<PAGE>

                                  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 [FEE REQUIRED]
                  For the fiscal year ended March 31, 1997
                                       OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES 
    EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

    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:      (816) 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, 1997 were
$7.0 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, 1997, was $12.0 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, 1997, there were 1,058,000 shares issued and 859,360
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, 1997.

         Part III of Form 10-KSB - Portions of the Proxy Statement for 1997
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,
1997, Hardin Federal had total assets of $103.4 million, deposits of $70.2
million and total equity of $13.2 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 2nd and Elm Street,
Hardin, Missouri 64035. Its telephone number at that address is (816) 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.

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

                                       2
<PAGE>


Lending Activities

         General. The Bank's loan portfolio consists primarily of conventional,
first mortgage loans secured by one- to four-family residences and, to a lesser
extent, consumer, construction, commercial business and land acquisition loans.
At March 31, 1997, the Bank's gross loans and mortgage-backed securities
outstanding totalled $75.3 million, of which $47.5 million or 63.1% were one-to
four-family residential mortgage loans. Of the one- to four-family mortgage
loans outstanding at that date, 54.8% were fixed-rate loans, and 45.2% were
adjustable-rate loans. At that same date, consumer loans totalled $5.6 million
or 7.4% of the Bank's total loan portfolio, construction loans totalled $1.6
million or 2.2% of the Bank's total loan and mortgage-backed securities
portfolio, commercial real estate loans totalled $1,045 or 1.4% of the Bank's
total loan and mortgage-backed securities portfolio and land acquisition loans
totalled $328,000 or .4% of the Bank's total loan and mortgage-backed securities
portfolio.

         The Bank also invests in mortgage-backed securities. At March 31, 1997,
mortgage-backed securities totalled $19.2 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, 1997, the maximum
amount which the Bank could have lent under this limit to any one borrower and
the borrower's related entities was approximately $1.98 million. At March 31,
1997, 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, 1997 was $669,600 secured by
several one- to four-family real estate dwellings located in Jackson County,
Missouri. At March 31, 1997, 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,
                                                       ----------------------------------------------------------------------
                                                               1997                      1996                    1995
                                                       --------------------     ---------------------    --------------------
                                                        Amount      Percent      Amount       Percent     Amount      Percent
                                                        ------      -------      ------       -------     ------      -------
                                                                                    (Dollars in Thousands)
<S>                                                    <C>          <C>         <C>           <C>        <C>         <C>
Real Estate Loans:
------------------
 One- to four-family................................   $ 47,473       63.09%    $ 38,395        54.76%   $ 28,969       46.66%
 Land...............................................        328        0.43          123         0.18         101        0.16
 Commercial.........................................      1,045        1.39          184         0.26         157        0.25
 Construction.......................................      1,619        2.15        2,674         3.81         358        0.58
                                                       --------    --------     --------     --------    --------    --------
     Total real estate loans........................     50,465       67.06       41,376        59.01      29,585       47.65
                                                       --------    --------     --------     --------    --------    --------

Consumer Loans:
--------------- 
 Consumer Loans:
  Secured by deposits...............................        570        0.76          678         0.96         628        1.01
  Automobile........................................      1,438        1.91        1,316         1.88       1,098        1.77
  Home equity.......................................      2,363        3.14        1,535         2.19       1,158        1.87
  Home improvement..................................        689        0.92          693         0.99         581        0.94
  Other consumer loans..............................        511        0.68          313         0.45         568        0.90
                                                       --------    --------     --------     --------    --------    --------
     Total consumer loans...........................      5,571        7.41        4,535         6.47       4,033        6.49
                                                       --------    --------     --------     --------    --------    --------

     Total loans receivable.........................     56,036       74.47       45,911        65.48      33,618       54.14
                                                        -------    --------     --------     --------     -------    --------

Mortgage-Backed Securities:
--------------------------- 
 GNMA...............................................      1,815        2.41        2,142         3.05       2,476        3.99
 FHLMC..............................................      6,591        8.76        9,044        12.90      11,079       17.84
 FNMA...............................................     10,808       14.36       13,020        18.57      14,918       24.03
                                                       --------    --------     --------     --------    --------    --------
     Total mortgage-backed securities...............     19,214       25.53       24,206        34.52      28,473       45.86
                                                       --------    --------     --------     --------    --------    --------
        Total loan and mortgage-backed
             securities portfolio...................     75,250      100.00%      70,117       100.00%     62,091      100.00%
                                                                   ========                  ========                ========

Less:
-----
Loans in process....................................     (1,353)                    (766)                    (247)
Deferred fees and discounts.........................         43                       17                      (22)
Allowance for loan losses...........................       (158)                    (131)                    (119)
                                                       --------                 --------                 --------
     Total loan and mortgage-
       backed securities portfolio, net.............   $ 73,782                 $ 69,237                 $ 61,703
                                                       ========                 ========                 ========
</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,
                                                       -----------------------------------------------------------------------
                                                               1997                      1996                    1995
                                                       --------------------     ---------------------    ---------------------
                                                        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...............................   $ 26,019       34.58%    $ 18,542        26.44%   $ 12,308       19.82%
  Land..............................................        255        0.34           86          .12          82        0.13
  Commercial........................................         64        0.09           67          .10          44        0.07
  Construction......................................      1,527        2.03        1,805         2.57         189        0.31
                                                       --------    --------     --------     --------    --------    --------
     Total real estate loans........................     27,865       37.04       20,500        29.23      12,623       20.33
Consumer............................................      5,035        6.69        4,442         6.34       4,027        6.49
Mortgage-backed securities..........................         35        0.04          588          .84         350        0.56
                                                       --------    --------     --------     --------    --------    --------
     Total fixed-rate...............................     32,935       43.77       25,530        36.41      17,000       27.38
                                                       --------    --------     --------     --------    --------    --------

Adjustable-Rate Loans:
----------------------
Real estate:
  One- to four-family...............................     21,454       28.51       19,853        28.31      16,661       26.84
  Land..............................................         73        0.10           37          .05          19        0.03
  Commercial........................................        981        1.30          117          .17         113        0.18
  Construction......................................         92        0.12          869         1.24         169        0.27
                                                       --------    --------     --------     --------    --------    --------
     Total real estate loans........................     22,600       30.03       20,876        29.77      16,962       27.32
Consumer............................................        536        0.71           93          .14           6        0.01
Mortgage-backed securities..........................     19,179       25.49       23,618        33.68      28,123       45.29
                                                       --------    --------     --------     --------    --------    --------
     Total adjustable rate..........................     42,315       56.23       44,587        63.59      45,091       72.62
                                                       --------    --------     --------     --------    --------    --------
     Total loan and mortgage-backed
       securities portfolio.........................     75,250      100.00%      70,117       100.00%     62,091      100.00%
                                                                   ========                  ========                ========

Less:
-----
 Loans in process...................................     (1,353)                    (766)                    (247)
 Deferred loan fees and discounts...................         43                       17                      (22)
 Allowance for loan losses..........................       (158)                    (131)                    (119)
                                                       --------                 --------                 --------
    Total loans and mortgage-backed
      securities portfolio, net.....................   $ 73,782                 $ 69,237                 $ 61,703
                                                       ========                 ========                 ========
</TABLE>
                                        5

<PAGE>



         The following schedule illustrates the contractual maturity and
weighted average rates of the Bank's loan portfolio at March 31, 1997. 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   
                                     ------------------   ---------------------    ----------------------             
Due During                                     Weighted               Weighted                 Weighted            
Year Ending                                    Average                Average                  Average             
March 31,                           Amount        Rate     Amount        Rate      Amount         Rate     
------------                        ------     ----------  ------     ---------    ------      ----------   
                                                       (Dollars in Thousands)
<S>                                 <C>          <C>       <C>           <C>      <C>            <C>      
1998(1)..........................   $    62       9.60%    $   790       8.20%     $     --         --%   
1999.............................        72       8.30          --         --            --         --           
2000.............................        61       9.70          --         --             7       9.70            
2001 and 2002....................     1,133       8.40          --         --            19       8.50           
2003 to 2007.....................     3,759       8.30          --         --           146       9.10           
2008 to 2022.....................    27,451       8.10         578       8.30           873       9.20          
2023 and following...............    14,935       8.10         251       7.30            --         --           
                                    -------                -------                 --------                

                                    $47,473                $ 1,619                 $  1,045                
                                    =======                =======                 ========                
</TABLE>
(RESTUBBED TABLE)
<TABLE>
<CAPTION>


                                             Land                 Consumer                  Total
                                    ---------------------  ---------------------  ---------------------
Due During                                     Weighted               Weighted          Weighted
Year Ending                                    Average                Average           Average
March 31,                           Amount        Rate     Amount        Rate     Amount         Rate
------------                        ------     ----------  ------     ----------  ------        -------
                                                            (Dollars in Thousands)
<S>                                 <C>           <C>      <C>          <C>       <C>            <C>
1998(1)..........................   $     --         --%   $  1,136      8.50%    $ 1,988          8.40%
1999.............................         --         --         322     10.40         394         10.00
2000.............................          4      10.00         651      9.80         723          9.80
2001 and 2002....................         --         --       1,289      9.80       2,441          9.20
2003 to 2007.....................         78       9.90       1,567      9.83       5,550          8.74
2008 to 2022.....................        246       8.10         606      9.39      29,754          8.20
2023 and following...............         --         --          --        --      15,186          8.10
                                    --------               --------               -------

                                    $    328               $  5,571               $56,036
                                    ========               ========               =======
</TABLE>
-----------------------
         (1) The total amount of loans due after March 31, 1998 which have
predetermined interest rates is $32.9 million while the total amount of loans
due after such date which have floating or adjustable interest rates is $23.1
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, 1997, the Bank's one- to four-family residential mortgage loans
totalled $47.5 million, or 63.1%, 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,
1997 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, 1997, the Bank originated $7.5 million
fixed-rate one- to four-family loans, which constituted 85.7% of total one- to
four-family loans originated and $1.2 million of adjustable-rate one- to
four-family loans or 14.3% of total one- to four-family loans originated.
Substantially all of the Bank's one- to four-family residential mortgage
originations are secured by properties located in its market area.

         The Bank offers adjustable-rate mortgage loans at rates and on terms
determined in accordance with market and competitive factors. The Bank currently
originates adjustable-rate mortgage loans with a term of up to 30 years. The
Bank currently offers one-year and three-year adjustable-rate mortgage loans
(where the terms are fixed for the first one-year and three-years, respectively,
and thereafter adjust every one or three years) with a stated interest rate
margin over the one and three year U.S. Treasury Index adjusted to a constant
maturity. Increases or decreases in the interest rate of the Bank's
adjustable-rate loans are generally limited to 1.0% at any adjustment date and
5.0% over the life of the loan. As a consequence of using caps, the interest
rates on these loans may not be as rate sensitive as is the Bank's cost of
funds. Currently, all adjustable-rate mortgage loans originated provide for a
minimum interest rate. The Bank qualifies borrowers for adjustable-rate loans
based on a current interest rate plus the first adjustment. As a result, the
risk of default on these loans may increase as interest rates increase. See "-
Asset Quality - Non-Performing Assets." At March 31, 1997, the total balance of
one-to four-family adjustable-rate loans was $21.5 million or 28.5% of the
Bank's gross loan and mortgage-backed securities portfolio. See "- Originations,
Purchases and Sales of Loans."

         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.

                                       7
<PAGE>


         The Bank also offers fixed-rate mortgage loans with maturities of up to
30 years. At March 31, 1997, the total balance of one- to four-family fixed-rate
loans was $26.0 million or 34.6% 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, 1997, the Bank's consumer loan portfolio totalled $5.6 million, or
7.4% 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, 1997, home equity
and home improvement loans amounted to $2.4 million and $689,000, respectively,
which represented 3.1% and .92%, respectively, of the Bank's gross loan and
mortgage-backed securities portfolio.

         The Bank also recently began originating equity lines of credit. These
loans are generally limited to 90% or less of the appraised value of the
property securing the loan. These loans are all adjustable-rate loans and have
maximum terms of up to 15 years.

         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, 1997, the Bank's automobile loans totalled
$1.4 million or 1.9% of the Bank's gross loan and mortgage-backed securities
portfolio.

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

                                        8

<PAGE>


         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, 1997, $3,000 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, 1997, the Bank had $1.6 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, 1997, the
Bank had $1.5 million and $92,000 of fixed-rate and adjustable-rate construction
loans, respectively, which represented 2.03% and .12%, 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 1997. 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, 1997 approximately $1.0 million, or 1.4% 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 permanent loan on a multi-family
apartment building in Cole 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.

         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.

                                        9

<PAGE>



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,
1997, the Bank originated $14.2 million in fixed-rate loans and $2.0 million in
adjustable rate loans.

         The Bank from time-to-time sells fixed rate loan originations as part
of its asset/liabilities management policies. The Bank generally followed a
policy of selling its fixed-rate loan originations during fiscal 1994. In early
fiscal 1995, the Bank changed its policy to retain fixed-rate loan originations
in its portfolio. The Bank's Board of Directors has adopted an informal policy
which is subject to change from time-to-time, of retaining fixed-rate loans in
order to increase the overall level of fixed-rate loans in its portfolio up to
50% of total loans receivable. At March 31, 1997, fixed-rate loans comprised
43.8% of gross loan and mortgage-backed securities portfolio. Reflecting these
policies, during the fiscal years ended March 31, 1997, 1996 and 1995, the Bank
sold $0, $0, and $234,000, respectively, of one- to four-family fixed-rate real
estate loans.

         During fiscal year 1997, the Bank purchased $4.4 million of real estate
loans originated by other lenders all of which were secured by properties
located in Missouri. At March 31, 1997, 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, 1997 were
substantially 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.


                                       10

<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,
                                                               ------------------------------------------
                                                                 1997           1996             1995
                                                               --------       --------         --------
                                                                            (In Thousands)
<S>                                                            <C>            <C>              <C>
Originations by type:
---------------------
 Adjustable rate:
  One- to four-family........................................  $   1,240      $     886        $   4,746
  Land.......................................................         55             20               --
  Commercial.................................................         20             --               --
  Construction...............................................        210            229               --
  Consumer...................................................        455             --               --
                                                               ---------      ---------        ---------
         Total adjustable-rate...............................      1,980          1,135            4,746
                                                               ---------      ---------        ---------
Fixed rate:
-----------
  One- to four-family........................................      7,452          7,406            2,325
  Land.......................................................        180             11               49
  Commercial.................................................         --             --               --
  Construction...............................................      1,947          1,502              273
  Consumer...................................................      4,659          3,864            4,055
                                                               ---------      ---------        ---------
         Total fixed-rate....................................     14,238         12,783            6,702
                                                               ---------      ---------        ---------
         Total loans originated..............................     16,218         13,918           11,448
                                                               ---------      ---------        ---------

Purchases:
----------
  One- to four-family........................................      4,250          5,810              789
  Five or more...............................................         --            491               --
  Commercial.................................................        148            640               --
  Mortgage-backed securities - at cost.......................         --            523            1,276
                                                               ---------      ---------        ---------
         Total purchased.....................................      4,398          7,464            2,065
                                                               ---------      ---------        ---------

Sales and Repayments:
---------------------
  One- to four-family........................................         --             --              234
  Mortgage-backed securities sold - at
    amortized cost...........................................      1,016             --               --
                                                               ---------      ---------        ---------
         Total sales.........................................      1,016             --              234
                                                               ---------      ---------        ---------

  Principal repayments.......................................     14,467         13,356           13,535
                                                               ---------      ---------        ---------
         Total sales and repayments..........................     15,483         13,356           13,769
                                                               ---------      ---------        ---------

Decrease (increase) in other items:
  Loans in process...........................................       (587)          (519)              88
  Deferred fees and discounts................................         26             39               25
  Allowance for loan losses..................................        (27)           (12)              (2)
                                                               ---------      ---------        ---------
         Net increase (decrease).............................  $   4,545      $   7,534        $    (145)
                                                               =========      =========        =========
</TABLE>
                                       11

<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, 1997. The amounts presented in
the table below represent the total remaining principal balances of the loans,
rather than the actual payment amounts which are overdue.
<TABLE>
<CAPTION>


                                                       Loans Delinquent For
                                 ----------------------------------------------------------------  
                                            60-89 Days                   90 Days and Over              Total Delinquent Loans
                                 -------------------------------  -------------------------------  ------------------------------
                                                        Percent                          Percent                          Percent
                                                        of Loan                          of Loan                          of Loan
                                  Number     Amount    Category    Number     Amount    Category    Number     Amount    Category
                                  ------     ------    --------    ------     ------    --------    ------     ------    --------
                                                                      (Dollars in Thousands)
<S>                             <C>     <C>         <C>          <C>      <C>         <C>          <C>       <C>        <C>
Real Estate:
  One- to four-family               5    $    133        0.28%        4    $   274        0.58%        9     $  407        0.86%
  Land.........................    --          --         --         --         --          --        --         --          --
  Commercial...................    --          --         --         --         --          --        --         --          --
  Construction.................    --          --         --         --         --          --        --         --          --
Consumer.......................     2          10        0.18         1          3        0.05         3         13        0.23
                                -----    --------      -------    -------    -------    --------   -------     ------      ------

     Total.....................     7    $    143        0.46%        5    $   277        0.63%       12     $  420       1.09%
                                =====    ========      =======    =======    =======    ========   =======     ======     ======
</TABLE>
                                       12

<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,
                                                               ----------------------------------------
                                                                 1997           1996             1995
                                                               --------       --------         --------
                                                                            (In Thousands)
<S>                                                            <C>            <C>              <C>
Non-accruing loans:
  One- to four-family........................................  $     274      $      93        $     109
  Land.......................................................         --             --               --
  Commercial.................................................         --             --               --
  Construction...............................................         --             --               --
  Consumer...................................................         --             --               --
                                                               ---------      ---------        ---------
     Total...................................................        274             93              109
                                                               ---------      ---------        ---------

Accruing loans delinquent 90 days or more:
  One- to four-family........................................         --             29               59
  Land.......................................................         --             --               --
  Commercial.................................................         --             --               --
  Construction...............................................         --             --               --
  Consumer...................................................          3             --               --
                                                               ---------      ---------        ---------
     Total...................................................          3             29               59
                                                               ---------      ---------        ---------

Foreclosed assets:
  One- to four-family........................................        103             --               --
  Land.......................................................         --             --               --
  Commercial.................................................         --             --               --
  Construction...............................................         --             --               --
  Consumer...................................................         --              2               --
                                                               ---------      ---------        ---------
     Total...................................................        103              2               --
                                                               ---------      ---------        ---------

Total non-performing assets..................................  $     380      $     124        $     168
                                                               =========      =========        =========
Total classified assets......................................        545      $     412        $     480
                                                               =========      =========        =========
Total non-performing assets as a
  percentage of total assets.................................      0.37%          0.15%            0.22%
                                                               ========       ========         ========
Total non-performing loans as a
  percentage of total loans receivable.......................      0.68%          0.29%            0.50%
                                                               =========      ========         ========
</TABLE>

         For the year ended March 31, 1997 gross interest income which would
have been recorded had the non-accruing loans been current in accordance with
their original terms amounted to $34,000. The amount that was included in
interest income on such loans was $20,000 for the year ended March 31, 1997.

         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

                                       13
<PAGE>

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, 1997, the Bank had classified a
total of $539,050 of its assets as substandard, $0 as doubtful, and $6,352 as
loss. At March 31, 1997, total classified assets comprised $545,402 or 4.1% of
the Bank's capital, or .53% 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, 1997, 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 property is established by a
charge to operations. At March 31, 1997, the Bank had two real estate properties
acquired through foreclosure with a carrying value of $103,000.


                                       14
<PAGE>

         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, 1997, the Bank had a total allowance for loan losses
of $158,000, representing 41.6% of total non-performing loans and .29% of the
Bank's loans, net. See Note 5 of the Notes to Consolidated Financial Statements.


                                       15

<PAGE>



         The distribution of the Bank's allowance for loan losses at the dates
indicated is summarized as follows:
<TABLE>
<CAPTION>
                                                                           At March 31,
                                 ------------------------------------------------------------------------------------------------
                                               1997                            1996                             1995
                                 -------------------------------  -------------------------------  ------------------------------
                                                        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........   $      81   $  47,473     84.72%   $   71   $  38,395      83.63%   $    61   $  28,969    86.17%
  Land.......................           3         328      0.59         1         123       0.27          1         101     0.30
  Commercial.................          11       1,045      1.86         2         184       0.40          2         157     0.47
  Construction...............          10       1,619      2.89         3       2,674       5.82          4         358     1.06
Consumer.....................          25       5,571      9.94        19       4,535       9.88         22       4,033    12.00
Unallocated..................          28          --        --        35          --         --         29          --       --
                                ---------   ---------  --------    ------   ---------    -------    -------   ---------  -------
       Total.................   $     158   $  56,036    100.00%   $  131   $  45,911     100.00%   $   119   $  33,618   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.

                                       16

<PAGE>



         The following table sets forth an analysis of the Bank's allowance for
loan losses.
<TABLE>
<CAPTION>

                                                                         Year Ended March 31,
                                                               -----------------------------------------
                                                                 1997           1996              1995
                                                               --------       --------          --------
                                                                            (In Thousands)
<S>                                                            <C>            <C>              <C>
Balance at beginning of period...............................  $     131      $     119        $     117

Charge-offs:
  One- to four-family........................................         (7)            --              (23)
  Land.......................................................         --             --               --
  Commercial.................................................         --             --               --
  Construction...............................................         --             --               --
  Consumer...................................................         --             (2)              --
                                                               ---------      ---------        ---------
                                                                      (7)            (2)             (23)
                                                               ---------      ---------        ---------

Recoveries:
  One- to four-family........................................         --             --               25
  Land.......................................................         --             --               --
  Commercial.................................................         --             --               --
  Construction...............................................         --             --               --
  Consumer...................................................         --             --               --
                                                               ---------      ---------        ---------
                                                                      --             --               25
                                                               ---------      ---------        ---------
Net recoveries (charge-offs).................................         (7)            (2)               2
Additions charged to operations..............................         34             14               --
                                                                              ---------        ---------
Balance at end of period.....................................  $     158      $     131        $     119
                                                               =========      =========        =========

Ratio of net recoveries (charge-offs) during the
 period to average loans outstanding during the
 period......................................................       0.01%            --%            0.01%
                                                               =========      =========        =========

Ratio of net recoveries (charge-offs) during
 the period to average non-performing assets.................       1.84%        (1.43)%             .90%
                                                               =========      ========         =========
</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, 1997, the
Bank's liquidity ratio (liquid assets as a percentage of net withdrawable
savings deposits and current borrowings) was 8.8%. 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

                                       17
<PAGE>

chartered savings institutions may also invest their assets in commercial paper,
investment grade corporate debt securities and mutual funds whose assets conform
to the investments that a federally chartered savings institution is otherwise
authorized to make directly.

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

         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 Federal Home
Loan Mortgage Corporation ("FHLMC"), Government National Mortgage Association
("GNMA") and Federal National Mortgage Association ("FNMA") obligations. At
March 31, 1997, the Bank's investment in mortgage-backed securities totalled
$19.2 million or 18.6% of its total assets.

         The Bank's available-for-sale mortgage-backed securities are reported
at fair market value, with unrealized gains and losses excluded from earnings
but reported as a separate component of stockholders' equity. The balance of the
Bank's mortgage-backed securities, $13.5 million, are classified as held to
maturity and are reported at amortized cost. During the fiscal year ended March
31, 1997, the Bank sold $1.0 million of its mortgage-backed securities. See Note
4 of the Notes to Consolidated Financial Statements.

         The FNMA, FHLMC 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. FNMA and FHLMC 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 FNMA and FHLMC 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.


                                       18

<PAGE>



         The following table sets forth the contractual maturities of the Bank's
mortgage-backed securities at March 31, 1997.

<TABLE>
<CAPTION>
                                                                                                                  At
                                                                        Due in                                 March 31,
                                   -------------------------------------------------------------------------     1997
                                    6 Months  6 Months    1 to      3 to 5     5 to 10   10 to 20    Over 20    Balance
                                     or Less  to 1 Year  3 Years     Years      Years      Years      Years   Outstanding
                                   --------------------  -------    -------    -------    -------    -------  -----------
                                                                 (Dollars in Thousands)
<S>                                  <C>       <C>      <C>        <C>          <C>     <C>        <C>         <C>

Government National
  Mortgage Association.............  $ --      $  --    $  --      $  --        $ --     $    --    $   1,816   $   1,816

Federal Home Loan
  Mortgage Corporation.............    --         --       --         --          --       1,641        4,949       6,590
 
Federal National
  Mortgage Corporation.............    --         --       --         --          --       1,636        9,172      10,808
                                     ----      -----    -----      -----        ----   ---------    ---------   ---------

     Total.........................  $ --      $  --    $  --      $  --        $ --     $ 3,277    $  15,937   $  19,214
                                     ====      =====    =====      =====        ====   =========    =========   =========
</TABLE>


         Investment Securities. At March 31, 1997, the Bank's investment
securities (including a $950,000 investment in the common stock of the FHLB of
Des Moines) totalled $23.3 million, or 22.5% 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 3 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% of the
Bank's unimpaired capital and unimpaired surplus as defined by federal
regulations, which totalled $13.2 million as of March 31, 1997, plus an
additional 10% if the investments are fully secured by readily marketable
collateral. At March 31, 1997, the Bank was in compliance with this regulation.
See "Regulation - Federal Regulation of Savings Associations" for a discussion
of additional restrictions on the Bank's investment activities.


                                       19

<PAGE>



         The following table sets forth the composition of the Bank's investment
portfolio at the dates indicated.
<TABLE>
<CAPTION>

                                                                             At March 31,
                                                    --------------------------------------------------------------
                                                           1997                  1996                  1995
                                                    ------------------    ------------------    ------------------
                                                     Book       % of       Book       % of       Book       % of
                                                     Value      Total      Value      Total      Value      Total
                                                  ----------   -------   ---------   -------   ---------   -------         
                                                                        (Dollars in Thousands)
<S>                                               <C>           <C>      <C>          <C>      <C>        <C>
Investment securities:
----------------------
U.S. government securities.....................   $       98       .36%  $      --        --%  $   3,667     29.67%
Federal agency obligations.....................       22,242     81.48       6,363     50.76       4,093     31.99
                                                  ----------   -------   ---------   -------   ---------   -------
     Subtotal..................................       22,340     81.84       6,363     50.76       7,760     60.66
FHLB stock.....................................          950      3.48         742      5.92         727      5.68
                                                  ----------   -------   ---------   -------   ---------   -------
     Total investment securities
      and FHLB stock...........................   $   23,290     85.32%  $   7,105     56.68%  $   8,487     66.34%
                                                  ----------   -------   ---------   -------   ---------   -------
Average remaining life of investment
 securities excluding FHLB stock                  13 years               4 years               2 years

Other interest-earning assets:
------------------------------
Interest-bearing deposits......................   $    4,007     14.68%  $   5,430     43.32%  $   4,306     33.66%

Total investment portfolio.....................   $   27,297    100.00%  $  12,535    100.00%  $  12,793    100.00%
                                                  ==========   =======   =========   =======   =========   =======
</TABLE>



         The composition and maturities of the investment securities portfolio,
excluding FHLB stock, are indicated in the following table.
<TABLE>
<CAPTION>


                                                                             March 31, 1997
                                               --------------------------------------------------------------------------
                                                                                                   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>

U.S. Government securities..............       $     --     $      --   $     --    $      98    $      98    $      98
Federal agency obligations..............             --         4,340      3,475       14,427       22,242       22,242
                                               --------     ---------   --------    ---------    ---------    ---------

Total investment securities.............       $     --     $   4,340   $  3,475    $  14,525    $  22,340    $  22,340
                                               --------     ---------   --------    ---------    ---------    ---------

Weighted average yield..................             --%         6.29%      7.80%        7.01%        6.96%        6.96%
                                               ========     =========   ========    =========    =========    =========
</TABLE>


                                       20

<PAGE>



         The Bank's investment securities portfolio at March 31, 1997, contained
neither tax-exempt securities nor securities of any issuer with 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, 1997, the Bank had $19.2 million in mortgage-backed
securities and investment securities with maturities of less than five years
available for sale with a fair value of $4.3 million. See Notes 3 and 4 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, 1997, the Bank had total FHLB advances
of $19.0 million. See "- Borrowings" and Note 8 of the Notes to Consolidated
Financial Statements.

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

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

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


                                       21


<PAGE>


         The following table sets forth the savings flows at the Bank during the
periods indicated.

<TABLE>
<CAPTION>

                                                                                Year Ended March 31,
                                                               ----------------------------------------------
                                                                 1997               1996               1995
                                                               --------           --------           --------
                                                                                (Dollars in Thousands)
<S>                                                            <C>               <C>               <C>

Opening balance............................................    $    66,605       $    67,449       $   66,722
Deposits...................................................         94,769            89,906           59,441
Withdrawals................................................         94,566            94,205           61,523
Interest credited..........................................          3,393             3,455            2,809
                                                               -----------       -----------       ----------  
Ending balance.............................................    $    70,201       $    66,605       $   67,449
                                                               ===========       ===========       ==========
Net increase (decrease)....................................    $     3,596       $      (844)      $      727
                                                               ===========       ===========       ==========
Percent increase (decrease)................................           5.40%            (1.25)%           1.09%
                                                               ===========       ===========       ==========
</TABLE>                          

         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,
                                                   ----------------------------------------------------------------
                                                           1997                  1996                  1995
                                                   -------------------     -----------------     ------------------
                                                               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.................................  $    140      0.20%   $    165      0.25%   $    126      0.19%
Passbook Accounts.................................     3,592      3.32       3,675      5.51       3,958      5.87
NOW Accounts......................................     2,334      5.83       1,825      2.74       1,986      2.94
Money Market.....................................      4,096      5.12       4,053      6.08       4,115      6.09
                                                      ------     -----       -----     -----      ------     -----
Total Non-Certificates............................    10,162     14.47       9,718     14.58      10,185     15.09
                                                      ------     -----       -----     -----      ------     -----
Certificates:
-------------
 2.00 - 3.99%...................................          37      0.05         110      0.17       3,949      5.85
 4.00 - 5.99%...................................      48,876     69.59      36,980     55.50      36,487     54.07
 6.00 - 7.99%...................................      11,119     15.83      19,414     29.13      15,810     23.43
 8.00 - 9.99%...................................           7      0.02         383      0.57       1,018      1.51
                                                      ------     -----      ------     -----      ------     -----
Total Certificates..............................      60,039     85.49      56,887     85.37      57,264     84.86
Accrued interest payable........................          30      0.04          30      0.05          32      0.05
                                                      ------    ------      ------    ------      ------    ------
Total deposits and accrued interest payable.....   $  70,231    100.00%  $  66,635    100.00%  $  67,481    100.00%
                                                      ======    ======      ======    ======      ======    ======
</TABLE>
--------------
         (1) See Note 7 of the Notes to Consolidated Financial Statements.


                                       22

<PAGE>



         The following tables shows rate and maturity information for the Bank's
certificates of deposit as of March 31, 1997.
<TABLE>
<CAPTION>


                                                     2.00-      4.00-      6.00-      8.00-                Percent
                                                     3.99%      5.99%      7.99%      9.99%      Total    of Total
                                                     -----      -----      -----      -----      -----    --------
                                                                           (Dollars in Thousands)
<S>                                             <C>           <C>         <C>        <C>       <C>          <C>

Certificate accounts maturing in quarter ending:

June 30, 1997...............................     $   37       $  11,011  $    429    $    --   $  11,477     19.12%
September 30, 1997..........................         --          10,596       441         --      11,037     18.38
December 31, 1997...........................         --           9,025       571         --       9,596     15.98
March 31, 1998..............................         --           8,536       249         --       8,785     14.63
June 30, 1998...............................         --           4,867       110         --       4,977      8.29
September 30, 1998..........................         --             888        29         --         917      1.53
December 31, 1998...........................         --             760        17          2         779      1.30
March 31, 1999..............................         --             531       778         --       1,309      2.18
June 30, 1999...............................         --             228     1,328         --       1,556      2.59
September 30, 1999..........................         --             348       850         --       1,198      2.00
December 31, 1999...........................         --              91     1,448         --       1,539      2.56
March 31, 2000..............................         --             425     2,951         --       3,376      5.62
Thereafter..................................         --           1,570     1,918          5       3,493      5.82
                                                 ------       ---------  --------    -------   ---------   -------

   Total....................................     $   37       $  48,876  $ 11,119    $     7   $  60,039    100.00%
                                                 ======       =========  ========    =======   =========    ======

   Percent of total.........................       0.06%          81.41%    18.52%      0.01%     100.00%
                                                 ======           =====  ========    =======   =========
</TABLE>
         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,
1997.
<TABLE>
<CAPTION>
                                                                             Maturity
                                                          ---------------------------------------------
                                                                        Over        Over
                                                          3 Months     3 to 6      6 to 12     Over
                                                           or Less     Months      Months    12 Months    Total
                                                           -------     ------      ------    ---------    -----
                                                                              (In thousands)
<S>                                                        <C>         <C>         <C>        <C>       <C>

Certificates of deposit less than $100,000..............   $  9,698    $  10,324   $  16,136  $  17,719  $  53,877

Certificates of deposit of $100,000 or more.............      1,690          523       2,081      1,419      5,713

Public funds (1)........................................         89          190         164          6        449
                                                           --------    ---------   ---------  ---------  ---------

Total certificates of deposit...........................   $ 11,477    $  11,037   $  18,381  $  19,144  $  60,039
                                                           ========    =========   =========  =========  =========
</TABLE>
----------
         (1) Deposits from governmental and other public entities, including
             deposits greater than $100,000.


         Borrowings. Hardin Federal's borrowings historically have consisted of
advances from the FHLB of Des Moines. Such advances may be made pursuant to
different credit programs, each of which has its own interest rate and range of
maturities. Federal law limits an institution's borrowings from the FHLB to 20

                                       23
<PAGE>

times the amount paid for capital stock in the FHLB, subject to regulatory
collateral requirements. At March 31, 1997, the Bank had $950,000 of FHLB of Des
Moines stock. The Bank has the ability to purchase additional capital stock from
the FHLB. At March 31, 1997 and March 31, 1996, the weighted average interest
rate of the Bank's FHLB advances was 5.64% and 6.18%, respectively. For
additional information regarding the term to maturity and average rate paid on
FHLB advances, see Note 8 of the Notes to Consolidated Financial Statements and
"- Lending Activities."

         The following table sets forth the maximum month-end balance and
average balance of FHLB advances.


                                                 Year Ended March 31,
                                 ---------------------------------------------
                                     1997             1996              1995
                                 -----------       ---------         ---------
                                                 (In Thousands)

Maximum Balance:
  FHLB advances................. $   19,000         $   1,500        $  2,500

Average Balance:
  FHLB advances................. $   10,000         $     208        $    654

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 $2.1 million
at March 31, 1997, 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,
1997, 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, 1997, the
Bank's investment in HSSC was $25,000. For the year ended March 31, 1997, HSSC
had pre-tax income of approximately $7,000.

                                   REGULATION

General

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

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

                                       24

<PAGE>




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, 1997, was approximately $27,000.

         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, 1997, the Bank's lending limit under this restriction was $1.98
million. The Bank is in compliance with the loans-to-one-borrower limitation.

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


                                       25

<PAGE>



Insurance of Accounts and Regulation by the FDIC

         Hardin Federal is a member of the SAIF, which is administered by the
FDIC. Deposits are insured up to applicable limits by the FDIC and such
insurance is backed by the full faith and credit of the U.S. Government. As
insurer, the FDIC imposes deposit insurance premiums and is authorized to
conduct examinations of and to require reporting by FDIC-insured institutions.
It also may prohibit any FDIC-insured institution from engaging in any activity
the FDIC determines by regulation or order to pose a serious risk to the FDIC.
The FDIC also has the authority to initiate enforcement actions against savings
banks, after giving the OTS an opportunity to take such action, and may
terminate the deposit insurance if it determines that the institution has
engaged or is engaging in unsafe or unsound practices, or is in an unsafe or
unsound condition.

         In September 1996, Congress enacted legislation to recapitalize the
SAIF by a one-time assessment on all SAIF-insured deposits held as of March 31,
1995. The assessment was 65.7 basis points per $100 in deposits, payable on
November 30, 1996. For the Bank, the assessment amounted to $441,018 (or
$277,841 when adjusted for taxes), based on the Bank's deposits on March 31,
1995. In addition, beginning January 1, 1997, pursuant to the legislation,
interest payments on FICO bonds issued in the late 1980's by the Financing
Corporation to recapitalize the now defunct Federal Savings and Loan Insurance
Corporation will be paid jointly by BIF-insured institutions and SAIF-insured
institutions. The FICO assessment will be 1.29 basis points per $100 in BIF
deposits and 6.44 basis points per $100 in SAIF deposits. Beginning January 1,
2000, the FICO interest payments will be paid pro rata by banks and thrifts
based on deposits (approximately 2.4 basis points per $100 in deposits). In
addition, as of January 1, 1997, SAIF assessment rates dropped significantly and
currently range from zero to 27 basis points, based upon an institution's
regulatory risk classification and capital group.

         The legislation further provides that the BIF and SAIF will merge on
January 1, 1999 if there are no more savings associations as of that date.
Several bills have been introduced in the current Congress that would eliminate
the federal thrift charter and OTS. The bills would require that all federal
savings associations convert to national banks or state depository institutions
by no later than January 1, 1998 in one bill and June 30, 1998 in the other and
would treat all state savings associations as state banks for purposes of
federal banking laws. Subject to a narrow grandfathering, all savings and loan
holding companies would become subject to the same regulation as bank holding
companies under the pending legislative proposals. Under such proposals, any
lawful activity in which a savings association participates would be permitted
for up to two years following the effective date of its conversion to the new
charter, with two additional one-year extensions which may be granted as the
discretion of the regulator. The legislative proposals would also abolish the
OTS and transfer its functions to the federal bank regulators with respect to
the institutions and to the Federal Reserve Board with respect to the regulation
of holding companies. The Bank is unable to predict whether the legislation will
be enacted or, given such uncertainty, determine the extent to which the
legislation, if enacted, would affect its business. The Bank is also unable to
predict whether the SAIF and BIF funds will eventually be merged.

         While the legislation has reduced the disparity between premiums paid
on BIF deposits and SAIF deposits, and has relieved the thrift industry of a
portion of the contingent liability represented by the FICO bonds, the premium
disparity between SAIF-insured institutions, such as the Bank, and BIF-insured
institutions will continue until at least January 1, 1999. Under the
legislation, the Bank anticipates that its ongoing annual SAIF premiums will be
approximately $45,000.

                                       26

<PAGE>




Regulatory Capital Requirements

         Federally insured savings associations, such as the Bank, are required
to maintain a minimum level of regulatory capital. The OTS has established
capital standards, including a tangible capital requirement, a leverage ratio
(or core capital) requirement and a risk-based capital requirement applicable to
such savings associations. Generally, these capital requirements must be
generally as stringent as the comparable capital requirements for national
banks. The OTS is also authorized to impose capital requirements in excess of
these standards on individual associations on a case-by-case basis.

         The capital regulations require tangible capital of at least 1.5% of
adjusted total assets (as defined by regulation). Tangible capital generally
includes common stockholders' equity and retained income, and certain
noncumulative perpetual preferred stock and related income. In addition, all
intangible assets, other than a limited amount of purchased mortgage servicing
rights, must be deducted from tangible capital for calculating compliance with
the requirement. Further, the valuation allowance applicable to the write-down
of investments and mortgage-backed securities in accordance with SFAS No. 115 is
excluded from the regulatory capital calculation. At March 31, 1997, the Bank
had no intangible assets and a valuation allowance, net of tax under SFAS No.
115 of $233,000.

         The OTS regulations establish special capitalization requirements for
savings associations that own subsidiaries. In determining compliance with the
capital requirements, all subsidiaries engaged solely in activities permissible
for national banks or engaged in certain other activities solely as agent for
its customers are "includable" subsidiaries that are consolidated for capital
purposes in proportion to the association's level of ownership. For excludable
subsidiaries the debt and equity investments in such subsidiaries are deducted
from assets and capital. The Bank has one service corporation subsidiary.

         At March 31, 1997, the Bank had tangible capital of $11.6 million, or
11.3% of adjusted total assets, which is approximately $10.0 million above the
minimum requirement of 1.5% of adjusted total assets in effect on that date.

         The capital standards also require core capital equal to at least 3% of
adjusted total assets (as defined by regulation). Core capital generally
consists of tangible capital plus certain intangible assets, including
supervisory goodwill (which is phased-out over a five-year period) and a limited
amount of purchased credit card relationships and purchased mortgage servicing
rights. As a result of the prompt corrective action provisions of FDICIA
discussed below, however, a savings association must maintain a core capital
ratio of at least 4% to be considered adequately capitalized unless its
supervisory condition is such to allow it to maintain a 3% ratio. At March 31,
1997, the Bank had no intangibles which were subject to these tests.

         At March 31, 1997, the Bank had core capital equal to $11.6 million, or
11.3% of adjusted total assets, which is $8.5 million above the minimum leverage
ratio requirement of 3% as in effect on that date.

          The OTS risk-based requirement requires savings associations to have
total capital of at least 8% of risk-weighted assets. Total capital consists of
core capital, as defined above, and supplementary capital. Supplementary capital
consists of certain permanent and maturing capital instruments that do not
qualify as core capital and general valuation loan and lease loss allowances up
to a maximum of 1.25% of risk- weighted assets. Supplementary capital may be
used to satisfy the risk-based requirement only to the extent of core capital.
At March 31, 1997, the Bank had $158,000 of general loan valuation allowances,
which was less than 1.25% of risk-weighted assets.


                                       27

<PAGE>



         Certain exclusions from capital and assets are required to be made for
the purpose of calculating total capital. Such exclusions consist of equity
investments (as defined by regulation) and that portion of land loans and
nonresidential construction loans in excess of an 80% loan-to-value ratio and
reciprocal holdings of qualifying capital instruments. Hardin Federal had $329
of such exclusions from capital and assets at March 31, 1997.

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

         On March 31, 1997, the Bank had total capital of $11.7 million
(including approximately $11.6 million in core capital and $159,000 in
qualifying supplementary capital) and risk-weighted assets of $40.6 million
(with no converted off-balance sheet assets); or total capital of 29.0% of
risk-weighted assets. This amount was $8.5 million above the 8% requirement in
effect on that date.

         The OTS has adopted a final rule that requires every savings
association with more than normal interest rate risk exposure to deduct from its
total capital, for purposes of determining compliance with such requirement, an
amount equal to 50% of its interest-rate risk exposure multiplied by the present
value of its assets. This exposure is a measure of the potential decline in the
net portfolio value of a savings association, greater than 2% of the present
value of its assets, based upon a hypothetical 200 basis point increase or
decrease in interest rates (whichever results in a greater decline). Net
portfolio value is the present value of expected cash flows from assets,
liabilities and off-balance sheet contracts. The rule provides for a two quarter
lag between calculating interest rate risk and recognizing any deduction from
capital. Any savings association with less than $300 million in assets and a
total risk-based capital ratio in excess of 12% is exempt from this requirement
unless the OTS determines otherwise.

         Pursuant to FDICIA, the federal banking agencies, including the OTS,
have also proposed regulations authorizing the agencies to require a depository
institution to maintain additional total capital to account for concentration of
credit risk and the risk of non-traditional activities. No assurance can be
given as to the final form of any such regulation.

         The OTS and the FDIC are authorized and, under certain circumstances
required, to take certain actions against savings associations that fail to meet
their capital requirements. Effective December 19, 1992, the federal banking
agencies, including the OTS, were given additional enforcement authority over
undercapitalized depository institutions. The OTS is generally required to take
action to restrict the activities of an "undercapitalized association"
(generally defined to be one with less than either a 4% core capital ratio, a 4%
Tier 1 risked-based capital ratio or an 8% risk-based capital ratio). Any such
association must submit a capital restoration plan and until such plan is
approved by the OTS may not increase its assets, acquire another institution,
establish a branch or engage in any new activities, and generally may not make
capital distributions. The OTS is authorized to impose the additional
restrictions that are applicable to significantly undercapitalized associations.

          As a condition to the approval of the capital restoration plan, any
company controlling an undercapitalized association must agree that it will
enter into a limited capital maintenance guarantee with respect to the
institution's achievement of its capital requirements.


                                       28

<PAGE>



         Any savings association that fails to comply with its capital plan or
is "significantly undercapitalized" (i.e., Tier 1 risk-based or core capital
ratios of less than 3% or a risk-based capital ratio of less than 6%) must be
made subject to one or more of additional specified actions and operating
restrictions, which may cover all aspects of its operations and include a forced
merger or acquisition of the association. An association that becomes
"critically undercapitalized" (i.e., a tangible capital ratio of 2% or less) is
subject to further mandatory restrictions on its activities in addition to those
applicable to significantly undercapitalized associations. In addition, the OTS
must appoint a receiver (or conservator with the concurrence of the FDIC) for a
savings association, with certain limited exceptions, within 90 days after it
becomes critically undercapitalized.

         Any undercapitalized association is also subject to the general
enforcement activity of the OTS and the FDIC, including the appointment of a
receiver or conservator.

         The OTS is also generally authorized to reclassify an association into
a lower capital category and impose restrictions applicable to such category if
the institution is engaged in unsafe or unsound practices or is in an unsafe or
unsound condition.

         The imposition by the OTS or the FDIC of any of these measures on
Hardin Federal may have a substantial adverse effect on the Bank's operations
and profitability and the value of the Company's common stock. Company
shareholders do not have preemptive rights, and therefore, if the Company is
directed by the OTS or the FDIC to issue additional shares of its common stock,
such issuance may result in the dilution in the percentage of ownership to
current shareholders.

Limitations on Dividends and Other Capital Distributions

         OTS regulations impose various restrictions or requirements on
associations with respect to their ability to pay dividends or make other
distributions of capital. OTS regulations prohibit an association from declaring
or paying any dividends or from repurchasing any of its stock if, as a result,
the regulatory capital of the association would be reduced below the amount
required to be maintained for the liquidation account established in connection
with its mutual to stock conversion.

         The OTS utilizes a three-tiered approach to permit associations, based
on their capital level and supervisory condition, to make capital distributions
which include dividends, stock redemptions or repurchases, cash-out mergers and
other transactions charged to the capital account. See "- Regulatory Capital
Requirements."

         Generally, Tier 1 associations, which are associations that before and
after the proposed distribution meet their fully phased-in capital requirements,
may make capital distributions during any calendar year equal to the greater of
100% of net income for the year-to-date plus 50% of the amount by which the
lesser of the association's tangible, core or risk-based capital exceeds its
fully phased-in capital requirement for such capital component, as measured at
the beginning of the calendar year, or the amount authorized for a Tier 2
association. However, a Tier 1 association deemed to be in need of more than
normal supervision by the OTS may be downgraded to a Tier 2 or Tier 3
association as a result of such a determination. The Bank meets the requirements
for a Tier 1 association and has not been notified of a need for more than
normal supervision. Tier 2 associations, which are associations that before and
after the proposed distribution meet their current minimum capital requirements,
may make capital distributions of up to 75% of net income over the most recent
four quarter period.

         Tier 3 associations (which are associations that do not meet current
minimum capital requirements) that propose to make any capital distribution and
Tier 2 associations that propose to make a capital distribution in excess of the
noted safe harbor level must obtain OTS approval prior to making such

                                       29

<PAGE>

distribution. Tier 2 associations proposing to make a capital distribution
within the safe harbor provisions and Tier 1 associations proposing to make any
capital distribution need only submit written notice to the OTS 30 days prior to
such distribution. As a subsidiary of the Company, the Bank is required to give
the OTS 30 days notice prior to declaring any dividend on its stock. The OTS may
object to the distribution during that 30-day period based on safety and
soundness concerns. See "- Regulatory Capital Requirements."

         The OTS has proposed regulations that would revise the current capital
distribution restrictions. The proposal eliminates the current tiered structure
and the safe-harbor percentage limitations. Under the proposal a savings
association may make a capital distribution without notice to the OTS (unless it
is a subsidiary of a holding company) provided that it has a CAMEL 1 or 2
rating, is not in troubled condition and would remain adequately capitalized (as
defined by regulation) following the proposed distribution. Savings associations
that would remain adequately capitalized following the proposed distribution but
do not meet the other noted requirements must notify the OTS 30 days prior to
declaring a capital distribution. The OTS stated it will generally regard as
permissible that amount of capital distributions that do not exceed 50% of the
institution's excess regulatory capital plus net income to date during the
calendar year. A savings association may not make a capital distribution without
prior approval of the OTS and the FDIC if it is undercapitalized before, or as a
result of, such a distribution. A savings association will be considered in
troubled condition if it has a CAMEL rating of 4 or 5, is subject to an
enforcement action relating to its safety and soundness or financial viability
or has been informed in writing by the OTS that it is in troubled condition. As
under the current rule, the OTS may object to a capital distribution if it would
constitute an unsafe or unsound practice. No assurance may be given as to
whether or in what form the regulations may be adopted.

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, 1997, the Bank was in compliance with both
requirements, with an overall liquid asset ratio of 8.8% and a short-term liquid
assets ratio of 7.1%.

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 made more stringent than GAAP by the OTS, 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.

                                       30

<PAGE>


Qualified Thrift Lender Test

         All savings associations, including the Bank, are required to meet a
qualified thrift lender ("QTL") test to avoid certain restrictions on their
operations. This test requires a savings association to have at least 65% of its
portfolio assets (as defined by regulation) in qualified thrift investments on a
monthly average for nine out of every 12 months on a rolling basis. Such assets
primarily consist of residential housing related loans and investments. At March
31, 1997, the Bank met the test and has always met the test since its
effectiveness.

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

Community Reinvestment Act

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

         The federal banking agencies, including the OTS, have recently revised
the CRA regulations and the methodology for determining an institution's
compliance with the CRA. Due to the heightened attention being given to the CRA
in the past few years, the Bank may be required to devote additional funds for
investment and lending in its local community. The Bank was examined for CRA
compliance in February 1996 and received a rating of "satisfactory."


                                       31

<PAGE>



Transactions with Affiliates

         Generally, transactions between a savings association or its
subsidiaries and its affiliates are required to be on terms as favorable to the
association as transactions with non-affiliates. In addition, certain of these
transactions, such as loans to an affiliate, are restricted to a percentage of
the association's capital. Affiliates of the Bank include the Company and any
company which is under common control with the Bank. In addition, a savings
association may not lend to any affiliate engaged in activities not permissible
for a bank holding company or acquire the securities of most affiliates.

         Certain transactions with directors, officers or controlling persons
are also subject to conflict of interest regulations enforced by the OTS. These
conflict of interest regulations and other statutes also impose restrictions on
loans to such persons and their related interests. Generally, such loans must be
made on terms substantially the same as for loans to unaffiliated individuals.
However, recent regulations now permit executive officers and directors to
receive loans with the same terms as those widely available to other employees
through benefit or compensation plans, as long as the director or executive
officer is not given preferential treatment compared to the other participating
employees.

Holding Company Regulation

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

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

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

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


                                       32

<PAGE>



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, 1997, 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, 1997, the Bank had $950,000 of FHLB stock,
which was in compliance with this requirement. In past years, the Bank has
received substantial dividends on its FHLB stock. Over the past five fiscal
years such dividends have averaged 7.83% and were 7.06% for fiscal 1997. For the
fiscal year ended March 31, 1997, dividends paid by the FHLB of Des Moines to
the Bank totaled approximately $55,000, which constitutes a $2,000 increase over
the amount of dividends received in fiscal year 1996. 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.

                                       33

<PAGE>



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.

         Under recently enacted legislation, the percentage of taxable income
method has been repealed for years beginning after December 31, 1995, and
"large" associations, i.e., the quarterly average of the association's total
assets or of the consolidated group of which it is a member, exceeds $500
million for the year, may no longer be entitled to use the experience method of
computing additions to their bad debt reserve. A "large" association must use
the direct write-off method for deducting bad debts, under which charge-offs are
deducted and recoveries are taken into taxable income as incurred. Since the
Bank is not a "large" association, the Bank will continue to be permitted to use
the experience method. The Bank will be required to recapture (i.e., take into
income) over a six-year period its applicable excess reserves, i.e, the balance
of its reserves for losses on qualifying loans and nonqualifying loans, as of
March 31, 1996, the close of the last tax year beginning before January 1, 1996,
over the greater of (a) the balance of such reserves as of December 31, 1987
(pre-1988 reserves) or (b) in the case of a bank which is not a "large"
association, an amount that would have been the balance of such reserves as of
the close of the last tax year beginning before January 1, 1996, had the bank
always computed the additions to its reserves using the experience method.
Postponement of the recapture is possible for a two-year period if an
association meets a minimum level of mortgage lending for 1996 and 1997. As of
March 31, 1997, the Bank's bad debt reserve subject to recapture over a six-year
period totaled approximately $424,000.

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

         In addition to the regular federal income tax, corporations, including
savings associations such as the Bank, generally are subject to a minimum tax.
An alternative minimum tax is imposed at a minimum tax rate of 20% on
alternative minimum taxable income, which is the sum of a corporation's regular
taxable income (with certain adjustments) and tax preference items, less any
available exemption. The alternative minimum tax is imposed to the extent it
exceeds the corporation's regular income tax and net operating losses can offset
no more than 90% of alternative minimum taxable income. For taxable years
beginning after 1986 and before 1996, corporations, including savings
associations such as the Bank, were also subject to an environmental tax equal
to 0.12% of the excess of alternative minimum taxable income for the taxable
year (determined without regard to net operating losses and the deduction for
the environmental tax) over $2 million.

                                       34

<PAGE>



         To the extent earnings appropriated to a savings association's bad debt
reserves for "qualifying real property loans" and deducted for federal income
tax purposes exceed the allowable amount of such reserves computed under the
experience method and to the extent of the Bank's supplemental reserves for
losses on loans ("Excess"), such Excess may not, without adverse tax
consequences, be utilized for the payment of cash dividends or other
distributions to a shareholder (including distributions on redemption,
dissolution or liquidation) or for any other purpose (except to absorb bad debt
losses). As of March 31, 1997, the Bank's excess for tax purposes totaled
approximately $2.1 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.

         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 and one credit union which compete for deposits and loans
in Ray County, Missouri. In Clay County, Missouri, there are 36 commercial
banks, 44 credit unions, and 10 savings institutions, other than Hardin Federal,
which compete for deposits and loans in Clay County, Missouri.

                                       35

<PAGE>


Employees

         At March 31, 1997, the Bank had a total of 23 full-time and 1 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 52, 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 53, joined the Bank in January
1997 as Vice President of Lending at our Excelsior Springs Branch. Mr. Schwarz
previously was employed as Executive Vice President of Lawson, Bank, Lawson,
Missouri.

Item 2.  Description of Property
         -----------------------

         The Bank conducts its business through three offices, which are located
in Ray and Clay Counties, Missouri. The Bank owns its main office and the
Excelsior Springs, Missouri branch. The Bank's Richmond, Missouri branch is
leased. The following table sets forth information relating to each of the
Bank's offices as of March 31, 1997. 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, 1997 was approximately $850,000.
See Note 6 of the Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>



                                                                               Total
                                                                           Approximate
                                                            Date               Square         Net Book Value at
                     Location                             Acquired             Footage          March 31, 1997
----------------------------------------------------      --------         --------------     ----------------
<S>                                                      <C>                 <C>                  <C>
Main Office:                                                1963                 4,600                $31,611
 100-04 North Second Street
 Hardin, Missouri

Branch Offices:(1)
 201 North Jesse James Road                                 1990                 2,024               $497,864
 Excelsior Springs, Missouri

 208 West Main Street                                      Leased                1,200                   N/A
 Richmond, Missouri                                    (expires 1996)
</TABLE>
----------------
         (1) The Bank has acquired land to build a new branch office in
Richmond, Missouri and to vacate its current Richmond, Missouri branch location.
The Bank expects construction on this branch facility to begin in July 1997.

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

                                       36

<PAGE>



         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.

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, 1997.


                                     PART II
                                     -------

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

         Page 42 of the attached 1997 Annual Report to Shareholders is herein
incorporated by reference.


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

         Pages 5 to 17 of the attached 1997 Annual Report to Shareholders are
herein incorporated by reference.

Item 7.  Financial Statements
         --------------------

         Pages 19 to 41 of the attached 1997 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.


                                       37

<PAGE>

                                    PART III
                                    --------

Item 9.  Directors and Executive Officers of the Registrant
         --------------------------------------------------

         Information concerning Directors of the Registrant is incorporated
herein by reference from the Company's definitive Proxy Statement for the Annual
Meeting of Shareholders scheduled to be held on July 24, 1997.

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 24, 1997.

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 24, 1997.

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 24, 1997.


                                     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, 1997, is incorporated by reference
in this Form 10-KSB Annual Report as Exhibit 13.
<TABLE>
<CAPTION>


                                                                                                         Page in
                                                                                                          Annual
               Annual Report Section                                                                      Report
               ---------------------                                                                      ------
<S>                                                                                                       <C>
Report of Independent Auditors.......................................................................      18

Consolidated Balance Sheets at March 31, 1997 and 1996...............................................      19

Consolidated Statements of Earnings for the Years ended March 31, 1997, 1996 and 1995................      20

Consolidated Statements of Stockholders' Equity for the Years ended
 March 31, 1997, 1996 and 1995.......................................................................      21

Consolidated Statements of Cash Flows for the Years ended March 31, 1997,
  1996 and 1995......................................................................................      22

Notes to Consolidated Financial Statements...........................................................      24
</TABLE>
                                       38

<PAGE>


         (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:
         ------------------
<TABLE>
<CAPTION>
                                                                                    Reference to
Regulation                                                                        Prior Filing or
S-B Exhibit                                                                        Exhibit Number
  Number                                 Document                                 Attached Hereto
-----------                       --------------------                            ---------------
<S>                       <C>                                                          <C>
   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 

</TABLE>

                                       39

<PAGE>

<TABLE>
<CAPTION>
                                                                                    Reference to
Regulation                                                                        Prior Filing or
S-B Exhibit                                                                        Exhibit Number
  Number                                 Document                                 Attached Hereto
-----------                       --------------------                            ---------------
<S>                       <C>                                                          <C>

  12                      Statement re: computation or ratios                          Not required

  13                      Annual Report to Security Holders                                 13

  16                      Letter re: change in certifying                                  None
                          accountant

  18                      Letter re: change in accounting                                  None
                          principles

  21                      Subsidiaries of Registrant                                        21

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

  23                      Consent of experts and counsel                                    23

  24                      Power of Attorney                                            Not Required

  27                      Financial Data Schedule                                           27

  28                      Information from reports furnished to                            None
                          State insurance regulatory authorities

  99                      Additional exhibits                                              None
</TABLE>
-------------------
         *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, 1997.

                                       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 27, 1997                     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 27, 1997                            Date: June 27, 1997

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 27, 1997                            Date: June 27, 1997

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

Date: June 27, 1997                            Date: June 27, 1997

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

Date: June 27, 1997



<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.