquid  assets at levels  above the minimum  requirements
imposed  by the OTS  regulations  and at levels  believed  adequate  to meet the
requirements  of normal  operations,  including  repayments of maturing debt and
potential  deposit outflows.  Cash flows projections are regularly  reviewed and
updated to assure that adequate liquidity is maintained.  At March 31, 1999, the
Bank's  liquidity  ratio  (liquid  assets as a  percentage  of net  withdrawable
savings  deposits with maturities of 1 year or less and current  borrowings) was
61.2%. See "Regulation--Liquidity."
<PAGE>
         Federally  chartered savings  institutions have the authority to invest
in various types of liquid assets, including United States Treasury obligations,
securities  of various  federal  agencies,  certain  certificates  of deposit of
insured banks and savings institutions, certain bankers' acceptances, repurchase
agreements  and  federal  funds.  Subject  to  various  restrictions,  federally
chartered savings institutions may also invest their assets in commercial paper,
investment grade corporate debt securities and mutual funds whose assets conform
to the investments that a federally  chartered savings  institution is otherwise
authorized to make directly.

         Generally,  the  investment  policy of the Bank, as  established by the
Board of Directors,  is to invest funds among various  categories of investments
and maturities based upon the Bank's liquidity needs, asset/liability management
policies, investment quality, marketability and performance objectives.

                                       18
<PAGE>
         Mortgage-backed   Securities.   The  Bank   purchases   mortgage-backed
securities  to  supplement  residential  loan  production  and  as  part  of its
asset/liability  strategy.  The type of  securities  purchased is based upon the
Bank's  asset/liability  management  strategy and balance sheet objectives.  For
instance,  substantially all of the mortgage-backed investments purchased by the
Bank over the last several years have had adjustable rates of interest. Bank has
invested  primarily  in federal  agency  securities,  principally  Freddie  Mac,
Government National Mortgage Association ("GNMA") and Fannie Mae obligations. At
March 31, 1999, the Bank's  investment in  mortgage-backed  securities  totalled
$12.6 million or 9.2% of its total assets.

         The Bank's available-for-sale  mortgage-backed  securities are reported
at fair market value,  with  unrealized  gains and losses excluded from earnings
but reported as a separate component of stockholders'  equity. During the fiscal
year ended March 31,  1999,  the Bank sold $2.8  million of its  mortgage-backed
securities. See Note 3 of the Notes to Consolidated Financial Statements.

         The  Fannie  Mae,  Freddie  Mac  and  GNMA  certificates  are  modified
pass-through  mortgage-backed  securities that represent  undivided interests in
underlying   pools  of   fixed-rate,   or  certain  types  of   adjustable-rate,
single-family   residential  mortgages  issued  by  these   government-sponsored
entities.  As a result, the interest rate risk characteristics of the underlying
pool of mortgages,  i.e.,  fixed rate or adjustable  rate, as well as prepayment
risk,  are  passed on to the  certificate  holder.  Fannie Mae and  Freddie  Mac
provide the  certificate  holder a guarantee of timely  payments of interest and
ultimate  collection  of  principal,  whether  or not they have been  collected.
GNMA's  guarantee to the holder of timely  payments of principal and interest is
backed by the full faith and credit of the U.S. government.

         Mortgage-backed  securities  generally  yield  less than the loans that
underlie such  securities,  because of the cost of payment  guarantees or credit
enhancements  that reduce credit risk. In addition,  mortgage-backed  securities
are more liquid than individual  mortgage loans and may be used to collateralize
obligations  of the  Bank.  In  general,  mortgage-backed  securities  issued or
guaranteed  by Fannie Mae and Freddie  Mac are  weighted at no more than 20% for
risk-based capital purposes, and mortgage-backed securities issued or guaranteed
by GNMA are  weighted  at 0% for  risk-based  capital  purposes,  compared to an
assigned risk  weighting of 50% to 100% for whole  residential  mortgage  loans.
These types of securities thus allow the Bank to optimize  regulatory capital to
a greater extent than non-securitized whole loans.

         While  mortgage-backed  securities  carry  a  reduced  credit  risk  as
compared  to whole  loans,  such  securities  remain  subject to the risk that a
fluctuating  interest  rate  environment,  along with other  factors such as the
geographic  distribution  of  the  underlying  mortgage  loans,  may  alter  the
prepayment rate of such mortgage loans and so affect both the prepayment  speed,
and value, of such securities.

         Investment  Securities.  At  March  31,  1999,  the  Bank's  investment
securities  (including a $2.0 million investment in the common stock of the FHLB
of Des Moines) totalled $46.5 million,  or 33.9% of its total assets.  It is the
Bank's general policy to purchase U.S. Government  securities and federal agency
obligations  and  other  investment  securities.  See  Note  2 of the  Notes  to
Consolidated Financial Statements.
<PAGE>
         OTS  regulations  restrict  investments  in  corporate  debt and equity
securities  by  the  Bank.  These  restrictions   include  prohibitions  against
investments  in the debt  securities  of any one  issuer in excess of 15% of the
Bank's  unimpaired   capital  and  unimpaired  surplus  as  defined  by  federal
regulations,  which  totalled  $12.6  million  as of  March  31,  1999,  plus an
additional  10% if the  investments  are fully  secured  by  readily  marketable
collateral.  At March 31, 1999, the Bank was in compliance with this regulation.
See "Regulation--Federal Regulation of Savings Associations" for a discussion of
additional restrictions on the Bank's investment activities.

                                       19
<PAGE>
         The following table sets forth the composition of the Bank's investment
portfolio, including mortgage-backed securities, at the dates indicated.
<TABLE>
<CAPTION>
                                                                             At March 31,
                                                    -------------------------------------------------------------
                                                          1999                  1998                  1997
                                                    ------------------    ------------------    -----------------
                                                     Book       % of       Book       % of       Book       % of
                                                     Value      Total      Value      Total      Value      Total

                                                                         (Dollars in Thousands)
<S>                                               <C>                    <C>                   <C>             <C>
Investment securities:
U.S. government securities.....................   $       --        --%  $      --        --%  $      98       .21%
Federal agency securities......................       38,206     60.40      31,651     56.15      22,242     47.82
Revenue bonds..................................        1,473      2.33       1,005      1.78          --        --
Perpetual preferred stock......................        4,840      7.65          --        --          --        --
                                                  ----------   -------   ---------   -------   ---------   -------
     Subtotal..................................       44,519     70.37      32,656     57.93      22,340     48.03
FHLB stock.....................................        2,000      3.16       1,475      2.62         950      2.04
                                                  ----------   -------   ---------   -------   ---------   -------
     Total investment securities
        and FHLB stock.........................   $   46,519     73.54%  $  34,131     60.55%  $  23,290     50.07%
                                                  ----------   -------   ---------   -------   ---------   -------
Average remaining life of investment
 securities excluding FHLB stock...............      8 years               9 years              13 years

Other interest-bearing assets:
Interest-bearing deposits......................   $    4,157      6.57%  $   3,225      5.72%  $   4,007      8.62%

Mortgage-backed securities:
   GNMA........................................        1,118      1.77       4,446      7.89       1,816      3.90
   Freddie Mac.................................        4,158      6.57       5,424      9.62       6,590     14.17
   Fannie Mae..................................        7,308     11.55       9,145     16.22      10,808     23.24
                                                  ----------   -------   ---------   -------   ---------   -------

     Total mortgage-backed securities, net.....       12,584     19.89      19,015     33.73      19,214     41.31
                                                  ----------   -------   ---------   -------   ---------   -------

Total investment portfolio.....................   $   63,260    100.00%  $  56,371    100.00%  $  46,511    100.00%
                                                  ==========   =======   =========   =======   =========   =======
</TABLE>

                                                        20
<PAGE>
         The composition and maturities of the investment  securities portfolio,
excluding FHLB stock, are indicated in the following table.
<TABLE>
<CAPTION>
                                                                            March 31, 1999
                                                                                                     Total     Investment
                                              Less Than     1 to 5       5 to 10       Over          Book      Securities
                                               1 Year        Years        Years      10 Years        Value    Market Value
                                            -----------   -----------  -----------  -----------  -----------  ------------

                                                                           (Dollars in Thousands)

<S>                                         <C>           <C>          <C>          <C>          <C>          <C>
Federal agency obligations..............    $  22,711     $  5,000     $      --    $  10,494    $  38,206    $  38,206
Revenue bonds...........................          341          643           489           --        1,473        1,473
Perpetual preferred stock...............        1,000        1,924         1,917           --        4,840        4,840
                                            ---------     --------     ---------    ---------    ---------    ---------

Total investment securities.............    $  24,052     $  7,567     $   2,406    $  10,494    $  44,519    $  44,519
                                            ---------     --------     ---------    ---------    ---------    ---------

Weighted average yield..................         6.59%        6.59%         5.94%        5.64%        6.19%        6.19%
                                            =========     ========     =========    =========    =========    =========
</TABLE>
                                                            21

<PAGE>
         The Bank's investment securities portfolio at March 31, 1999, contained
tax-exempt  securities  consisting of local revenue bonds.  No securities of any
issuer  had an  aggregate  book  value in excess of 10% of the  Bank's  retained
earnings, excluding those issued by the U.S. government, or its agencies.

         Hardin Federal's investments, including the mortgage-backed and related
securities portfolio, are managed in accordance with a written investment policy
adopted by the Board of Directors.

         OTS guidelines  regarding  investment  portfolio  policy and accounting
require insured  institutions to categorize  securities and certain other assets
as held for "investment," "sale," or "trading." In addition,  effective April 1,
1994, the Bank adopted SFAS 115 which states that securities  available for sale
are accounted for at fair value and securities  which  management has the intent
and the  Bank  has the  ability  to hold to  maturity  are  accounted  for on an
amortized cost basis. The Bank's  investment policy has strategies for each type
of security.  At March 31, 1999,  the Bank had $31.6 million in  mortgage-backed
securities and  investment  securities  with  maturities of less than five years
classified  as  available  for  sale.  See  Notes  2 and 3 of the  Notes  to the
Consolidated Financial Statements.

Sources of Funds

         General.  The Bank's primary sources of funds are deposits,  receipt of
principal and interest on loans and securities,  interest-earning  deposits with
other banks, FHLB advances, and other funds provided from operations.

         FHLB advances are used to support  lending  activities and to assist in
the Bank's asset/liability management strategy. Typically, the Bank does not use
other forms of  borrowings.  At March 31, 1999, the Bank had total FHLB advances
of $40.0 million.  See  "--Borrowings"  and Note 8 of the Notes to  Consolidated
Financial Statements.

         Deposits.  Hardin Federal offers a variety of deposit accounts having a
wide range of interest rates and terms.  The Bank's deposits  consist of savings
deposits, commercial demand, NOW, money market deposit and certificate accounts.
The certificate accounts currently range in terms from 90 days to five years.

         The Bank relies primarily on advertising,  competitive pricing policies
and customer  service to attract and retain these  deposits.  Currently,  Hardin
Federal solicits deposits from its market area only, and does not use brokers to
obtain  deposits.  The flow of deposits is influenced  significantly  by general
economic  conditions,  changes in money market and prevailing interest rates and
competition.

         The Bank has become more  susceptible  to  short-term  fluctuations  in
deposit flows as customers  have become more interest rate  conscious.  The Bank
endeavors   to  manage  the  pricing  of  its   deposits  in  keeping  with  its
profitability objectives giving consideration to its asset/liability management.
The  ability  of  the  Bank  to  attract  and  maintain   savings  accounts  and
certificates of deposit, and the rates paid on these deposits, has been and will
continue to be significantly affected by market conditions.

                                       22
<PAGE>
         The following table sets forth the dollar amount of savings deposits in
the  various  types of  deposit  programs  offered  by the Bank for the  periods
indicated.
<TABLE>
<CAPTION>
                                                                             At March 31,
                                                    --------------------------------------------------------------
                                                           1999                 1998                  1997
                                                    ------------------    ------------------    ------------------
                                                             Percent               Percent               Percent
                                                     Amount  of Total     Amount   of Total     Amount   of Total
                                                                           (Dollars in Thousands)
<S>                                                 <C>           <C>     <C>           <C>     <C>           <C>
Transactions and Savings Deposits:(1)
Commercial Demand.................................  $  1,919      2.30%   $  1,082      1.41%   $    140      0.20%
Savings Accounts..................................     3,805      4.57       3,265      4.25       3,592      5.12
NOW Accounts......................................     6,852      8.22       4,258      5.53       2,334      3.32
Money Market.....................................      6,584      7.90       5,901      7.68       4,096      5.83
Certificates......................................    64,167     77.01      62,378     81.13      60,039     85.53
                                                    --------   -------    --------   -------    --------   -------

Total deposit accounts............................  $ 83,327    100.00%   $ 76,884    100.00%   $ 70,201    100.00%
                                                    ========    ======    ========   =======    ========    ======
</TABLE>
         (1) See Note 6 of the Notes to Consolidated Financial Statements.

         The following table indicates the amount of the Bank's  certificates of
deposit and other  deposits  by time  remaining  until  maturity as of March 31,
1999.
<TABLE>
<CAPTION>
                                                                               Maturity
                                                           --------------------------------------------
                                                                        Over        Over
                                                           3 Months     3 to 6      6 to 12     Over
                                                           or Less      Months      Months    12 Months    Total
                                                           --------    ---------   ---------  ---------  ---------
                                                                            (In thousands)

<S>                                                        <C>         <C>         <C>        <C>        <C>
Certificates of deposit less than $100,000..............   $ 10,087    $   9,025   $  19,091  $  17,345  $  55,548

Certificates of deposit of $100,000 or more.............      2,462        1,001       3,641      1,128      8,232

Public funds (1)........................................         60           19         158        150        387
                                                           --------    ---------   ---------  ---------  ---------

Total certificates of deposit...........................   $ 12,609    $  10,045   $  22,890  $  18,623  $  64,167
                                                           ========    =========   =========  =========  =========
</TABLE>

         (1)      Deposits  from   governmental   and  other  public   entities,
                  including deposits greater than $100,000.

         Borrowings.  Hardin Federal's borrowings historically have consisted of
advances  from the FHLB of Des Moines.  Such  advances  may be made  pursuant to
different credit programs,  each of which has its own interest rate and range of
maturities.  Federal law limits an institution's  borrowings from the FHLB to 20
times the amount  paid for  capital  stock in the FHLB,  subject  to  regulatory
collateral requirements. At March 31, 1999, the Bank had $2.0 million of FHLB of
Des Moines stock. The Bank has the ability to purchase  additional capital stock
from the FHLB.  At March  31,  1999 and March 31,  1998,  the  weighted  average
interest rate of the Bank's FHLB advances was 5.18% and 5.68%, respectively. For
additional  information  regarding the term to maturity and average rate paid on
FHLB advances,  see Note 8 of the Notes to Consolidated Financial Statements and
"--Lending Activities."
                                       23
<PAGE>
         The  following  table  sets forth the  maximum  month-end  balance  and
average balance of FHLB advances.
<TABLE>
<CAPTION>
                                                                           Year Ended March 31,
                                                               ------------------------------------------
                                                                  1999            1998            1997
                                                               ---------        ---------       ---------
                                                                                (In Thousands)
<S>                                                            <C>               <C>             <C>
Maximum Balance:
  FHLB advances............................................    $ 40,000          $  29,500       $  19,000

Average Balance:
  FHLB advances............................................    $  37,458         $  24,458       $  10,000
</TABLE>
Service Corporation Activities

         As a federally  chartered  savings bank, Hardin Federal is permitted by
OTS regulations to invest up to 2% of its assets, or approximately  $2.7 million
at  March  31,  1999,  in  the  stock  of,  or  loans  to,  service  corporation
subsidiaries.  Hardin  Federal  may  invest an  additional  1% of its  assets in
service  corporations  where such  additional  funds are used for  inner-city or
community  development purposes and up to 50% of its total capital in conforming
loans to  service  corporations  in which it owns more  than 10% of the  capital
stock. In addition to investments in service corporations,  federal associations
are permitted to invest an unlimited  amount in operating  subsidiaries  engaged
solely in activities  in which a federal  association  may engage.  At March 31,
1999,  Hardin Federal had one  subsidiary,  Hardin Savings  Service  Corporation
("HSSC").  HSSC was established in 1993 for the purpose of offering credit life,
disability  and accident  insurance  to its  customers.  At March 31, 1999,  the
Bank's  investment in HSSC was $37,000.  For the year ended March 31, 1999, HSSC
had pre-tax income of approximately $5,000.

                                   REGULATION
General

         Hardin Federal is a federally  chartered  savings bank, the deposits of
which are  federally  insured  and  backed by the full  faith and  credit of the
United  States  Government.  Accordingly,  the Bank is subject to broad  federal
regulation and oversight  extending to all its operations.  The Bank is a member
of the FHLB of Des Moines and is subject to certain  limited  regulation  by the
Federal  Reserve Board. As the savings and loan holding company of the Bank, the
Company also is subject to federal regulation and oversight.  The purpose of the
regulation of the Company and other holding  companies is to protect  subsidiary
savings associations. The Bank is a member of the SAIF. The deposits of the Bank
are  insured  by the  SAIF of the  FDIC.  As a  result,  the  FDIC  has  certain
regulatory and examination authority over the Bank.

         Certain of these regulatory requirements and restrictions are discussed
below or elsewhere in this document.

Federal Regulation of Savings Associations

         The  OTS  has  extensive  authority  over  the  operations  of  savings
associations.  As part of this authority,  the Bank is required to file periodic
reports with the OTS and is subject to periodic  examinations by the OTS and the
FDIC.  When  these  examinations  are  conducted  by the OTS and the  FDIC,  the
examiners  may require the Bank to provide for higher  general or specific  loan
loss reserves.
                                       24
<PAGE>
         All savings associations are subject to a semi-annual assessment, based
upon the savings  association's  total assets. The Bank's OTS assessment for the
fiscal year ended March 31, 1999, was approximately $37,000.

         The OTS also  has  extensive  enforcement  authority  over all  savings
institutions  and their  holding  companies,  including the Bank and the Holding
Company. This enforcement authority includes, among other things, the ability to
assess civil money penalties, to issue cease-and-desist or removal orders and to
initiate  injunctive  actions.  In  general,  these  enforcement  actions may be
initiated  for  violations  of  laws  and  regulations  and  unsafe  or  unsound
practices.  Other  actions or  inactions  may provide the basis for  enforcement
action,  including  misleading or untimely  reports  filed with the OTS.  Except
under certain  circumstances,  public disclosure of final enforcement actions by
the OTS is required.

         In addition,  the  investment,  lending and branching  authority of the
Bank is prescribed by federal laws, and  regulations,  and it is prohibited from
engaging in any  activities  not  permitted  by such laws and  regulations.  For
instance,  no savings  institution may invest in non-investment  grade corporate
debt  securities.  In addition,  the permissible  level of investment by federal
associations  in loans secured by  non-residential  real property may not exceed
400% of  total  capital,  except  with  approval  of the  OTS.  Federal  savings
associations are also generally authorized to branch nationwide.  The Bank is in
compliance with the noted restrictions.

         The Bank's general permissible lending limit for  loans-to-one-borrower
is equal to the  greater of $500,000  or 15% of  unimpaired  capital and surplus
(except for loans fully secured by certain  readily  marketable  collateral,  in
which case this limit is increased to 25% of unimpaired capital and surplus). At
March 31,  1999,  the  Bank's  lending  limit  under this  restriction  was $1.9
million. The Bank is in compliance with the loans-to-one-borrower limitation.

         The OTS, as well as the other  federal  banking  agencies,  has adopted
guidelines  establishing  safety and soundness standards on such matters as loan
underwriting and  documentation,  internal controls and audit systems,  interest
rate risk exposure and compensation and other employee benefits. Any institution
which fails to comply  with these  standards  must  submit a capital  compliance
plan. A failure to submit a plan or to comply with an approved plan will subject
the  institution to further  enforcement  action.  The OTS and the other federal
banking  agencies have also adopted  additional  guidelines on asset quality and
earnings standards.  The guidelines are designed to enhance early identification
and resolution of problem assets.  The guidelines are not expected to materially
effect the Bank.

Insurance of Accounts and Regulation by the FDIC

         Deposit  Insurance.  The FDIC is an  independent  federal  agency  that
insures deposits of banks and thrift institutions up to certain specified limits
and regulates such  institutions for safety and soundness.  The FDIC administers
two separate  insurance  funds,  the Bank  Insurance Fund ("BIF") for commercial
banks and state savings banks, and the SAIF for savings associations such as the
Bank and banks that have acquired deposits from savings  associations.  The FDIC
is required to maintain designated levels of reserves in each fund.

         Assessments.  The  FDIC is  authorized  to  establish  separate  annual
assessment rates for deposit insurance for members of the BIF and members of the
SAIF.  The FDIC may  increase  assessment  rates for either fund if necessary to
restore the fund's  ratio of reserves  to insured  deposits to the target  level
within a reasonable  time,  and may decrease these rates if the target level has
been met. The FDIC has established a risk-based  assessment system for both SAIF
and BIF members. Under this system, assessments vary

                                       25
<PAGE>
depending on the risk the  institution  poses to its deposit  insurance fund. An
institution's  risk level is  determined  based on its capital  levels,  and the
FDIC's level of supervisory concern about the institution.

         In 1996,  federal  legislation was enacted to recapitalize the SAIF and
eliminate the significant  premium disparity between the BIF and the SAIF. Under
that law,  the Bank and other  institutions  with SAIF-  insured  deposits  were
charged a one-time  special  assessment  equal to $0.657 per $100 of  assessable
deposits at March  31,1995.  The Bank  recognized  this special  assessment as a
charge to noninterest  expense of $441,018 (or $277,841 when adjusted for taxes)
during the year ended March 31, 1997. The  assessment  was fully  deductible for
both  federal  and state  income  tax  purposes.  Assessment  rates for  regular
ongoing, deposit insurance premiums currently range from 0.0% of deposits for an
institution in the highest  category  (i.e.,  well-capitalized  and  financially
sound,  with no more than a few minor  weaknesses)  to 0.27% of deposits  for an
institution  in the lowest  category  (i.e.,  undercapitalized  and  substantial
supervisory  consent).  The Bank's  assessment  rate for deposit  insurance  was
reduced to 0.0% of deposits beginning on January 1, 1997. The FDIC is authorized
to raise the  assessment  rates as necessary  to maintain  the required  reserve
ratio of 1.25%,  and both the BIF and the SAIF  currently  satisfy  the  reserve
ratio requirement.  The annual rate of assessments on  SAIF-assessable  deposits
for the  payments  on the FICO  bonds was  0.0648%  for the  semi-annual  period
beginning on January 1, 1997;  0.0630% for the semi-annual  period  beginning on
July 1, 1997; and 0.0622%  currently.  The 1996 law also provides for the merger
of the SAIF and the BIF by 1999,  but not  until  such  time as bank and  thrift
charters are  combined.  Until the charters are combined,  savings  associations
with SAIF deposits may not transfer  deposits to the BIF without  paying various
exit and entrance fees, and SAIF  institutions  will continue to pay higher FICO
assessments.  Such exit and entrance fees need not be paid if a SAIF institution
converts to a bank charter or merges with a bank, as long as the resulting  bank
continues to pay  applicable  insurance  assessments to the SAIF, and as long as
certain other conditions are met.

         While the legislation has reduced the disparity  between  premiums paid
on BIF deposits  and SAIF  deposits,  and has relieved the thrift  industry of a
portion of the contingent  liability  represented by the FICO bonds, the premium
disparity between SAIF-insured  institutions,  such as the Bank, and BIF-insured
institutions may continue in the future.

Regulatory Capital Requirements

         Federally insured savings associations,  such as the Bank, are required
to  maintain a minimum  level of  regulatory  capital.  The OTS has  established
capital standards,  including a tangible capital  requirement,  a leverage ratio
(or core capital) requirement and a risk-based capital requirement applicable to
such  savings  associations.  Generally,  these  capital  requirements  must  be
generally as  stringent  as the  comparable  capital  requirements  for national
banks.  The OTS is also  authorized to impose capital  requirements in excess of
these standards on individual associations on a case-by-case basis.
<PAGE>
         The capital  regulations  require  tangible capital of at least 1.5% of
adjusted total assets (as defined by  regulation).  Tangible  capital  generally
includes  common   stockholders'   equity  and  retained  income,   and  certain
noncumulative  perpetual  preferred stock and related income.  In addition,  all
intangible  assets,  other than a limited amount of purchased mortgage servicing
rights,  must be deducted from tangible capital for calculating  compliance with
the requirement.  Further,  the valuation allowance applicable to the unrealized
loss  on  investments  and  mortgage-backed  securities  is  excluded  from  the
regulatory  capital  calculation.  At March 31, 1999, the Bank had no intangible
assets and a valuation allowance, net of tax of $394,000.

         The OTS regulations establish special  capitalization  requirements for
savings associations that own subsidiaries.  In determining  compliance with the
capital requirements, all subsidiaries engaged solely in

                                       26
<PAGE>
activities permissible for national banks or engaged in certain other activities
solely  as  agent  for its  customers  are  "includable"  subsidiaries  that are
consolidated  for capital purposes in proportion to the  association's  level of
ownership.  For excludable  subsidiaries the debt and equity investments in such
subsidiaries  are  deducted  from assets and  capital.  The Bank has one service
corporation subsidiary.

         At March 31, 1999, the Bank had tangible  capital of $12.3 million,  or
9.0% of adjusted total assets,  which is  approximately  $10.2 million above the
minimum requirement of 1.5% of adjusted total assets in effect on that date.

         The capital standards also require core capital equal to at least 3% of
adjusted  total  assets  (as  defined by  regulation).  Core  capital  generally
consists of tangible capital plus certain intangible assets, including a limited
amount of purchased credit card  relationships and purchased  mortgage servicing
rights.  As a result  of the  prompt  corrective  action  provisions  of  FDICIA
discussed  below,  however,  a savings  association must maintain a core capital
ratio  of at  least  4% to  be  considered  adequately  capitalized  unless  its
supervisory  condition is such to allow it to maintain a 3% ratio.  At March 31,
1999, the Bank had no intangibles which were subject to these tests.

         At March 31, 1999, the Bank had core capital equal to $12.3 million, or
9.0% of adjusted total assets,  which is $8.2 million above the minimum leverage
ratio requirement of 3% as in effect on that date.

          The OTS risk-based  requirement  requires savings associations to have
total capital of at least 8% of risk-weighted  assets. Total capital consists of
core capital, as defined above, and supplementary capital. Supplementary capital
consists of certain  permanent  and  maturing  capital  instruments  that do not
qualify as core capital and general  valuation loan and lease loss allowances up
to a maximum of 1.25% of risk-  weighted  assets.  Supplementary  capital may be
used to satisfy the risk-based  requirement  only to the extent of core capital.
The OTS is also  authorized  to require a savings  association  to  maintain  an
additional  amount of total capital to account for  concentration of credit risk
and the risk of  non-traditional  activities.  At March 31,  1999,  the Bank had
$311,000  of general  loan  valuation  allowances,  which was less than 1.25% of
risk- weighted assets.

         Certain  exclusions from capital and assets are required to be made for
the purpose of calculating  total  capital.  Such  exclusions  consist of equity
investments  (as  defined  by  regulation)  and that  portion  of land loans and
nonresidential  construction  loans in excess of an 80% loan-to-value  ratio and
reciprocal  holdings of qualifying  capital  instruments.  Hardin Federal had no
such exclusions from capital and assets at March 31, 1999.

         In  determining  the  amount  of  risk-weighted   assets,  all  assets,
including certain  off-balance sheet items, will be multiplied by a risk weight,
ranging from 0% to 100%,  based on the risk  inherent in the type of asset.  For
example,  the OTS has assigned a risk weight of 50% for  prudently  underwritten
permanent  one- to  four-family  first lien mortgage loans not more than 90 days
delinquent  and having a loan to value ratio of not more than 80% at origination
unless the loan amount in excess of such ratio is insured by an insurer approved
by the Fannie Mae or Freddie Mac.

         On March 31,  1999,  the Bank had total  risk  based  capital  of $12.6
million (including  approximately  $12.3 million in core capital and $305,000 in
qualifying  supplementary  capital) and  risk-weighted  assets of $61.6  million
(with  no  converted  off-balance  sheet  assets);  or total  capital  of 20% of
risk-weighted  assets.  This amount was $7.7 million above the 8% requirement in
effect on that date.
                                       27
<PAGE>
         The  OTS  has  adopted  a  final  rule  that  requires   every  savings
association with more than normal interest rate risk exposure to deduct from its
total capital, for purposes of determining compliance with such requirement,  an
amount equal to 50% of its interest-rate risk exposure multiplied by the present
value of its assets.  This exposure is a measure of the potential decline in the
net  portfolio  value of a savings  association,  greater than 2% of the present
value of its  assets,  based upon a  hypothetical  200 basis  point  increase or
decrease  in  interest  rates  (whichever  results  in a greater  decline).  Net
portfolio  value is the  present  value of  expected  cash  flows  from  assets,
liabilities and off-balance sheet contracts. The rule provides for a two quarter
lag between  calculating  interest rate risk and  recognizing any deduction from
capital.  Any savings  association  with less than $300  million in assets and a
total risk-based  capital ratio in excess of 12% is exempt from this requirement
unless the OTS determines otherwise.

Thrift Charter

         Congress has been  considering  legislation in various forms that would
require federal thrifts, such as the Bank, to convert their charters to national
or state bank  charters.  Legislation  enacted  in 1996  required  the  Treasury
Department to prepare for Congress a  comprehensive  study on  development  of a
common  charter for federal  savings  associations  and  commercial  banks;  and
provided for the merger of the BIF and the SAIF into a single deposit  insurance
fund on January 1, 1999  provided the thrift  charter was  eliminated.  The Bank
cannot  determine  whether,  or in what form, such legislation may eventually be
enacted and there can be no assurance that any legislation that is enacted would
not adversely affect the Bank and the Company.

Prompt Corrective Regulatory Action

         Under the OTS Prompt Corrective Action regulations, the OTS is required
to take certain supervisory actions against undercapitalized  institutions,  the
severity  of which  depends  upon the  institution's  degree of  capitalization.
Generally,  a savings institution that has total risk-based capital of less than
8.0% or a leverage  ratio or a Tier 1 core capital  ratio that is less than 4.0%
is  considered  to be  undercapitalized.  A savings  institution  that has total
risk-based  capital of less than 6.0%, a Tier 1 core risk-based capital ratio of
less than 3.0% or a leverage  ratio that is less than 3.0% is  considered  to be
"significantly  undercapitalized," and a savings institution that has a tangible
capital to assets  ratio equal to or less than 2.0% is deemed to be  "critically
undercapitalized."  Subject to a narrow  exception,  the  banking  regulator  is
required  to  appoint a  receiver  or  conservator  for an  institution  that is
"critically  undercapitalized."  The  regulation  also  provides  that a capital
restoration  plan  must be  filed  with  the OTS  within  45 days of the date an
institution  receives  notice  that  it  is  "undercapitalized,"  "significantly
undercapitalized"  or  "critically   undercapitalized."  In  addition,  numerous
mandatory supervisory actions become immediately  applicable to the institution,
including,  but not limited to, restrictions on growth,  investment  activities,
capital distributions, and affiliate transactions. The OTS may also take any one
of a number of discretionary  supervisory  actions,  including the issuance of a
capital  directive  and  the  replacement  of  senior  executive   officers  and
directors.
<PAGE>
         At March 31,  1999,  the Bank was  categorized  as "well  capitalized,"
meaning that the Bank's total  risk-based  capital ratio exceeded 10.0%,  Tier I
risk-based  capital ratio exceeded 6.0%,  leverage  capital ratio exceeded 5.0%,
and the Bank was not subject to a  regulatory  order,  agreement or directive to
meet and maintain a specific capital level for any capital measure.

Limitations on Dividends and Other Capital Distributions

         OTS regulations  applicable to the Bank governed capital  distributions
by savings  institutions,  which include cash  dividends,  stock  redemptions or
repurchases, cash-out mergers, interest payments on certain

                                       28
<PAGE>
convertible  debt and other  transactions  charged to the  capital  account of a
savings institution to make capital  distributions.  Generally,  the regulations
create  a  safe  harbor  for  specified  levels  of  capital  distributions  for
institutions  meeting at least their minimum  capital  requirements,  so long as
such  institutions  notify the OTS and receive no objection to the  distribution
from the OTS.  Institutions and  distributions  that do not qualify for the safe
harbor are  required  to obtain  prior OTS  approval  before  making any capital
distributions.

         Pursuant to a recent revision to these regulations,  effective April 1,
1999,  a "well  capitalized"  savings  association,  such as the  Bank,  will be
permitted to make capital  distributions  during a calendar year in an amount up
to  the  savings  association's  net  income  for  the  year  plus  the  savings
association's retained net income for the preceding two years, without filing an
application for approval of the capital  distribution with the OTS.  However,  a
"well  capitalized"  savings  association must provide 30 days written notice to
the OTS prior to making the distribution as long as the savings association is a
subsidiary of a savings and loan holding company.

Liquidity

         All savings associations,  including the Bank, are required to maintain
an average daily  balance of liquid assets equal to a certain  percentage of the
sum of its  average  daily  balance of net  withdrawable  deposit  accounts  and
borrowings  payable in one year or less. This liquid asset ratio requirement may
vary from time to time (between 4% and 10%) depending  upon economic  conditions
and savings flows of all savings associations.  At the present time, the minimum
liquid asset ratio is 5%.

         In  addition,  short-term  liquid  assets  (e.g.,  cash,  certain  time
deposits,  certain  bankers  acceptances  and short-term  United States Treasury
obligations)  currently must constitute at least 1% of the association's average
daily  balance of net  withdrawable  deposit  accounts  and current  borrowings.
Penalties may be imposed upon associations for violations of either liquid asset
ratio  requirement.  At March 31,  1999,  the Bank was in  compliance  with both
requirements,  with an  overall  liquid  asset  ratio of 61.2% and a  short-term
liquid assets ratio of 44.4%.

Accounting

         An  OTS  policy  statement   applicable  to  all  savings  associations
clarifies  and  re-emphasizes  that  the  investment  activities  of  a  savings
association  must be in  compliance  with  approved  and  documented  investment
policies and  strategies,  and must be accounted  for in  accordance  with GAAP.
Under the policy  statement,  management must support its  classification of and
accounting for loans and securities (i.e., whether held for investment,  sale or
trading) with appropriate documentation.

         The OTS has adopted an amendment to its accounting  regulations,  which
may be more stringent than GAAP, to require that  transactions  be reported in a
manner that best reflects their underlying  economic substance and inherent risk
and that financial reports must incorporate any other accounting  regulations or
orders  prescribed  by the OTS.  The Bank is in  compliance  with these  amended
rules.
<PAGE>
Qualified Thrift Lender Test

         All savings  associations,  including the Bank,  are required to meet a
qualified  thrift  lender  ("QTL") test to avoid certain  restrictions  on their
operations. This test requires a savings association to have at least 65% of its
portfolio assets (as defined by regulation) in qualified thrift investments on a
monthly average for nine out of every 12 months on a rolling basis.  Such assets
primarily consist of residential housing

                                       29
<PAGE>
related loans and investments.  At March 31, 1999, the Bank met the test and has
always met the test since its effectiveness.

         Any savings association that fails to meet the QTL test must convert to
a national bank charter, unless it requalifies as a QTL and thereafter remains a
QTL. If an  association  does not  requalify  and  converts  to a national  bank
charter,  it must remain  SAIF-insured  until the FDIC permits it to transfer to
the BIF.  If such an  association  has not yet  requalified  or  converted  to a
national  bank,  its  new  investments  and  activities  are  limited  to  those
permissible  for both a  savings  association  and a  national  bank,  and it is
limited to national bank branching  rights in its home state.  In addition,  the
association is immediately  ineligible to receive any new FHLB borrowings and is
subject to national  bank limits for payment of dividends.  If such  association
has not requalified or converted to a national bank within three years after the
failure,  it must  divest  of all  investments  and  cease  all  activities  not
permissible  for a  national  bank.  In  addition,  it must repay  promptly  any
outstanding FHLB borrowings,  which may result in prepayment  penalties.  If any
association  that fails the QTL test is  controlled by a holding  company,  then
within one year after the failure,  the holding  company must register as a bank
holding  company  and  become  subject  to  all  restrictions  on  bank  holding
companies. See "--Holding Company Regulation."

Community Reinvestment Act

         Under the  Community  Reinvestment  Act  ("CRA"),  every  FDIC  insured
institution has a continuing and affirmative obligation consistent with safe and
sound banking  practices to help meet the credit needs of its entire  community,
including  low and moderate  income  neighborhoods.  The CRA does not  establish
specific lending requirements or programs for financial institutions nor does it
limit an institution's  discretion to develop the types of products and services
that it believes are best suited to its particular  community,  consistent  with
the CRA. The CRA requires the OTS, in  connection  with the  examination  of the
Bank,  to assess the  institution's  record of meeting  the credit  needs of its
community  and to take such record  into  account in its  evaluation  of certain
applications, such as a merger or the establishment of a branch, by the Bank. An
unsatisfactory  rating may be used as the basis for the denial of an application
by the OTS.

         The federal banking agencies,  including the OTS, have recently revised
the CRA  regulations  and  the  methodology  for  determining  an  institution's
compliance with the CRA. Due to the heightened  attention being given to the CRA
in the past few years,  the Bank may be required to devote  additional funds for
investment  and lending in its local  community.  The Bank was  examined for CRA
compliance in February 1999 and received a rating of "satisfactory."

Transactions with Affiliates

         Generally,   transactions   between  a  savings   association   or  its
subsidiaries  and its affiliates are required to be on terms as favorable to the
association as transactions with non-affiliates.  In addition,  certain of these
transactions,  such as loans to an affiliate,  are restricted to a percentage of
the  association's  capital.  Affiliates of the Bank include the Company and any
company  which is under  common  control with the Bank.  In addition,  a savings
association may not lend to any affiliate  engaged in activities not permissible
for a bank holding company or acquire the securities of most affiliates.
<PAGE>
         Certain  transactions with directors,  officers or controlling  persons
are also subject to conflict of interest  regulations enforced by the OTS. These
conflict of interest  regulations and other statutes also impose restrictions on
loans to such persons and their related interests. Generally, such loans must be
made on terms  substantially the same as for loans to unaffiliated  individuals.
However,  recent  regulations  now permit  executive  officers and  directors to
receive loans with the same terms as those widely available to

                                       30
<PAGE>
other employees  through benefit or compensation  plans, as long as the director
or executive officer is not given  preferential  treatment compared to the other
participating employees.

Holding Company Regulation

         The Company is a unitary  savings and loan holding  company  subject to
regulatory  oversight  by the OTS. As such,  the Company is required to register
and file reports with the OTS and is subject to regulation  and  examination  by
the OTS. In addition, the OTS has enforcement authority over the Company and its
non- savings association  subsidiaries which also permits the OTS to restrict or
prohibit  activities  that are determined to be a serious risk to the subsidiary
savings association.

         As a unitary savings and loan holding company, the Company generally is
not subject to activity restrictions. If the Company acquires control of another
savings association as a separate subsidiary, it would become a multiple savings
and loan  holding  company,  and the  activities  of the  Company and any of its
subsidiaries (other than the Bank or any other SAIF-insured savings association)
would become subject to such  restrictions  unless such other  associations each
qualify as a QTL and were acquired in a supervisory acquisition.

         If the Bank fails the QTL test, the Company must obtain the approval of
the OTS prior to continuing  after such  failure,  directly or through its other
subsidiaries,  any  business  activity  other than those  approved  for multiple
savings and loan holding companies or their  subsidiaries.  In addition,  within
one year of such failure the Company must  register as, and will become  subject
to, the  restrictions  applicable  to bank  holding  companies.  The  activities
authorized  for a bank holding  company are more limited than are the activities
authorized  for a unitary or multiple  savings  and loan  holding  company.  See
"--Qualified Thrift Lender Test."

         The Company must obtain approval from the OTS before acquiring  control
of  any  other  SAIF-  insured  association.  Such  acquisitions  are  generally
prohibited  if they  result  in a  multiple  savings  and loan  holding  company
controlling  savings  associations  in  more  than  one  state.   However,  such
interstate  acquisitions are permitted based on specific state  authorization or
in a supervisory acquisition of a failing savings association.

Federal Securities Law

         The  stock  of the  Company  is  registered  with  the  SEC  under  the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company is
subject to the information, proxy solicitation, insider trading restrictions and
other requirements of the SEC under the Exchange Act.

         Company stock held by persons who are affiliates  (generally  officers,
directors and principal  stockholders)  of the Company may not be resold without
registration or unless sold in accordance with certain resale  restrictions.  If
the Company  meets  specified  current  public  information  requirements,  each
affiliate  of the  Company  is  able  to  sell  in the  public  market,  without
registration, a limited number of shares in any three-month period.

                                       31
<PAGE>
Federal Reserve System

         The Federal  Reserve  Board  requires all  depository  institutions  to
maintain  non-interest  bearing  reserves  at  specified  levels  against  their
transaction accounts (primarily checking,  NOW and Super NOW checking accounts).
At March 31, 1999, the Bank was in compliance  with these reserve  requirements.
The balances maintained to meet the reserve  requirements imposed by the Federal
Reserve Board may be used to satisfy liquidity  requirements that may be imposed
by the OTS. See "--Liquidity."

         Savings  associations are authorized to borrow from the Federal Reserve
Bank  "discount   window,"  but  Federal  Reserve  Board   regulations   require
associations to exhaust other reasonable alternative sources of funds, including
FHLB borrowings, before borrowing from the Federal Reserve Bank.

Federal Home Loan Bank System

         The Bank is a  member  of the  FHLB of Des  Moines,  which is one of 12
regional FHLBs,  that  administers the home financing credit function of savings
associations.  Each FHLB  serves as a reserve  or central  bank for its  members
within its assigned  region.  It is funded  primarily from proceeds derived from
the sale of  consolidated  obligations  of the FHLB  System.  It makes  loans to
members (i.e.,  advances) in accordance with policies and procedures established
by the board of directors of the FHLB. These policies and procedures are subject
to the  regulation  and  oversight of the Federal  Housing  Finance  Board.  All
advances from the FHLB are required to be fully secured by sufficient collateral
as determined by the FHLB. In addition,  all long-term  advances are required to
provide funds for residential home financing.

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of Des Moines.  At March 31, 1999, the Bank had $2.0 million of FHLB stock,
which was in  compliance  with this  requirement.  In past  years,  the Bank has
received  substantial  dividends  on its FHLB  stock.  Over the past five fiscal
years such dividends have averaged 7.14% and were 6.53% for fiscal 1999. For the
fiscal year ended March 31,  1999,  dividends  paid by the FHLB of Des Moines to
the Bank totaled  approximately  $123,668,  which constitutes a $37,163 increase
over the amount of dividends  received in fiscal year 1998.  No assurance can be
given that such dividends will continue in the future at such levels.

         Under  federal  law,  the FHLBs are  required to provide  funds for the
resolution  of  troubled  savings  associations  and to  contribute  to low- and
moderately priced housing programs through direct loans or interest subsidies on
advances targeted for community investment and low- and moderate-income  housing
projects.  These  contributions  have  affected  adversely  the  level  of  FHLB
dividends  paid and could continue to do so in the future.  These  contributions
could also have an adverse  effect on the value of FHLB stock in the  future.  A
reduction  in value of the  Bank's  FHLB  stock may  result  in a  corresponding
reduction in the Bank's capital.

Federal and State Taxation

         Federal  Taxation.  Savings  associations  such as the  Bank  that  met
certain  definitional  tests  relating  to the  composition  of assets and other
conditions  prescribed  by the Internal  Revenue  Code of 1986,  as amended (the
"Code"),  have been  permitted to  establish  reserves for bad debts and to make
annual additions thereto which, within specified formula limits, were taken as a
deduction in  computing  taxable  income for federal  income tax  purposes.  The
amount of the bad debt reserve deduction for "non-qualifying loans" was computed
under the experience  method.  For tax years beginning before December 31, 1995,
the amount of the bad debt  reserve  deduction  for  "qualifying  real  property
loans"  (generally,  loans secured by improved  real estate) was computed  under
either the experience method or the percentage of taxable income method

                                       32
<PAGE>
(based on an annual  election).  If a savings  association  elected  the  latter
method,  it could claim, each year, a deduction based on a percentage of taxable
income, without regard to actual bad debt experience.

         Under the  experience  method,  the bad debt  reserve  deduction  is an
amount  determined  under a formula based  generally upon the bad debts actually
sustained by the savings association over a period of years.

         The  percentage  of taxable  income  method has been repealed for years
beginning after December 31, 1995, and "large" associations, i.e., the quarterly
average of the association's  total assets or of the consolidated group of which
it is a member,  exceeds $500 million for the year, may no longer be entitled to
use the experience  method of computing  additions to their bad debt reserve.  A
"large"  association  must use the direct  write-off  method for  deducting  bad
debts,  under which  charge-offs  are  deducted  and  recoveries  are taken into
taxable  income as incurred.  Since the Bank is not a "large"  association,  the
Bank will continue to be permitted to use the experience  method.  The Bank will
be required to recapture  (i.e.,  take into  income) over a six-year  period its
applicable  excess  reserves,  i.e,  the balance of its  reserves  for losses on
qualifying loans and nonqualifying loans, as of March 31, 1996, the close of the
last tax year  beginning  before  January 1, 1996,  over the  greater of (a) the
balance of such reserves as of December 31, 1987  (pre-1988  reserves) or (b) in
the case of a bank which is not a "large" association, an amount that would have
been the balance of such reserves as of the close of the last tax year beginning
before  January 1, 1996,  had the bank  always  computed  the  additions  to its
reserves using the experience method.  Postponement of the recapture is possible
for a  two-year  period  if an  association  meets a minimum  level of  mortgage
lending for 1996 and 1997.  As of March 31,  1999,  the Bank's bad debt  reserve
subject to recapture over a six-year period totaled approximately $350,000.

         If an  association  ceases to qualify  as a "bank" (as  defined in Code
Section  581) or converts  to a credit  union,  the  pre-1988  reserves  and the
supplemental  reserve are  restored to income  ratably  over a six-year  period,
beginning in the tax year the  association  no longer  qualifies as a bank.  The
balance of the pre- 1988  reserves  are also subject to recapture in the case of
certain excess  distributions  to (including  distributions  on liquidation  and
dissolution), or redemptions of, shareholders.

         In addition to the regular federal income tax, corporations,  including
savings  associations such as the Bank,  generally are subject to a minimum tax.
An  alternative  minimum  tax  is  imposed  at a  minimum  tax  rate  of  20% on
alternative minimum taxable income, which is the sum of a corporation's  regular
taxable income (with certain  adjustments)  and tax preference  items,  less any
available  exemption.  The  alternative  minimum tax is imposed to the extent it
exceeds the corporation's regular income tax and net operating losses can offset
no more than 90% of  alternative  minimum  taxable  income.  For  taxable  years
beginning  after  1986  and  before  1996,   corporations,   including   savings
associations  such as the Bank, were also subject to an environmental  tax equal
to 0.12% of the excess of  alternative  minimum  taxable  income for the taxable
year  (determined  without regard to net operating  losses and the deduction for
the environmental tax) over $2 million.
<PAGE>
         To the extent earnings appropriated to a savings association's bad debt
reserves for  "qualifying  real property  loans" and deducted for federal income
tax purposes  exceed the allowable  amount of such reserves  computed  under the
experience  method  and to the extent of the Bank's  supplemental  reserves  for
losses  on  loans   ("Excess"),   such  Excess  may  not,  without  adverse  tax
consequences,   be  utilized  for  the  payment  of  cash   dividends  or  other
distributions   to  a  shareholder   (including   distributions  on  redemption,
dissolution or  liquidation) or for any other purpose (except to absorb bad debt
losses).  As of March 31,  1999,  the  Bank's  excess for tax  purposes  totaled
approximately $1.6 million.
                                       33
<PAGE>
         The Company and its subsidiaries file  consolidated  federal income tax
returns on a fiscal year basis using the accrual method of  accounting.  Savings
associations,  such as the Bank, that file federal income tax returns as part of
a consolidated group were required by applicable Treasury  regulations to reduce
their taxable  income for purposes of computing the now expired  percentage  bad
debt  deduction  for  losses  attributable  to  activities  of  the  non-savings
association members of the consolidated group that were functionally  related to
the activities of the savings association member.

         The Bank has not been  audited  by the IRS  recently  with  respect  to
federal  income tax returns.  In the opinion of management,  any  examination of
still open returns would not result in a deficiency  which could have a material
adverse effect on the financial condition of the Bank.

         Missouri  Taxation.  The State of Missouri has a corporate  income tax;
however,  savings associations are exempt from such tax.  Missouri-based  thrift
institutions,  such as the Bank, are subject to a special financial institutions
tax, based on net income without regard to net operating loss carryforwards,  at
the rate of 7% of net income as defined in the Missouri statutes.  This tax is a
prospective tax for the privilege of the Bank exercising its corporate franchise
within the state,  based on its net income for the preceding year. The tax is in
lieu of all other state taxes on thrifts,  except taxes on real estate, tangible
personal  property owned by the taxpayer and held for lease or rental to others,
certain payroll taxes, and sales and use taxes.

         Delaware  Taxation.  As a  Delaware  holding  company,  the  Company is
exempted  from Delaware  corporate  income tax but is required to file an annual
report with and pay an annual fee to the State of Delaware.  The Company is also
subject to an annual franchise tax imposed by the State of Delaware.

Competition

         Hardin  Federal  faces strong  competition,  both in  originating  real
estate loans and in attracting deposits.  Competition in originating real estate
loans  comes  primarily  from  commercial  banks,   credit  unions  and  savings
institutions located in the Bank's market area.  Commercial banks, credit unions
and savings  institutions  provide vigorous competition in consumer lending. The
Bank  competes for real estate and other loans  principally  on the basis of the
quality of services it provides to borrowers,  the interest  rates and loan fees
it  charges,  and the  types  of  loans it  originates.  See  "Business--Lending
Activities."

         The Bank  attracts  all of its  deposits  through  its  retail  banking
offices,  primarily from the  communities in which those retail banking  offices
are located.  Therefore,  competition  for those  deposits is  principally  from
retail  brokerage   offices,   commercial  banks,   credit  unions  and  savings
institutions located in these communities.  The Bank competes for these deposits
by  offering a variety  of  account  alternatives  at  competitive  rates and by
providing  convenient  business hours,  branch locations and interbranch deposit
and withdrawal privileges.

         The Bank serves  primarily Ray and Clay Counties,  Missouri.  There are
six  commercial  banks,  one  savings  institution,  and one credit  union which
compete  for  deposits  and  loans  in Ray  County,  Missouri.  In Clay  County,
Missouri,  there are approximately 36 commercial banks, 44 credit unions, and 10
savings institutions,  other than Hardin Federal, which compete for deposits and
loans in Clay County, Missouri.
<PAGE>
Employees

         At March 31, 1999, the Bank had a total of 28 full-time and 5 part-time
employees. The Bank's employees are not represented by any collective bargaining
group. Management considers its employee relations to be good.

                                       34
<PAGE>
Executive Officers of the Company and the Bank Who Are Not Directors

         Lyndon M. Goodwin.  Mr. Goodwin, age 54, is currently Vice President of
the Bank responsible for the supervision of all lending  operations of the Bank.
Prior to joining the Bank in 1994,  Mr.  Goodwin was a County  Supervisor of the
United States Department of Agriculture,  Farmer's Home  Administration,  for 28
years.

         J. Michael  Schwarz.  Mr.  Schwarz,  age 55, joined the Bank in January
1997 as Vice President of Lending at the Excelsior  Springs Branch.  Mr. Schwarz
previously  was employed as  Executive  Vice  President of Lawson Bank,  Lawson,
Missouri.

Item 2.  Description of Property

         The Bank conducts its business through three offices, which are located
in Ray and Clay  Counties,  Missouri.  The Bank  owns  its main  office  and its
Richmond and Excelsior  Springs,  Missouri branch  offices.  The following table
sets forth  information  relating to each of the Bank's  offices as of March 31,
1999. The total net book value of the Bank's  premises and equipment  (including
land,  buildings  and  leasehold   improvements  and  furniture,   fixtures  and
equipment) at March 31, 1999 was approximately $1.8 million.
See Note 5 of the Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
                                                                                 Total
                                                                              Approximate
                                                            Date                 Square         Net Book Value at
                     Location                             Acquired              Footage          March 31, 1999
----------------------------------------------------      --------              -------          --------------
<S>                                                         <C>                   <C>                 <C>
 Main Office:                                               1963                  4600             $75,059
 201 Northeast Elm Street
 Hardin, Missouri

 Branch Offices:(1)
 201 North Jesse James Road                                 1990                  2024              597,213
 Excelsior Springs, Missouri

 200 N. Spartan Drive                                       1998                  6800              1,160,039
 Richmond, Missouri
</TABLE>
----------------
         (1) The Bank  constructed  an  approximate  6800 sq. foot branch office
facility located at 200 N. Spartan Drive, Richmond,  Missouri,  which opened for
business on March 31,  1998.  At that time,  the Bank  closed its branch  office
which was located at 208 West Main Street in Richmond, Missouri.

         Hardin  Federal  believes that its current  facilities  are adequate to
meet the present and foreseeable needs of the Bank and the Holding Company.

         The Bank  maintains  an on-line data base with an  independent  service
bureau servicing financial institutions.

                                       35
<PAGE>
Item 3.  Legal Proceedings

         The Company  and Hardin  Federal are  involved,  from time to time,  as
plaintiff or defendant in various legal actions  arising in the normal course of
their  businesses.  While the ultimate  outcome of these  proceedings  cannot be
predicted with certainty,  it is the opinion of management,  after  consultation
with counsel  representing  Hardin  Federal and the Company in the  proceedings,
that the resolution of these  proceedings  should not have a material  effect on
the Company's  financial  position or results of  operations  on a  consolidated
basis.

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

         No matter was  submitted  to a vote of  security  holders,  through the
solicitation of proxies or otherwise, during the quarter ended March 31, 1999.

                                     PART II
                                     -------

Item 5.  Market for the  Registrant's  Common Stock and Related  Security Holder
         Matters

         Page  45 of the attached  1999 Annual Report to Shareholders  is herein
         incorporated by reference.


Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

         Pages 5 to 17 of the attached  1999 Annual Report to  Shareholders  are
         herein incorporated by reference.


Item 7.  Financial Statements

         Pages 18 to 44 of the attached 1999 Annual Report to  Shareholders  are
herein incorporated by reference.


Item 8.  Changes  in  and  Disagreements  With  Accountants  on  Accounting  and
         Financial Disclosure

         There has been no  Current  Report  on Form 8-K filed  within 24 months
prior to the date of the most recent financial  statements reporting a change of
accountants and/or reporting disagreements on any matter of accounting principle
or financial statement disclosure.
                                       36
<PAGE>
                                    PART III

Item 9.  Directors and Executive Officers of the Registrant

         Information  concerning  Directors of the  Registrant  is  incorporated
herein by reference from the Company's definitive Proxy Statement for the Annual
Meeting of Shareholders scheduled to be held on July 22, 1999.


Item 10.  Executive Compensation

         Information concerning executive compensation is incorporated herein by
reference from the Company's  definitive  Proxy Statement for the Annual Meeting
of Shareholders scheduled to be held on July 22, 1999.


Item 11.  Security Ownership of Certain Beneficial Owners and Management

         Information  concerning security ownership of certain beneficial owners
and management is incorporated herein by reference from the Company's definitive
Proxy Statement for the Annual Meeting of  Shareholders  scheduled to be held on
July 22, 1999.


Item 12.  Certain Relationships and Related Transactions

         Information   concerning  certain  relationships  and  transactions  is
incorporated  herein by reference from the Company's  definitive Proxy Statement
for the Annual Meeting of Shareholders scheduled to be held on July 22, 1999.


                                     PART IV
                                     -------

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

         (a) (1)  Financial Statements:

         The following  information  appearing in the Registrant's Annual Report
to Shareholders  for the year ended March 31, 1999, is incorporated by reference
in this Form 10-KSB Annual Report as Exhibit 13.
<TABLE>
<CAPTION>
                                                                                                        Page in
                                                                                                         Annual
               Annual Report Section                                                                     Report
               ---------------------                                                                     ------

<S>                                                                                                        <C>
Report of Independent Auditors.......................................................................      18

Consolidated Balance Sheets at March 31, 1999 and 1998...............................................      19
</TABLE>
                                                        37
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                                        <C>
Consolidated Statements of Earnings for the Years ended March 31, 1999, 1998 and 1997................      20

Consolidated Statements of Stockholders' Equity for the Years ended
 March 31, 1999, 1998 and 1997.......................................................................      21

Consolidated Statements of Cash Flows for the Years ended March 31, 1999,
  1998 and 1997......................................................................................      22

Notes to Consolidated Financial Statements...........................................................      24
</TABLE>


         (a) (2)  Financial Statement Schedules:

         All financial  statement schedules have been omitted as the information
is not required under the related instructions or is inapplicable.

         (a) (3)  Exhibits:
                                                                Reference to
Regulation                                                     Prior Filing or
S-B Exhibit                                                     Exhibit Number
  Number                         Document                      Attached Hereto
  ------                         --------                      ---------------
   2              Plan of acquisition, reorganization,               None
                  arrangement, liquidation or succession

   3              Certificate of Incorporation and Bylaws             *

   4              Instruments defining the rights of                  *
                  security holders, including indentures

   9              Voting trust agreement                             None

   10.1           1995 Stock Option and Incentive Plan                **

   10.2           Employment Agreement with Robert W. King            *

   10.3           Employment Agreement with Karen K.                  *
                  Blankenship

   10.4           Employee Stock Ownership Plan                       *

   10.5           Recognition and Retention Plan                      **

   10.6           Deferred Compensation Agreement                     *

   10.7           Compensation Agreement with Directors               *

   11             Statement re: computation of per                   None

                                       38
<PAGE>
                                                                 Reference to
Regulation                                                     Prior Filing or
S-B Exhibit                                                     Exhibit Number
  Number                         Document                      Attached Hereto
  ------                         --------                      ---------------
                  share earnings

   12             Statement re: computation or ratios               Not required

   13             Annual Report to Security Holders                      13

   16             Letter re: change in certifying                       None
                    accountant

   18             Letter re: change in accounting                       None
                    principles

   21             Subsidiaries of Registrant                             21

   22             Published report regarding matters                    None
                   submitted to vote of security holders

   23             Consent of experts and counsel                         23

   24             Power of Attorney                                 Not Required

   27             Financial Data Schedule                                27

   28             Information from reports furnished to                 None
                   State insurance regulatory authorities

   99             Additional exhibits                                   None
   -------------------

            *Filed on June 23,  1995,  as  exhibits  to the  Registrant's  Form
S-1  registration  statement  (Registration  No.  33-93888),   pursuant  to  the
Securities  Act of 1933.  All of such  previously  filed  documents  are  hereby
incorporated herein by reference in accordance with Item 601 of Regulation S-B.

         **Filed on March 18, 1996, as exhibits to the  Registrant's  definitive
proxy  statement  relating to the  Registrant's  special meeting of stockholders
held on April 16,  1996.  All of such  previously  filed  documents  are  hereby
incorporated herein by reference in accordance with Item 601 of Regulation S-B.

         (b) Reports on Form 8-K:

         No current  reports on Form 8-K were  filed by the  Company  during the
three months ended March 31, 1999.

                                       39
<PAGE>
                                   SIGNATURES
                                   ----------

         Pursuant to the  requirements  of Section 13 or 15(d) 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.

                                                HARDIN BANCORP, INC.



Date: June 28, 1999                            By: /s/ Robert W. King
                                               --------------------------------
                                               Robert W. King
                                               (Duly Authorized Representative)

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.


By:  /s/ Robert W. King                    By:  /s/ Ivan R. Hogan
     -----------------------------              --------------------------------
     Robert W. King, President                  Ivan R. Hogan
     Chief Executive Officer and Director       Chairman of the Board

Date: June 28, 1999                         Date: June 28, 1999




By:  /s/ Karen K. Blankenship              By:  /s/ David K. Hatfield
     -----------------------------              --------------------------------
     Karen K. Blankenship, Senior Vice          David K. Hatfield, Director
     President, Secretary and Director
    (Principal Accounting Officer)

Date: June 28, 1999                         Date: June 28, 1999




By:  /s/ David D. Lodwick                  By:  /s/ W. Levan Thurman
     -----------------------------              --------------------------------
     David D. Lodwick, Director                 W. Levan Thurman, Director

Date: June 28, 1999                         Date: June 28, 1999





By:  /s/ William L. Homan
     -----------------------------
      William L. Homan, Vice President,
       Treasurer and Director
       (Principal Financial Officer)

Date: June 28, 1999
<PAGE>
                                  EXHIBIT INDEX

3     Certificate of Incorporation and Bylaws*

4     Instruments defining the rights of security holders, including indentures*

10.1  1995 Stock Option and Incentive Plan**

10.2  Employment Agreement with Robert W. King*

10.3  Employment Agreement with Karen K. Blankenship*

10.4  Employee Stock Ownership Plan*

10.5  Recognition and Retention Plan**

10.6  Deferred Compensation Agreement*

10.7  Compensation Agreement with Directors*

13    Annual Report to Security Holders

21    Subsidiaries of Registrant

23    Consent of experts and counsel

27    Financial Data Schedule
---------------

         *Filed on June 23,  1995,  as  exhibits  to the  Registrant's  Form S-1
registration statement  (Registration No. 33-93888),  pursuant to the Securities
Act of 1933.  All of such  previously  filed  documents are hereby  incorporated
herein by reference in accordance with Item 601 of Regulation S-B.

         **Filed on March 18, 1996, as exhibits to the  Registrant's  definitive
proxy  statement  relating to the  Registrant's  special meeting of stockholders
held on April 16,  1996.  All of such  previously  filed  documents  are  hereby
incorporated herein by reference in accordance with Item 601 of Regulation S-B.