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, 2000
                                       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 incorporation          (I.R.S. Employer
                  or organization)                     Identification No.)


  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, 2000 were
$8.8 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,  2000,  was $10.1  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, 2000,  there were  1,058,000  shares issued and 731,453
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, 2000.

         Part III of Form  10-KSB -  Portions  of the Proxy  Statement  for 2000
Annual Meeting of Stockholders.

<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,
2000, the Company had total assets of $138.5 million,  deposits of $86.6 million
and total equity of $12.4 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.,
                                        2

<PAGE>

American  Italian Pasta Co., Ray County  Memorial  Hospital,  Excelsior  Springs
Community Hospital, the Richmond RXVI Public Schools, Lawson RXIV Public Schools
and Excelsior Springs Public Schools.

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,  2000,  the  Bank's  gross  loans and  mortgage-backed  securities
outstanding  totalled  $93.0 of  which  $60.7  million  or  65.3%  were  one- to
four-family  residential  mortgage  loans.  Of the one- to four-family  mortgage
loans  outstanding at that date,  45.0% were  fixed-rate  loans,  and 20.3% were
adjustable-rate  loans. At that same date, consumer loans totalled $10.2 million
or 11.0% of the Bank's total loan  portfolio,  construction  loans totalled $3.2
million  or  3.5%  of the  Bank's  total  loan  and  mortgage-backed  securities
portfolio,  commercial  real estate loans  totalled  $3.0 million or 3.2% of the
Bank's total loan and mortgage-backed  securities portfolio and land acquisition
loans totalled $3.3 million or 3.6% of the Bank's total loan and mortgage-backed
securities portfolio.

         The Bank also invests in mortgage-backed securities. At March 31, 2000,
mortgage-backed   securities   totalled   $11.8   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, 2000,  the maximum
amount  which the Bank could have lent under this limit to any one  borrower and
the borrower's  related entities was  approximately  $1.8 million.  At March 31,
2000,  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, 2000 was $1.1 million secured
by a loan to develop  raw land into  residential  lots  located in Clay  County,
Missouri.  At March 31, 2000,  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,
                                                 --------------------------------------------------------------------------
                                                          2000                      1999                      1998
                                                 ----------------------    ----------------------    ----------------------
                                                  Amount      Percent         Amount      Percent      Amount      Percent
                                                 -------      ---------    ----------    ---------     ------      -------
                                                                           (Dollars in Thousands)
Real Estate Loans:
-----------------
<S>                                              <C>            <C>        <C>            <C>        <C>            <C>
  One- to four-family..........................  $  60,675      65.26%     $  54,122      64.04%     $  50,646      60.65%
  Land.........................................      3,304       3.55          3,048       3.61            810        .98
  Commercial...................................      2,986       3.21          3,031       3.59          2,356       2.82
  Construction.................................      3,214       3.46          2,380       2.81          3,967       4.75
                                                 ---------    -------      ---------    -------      ---------     ------
     Total real estate loans...................     70,179      75.48         62,581      74.05         57,779      69.20
                                                 ---------    -------      ---------    -------      ---------     ------

Consumer Loans:
--------------
  Consumer Loans:
   Secured by deposits.........................        829       0.89            976       1.15            635        .76
   Automobile..................................      2,548       2.74          2,008       2.38          1,631       1.95
   Home equity.................................      5,337       5.74          4,338       5.13          3,193       3.82
   Home improvement............................        316       0.34            303       0.36            521        .62
   Other consumer loans........................      1,161       1.25            945       1.12            725        .88
                                                 ---------    -------      ---------    -------      ---------     ------
     Total consumer loans......................     10,191      10.96          8,570      10.14          6,705       8.03
                                                 ---------    -------      ---------    -------      ---------     ------

  Commercial business loans....................        796       0.86            781       0.92             --         --
                                                 ---------    -------      ---------    -------      ---------     ------

   Total loans receivable......................     81,166      87.30         71,932      85.11         64,484      77.23
                                                 ---------    -------      ---------    -------      ---------     ------


Mortgage-Backed Securities:
--------------------------
  GNMA.........................................      2,053       2.21          1,118       1.32          4,446       5.32
  FHLMC........................................      4,068       4.38          4,158       4.92          5,425       6.50
  FNMA.........................................      5,685       6.11          7,308       8.65          9,144      10.95
                                                 ---------    -------      ---------    -------      ---------     ------
     Total mortgage-backed securities..........     11,806      12.70         12,584      14.89         19,015      22.77
                                                 ---------    -------      ---------    -------      ---------     ------
     Total loan and mortgage-backed
       securities portfolio....................     92,972     100.00%        84,516     100.00%        83,499     100.00%
                                                              =======                    ======                    ======

Less:
----
Loans in process...............................     (2,910)                   (2,195)                   (3,022)
Deferred fees and discounts....................        107                        79                        60
Allowance for loan losses......................       (304)                     (311)                     (248)
                                                 ---------                 ---------                 ---------
     Total loan and mortgage-backed
       securities portfolio, net...............  $  89,865                 $  82,089                 $  80,289
                                                 =========                 =========                 =========
</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,
                                                 --------------------------------------------------------------------------
                                                          2000                      1999                      1998
                                                 ----------------------    ----------------------    ----------------------
                                                   Amount      Percent       Amount      Percent      Amount       Percent
                                                 ---------   ----------    ---------   ----------    ---------   ----------
                                                                           (Dollars in Thousands)
<S>                                              <C>            <C>        <C>            <C>        <C>            <C>
Fixed-Rate Loans:
----------------
Real estate:
  One- to four-family.......................     $  41,810      44.97%     $  36,589      43.29%     $  30,623      36.67%
  Land......................................           538       0.58            512       0.61            426        .51
  Commercial................................           567       0.61            624       0.74            529        .64
  Construction..............................         2,870       3.08          1,711       2.02          3,298       3.95
                                                              -------      ---------    -------      ---------     ------
   Total real estate loans..................        45,785      49.24         39,436      46.66         34,876      41.77
Consumer....................................         6,340       6.82          5,829       6.90          5,062       6.06
Commercial business.........................            18       0.02             --         --             --         --
Mortgage-backed securities..................            --         --             --         --             --         --
                                                 ---------    -------      ---------    -------      ---------     ------
   Total fixed-rate.........................        52,143      56.08         45,265      53.56         39,938      47.83
                                                 ---------    -------      ---------    -------      ---------     ------

Adjustable-Rate Loans:
---------------------
Real estate:
  One- to four-family.......................        18,865      20.29         17,533      20.75         20,023      23.98
  Land......................................         2,766       2.98          2,536       3.00            384        .46
  Commercial................................         2,419       2.60          2,407       2.85          1,827       2.19
  Construction..............................           344       0.37            669       0.79            669        .80
                                                 ---------    -------      ---------    -------      ---------     ------
   Total real estate loans..................        24,394      26.24         23,145      27.39         22,903      27.43
Consumer....................................         3,851       4.14          2,741       3.24          1,643       1.97
Commercial business.........................           778       0.84            781       0.92             --         --
Mortgage-backed securities..................        11,806      12.70         12,584      14.89         19,015      22.77
                                                 ---------    -------      ---------    -------      ---------     ------
   Total adjustable rate....................        40,829      43.92         39,251      46.44         43,561      52.17
                                                 ---------    -------      ---------    -------      ---------     ------
   Total loan and mortgage-backed
    securities portfolio....................        92,972     100.00%        84,516     100.00%     83,499        100.00%
                                                 =========                               ======                    ======

Less:
----
  Loans in process..........................        (2,910)                   (2,195)                   (3,022)
  Deferred loan fees and discounts..........           107                        79                        60
  Allowance for loan losses.................          (304)                     (311)                     (248)
                                                 ---------                 ---------                 ----------
   Total loans and mortgage-backed
    securities portfolio, net...............     $  89,865                 $  82,089                 $  80,289
                                                 =========                 =========                 =========
</TABLE>

                                                                 5

<PAGE>

         The  following  schedule   illustrates  the  contractual  maturity  and
weighted average rates of the Bank's loan portfolio at March 31, 2000. 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.
<TABLE>
<CAPTION>
                       One-to Four-Family       Construction       Commercial Real EstateLand                 Consumer
                      --------------------  --------------------  --------------------------------          ------------
Due During                        Weighted              Weighted              Weighted              Weighted              Weighted
Year Ending                        Average               Average               Average              Average               Average
March 31,               Amount      Rate      Amount      Rate      Amount      Rate      Amount      Rate      Amount      Rate
------------          ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                                                                  (Dollars in Thousands)

<S>                   <C>           <C>     <C>           <C>     <C>           <C>     <C>           <C>     <C>           <C>
2001(1).............  $    353      7.92%   $  1,594      8.64%   $     475     9.63%   $      40     9.00%   $   1,896     8.47%
2002................       852      8.37          --        --            7     9.00        1,800     9.69          544    10.11
2003................       200      8.39          --        --           --       --           --       --          886     9.82
2004 and 2005.......       489      8.48          --        --           16     9.50           87     8.55        1,802     9.40
2006 to 2010........     5,551      7.82          --        --          530     8.64          187     8.41        1,082     9.65
2011 to 2025........    31,134      7.79         396      8.16        1,893     8.62          992     8.95        3,981     9.97
2026 and following..    22,096      7.97       1,224      8.57           65     7.50          198     8.29           --       --
                      --------              --------              ---------             ---------             ---------

 ....................  $ 60,675              $  3,214              $   2,986             $   3,304             $  10,191
                      ========              ========              =========             =========             =========
</TABLE>

<TABLE>
<CAPTION>
                      Commercial Business             Total
                      --------------------  ------------------------
Due During                        Weighted              Weighted
Year Ending                       Average               Average
March 31,               Amount      Rate      Amount      Rate
------------          ---------  ---------  ---------   ------------


<S>                   <C>           <C>     <C>           <C>
2001(1).............  $     475     9.57%   $  4,833      8.71%
2002................         --       --       3,203      9.41
2003................         21    10.36       1,107      9.57
2004 and 2005.......         --       --       2,394      9.18
2006 to 2010........        300     8.75       7,650      8.19
2011 to 2025........         --       --      38,396      8.09
2026 and following..         --       --      23,583      8.01
                      ---------             --------

 ....................  $     796             $ 81,166
                      =========             ========
</TABLE>


-----------------------
         (1)The  total  amount of loans due after  March  31,  2001  which  have
predetermined  interest  rates is $48.8  million while the total amount of loans
due after such date which have  floating or adjustable  interest  rates is $27.8
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, 2000,  the Bank's one- to  four-family  residential  mortgage loans
totalled $60.7 million,  or 65.3%, 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,
2000 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, 2000,  the Bank  originated  $11.4  million
fixed-rate one- to four-family  loans,  which constituted 70.5% of total one- to
four-family  loans  originated  and  $4.8  million  of  adjustable-rate  one- to
four-family  loans  or  29.5% 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 2.0% at any adjustment date and
6.0% 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, 2000, the total balance
of one-to  four-family  adjustable-rate  loans was $18.9 million or 20.3% 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, 2000, the total balance of one- to four-family fixed-rate
loans was $41.8  million or 45.0% 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, 2000, the Bank's consumer loan portfolio totalled $10.2 million, or
11.0% 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,  2000,  home  equity  and home
improvement  loans  amounted to $5.3 million and $316,000,  respectively,  which
represented  5.7%  and  .3%,   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 89% 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.

         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, 2000, the Bank's  automobile  loans totalled
$2.5  million or 2.7% of the Bank's  gross loan and  mortgage-backed  securities
portfolio.

                                        8

<PAGE>

         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  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,  2000,  $18,000  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, 2000, the Bank had $3.2 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, 2000, the
Bank  had  $2.9  million  and  $344,000  of   fixed-rate   and   adjustable-rate
construction loans, respectively,  which represented 3.1% and .4%, 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 2000. 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, 2000 approximately $3.0 million,  or 3.2% 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.


                                        9

<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 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,  2000,  the Bank had a total of  $796,000  outstanding  in
commercial business loans, and an additional  commitment to fund a $240,000 line
of credit. At March 31, 2000, the largest  outstanding  commercial business loan
was a $340,000 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 eight commercial loans at March 31, 2000.

         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,
2000, the Bank originated  $21.1 million in fixed-rate loans and $9.2 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

                                       10

<PAGE>

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, 2000,
fixed-rate  loans comprised 56.1% of gross loan and  mortgage-backed  securities
portfolio.  Reflecting  these policies,  during the fiscal years ended March 31,
2000,  1999 and 1998,  the Bank sold $675,000,  $3.5 million,  and $3.7 million,
respectively, of one- to four-family fixed-rate real estate loans.

         During  fiscal year 2000,  the Bank  purchased  $423,000 of real estate
loans  originated  by other  lenders  all of which were  secured  by  properties
located in Missouri. At March 31, 2000, 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,  2000 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,
                                                                           -----------------------------------
                                                                              2000         1999         1998
                                                                           ---------    ---------    ---------
                                                                                        (In Thousands)
<S>                                                                        <C>          <C>          <C>
Originations by type:
--------------------
Adjustable rate:
   One- to four-family..................................................   $   4,769    $   1,072    $   3,367
   Land.................................................................       1,855        1,525          333
   Commercial real estate...............................................          15        2,215        1,140
   Construction.........................................................          --           --          669
   Consumer.............................................................       2,130        2,007        1,963
   Commercial business..................................................         417          930           --
                                                                           ---------    ---------    ---------
     Total adjustable-rate..............................................       9,186        7,749        7,462
                                                                           ---------    ---------    ---------
Fixed rate:
   One- to four-family..................................................      11,395       15,064       12,254
   Land.................................................................         306          292          188
   Commercial real estate...............................................          --          225           --
   Construction.........................................................       3,357        1,964        3,351
   Consumer.............................................................       6,068        4,247        4,398
   Commercial business..................................................          20           --           --
                                                                           ---------    ---------    ---------
     Total fixed-rate...................................................      21,146       21,792       20,191
                                                                           ---------    ---------    ---------
     Total loans originated.............................................      30,332       29,541       27,653
                                                                           ---------    ---------    ---------

Purchases:
---------
   One- to four-family..................................................         423        1,212        1,048
   Land.................................................................          --           --          184
   Commercial real estate...............................................          --          450           --
   Mortgage-backed securities - at cost.................................       2,362           --       10,940
                                                                           ---------    ---------    ---------
     Total purchased....................................................       2,785        1,662       12,172
                                                                           ---------    ---------    ---------

Sales and Repayments:
--------------------
   One- to four-family..................................................         675        3,486        3,737
   Mortgage-backed securities sold - at amortized cost..................         361        2,769        8,176
                                                                           ---------    ---------    ---------
     Total sales........................................................       1,036        6,255       11,913
                                                                           ---------    ---------    ---------

   Principal repayments.................................................      23,569       23,893       19,630
                                                                           ---------    ---------    ---------
     Total sales and repayments.........................................      24,605       30,148       31,543
                                                                           ---------    ---------    ---------

Decrease (increase) in other items:
   Loans in process.....................................................        (715)         827       (1,669)
   Deferred fees and discounts..........................................         (28)         (19)         (17)
   Allowance for loan losses............................................           7          (63)         (89)
                                                                           ---------    ---------    ---------
     Net increase (decrease)............................................   $   7,776    $   1,800    $   6,507
                                                                           =========    =========    =========
</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, 2000. 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)
Real Estate:
<S>                                     <C>  <C>           <C>          <C>   <C>            <C>         <C>   <C>          <C>
  One- to four-family..........          7   $    230      0.38%         3    $   219        0.36%       10    $  449       0.74%
  Land.........................         --         --        --         --         --          --        --        --         --
  Commercial...................         --         --        --         --         --          --        --        --         --
  Construction.................         --         --        --         --         --          --        --        --         --
Consumer.......................         --         --        --          2         11        0.10         2        11       0.10
Commercial business............         --         --        --         --         --          --        --        --         --
                                 ---------   --------   -------    -------    -------    --------   -------    ------     ------

   Total.......................          7   $    230      0.38%         5    $   230        0.46%       12    $  460       0.84%
                                 =========   ========   =======    =======    =======    ========   =======    ======     ======
</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,
                                                                       -----------------------------------
                                                                         2000         1999         1998
                                                                       ---------    ---------    ---------
                                                                                 (In Thousands)
<S>                                                                    <C>          <C>          <C>
Non-accruing loans
   One- to four-family.............................................    $     100    $     205    $     220
   Land............................................................           --           --           --
   Commercial real estate..........................................           --           --           --
   Construction....................................................           --           --           --
   Consumer........................................................           11           25           12
   Commercial business.............................................           --           --           --
                                                                       ---------    ---------    ---------
     Total.........................................................          111          230          232
                                                                       ---------    ---------    ---------

Accruing loans delinquent 90 days or more
   One- to four-family.............................................          119           47           --
   Land............................................................           --           --           --
   Commercial real estate..........................................           --           --           --
   Construction....................................................           --           --           --
   Consumer........................................................           --           --           --
   Commercial business.............................................           --           --           --
                                                                       ---------    ---------    ---------
     Total.........................................................          119           47           --
                                                                       ---------    ---------    ---------

Foreclosed assets
   One- to four-family.............................................           --           --           --
   Land............................................................           --           --           --
   Commercial real estate..........................................           --           --           --
   Construction....................................................           --           --           --
   Consumer........................................................            7           --           --
   Commercial business.............................................           --           --           --
                                                                       ---------    ---------    ---------
     Total.........................................................            7           --           --
                                                                       ---------    ---------    ---------

Total non-performing assets........................................    $     237    $     277    $     232
                                                                       =========    =========    =========
Total classified assets............................................    $     628    $     336    $     501
                                                                       =========    =========    =========
Total non-performing assets as a percentage of total assets                              0.17%         .20%
Total non-performing loans as a percentage of total
   loans receivable................................................         0.30%         .45%         .36%
                                                                       =========    =========    =========
</TABLE>

         For the year ended March 31,  2000 gross  interest  income  which would
have been recorded had the  non-accruing  loans been current in accordance  with
their  original  terms  amounted  to $20,000.  The amount  that was  included in
interest income on such loans was $18,000 for the year ended March 31, 2000.


                                       14

<PAGE>

         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 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, 2000, the Bank had classified a
total of $628,000of its assets as  substandard,  -0- as doubtful,  and $7,000 as
loss. At March 31, 2000, total classified assets comprised  $635,000 or 5.11% of
the Bank's capital, or .46% 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, 2000, 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.

         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

                                       15

<PAGE>

property is established  by a charge to operations.  At March 31, 2000, 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 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, 2000, the Bank had a total  allowance for loan losses
of $304,000,  representing 128.3% of total  non-performing loans and .39% 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,
                                 -------------------------------------------------------------------------------------------------
                                               2000                             1999                             1998
                                 -------------------------------  -------------------------------  -------------------------------
                                                         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.......        152    $60,675      74.75%   $   113    $54,122      75.24%   $    74    $50,646      78.54%
   Land......................         34      3,304       4.07         31      3,048       4.24          8        810       1.26
   Commercial real estate....         30      2,986       3.68         31      3,031       4.21         24      2,356       3.65
   Construction..............          3      3,214       3.96          7      2,380       3.31         13      3,967       6.15
Consumer.....................         63     10,191      12.56         49      9,350      13.00         32      6,705      10.40
Commercial business..........          8        796       0.98          8        781       1.09         --         --         --
Unallocated..................         14         --         --         72         --         --         97         --         --
                                 -------    -------    -------    -------    -------    -------    -------    -------    -------
     Total...................    $   304    $81,166     100.00%   $   311    $71,932     100.00%   $   248    $64,484     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,
                                                                           -----------------------------------
                                                                              2000         1999         1998
                                                                           ---------    ---------    ---------
                                                                                        (In Thousands)
<S>                                                                        <C>          <C>          <C>
Balance at beginning of period...........................................  $   311      $   248      $   158

Charge-offs:
-----------
   One- to four-family...................................................       --           --           --
   Land..................................................................       --           --           --
   Commercial real estate................................................       --           --           --
   Construction..........................................................       --           --           --
   Consumer..............................................................      (11)          (3)          (4)
   Commercial business...................................................       --           --           --
                                                                           -------      -------      -------
                                                                               (11)          (3)          (4)
                                                                           -------      -------      --------

Recoveries:
----------
   One- to four-family...................................................       --           --           --
   Land..................................................................       --           --           --
   Commercial real estate................................................       --           --           --
   Construction..........................................................       --           --           --
   Consumer..............................................................        3           --           --
   Commercial business...................................................       --           --           --
                                                                           -------      -------      -------
                                                                                 3           --           --
                                                                           -------      -------      -------

Net charge-offs..........................................................       (8)          (3)          (4)
Additions charged to operations..........................................        1           66           94
                                                                           -------      -------      -------
Balance at end of period.................................................  $   304      $   311      $   248
                                                                           =======      =======      =======

Ratio of net charge-offs during the
   period to average loans outstanding during the period.................    0.011%        .004%         .01%
                                                                           =======      =======      =======

Ratio of net charge-offs during the period to
   average non-performing assets.........................................     5.22%        1.13%        1.98%
                                                                           =======      =======      =======
</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, 2000, 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
33.8%. See "Regulation--Liquidity."

         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.

                                       18

<PAGE>

         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.

         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. The Bank
has invested  primarily in federal agency securities,  principally  Freddie Mac,
Government National Mortgage Association ("GNMA") and Fannie Mae obligations. At
March 31, 2000, the Bank's  investment in  mortgage-backed  securities  totalled
$11.8 million or 8.5% of its total assets.

         The Bank's available-for-sale  mortgage-backed  securities are reported
at fair 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, 2000, the Bank sold $361,000 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,  2000,  the  Bank's  investment
securities  (including a $2.0 million investment in the common stock of the FHLB
of Des Moines) totalled $39.8 million,  or 28.7% 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.

         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%

                                       19

<PAGE>

of the Bank's  unimpaired  capital and unimpaired  surplus as defined by federal
regulations,  which  totalled  $12.4  million  as of  March  31,  2000,  plus an
additional  10% if the  investments  are fully  secured  by  readily  marketable
collateral.  At March 31, 2000, 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.

         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,
                                          --------------------------------------------------------------------------
                                                   2000                      1999                      1998
                                          ----------------------    ----------------------    ----------------------
                                            Book         % of          Book         % of         Book         % of
                                            Value        Total         Value        Total        Value        Total
                                          ---------    ---------    ---------    ---------    ---------     --------
                                                                    (Dollars in Thousands)
Investment securities:
---------------------
<S>                                       <C>            <C>        <C>              <C>      <C>              <C>
Federal agency securities...........      $  32,821      59.73%     $      --           --%   $      --           --%
Revenue bonds.......................          1,054       1.92         38,206        60.40       31,651        56.15
Perpetual preferred stock...........          3,814       6.94          1,473         2.33        1,005         1.78
Other investments...................            104       0.19          4,840         7.65           --           --
                                          ---------    -------      ---------    ---------    ---------     --------
  Subtotal..........................         37,793      68.78         44,519        70.37       32,656        57.93
FHLB stock..........................          2,015       3.67          2,000         3.16        1,475         2.62
                                          ---------    -------      ---------    ---------    ---------     --------
  Total investment securities
   and FHLB stock...................         39,808      72.45      $  46,519        73.54%   $  34,131        60.55%
                                          ---------    -------      ---------    ---------    ---------     --------
Average remaining life of investment
  securities excluding FHLB stock...        9 years                   8 years                   9 years

Other interest-bearing assets:
-----------------------------
Interest-bearing deposits...........      $   3,332       6.06%     $   4,157         6.57%   $   3,225         5.72%

Mortgage-backed securities:
  GNMA..............................          2,053       3.74          1,118         1.77        4,446         7.89
  Freddie Mac.......................          4,068       7.40          4,158         6.57        5,424         9.62
  Fannie Mae........................          5,685      10.35          7,308        11.55        9,145        16.22
                                          ---------    -------      ---------    ---------    ---------     --------

   Total mortgage-backed securities, net     11,806       21.49        12,584       19.89         19,015       33.73
                                          ---------   ---------    ----------    --------     ----------  ----------

Total investment portfolio..........      $  54,946     100.00%     $  63,260       100.00%   $  56,371       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, 2000
                                            -----------------------------------------------------------------------------
                                                                                                     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..............    $  26,122     $     --     $      --    $   6,699    $  32,821    $  32,821
Revenue bonds...........................           --          618           436           --        1,054        1,054
Perpetual preferred stock...............           --        1,913         1,901           --        3,814        3,814
Other Investments.......................           --           --            --          104          104          104
                                            ---------     --------     ---------    ---------    ---------    ---------
Total investment securities.............    $  26,122     $  2,531     $   2,337    $   6,803    $  37,793    $  37,793
                                            ---------     --------     ---------    ---------    ---------    ---------

Weighted average yield..................         6.66%        6.24%         6.36%        6.38%        6.42%        6.42%
                                            =========     ========     =========    =========    =========    =========
</TABLE>


         The Bank's investment securities portfolio at March 31, 2000, 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, 2000,  the Bank had $28.7 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, 2000, the Bank had total FHLB advances
of $38.3 million.  See  "--Borrowings"  and Note 7 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.

                                       21

<PAGE>

         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.

         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,
                                      --------------------------------------------------------------------------
                                               2000                      1999                      1998
                                      ----------------------    ----------------------    ----------------------
                                                    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...................  $   2,653       3.06%     $   1,919       2.30%     $   1,082       1.41%
Savings Accounts....................      4,402       5.09          3,805       4.57          3,265       4.25
NOW Accounts........................      8,783      10.15          6,852       8.22          4,258       5.53
Money Market.......................       7,033       8.12          6,584       7.90          5,901       7.68
Certificates........................     63,694      73.58         64,167      77.01         62,378      81.13
                                      ---------    -------      ---------    -------      ---------     ------

Total deposit accounts..............  $  86,565     100.00%     $  83,327     100.00%     $  76,884     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,
2000.
<TABLE>
<CAPTION>
                                                                             Maturity
                                                              ---------------------------------------
                                                                           Over       Over       Over
                                                              3 Months   3 to 6     6 to 12       12
                                                               or Less    Months     Months     Months      Total
                                                              ---------  ---------  ---------  ---------  ---------
                                                                                    (In thousands)
<S>                                                           <C>        <C>        <C>        <C>        <C>
Certificates of deposit less than $100,000..............      $  40,466  $   5,673  $   1,715  $   4,597  $  52,451

Certificates of deposit of $100,000 or more.............          8,624        784        313      1,089     10,810

Public funds (1)........................................            390         37          6         --        433
                                                              ---------  ---------  ---------  ---------  ---------

Total certificates of deposit...........................      $  49,480  $   6,494  $   2,034  $   5,686  $  63,694
                                                              =========  =========  =========  =========  =========
</TABLE>


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

                                       22

<PAGE>

         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, 2000, 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,  2000 and March 31,  1999,  the  weighted  average
interest rate of the Bank's FHLB advances was 5.84% and 5.18%, respectively. For
additional  information  regarding the term to maturity and average rate paid on
FHLB advances,  see Note 7 of the Notes to Consolidated Financial Statements and
"--Lending Activities."

         The  following  table  sets forth the  maximum  month-end  balance  and
average balance of FHLB advances.
<TABLE>
<CAPTION>
                                                                             Year Ended March 31,
                                                              ------------------------------------------------
                                                                    2000             1999             1998
                                                              --------------    --------------   -------------
                                                                                (In Thousands)
<S>                                                             <C>                <C>             <C>
Maximum Balance:
---------------
  FHLB advances............................................     $   38,300         $  40,000       $  29,500

Average Balance:
---------------
  FHLB advances............................................     $   36,583         $  37,458       $  24,458
</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  $2.8 million
at  March  31,2000,   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,
2000,  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, 2000,  the
Bank's  investment in HSSC was $50,000.  For the year ended March 31, 2000, HSSC
had pre-tax income of approximately $14,000.

         In  November   1999,   Hardin  Federal   Savings  Bank   established  a
wholly-owned   direct  operating   subsidiary,   Hardin  Investment,   LLC.  The
subsidiary's  activities  consists  solely of  investment  portfolio  management
activities.

                                   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

                                       23

<PAGE>

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.

         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, 2000, was approximately $41,000.

         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,  2000,  the  Bank's  lending  limit  under this  restriction  was $1.8
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

                                       24
<PAGE>

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 Deposits

                  The FDIC is an  independent  federal  agency that  insures the
deposits,  up to prescribed  statutory limits, of depository  institutions.  The
FDIC currently  maintains two separate  insurance funds: the Bank Insurance Fund
and the  Savings  Association  Insurance  Fund.  As insurer of Hardin  Federal's
deposits,  the FDIC has examination,  supervisory and enforcement authority over
Hardin Federal.

         Hardin  Federal's  accounts  are  insured  by the  Savings  Association
Insurance  Fund to the maximum  extent  permitted  by law.  Hardin  Federal pays
deposit insurance  premiums based on a risk-based  assessment system established
by the FDIC. Under applicable  regulations,  institutions are assigned to one of
three  capital  groups  that are based  solely on the level of an  institution's
capital -- "well capitalized,"  "adequately capitalized," and "undercapitalized"
-- which are  defined in the same  manner as the  regulations  establishing  the
prompt corrective action system, as discussed below. These three groups are then
divided  into  three  subgroups  which  reflect  varying  levels of  supervisory
concern,  from those  which are  considered  to be  healthy  to those  which are
considered  to be of  substantial  supervisory  concern.  The  matrix so created
results in nine assessment risk classifications, with rates that until September
30, 1996 ranged from 0.23% for well capitalized,  financially sound institutions
with only a few minor weaknesses to 0.31% for undercapitalized institutions that
pose a substantial risk of loss to the Savings Association Insurance Fund unless
effective corrective action is taken.

         Under the Deposit  Insurance  Funds Act, which was enacted on September
30, 1996, the FDIC imposed a special  assessment on each depository  institution
with Savings Association  Insurance  Fund-assessable  deposits which resulted in
the Savings  Association  Insurance Fund achieving its designated reserve ratio.
As a result,  the FDIC reduced the assessment  schedule for Savings  Association
Insurance  Fund members,  effective  January 1, 1997, to a range of 0% to 0.27%,
with most  institutions,  including  Hardin Federal,  paying 0%. This assessment
schedule  is the same as that for the Bank  Insurance  Fund,  which  reached its
designated  reserve ratio in 1995. In addition,  since January 1, 1997,  Savings
Association Insurance Fund members are charged an assessment of .065% of Savings
Association   Insurance   Fund-assessable   deposits  to  pay  interest  on  the
obligations  issued by the Financing  Corporation  in the 1980s to help fund the
thrift  industry  cleanup.  Bank  Insurance  Fund-assessable  deposits have been
charged an assessment to help pay interest on the Financing Corporation bonds at
a rate of approximately .013% until the earlier of December 31, 1999 or the date
upon which the last savings  association  ceases to exist,  after which time the
assessment will be the same for all insured deposits.

         The Deposit  Insurance Funds Act also contemplates the development of a
common  charter for all  federally  chartered  depository  institutions  and the
abolition  of  separate   charters  for  national  banks  and  federal   savings
associations.  It is not known  what form the common  charter  may take and what
effect,  if any,  the adoption of a new charter  would have on the  operation of
Hardin Federal.

         The FDIC may terminate the deposit insurance of any insured  depository
institution if it determines after a hearing that the institution has engaged or
is engaging in unsafe or unsound practices, is in an unsafe or unsound condition
to continue operations, or has violated any applicable law, regulation, order or
any
                                       25

<PAGE>

condition  imposed by an agreement  with the FDIC.  It also may suspend  deposit
insurance  temporarily during the hearing process for the permanent  termination
of  insurance,  if the  institution  has no tangible  capital.  If  insurance of
accounts  is  terminated,  the  accounts  at  the  institution  at the  time  of
termination,  less  subsequent  withdrawals,  shall continue to be insured for a
period of six months to two years,  as  determined  by the FDIC.  Management  is
aware of no  existing  circumstances  that could  result in  termination  of the
deposit insurance of Hardin Federal.

Capital Requirements.

         The OTS capital regulations require savings  institutions to meet three
capital  standards:  a 1.5% tangible  capital  standard,  a 3.0% leverage  (core
capital)  standard,  and an 8.0% risk-based  capital  standard.  Core capital is
defined as common  stockholders'  equity (including retained earnings),  certain
noncumulative perpetual preferred stock and related surplus,  minority interests
in equity  accounts of consolidated  subsidiaries  less  intangibles  other than
certain   mortgage   servicing   rights  ("MSRs")  and  purchased   credit  card
relationships.  The OTS regulations require that, in meeting the tangible,  core
and risk-based capital standards, institutions generally must deduct investments
in and  loans to  subsidiaries  engaged  in  activities  not  permissible  for a
national bank. In addition, the OTS prompt corrective action regulation provides
that a savings  institution  that has a leverage capital ratio of less than 4.0%
(3.0% for institutions  receiving the highest CAMELS examination rating) will be
deemed to be "undercapitalized" and may be subject to certain restrictions.

         The risk-based capital standard for savings  institutions  requires the
maintenance of total capital (which is defined as core capital and supplementary
capital)  to  risk-weighted  assets  of  8.0%.  In  determining  the  amount  of
risk-weighted  assets,  assets and certain  off-balance  sheet  assets items are
multiplied  by a risk-  weight of 0% to 100%,  as  assigned  by the OTS  capital
regulation  based on the risks OTS  believes  are inherent in the type of asset.
The components of core capital are equivalent to those  discussed  earlier under
the 3.0% leverage  standard.  The components of supplementary  capital currently
include  cumulative  preferred  stock,   long-term  perpetual  preferred  stock,
mandatory convertible  securities,  subordinated debt and intermediate preferred
stock and, within specified limits, the allowance for loan losses.  Overall, the
amount of supplementary  capital included as part of total capital cannot exceed
100% of core capital.

         The OTS has  incorporated  an  interest  rate risk  component  into its
regulatory  capital  rule.  Under the rule,  savings  associations  with  "above
normal"  interest rate risk exposure  would be subject to a deduction from total
capital for purposes of calculating  their risk-based  capital  requirements.  A
savings  association's  interest rate risk is measured by the decline in the net
portfolio  value of its  assets  (i.e.,  the  difference  between  incoming  and
outgoing  discounted cash flows from assets,  liabilities and off-balance  sheet
contracts)  that would result from a  hypothetical  200-basis  point increase or
decrease in market interest rates divided by the estimated economic value of the
association's  assets,  as calculated in accordance with guidelines set forth by
the OTS.  A savings  association  whose  measured  interest  rate risk  exposure
exceeds 2% must deduct an  interest  rate  component  in  calculating  its total
capital under the  risk-based  capital rule. The interest rate risk component is
an amount equal to one-half of the difference between the institution's measured
interest rate risk and 2%,  multiplied by the  estimated  economic  value of the
association's assets. That dollar amount is deducted from an association's total
capital in calculating compliance with its risk-based capital requirement. Under
the  rule,  there  is a  two  quarter  lag  between  the  reporting  date  of an
institution's  financial  data  and the  effective  date  for  the  new  capital
requirement  based on that data. A savings  association with assets of less than
$300 million and  risk-based  capital ratios in excess of 12% is exempt from the
interest rate risk component, unless the OTS determines otherwise. The rule also
provides that the OTS may waive or defer

                                       26

<PAGE>

an  association's  interest rate risk component on a case-by-case  basis.  Under
certain  circumstances,  a savings  association may request an adjustment to its
interest rate risk  component if it believes that the  calculated  interest rate
risk  component,  as  calculated by the OTS,  overstates  its interest rate risk
exposure.  In  addition,  certain  "well-capitalized"  institutions  may  obtain
authorization  to use their own  interest  rate risk  model to  calculate  their
interest rate risk component in lieu of the amount as calculated by the OTS. The
OTS has  postponed  the date that the  component  will first be deducted from an
institution's total capital.

         At March 31, 2000, the Bank had tangible  capital of $13.2 million,  or
9.43% of adjusted total assets,  which is approximately  $11.1 million above the
minimum  requirement of 1.5% of adjusted total assets in effect on that date. At
March 31, 2000,  the Bank had core capital equal to $13.2  million,  or 9.43% of
adjusted  total assets,  which is $7.6 million above the minimum  leverage ratio
requirement  of 4% as in effect on that date.  At that date,  the Bank had total
risk based capital of $13.5 million  (including  approximately  $13.2 million in
core capital and $304,000 in qualifying supplementary capital) and risk-weighted
assets of $72.4 million (with no converted  off-balance sheet assets);  or total
capital of 18.63% of  risk-weighted  assets.  This amount was $7.7 million above
the 8% requirement in effect on that date.

Prompt Corrective Regulatory Action

         Each federal banking agency is required to implement a system of prompt
corrective  action for  institutions  that it  regulates.  The  federal  banking
agencies have promulgated  substantially  similar  regulations to implement this
system of prompt corrective action. Under the regulations,  an institution shall
be deemed to be "well capitalized" if it has a total risk-based capital ratio of
10.0% or more,  has a Tier I  risk-based  capital  ratio of 6.0% or more,  has a
leverage  ratio  of 5.0% or more and is not  required  to meet  and  maintain  a
specific  capital level for any capital  measure;"adequately  capitalized" if it
has a total  risk-based  capital ratio of 8.0% or more,  has a Tier I risk-based
capital  ratio of 4.0% or more,  has a leverage  ratio of 4.0% or more,  or 3.0%
under  certain  circumstances,  and  does  not  meet  the  definition  of  "well
capitalized"; "undercapitalized" if it has a total risk-based capital ratio that
is less than 8.0%, has a Tier I risk-based  capital ratio that is less than 4.0%
or has a  leverage  ratio  that  is  less  than  4.0%,  or  3.0%  under  certain
circumstances;  "significantly  undercapitalized"  if it has a total  risk-based
capital ratio that is less than 6.0%, has a Tier I risk-based capital ratio that
is  less  than  3.0%  or has a  leverage  ratio  that is  less  than  3.0%;  and
"critically  undercapitalized"  if it has a ratio of  tangible  equity  to total
assets that is equal to or less than 2.0%.

         A federal  banking agency may,  after notice and an  opportunity  for a
hearing, reclassify a well capitalized institution as adequately capitalized and
may  require  an  adequately  capitalized  institution  or  an  undercapitalized
institution to comply with  supervisory  actions as if it were in the next lower
category if the institution is in an unsafe or unsound condition or has received
in its most recent examination,  and has not corrected, a less than satisfactory
rating for asset quality,  management,  earnings or liquidity.  The OTS may not,
however, reclassify a significantly  undercapitalized  institution as critically
undercapitalized.

         An institution  generally must file a written capital  restoration plan
that meets  specified  requirements,  as well as a performance  guaranty by each
company that controls the  institution,  with the  appropriate  federal  banking
agency  within 45 days of the date that the  institution  receives  notice or is
deemed   to   have   notice   that   it   is   undercapitalized,   significantly
undercapitalized  or  critically  undercapitalized.  Immediately  upon  becoming
undercapitalized,  an institution shall face various mandatory and discretionary
restrictions on its operations.

                                       27

<PAGE>

         At March 31, 2000, the Bank was categorized as "well  capitalized"under
the prompt corrective action regulations.

Standards for Safety and Soundness

         The  federal  banking  regulatory   agencies  have  adopted  regulatory
guidelines  for  all  insured  depository   institutions  relating  to  internal
controls,  information  systems and internal audit systems;  loan documentation;
credit underwriting;  interest rate risk exposure;  asset growth; asset quality;
earnings; and compensation, fees and benefits. The guidelines outline the safety
and soundness  standards that the federal  banking  agencies use to identify and
address  problems at insured  depository  institutions  before  capital  becomes
impaired.  If the OTS  determines  that  the Bank  fails  to meet  any  standard
prescribed by the guidelines, it may require the Bank to submit to the agency an
acceptable  plan to  achieve  compliance  with  the  standard.  OTS  regulations
establish  deadlines  for the  submission  and  review of safety  and  soundness
compliance plans.

Capital Distributions

         OTS regulations govern capital  distributions by savings  institutions,
which include cash dividends,  stock repurchases and other transactions  charged
to the capital account of a savings  institution to make capital  distributions.
Under new regulations  effective April 1, 1999, a savings  institution must file
an application  for OTS approval of the capital  distribution  if either (1) the
total capital  distributions for the applicable  calendar year exceed the sum of
the  institution's  net  income  for that  year to date  plus the  institution's
retained net income for the preceding two years,  (2) the institution  would not
be  at  least  adequately  capitalized  following  the  distribution,   (3)  the
distribution  would violate any  applicable  statute,  regulation,  agreement or
OTS-imposed  condition,  or (4) the  institution  is not eligible for  expedited
treatment of its filings. If an application is not required to be filed, savings
institutions  which are a subsidiary  of a holding  company,  as well as certain
other  institutions,  must  still  file a  notice  with the OTS at least 30 days
before  the  board of  directors  declares  a  dividend  or  approves  a capital
distribution.

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,  2000,  the Bank was in  compliance  with both
requirements,  with an  overall  liquid  asset  ratio of 33.8% and a  short-term
liquid assets ratio of 24.4%.

                                       28
<PAGE>

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.

Qualified Thrift Lender Test

         All savings associations are required to meet a qualified thrift lender
test to avoid certain  restrictions on their operations.  A savings  institution
that fails to become or remain a qualified thrift lender shall either convert to
a national bank charter or face the following  restrictions  on its  operations.
These  restrictions  are: the  association  may not make any new  investment  or
engage in  activities  that would not be  permissible  for national  banks;  the
association  may not  establish  any new branch  office  where a  national  bank
located in the savings institution's home state would not be able to establish a
branch office;  the association  shall be ineligible to obtain new advances from
any Federal  Home Loan Bank;  and the payment of  dividends  by the  association
shall be under  the  rules  regarding  the  statutory  and  regulatory  dividend
restrictions applicable to national banks. Also, beginning three years after the
date on which the savings  institution  ceases to be a qualified  thrift lender,
the savings  institution  would be prohibited  from  retaining any investment or
engaging  in any  activity  not  permissible  for a  national  bank and would be
required to repay any  outstanding  advances to any Federal  Home Loan Bank.  In
addition,  within one year of the date on which a savings association controlled
by a company ceases to be a qualified  thrift lender,  the company must register
as a bank  holding  company  and follow  the rules  applicable  to bank  holding
companies.  A savings  institution may requalify as a qualified thrift lender if
it thereafter complies with the test.

         Currently,  the  qualified  thrift  lender test requires that either an
institution  qualify  as a  domestic  building  and loan  association  under the
Internal Revenue Code or that 65% of an institution's "portfolio assets" consist
of certain  housing and  consumer-related  assets on a monthly  average basis in
nine out of every 12 months.  Assets that qualify without limit for inclusion as
part of the 65%  requirement are loans made to purchase,  refinance,  construct,
improve or repair domestic  residential housing and manufactured  housing;  home
equity  loans;  mortgage-backed  securities  where the  mortgages are secured by
domestic  residential  housing or manufactured  housing;  Federal Home Loan Bank
stock;  direct or indirect  obligations of the FDIC;  and loans for  educational
purposes,  loans to small  businesses  and loans made through  credit cards.  In
addition,  the following  assets,  among others,  may be included in meeting the
test based on an overall  limit of 20% of the  savings  institution's  portfolio
assets: 50% of residential  mortgage loans originated and sold within 90 days of
origination;  100% of consumer loans;  and stock issued by Freddie Mac or Fannie
Mae.  Portfolio  assets  consist of total  assets  minus the sum of goodwill and
other intangible assets, property used by the savings institution to conduct its
business,  and liquid assets up to 20% of the  institution's  total  assets.  At
March 31, 2000,  the Bank was in  compliance  with the  qualified  thrift lender
test.

                                       29

<PAGE>
Community Reinvestment Act

         Savings  associations  are  required  to follow the  provisions  of the
Community  Reinvestment Act of 1977, which requires the appropriate federal bank
regulatory  agency,  in  connection  with its regular  examination  of a savings
association,  to assess the savings  association's  record in meeting the credit
needs of the community serviced by the savings  associations,  including low and
moderate income neighborhoods. The regulatory agency's assessment of the savings
association's record is made available to the public.  Further, an assessment is
required of any savings  associations which has applied,  among other things, to
establish a new branch  office that will accept  deposits,  relocate an existing
office or merge or  consolidate  with,  or  acquire  the  assets  or assume  the
liabilities of, a federally regulated financial institution. The Bank received a
"satisfactory" rating as a result of its most recent examination.

Activities of Associations and Their Subsidiaries

         A savings association may establish operating subsidiaries to engage in
any activity that the savings association may conduct directly and may establish
service  corporation  subsidiaries to engage in certain pre- approved activities
or,  with  approval  of the OTS,  other  activities  reasonably  related  to the
activities of financial institutions.  When a savings association establishes or
acquires a subsidiary or elects to conduct any new activity through a subsidiary
that the association controls,  the savings association must notify the FDIC and
the OTS 30 days in advance  and  provide  the  information  each  agency may, by
regulation,  require.  Savings  associations also must conduct the activities of
subsidiaries in accordance with existing regulations and orders.

         The OTS may determine that the continuation by a savings association of
its ownership  control of, or its relationship to, the subsidiary  constitutes a
serious risk to the safety,  soundness or  stability  of the  association  or is
inconsistent with sound banking practices.  Based upon that  determination,  the
FDIC or the OTS has the  authority  to order the savings  association  to divest
itself of control of the  subsidiary.  The FDIC also may determine by regulation
or order  that any  specific  activity  poses a serious  threat  to the  Savings
Association  Insurance  Fund. If so, it may require that no Savings  Association
Insurance Fund member engage in that activity directly.

Transactions with Affiliates

         Savings  associations  must  comply  with  Sections  23A and 23B of the
Federal Reserve Act relative to transactions  with affiliates in the same manner
and to the same  extent as if the  savings  association  were a Federal  Reserve
member bank. A savings and loan holding company,  its subsidiaries and any other
company under common control are considered affiliates of the subsidiary savings
association  under the Home Owners  Loan Act.  Generally,  Sections  23A and 23B
limit the extent to which the insured association or its subsidiaries may engage
in certain covered  transactions  with an affiliate to an amount equal to 10% of
the  institution's  capital  and  surplus  and place an  aggregate  limit on all
transactions  with  affiliates to an amount equal to 20% of capital and surplus,
and require that all  transactions  be on terms  substantially  the same,  or at
least as favorable to the  institution  or  subsidiary,  as those  provided to a
non-affiliate.  The term"covered  transaction" includes the making of loans, the
purchase  of  assets,   the  issuance  of  a  guarantee  and  similar  types  of
transactions.

         Any loan or  extension  of credit by the Bank to an  affiliate  must be
secured by collateral in accordance with Section 23A.

                                       30

<PAGE>

         Three additional rules apply to savings associations.  First, a savings
association  may not make any loan or other  extension of credit to an affiliate
unless that affiliate is engaged only in activities permissible for bank holding
companies. Second, a savings association may not purchase or invest insecurities
issued by an affiliate,  other than securities of a subsidiary.  Third,  the OTS
may, for reasons of safety and soundness,  impose more stringent restrictions on
savings  associations but may not exempt  transactions from or otherwise abridge
Section 23A or 23B.  Exemptions  from  Section 23A or 23B may be granted only by
the Federal  Reserve,  as is currently the case with respect to all FDIC-insured
banks.

         The Bank's authority to extend credit to executive officers,  directors
and 10%  shareholders,  as well as  entities  controlled  by those  persons,  is
currently  governed by Sections 22(g) and 22(h) of the Federal  Reserve Act, and
Regulation O thereunder.  Among other  things,  these  regulations  require that
loans be made on terms and conditions substantially the same as those offered to
unaffiliated individuals and not involve more than the normal risk of repayment.
Regulation O also places  individual and aggregate limits on the amount of loans
the Bank may  make to those  persons  based,  in  part,  on the  Bank's  capital
position, and requires certain board approval procedures to be followed. The OTS
regulations,  with  certain  minor  variances,  apply  Regulation  O to  savings
institutions.

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 holding companies
and their  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.

         Federal  law and  regulation  generally  prohibit  a  savings  and loan
holding company,  without prior OTS approval, from acquiring more than 5% of the
voting  stock of any other  savings  association  or  savings  and loan  holding
company or  controlling  the assets  thereof.  They also  prohibit,  among other
things,  any director or officer of a savings and loan holding  company,  or any
individual  who owns or  controls  more  than 25% of the  voting  shares  of the
Company from acquiring control of any savings  association not a subsidiary of a
savings and loan holding company, unless the acquisition is approved by the OTS.

         Until  recently,  a unitary  savings and loan  holding  company was not
restricted  as to the types of  business  activities  in which it could  engage,
provided that its  subsidiary  savings  association  continued to be a qualified
thrift lender.  Recent legislation,  however,  restricts unitary saving and loan
holding  companies  not existing or applied for before May 4, 1999 to activities
permissible for a financial  holding  company as defined under the  legislation,
including  insurance  and  securities  activities,  and  those  permitted  for a
multiple  savings and loan holding company as described  below.  The Company has
certain  grandfather  rights under this  legislation.  Upon any  non-supervisory
acquisition  by  the  Company  of  another  savings  association  as a  separate
subsidiary, the Company would become a multiple savings and loan holding company
and would have  extensive  limitations  on the types of business  activities  in
which it could  engage.  The Home  Owner's Loan Act limits the  activities  of a
multiple  savings  and loan  holding  company  and its  non-insured  institution
subsidiaries  primarily to activities permissible for the bank holding companies
under  Section  4(c)(8) of the Bank  Holding  Company  Act,  provided  the prior
approval  of the  Office  of  Thrift  Supervision  is  obtained,  and  to  other
activities  authorized  by  Office of Thrift  Supervision  regulation.  Multiple
savings and loan holding  companies are generally  prohibited  from acquiring or
retaining more than 5% of a  non-subsidiary  company engaged in activities other
than those permitted by the Home Owners. Loan Act.

                                       31

<PAGE>

         The activities  authorized by the Federal  Reserve Board as permissible
for bank  holding  companies  also  must be  approved  by the OTS prior to being
engaged in by a multiple savings and loan holding company.

         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."

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.

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, 2000, 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, 2000, the Bank had $2.0 million of FHLB stock,
which was in compliance with this requirement.

                                       32

<PAGE>

In past years,  the Bank has received  substantial  dividends on its FHLB stock.
Over the past five fiscal  years such  dividends  have  averaged  6.81% and were
6.40% for fiscal 2000. For the fiscal year ended March 31, 2000,  dividends paid
by the FHLB of Des  Moines to the Bank  totaled  approximately  $129,000,  which
constitutes a $5,000  increase  over the amount of dividends  received in fiscal
year 1999.  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 (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  was  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,  2000,  the Bank's bad debt  reserve
subject to recapture over a six-year period totaled approximately $282,000.

                                       33

<PAGE>

         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.

         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,  2000,  the  Bank's  excess for tax  purposes  totaled
approximately $1.6 million.

         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.

                                       34

<PAGE>

         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.

Employees

         At March 31, 2000, the Bank had a total of 31 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.

Executive Officers of the Company and the Bank Who Are Not Directors

         Lyndon M. Goodwin.  Mr. Goodwin, age 55, 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 56, 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.

                                       35

<PAGE>

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,
2000. 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, 2000 was approximately  $1.8 million.  See Note 5 of the
Notes to Consolidated Financial Statements.


                                                   Total
                                                Approximate
                                     Date          Square      Net Book Value at
            Location               Acquired       Footage       March 31, 2000
----------------------------       --------       -------       --------------

Main Office:                         1963           4600              62,128
 201 Northeast Elm Street
 Hardin, Missouri

Branch Offices:(1)
 201 North Jesse James Road          1990           2024             591,842
 Excelsior Springs, Missouri

 200 N. Spartan Drive                1998           6800           1,123,941
 Richmond, Missouri

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

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.

                                       36

<PAGE>

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, 2000.


                                                      PART II

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

         Page 43 of the attached  2000 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 16 of the attached  2000 Annual Report to  Shareholders  are
herein incorporated by reference.

Item 7.           Financial Statements

         Pages 17 to 42 of the attached 2000 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.

                                    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 27, 2000.

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 27, 2000.

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 27, 2000.

                                       37

<PAGE>

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 27, 2000.


                                     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, 2000, 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...............................................................    17

Consolidated Balance Sheets at March 31, 2000 and 1999.......................................    18

Consolidated Statements of Earnings for the Years ended March 31, 2000, 1999 and 1998........    19

Consolidated Statements of Stockholders' Equity for the Years ended
 March 31, 2000, 1999 and 1998...............................................................    20

Consolidated Statements of Cash Flows for the Years ended March 31, 2000,
  1999 and 1998..............................................................................    21

Notes to Consolidated Financial Statements...................................................    23
</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:
         -----------------


                                       38
<PAGE>

                                                                 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
                    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


                                  39

    <PAGE>
                                                                  Reference to
Regulation                                                     Prior Filing or
S-B Exhibit                                                     Exhibit Number
  Number                       Document                         Attached Hereto
-----------       --------------------------------------       -----------------
    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, 2000.


                                       40


<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, 2000                    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, 2000                             Date: June 28, 2000

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, 2000                             Date: June 28, 2000

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

Date: June 28, 2000                             Date: June 28, 2000

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

Date: June 28, 2000


<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.