SECURITIES AND EXCHANGE COMMISSION              
     

                           Washington, D. C.  20549

                                 FORM 10-KSB

               Annual Report Pursuant to Section 13 or 15(d) of
                     the Securities Exchange Act of 1934


For the fiscal year ended June 30, 1998   Commission file number 0-21688 



                                FFBS Bancorp, Inc.               
               
            (Exact name of registrant as specified in its charter)


            Delaware                               64-0828070    
(State or other jurisdiction of                 (I.R.S. Employer 
 incorporation or organization)                 Identification No.)

 1121 Main Street, Columbus, Mississippi               39703
(Address of principal executive offices)             (Zip Code)  
                 
       (601) 328-4631
(Registrant's telephone number, 
 including area code)  

Securities registered pursuant to Section 12(b) of the Act:

                                              Name of each exchange on

        Title of each class                        which registered
     
               None                                       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 filing requirements for the past 90 days.

 Yes    X           No        

Indicate by check mark if no disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is 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.  

Yes     X           No

Issuer's revenues for the year ended June 30, 1998 (In thousands)
                              $10,450

Aggregate market value of the voting stock held by nonaffiliates was
approximately $31,948,080.

Indicate the number of shares outstanding of each of the issuers'
classes of common stock as of the latest practicable date.

             Class                        Outstanding at June 30, 1998
               
   Common stock, $.01 par value                 1,575,735 shares


Documents Incorporated by Reference -

   Annual report to stockholders for the fiscal year ended June 30,
   1998. 

   Proxy statement for the 1998 annual meeting of stockholders.




                                    PART I


ITEM 1 - DESCRIPTION OF BUSINESS

FFBS Bancorp, Inc. (Company) was organized in March, 1993, at the
direction of the Board of Director's of First Federal Bank for Savings
(Bank) to acquire all of the capital stock that the Bank issued upon its
conversion from a mutual to a stock form of ownership.  The Company may
acquire or organize other operating subsidiaries, including other
financial institutions, although there are currently no specific plans
regarding such activities by the Company.  On June 30, 1993, the Company
acquired 100% of the outstanding common stock issued by the Bank upon
its conversion from a mutual association to a stock form of ownership. 
Prior to that date, the Company conducted no other business other than
its formation and organization.  The Company's primary source of income
is from its equity ownership in the Bank.  At June 30, 1998, the Company
had total consolidated assets of $150.8 million, deposits of $114.5
million and stockholders' equity of $23.3 million.

The Bank descended from Columbus Building and Loan Association, which
dated back to 1892.  In 1934, the Bank was organized as a federally
chartered mutual savings association headquartered in Columbus,
Mississippi.  Its deposits are insured up to the maximum allowable
amount by the Federal Deposit Insurance Corporation (the "FDIC").  The
Bank primarily serves Lowndes County, Mississippi, and adjacent counties
in Mississippi and Alabama through its main office and three branch
offices in Columbus.  The Bank is a community-oriented financial
institution offering a variety of financial services to meet the
financial service needs of the communities it serves.  The Bank attracts
deposits from the general public and uses such deposits primarily to
originate loans secured by first mortgages on owner-occupied, one-to-
four family residences in its market area.

In addition to interest earned on loans and investments, the Bank
receives fee income for loan origination and commitments, late payments
and other miscellaneous services.  Also, see  "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the
Annual Report to Stockholders filed as Exhibit 13 hereto.

Like other institutions, the Bank is materially affected by general
economic conditions, the monetary and fiscal policies of the federal
government and the policies of the various regulatory authorities,
including the Office of Thrift Supervision (OTS) and the Board of
Governors of the Federal Reserve System ("Federal Reserve Board").  The
Bank's results of operations are largely dependent upon its net interest
income, which is the difference between (i) the interest it receives on
its loan portfolio and its investment securities portfolio and (ii) the
interest it pays on its deposit accounts and borrowings.  See Supplemental
Statistical Information for analysis of net interest earnings and
rate/volume analysis.  

The Bank's principal business has been and continues to be attracting
retail deposits from the general public and investing those deposits,
together with funds generated from operations, primarily in one-to-four-
family loans, commercial business loans, construction loans and consumer
loans.  In addition, the Bank invests in mortgage-backed and related
securities, U. S. government and federal agency securities and other
marketable securities.  The Bank's revenues are derived principally from
interest on its mortgage loan, consumer loan, and mortgage-backed
securities portfolio and earnings on its investment securities.  The Bank's
primary sources of funds are deposits, borrowings, and principal and
interest payments on loans and mortgage-backed and related securities.  At
June 30, 1998, the Bank had no brokered deposits and Federal Home Loan Bank
advances totalling $11.0 million.

The following table sets forth the composition of the Bank's mortgage
and other loan portfolios and its mortgage-backed and related securities
in dollar amounts and in percentages at the dates indicated.

                                               At June 30,
                           _______________________________________________
                                  1996            1997          1998  
                           _______________ _______________ _______________
                                   Percent         Percent         Percent
                                      Of              Of              Of
                            Amount  Total   Amount  Total   Amount  Total
                           _______ _______ _______ _______ _______ _______
                                        (Dollars in Thousands)
Mortgage loans:
  One-to-four-family       $61,077  73.12% $67,198  72.44% $67,562  68.30%
  Multi-family               1,021   1.22      982   1.06      229    .23
  Commercial real estate     7,867   9.42    8,706   9.39   10,946  11.06
  Construction and land      4,218   5.05    4,834   5.21    5,865   5.93
                           _______ _______ _______ _______ _______ _______
    Total mortgage loans    74,183  88.81   81,720  88.10   84,602  85.52
                           _______ _______ _______ _______ _______ _______

Consumer and other loans:
  Loans on deposit           1,592   1.91    1,090   1.18    1,530   1.55
  Home improvement and
    education                   83    .10       43    .05        5    .01
  Auto loans                 3,680   4.41    4,271   4.60    4,685   4.74
  Commercial - 
    collateralized             974   1.17    1,678   1.81    3,658   3.70
  Commercial - unsecured       479    .57      333    .36      505    .51
  Other loans                3,230   3.86    4,215   4.54    4,457   4.50
                           _______ _______ _______ _______ _______ _______
    Total consumer and

      other loans           10,038  12.02   11,630  12.54   14,840  15.01
                           _______ _______ _______ _______ _______ _______
    Total loans 
      receivable            84,221 100.83   93,350 100.64   99,442 100.53

Less:
  Unearned discounts and
    deferred loan fees          27    .03       14    .02        1    .00
  Allowance for loan 
    losses                     666    .80      576    .62      523    .53
                           _______ _______ _______ _______ _______ _______

  Loans receivable, net    $83,528 100.00% $92,760 100.00% $98,918 100.00%
                           ======= ======= ======= ======= ======= =======

Mortgage-backed and
  related securities:
    FHLMC                  $ 1,469  58.62% $ 5,265  72.44% $ 3,000  18.26%
    CMOs                       -     0.00       -    0.00    7,757  47.22
    FNMA                     1,029  41.06    1,993  27.42    1,843  11.22
    GNMA                       -     0.00       -    0.00    3,622  22.05 
                           _______ _______ _______ _______ _______ _______

Total mortgage-backed and
  related securities         2,498  99.68    7,258  99.86   16,222  98.75

Net premiums                     8    .32       10    .14      241   1.46
Unrealized gains (losses)
  on available for sale 
  securities                   -      -        -      -        (35)  (.21)
                           _______ _______ _______ _______ _______ _______
 
Net mortgage-backed and
  related securities       $ 2,506 100.00% $ 7,268 100.00% $16,428 100.00%
                           ======= ======= ======= ======= ======= ======= 

 
The following table sets forth the composition of the Bank's loan
portfolio by fixed and adjustable rate at the dates indicated:

                                              At June 30,
                           _______________________________________________
                                 1996            1997            1998     
                           _______________ _______________ _______________
                                   Percent         Percent         Percent
                                     Of              Of               Of
                            Amount  Total   Amount  Total   Amount  Total
                           _______ _______ _______ _______ _______ _______
                                        (Dollars in Thousands)

Fixed Rate Loans:

  Mortgage Loans:
    One-to-four family     $26,574  31.55% $30,583  32.76% $30,627  30.80%
    Multi-family               915   1.08      879    .94      129    .13
    Commercial real 
      estate                 7,391   8.78    8,315   8.91   10,545  10.60
    Construction and land    3,963   4.71    4,587   4.91    5,865   5.90
                           _______ _______ _______ _______ _______ _______
      Total mortgage 
        loans               38,843  46.12   44,364  47.52   47,166  47.43

    Consumer                 8,585  10.19    8,600   9.21    9,314   9.37
    Commercial               1,453   1.73    1,815   1.95    3,974   4.00
                           _______ _______ _______ _______ _______ _______
    Total fixed rate 
      loans                 48,881  58.04   54,779  58.68   60,454  60.80
                           _______ _______ _______ _______ _______ _______
Adjustable Rate Loans 
  (ARM):
    Mortgage Loans:
      One-to-four-family    34,550  41.02   36,596  39.20   36,935  37.14
      Multi-family             106    .13      103    .11      100    .10
      Commercial real 
        estate                 430    .51      410    .44      401    .40
      Construction and 
        land                   254    .30      247    .27       -      - 
                           _______ _______ _______ _______ _______ _______
        Total mortgage 
          loans             35,340  41.96   37,356  40.02   37,436  37.64
  
      Consumer                  -      -     1,019   1.09    1,363   1.37
      Commercial                -      -       196    .21      189    .19
                           _______ _______ _______ _______ _______ _______
      Total adjustable
        rate loans          35,340  41.96   38,571  41.32   38,988  39.20
                           _______ _______ _______ _______ _______ _______

    Total Loans            $84,221 100.00% $93,350 100.00% $99,442 100.00%
                           ======= ======= ======= ======= ======= =======
    Fixed rate mortgage-
      backed and related
      securities           $ 2,498 100.00% $ 5,731  78.96% $ 4,427  27.29

    Adjustable rate 
      mortgage-backed and
      related securities       -     0.00    1,527  21.04   11,795  72.71
                           _______ _______ _______ _______ _______ _______

    Total mortgage-backed
      and related 
      securities           $ 2,498 100.00% $ 7,258 100.00% $16,222 100.00%

                           ======= ======= ======= ======= ======= =======

The primary focus of the Bank is to originate ARM loans; however, they
are dependent upon relative customer demand as well as current and
expected future levels of interest rates.  The Bank originates loans
that generally meet the Bank's underwriting standards, which are secured
by first mortgages on owner-occupied one-to-four-family residences and
commercial real estate located primarily in northeast Mississippi.  The
Bank began a program of originating fixed-rate conforming loans for sale
for customers who desire the fixed-rate loan features.  See Supplemental
Statistical Information for loan maturities and sensitivities to changes
in interest rates.

The following table sets forth the Bank's loan originations and loan and
mortgage-backed and related securities purchases, sales, principal
repayments and amortization of premiums and discounts for the periods
indicated.
                                                  At June 30,
                                           _________________________
                                             1996     1997    1998
                                           _______  _______  _______
                                                (In Thousands)

Mortgage loans (gross):
  At beginning of period                   $72,054  $74,183  $81,720
                                           _______  _______  _______ 
  
    Mortgage loans originated:
      One-to-four family                    25,617   30,523   33,932
      Multi-family and commercial real
        estate                               4,549    8,711    6,082
      Construction and land                  6,741    8,326    8,066
                                           _______  _______  _______ 

        Total mortgage loans originated     36,907   47,560   48,080
                                           _______  _______  _______

    Mortgage loans purchases                   117       -       -

  Less:
    Transfer of mortgage loans to
      foreclosed real estate                   755       -       415
    Principal repayments                    28,485   35,367   36,690
    Sales of one-to-four-family
      mortgage loans                         5,655    4,656    8,093
                                           _______  _______  _______

    At end of period                       $74,183  $81,720  $84,602
                                           =======  =======  =======


  Consumer and other loans (gross):
    At beginning of period                 $ 9,081  $10,038  $11,630
      Consumer and other loans originated    7,701   12,045   12,505
      Principal repayments                  (6,744) (10,453) (9,295)
      Transfer to other assets                  -        -       -
                                           _______  _______  _______

    At end of period                       $10,038  $11,630  $14,840
                                           =======  =======  =======

  Mortgage-backed and related securities
    (gross):
      At beginning of period               $ 2,002  $ 2,506  $ 7,268
        Mortgage-backed and related
          securities purchased                 985    5,527   13,422
        Amortization and repayments           (481)    (765)  (4,227)
        Unrealized gains(losses) on AFS        -        -        (35)
                                           _______  _______  _______

      At end of period                     $ 2,506  $ 7,268  $16,428
                                           =======  =======  =======

The Bank provides valuation reserves for anticipated losses on loans at
a level considered adequate by management.  Management performs
quarterly reviews of the Bank's loan portfolio to evaluate the adequacy
of the allowance with any adjustments being made through provisions for
loan losses.  These reviews take into consideration the Bank's past due
and nonperforming loans, prior years' loss experience, economic
conditions, underlying collateral and the distribution of loans in the
portfolio by risk class.  Amounts of the allowance are assigned to
specific loans and loan categories based upon these factors.  Although 
management believes that it uses the best information available to make
such determinations, future adjustments to reserves may be necessary,
and net income could be significantly affected, if circumstances differ
substantially from the assumptions used in making the initial
determinations.  See Supplemental Statistical Information for summary of
loan loss experience.

Investment securities held by the Bank at June 30, 1997 and 1998, are
described in Note B to the consolidated financial statements and
included as part of Exhibit 13 to this annual report.


The Bank's primary source of funds are deposits for lending and other
investment purposes.  In addition to deposits, the Company derives funds
from loan principal repayments, which are a relatively stable source of
funds, while deposit inflows and outflows are significantly influenced by
general interest rates and money market conditions.  Borrowings may be used
on a short-term basis to compensate for reductions in the availability of
funds from other sources.  They may also be used on a longer term basis to
fund longer term investments and loan programs.                             
                                                                            
                   
The Bank offers a variety of deposit accounts having a range of interest
rates and terms.  The Bank's deposits principally consist of fixed-term
certificates, regular passbook accounts, money market accounts, IRAs,
NOW accounts and commercial checking and demand (non-interest-bearing)
accounts.  The flow of deposits is influenced significantly by general
economic conditions, changes in money market rates and other prevailing
interest rates and competition.  The Bank relies primarily on customer
service and long-standing relationships with customers to attract and
retain these deposits.  The Bank has no brokered deposits.

The Bank seeks to maintain a high level of stable core deposits by
advertising, providing reduced fees on checking accounts for senior
citizens and generally promoting checking accounts.  When pricing
deposits, consideration is given to local competition, the Bank's gap
position, U. S. Treasury 90-day and six-month rates and the need for
funds.  Management's strategy is to price at or just above the median
competition, contingent upon the need for funds, and to stratify the
pricing system to attract deposits and maintain a controlled gap
position.

There are no concentrations of deposits which are dependent on a
specific industry, governmental entity, etc., which if withdrawn would
significantly impact the Bank's financial condition.

Reference should be made to Note H - Deposits of the consolidated
financial statements included as part of Exhibit 13 to this annual
report for the distribution of the Bank's deposit accounts at June 30,
1997 and 1998, and the weighted average nominal interest rates.


Regulation

The Bank 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 of its operations. 
The Bank is a member of the FHLB of Dallas and is subject to certain
limited regulation by the Federal Reserve Board.  Also, the Bank is a
member of the Savings Association Insurance Fund (SAIF) and the deposits
of the Bank are insured by the FDIC.  As a result, the FDIC has certain
regulatory and examination authority.  Certain regulatory requirements
and restrictions are discussed below:

The Bank must file reports with the OTS and the FDIC concerning its
activities and financial condition, in addition to obtaining regulatory
approvals prior to entering certain transactions such as mergers with or
acquisitions of other financial institutions.  There are periodic
examinations by the OTS and the FDIC to test the Bank's compliance with
various regulatory requirements.  This regulation and supervision
establishes a comprehensive framework of activities in which an
institution can engage and is intended primarily for the protection of
the insurance fund and depositors.  The regulatory structure also gives
the regulatory authorities extensive discretion in connection with their
supervisory and enforcement activities and examination policies,
including policies with respect to the classification of assets and the
establishment of adequate loan loss reserves for regulatory purposes. 
Any change in such regulation, whether by the OTS, the FDIC or the
Congress could have a material adverse impact on the Company, the Bank
and their operations.  The Holding Company is also required to file
certain reports and comply with the rules and regulations of the OTS,
the Securities and Exchange Commission ("SEC"), and the National
Association of Securities Dealers (NASD).

FDICIA

On December 19, 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") became law.  While FDICIA primarily
addresses additional sources of funding for the Bank Insurance Fund
(BIF), which insures the deposits of commercial banks and savings banks,
it also imposes a number of new mandatory supervisory measures on
savings associations and banks.  Some of the more significant provisions
are as follows:

a) Standards for Safety and Soundness.  FDICIA requires the federal
   bank regulatory agencies to prescribe, by regulation, standards for
   all insured depository institutions and depository institution
   holding companies relating to: (i) internal controls, information
   systems and audit systems; (ii) loan documentation; (iii) credit
   underwriting; (iv) interest rate risk exposure; (v) asset growth;
   and (vi) compensation, fees and benefits.  The compensation
   standards prohibit employment contracts, compensation or benefit
   arrangements, stock option plans, fee arrangements or other
   compensatory arrangements that would provide excessive compensation,
   fees or benefits or could lead to material financial loss.  The FDICIA
   also provides for enhanced federal supervision of depository 
   institutions based on, among other things, an institution's capital 
   level.

b) Prompt Corrective Regulatory Action.  FDICIA establishes a system
   of prompt corrective action to resolve the problems of
   undercapitalized institutions.  Under this system, which became
   effective on December 19, 1992, the banking regulators are required
   to take certain supervisory actions against undercapitalized
   institutions, the severity of which depends upon the institution's
   degree of capitalization.  Generally, subject to a narrow
   exception, FDICIA requires the banking regulator to appoint a
   receiver or conservator for an institution that is critically
   undercapitalized.  FDICIA authorizes the banking regulators to
   specify the ratio of tangible capital to assets at which an
   institution becomes critically undercapitalized and requires that
   ratio to be no less than 2% of assets.

   Under the OTS regulations, generally, a savings institution that has
   a total risk-based capital of less than 8.0% or a leverage ratio
   that is less than 4.0% is considered to be undercapitalized.  A
   savings institution that has a total risk-based capital less than
   8.0%, a Tier I risk-based capital ratio of less than 4% or a
   leverage ratio that is less than 4.0% is considered to be
   "significantly undercapitalized" and a savings institution that has
   a tangible capital to assets ratio equal to or less than 2% is
   deemed to be "critically undercapitalized."  Generally, a capital
   restoration plan must be filed with the OTS within 45 days of the
   date an association receives notice that it is "undercapitalized,"
   "significantly undercapitalized" or "critically undercapitalized." 
   In addition, numerous mandatory supervisory actions become
   immediately applicable to the institution, including, but not
   limited to, restrictions on growth, investment activities, capital
   distributions, and affiliate transactions.  The OTS could also take
   any one of a number of discretionary supervisory actions, including
   the issuance of a capital directive and the replacement of senior
   executive officers and directors.

c) Uniform Lending Standards.  Under FDICIA, the federal banking
   agencies are required to adopt uniform regulations prescribing
   standards for extensions of credit that are secured by liens on
   interests in real estate or made for the purpose of financing the
   construction of a building or other improvements to real estate. 
   Under joint regulations adopted by the banking agencies,
   which became effective March 19, 1993, savings associations must
   adopt and maintain written policies that establish appropriate
   limits and standards for extensions of credit that are secured by
   liens or interests in real estate or are made for the purpose of
   financing standards, prudent underwriting standards (including
   loan-to-value limits) that are clear and measurable, loan
   administration procedures, and documentation, approval and
   reporting requirements.  The real estate lending policies must
   reflect consideration of the Interagency Guidelines for Real Estate
   Lending Policies that have been adopted by the federal bank
   regulators.

d) Miscellaneous.  FDICIA increases the consumer lending authority of
   federal associations to 35% of assets, extends the deadline for the
   mandatory use of state-certified and state-licensed appraisers,
   modifies the Qualified Thrift Lender (QTL) test to require 65%
   rather than 70% of portfolio assets to be qualified thrift
   investments and authorizes the OTS to prescribe rules for the
   amount of purchased mortgage servicing rights that must be deducted
   from capital for regulatory reporting purposes.  FDICIA also
   authorizes acquisitions of banks by savings associations on the
   same terms as savings associations may be acquired by banks.

Small Business Job Protection Act

The Small Business Job Protection Act of 1996 was signed into law on 
August 20, 1996.  As the result of the enactment of the Small Business 
Act, all savings banks and savings associations will be able to change 
to a commercial bank charter, diversify their lending, or to be merged 
into a commercial bank without having to recapture any of their pre-1988
tax bad debt reserve accumulations.  Any tax bad debt reserves accumulated
above the 1987 level will be subject to recapture, regardless of whether
or not a particular thrift intends to change its charter, be acquired, 
or diversify its activities.  The recapture tax on the post-1987 tax bad
debt reserves will be paid in equal amounts over six years.  If a thrift 
originated the same principal amount of mortgage loans in 1997 or 1998 
that it originated in the six years before, the payment of the recapture
tax may be deferred for each year.  The Bank had accumulated tax reserves
of $1,600,000 as of July 1, 1988, and $2,550,000 as of June 30, 1996; 
thus, resulting in tax reserves to be recaptured of $950,000.  The Bank 
is deferring any recapture tax for two years (1997 and 1998),
the maximum deferment period, due to meeting the mortgage origination test.
  
Federal Securities Law

The Company filed with the SEC a registration statement under the
Securities Act, for the registration of the Common Stock to be issued
pursuant to the Conversion.  Upon completion of the Conversion, the
Company's Common Stock was registered with the SEC under the Exchange
Act.  The Company is subject to the information, proxy solicitation,
insider trading restrictions and other requirements under the Exchange
Act.

The registration under the Securities Act of shares of the Common Stock
to be issued in the Conversion does not cover the resale of such shares. 
Shares of the Common Stock purchased by persons who are not affiliates
of the Company may be resold without registration.  Shares purchased by
an affiliate of the Company are subject to  the resale restrictions of
Rule 144 under the Securities Act.  If the Company meets the current
public information requirements of Rule 144 under the Securities Act,
each affiliate of the Company who complies with the other conditions of
Rule 144 (including those that require the affiliate's sale to be
aggregated with those of certain other persons) will be able to sell in
the public market, without registration, a number of shares not to
exceed, in any three-month period, the greater of (i) 1% of the outstanding
shares of the Company or (ii) the average weekly volume of trading in
such shares during the preceding four calendar weeks.  Provision may be
made in the future by the Company to permit affiliates to have their
shares registered for sale under the Securities Act under certain
circumstances.

Regulatory Capital Requirements

The OTS capital regulations require savings institutions to meet three
capital standards: a 1.5% tangible capital standard; a 3% leverage (core
capital) ratio; and an 8% risk based capital standard.  Core capital is
defined as common stockholder's equity (including retained earnings),
noncumulative perpetual preferred stock and related surplus, minority
interest in equity accounts of consolidated subsidiaries less
intangibles other than certain qualifying supervisory intangible assets
and certain purchased mortgage servicing rights.  The OTS regulations
also require that, in meeting the leverage ratio, tangible and risk-
based capital standards, institutions must deduct investments in and
loans to subsidiaries engaged in activities not permissible for a
national bank.  The Bank currently has no subsidiaries engaged in such
activities.  At June 30, 1997 and 1998, the Bank exceeded each of its
capital requirements.  See Supplemental Statistical Information -
Capital Adequacy Data of Subsidiary Bank.

On August 31, 1993, the OTS issued a final rule which sets forth the
methodology for calculating an interest rate risk ("IRR") component
which is added to the risk-based capital requirements for OTS regulated
thrift institutions.  Under the final rule, savings associations with a
greater than "normal" level of interest rate exposure will be subject to
a deduction from total capital for purposes of calculating their risk-
based capital requirement.  Specifically, interest rate exposure will be
measured as the decline in net portfolio value due to a 200 basis point
change in market interest rates.  The interest rate risk ("IRR")
component to be deducted from total capital is equal to one-half the
difference between an institution's measured exposure and the "normal"
level of exposure, which is defined as two percent of the estimated
economic value of its assets.  The final rule establishes a two quarter
"lag" between the reporting date that is used to calculate the IRR
component and the effective date of each quarter's IRR component.  The
Director of the OTS may waive or defer an institution's IRR component,
but not decrease it unless it is as the result of an appeal.  The OTS
intends to make an appeals process available to institutions under
certain circumstances.  Recently, the OTS has postponed the interest
rate risk capital deduction in order to provide sufficient time to
implement and evaluate the OTS appeals process as well as get a better
sense of the direction that the other federal banking agencies may take
in their implementation of Section 305 of FDICIA.

Liquidity Requirements

The Bank is required to maintain an average daily balance of liquid 
assets equal to a specified percentage of its net withdrawable deposit
accounts excluding accounts with maturities exceeding 1 year plus
short-term borrowings.  This liquidity requirement may be changed from 
time to time by the OTS to any amount within the range of 4% to 10%
depending upon economic conditions and the savings flows of member
institutions, and is currently 4%. Monetary penalties may be imposed for
failure to meet these liquidity requirements.  The Bank's average
liquidity ratio for June 30, 1998, was 22.02% which exceeded the then
applicable requirement.  The Bank has never been subject to monetary
penalties for failure to meet its liquidity requirements.

Insurance of Deposit Accounts

The FDIC charges an annual assessment for the insurance of deposits
based on the risk a particular institution poses to its deposit insurance
fund.  The risk-related premium system (RRPS) is used to determine the 
deposit insurance assessment rate.  Under the RRPS, each insured
institution is assigned to one of three capital groups and to one of 
three supervisory subgroups for purposes of determining an assessment 
risk classification.  The three capital categories based on the
institution's financial condition consist of (1) well capitalized, 
(2) adequately capitalized, or (3) undercapitalized.  The three
supervisory subgroups are (1) Subgroup A, (2) Subgroup B, and (3)
Subgroup C.  The subgroup assignment is based upon a variety of factors
including, but not limited to, the latest supervisory examination of the
institution.  For the assessment period beginning January 1, 1998, the
Bank has been assigned to the well capitalized and Subgroup A 
categories.  This resulted in the Bank receiving the lowest assessment
rate of .061% of deposits.  However, the FDIC is authorized to raise
insurance premiums.  Thus, any increase in the assessment rates could
have an impact on the Bank's earnings.  

On September 30, 1996, the Deposit Insurance Funds Act of 1996 was enacted
and called for a special assessment on SAIF-assessable deposits to 
capitalize the Savings Association Insurance Fund.  During the fiscal year
ended June 30, 1997, the Company paid the FDIC special assessment of
$599,000,
which was a charge to earnings of $376,000, net of taxes.

Qualified Thrift Lender Test

The Home Owners Loan Act ("HOLA"), as amended, requires savings
institutions to meet a qualified thrift lender ("QTL") test.  If the
Association maintains an appropriate level of Qualified Thrift
Investments (primarily residential mortgages and related investments,
including certain mortgage-backed securities) ("QTIs") and otherwise
qualifies as a QTL, it will continue to enjoy full borrowing privileges
from the FHLB of Dallas.  Under FDICIA, the required percentage of QTIs
was decreased from 70% to 65% of portfolio assets (defined as all assets
minus intangible assets, property used by the institution in conducting
its business and liquid assets up to 20% of total assets).  Certain
assets are subject to a percentage limitation of 20% of portfolio
assets.  In addition, savings associations may include shares of stock
of the Federal Home Loan Banks, FNMA and FHLMC as qualifying QTIs.  The
FDICIA also amended the method for measuring compliance with the QTL
test to be on a monthly basis in nine out of every 12 months, as opposed
to on a daily or weekly average of QTIs.  As of June 30, 1998, the
Association was in compliance with QTL requirement with 93.19% of its
total assets invested in Qualified Thrift Investments.

A savings association that does not meet a QTL test must either convert
to a bank charter or comply with the following restrictions on its
operations: (i) the savings associations may not engage in any new
activity or make any new investment, directly or indirectly, unless such
activity or investment is permissible for a national bank; (ii) the
branching powers of the savings association shall be restricted to those
of a national bank; (iii) the savings association shall not be eligible
to obtain any advances from its FHLB; and (iv) payment of dividends by the
savings association shall be subject to the rules regarding payment from
the date the savings association ceases to be a QTL, it must cease any
activity and not retain any investment not permissible for a national bank
and immediately repay any outstanding FHLB advances (subject to safety and
soundness considerations.

Loans to One Borrower 
 
Under the HOLA, as amended, savings institutions are subject to the 
national bank limits on loans to one borrower.  Generally, a savings 
association may not make a loan or extend credit to a single or related 
group of borrowers in excess of 15% of the savings association's 
unimpaired capital and surplus.  An additional amount may be lent, equal 
to 10% of unimpaired capital and surplus, if such loan is secured by 
readily-marketable collateral, which is defined to include certain 
securities and bullion, but generally does not include real estate. 
 
Dividend and Other Capital Distribution Limitations 
 
OTS regulations impose limitations upon all capital distributions by 
savings institutions, such as cash dividends, payments to repurchase or 
otherwise acquire its shares, payments to shareholders of another 
institution in a cash-out merger and other distributions charged against 
capital.  The rule establishes three tiers of institutions, which are 
based primarily on an institution's capital level.  An institution that 
exceeds all fully phased-in capital requirements before and after a 
proposed capital distribution ("Tier 1 Association") and has not been 
advised by the OTS that it is in need of more than normal supervision, 
could, after prior notice but without the approval of the OTS, make 
capital distributions during the calendar year equal to the greater of: 
(i) 100% of its net income to date during the calendar year plus the 
amount that would reduce by one-half its "surplus capital ratio" (the 
excess capital over its fully phased-in capital requirements) at the 
beginning of the calendar year; or (ii) 75% of its net income for the 
previous four quarters.  Any additional capital distributions would 
require prior regulatory approval.  In the event the Bank's capital fell 
below its fully phased-in requirement or the OTS notified it that it was 
in need of more than normal supervision, the Bank's ability to make 
capital distributions could be restricted.  In addition, the OTS could 
prohibit a proposed capital distribution by any institution, which would 
otherwise be permitted by the regulation, if the OTS determines that 
such distribution would constitute an unsafe or unsound practice.  
Furthermore, under the OTS prompt corrective action regulations, which 
took effect on December 19, 1992, the Bank would be prohibited from 
making any capital distributions if, after the distribution, the Bank 
would have (i) a total risk-based capital ratio of less than 8.0%; (ii) 
a Tier 1 risk-based capital ratio of less than 4.0% or (iii) a leverage 
ratio of less than 4.0%. 
 
Federal Home Loan Bank System 

The Association is a member of the FHLB of Dallas, which is one of 12 
regional FHLBs that administer 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. 
 
As a member, the Association is required to purchase and maintain stock 
in the FHLB of Dallas in an amount equal to at least 1% of its aggregate 
unpaid residential mortgage loans, home purchase contracts or similar 
obligations at the beginning of each year.  At June 30, 1998, the 
Association had $851,000 in FHLB stock, which was in compliance with 
this requirement. 
 
As a result of FIRREA, the FHLBs are required to provide funds for the 
resolution of troubled savings associations and to contribute to 
affordable housing programs through direct loans or interest subsidies 
on advances targeted for community investment and low- and moderate- 
income housing projects.  These contributions have adversely affected 
the level of FHLB dividends paid and could continue to do so in the 
future.  For the year ended June 30, 1998, dividends paid by the FHLB of 
Dallas to the Association totaled $49,246. 
 
Federal Reserve System  
 
The Federal Reserve Board regulations require savings institutions to 
maintain non-interest earning reserves against their transaction 
accounts (primarily NOW and regular checking accounts).  The Federal 
Reserve Board regulations generally require that reserves of 3% must be 
maintained against aggregate transaction accounts of $43.1 million or 
less (subject to adjustment by the Federal Reserve Board) plus 10% 
(subject to adjustment by the Federal Reserve Board between 8% and 14%) 
against that portion of total transaction accounts in excess of $43.1 
million.  The first $4.7 million of otherwise reservable balances 
(subject to adjustments by the Federal Reserve Board) are exempted from 
the reserve requirements.  The Bank is in compliance with the foregoing 
requirements.  The balances maintained to meet the reserve requirements 
imposed by the Federal Reserve Board may be used to satisfy liquidity 
requirements imposed by the OTS.  Because required reserves must be 
maintained in the form of either vault cash, a non-interest-bearing 
account at a Federal Reserve Bank or a pass-through account as defined 
by the Federal Reserve Board, the effect of this reserve requirement is 
to reduce the Bank's interest-earning assets.  FHLB System members are 
also authorized to borrow from the Federal Reserve "discount window," 
but Federal Reserve Board regulations require institutions to exhaust 
all FHLB sources before borrowing from a Federal Reserve Bank. 
 
Holding Company Regulation 
 
The Company is a nondiversified savings and loan holding company within 
the meaning of the Home Owners' Loan Act (HOLA), as amended.  As such, 
the Company is required to register with the OTS and will be subject to 
OTS regulations, examinations, supervision and reporting requirements.  
In addition, the OTS has enforcement authority over the Company and any 
non-savings institution subsidiaries.  Among other things, this 
authority permits the OTS to restrict or prohibit activities that are 
determined to be a serious risk to the subsidiary savings institution.  
The Bank must notify the OTS 30 days before declaring any dividend to 
the Company. 
 
The HOLA prohibits a savings and loan holding company, directly or 
indirectly, or through one or more subsidiaries, from acquiring another 
savings institution or holding company thereof, without prior written 
approval of the OTS; acquiring or retaining, with certain exceptions, 
more than 5% of a nonsubsidiary savings institution, a nonsubsidiary 
holding company, or a nonsubsidiary company engaged in activities other 
than those permitted by the HOLA; or acquiring or retaining control of 
an institution that is not federally insured.  In evaluating 
applications by holding companies to acquire savings institutions, the 
OTS must consider the financial and managerial resources and future 
prospects of the company and institution involved, the effect of the 
acquisition on the risk to the insurance funds, the convenience and 
needs of the community and competitive factors. 
 
As a unitary savings and loan holding company, the Company generally 
will not be restricted under existing laws as to the types of business 
activities in which it may engage, provided that the Bank continues to 
meet OTS requirements.  The HOLA limits the activities of a multiple 
savings and loan holding company and any non-insured institution 
subsidiaries primarily to activities permissible for bank holding 
companies under Section 4(c)(8) of the BHC Act, subject to the prior 
approval of the OTS, and activities authorized by OTS regulations.  The 
activities of savings institutions are governed by HOLA, as amended and, 
in certain respects, the FDI Act.  The HOLA and the FDI Act were amended 
by the FIRREA, which was enacted for the purpose of resolving problem 
savings institutions, establishing a new thrift insurance fund, 
reorganizing the regulatory structure applicable to a savings 
institution, and imposing bank-like standards on savings institutions, 
and by FDICIA.  The federal banking statues as amended by the FIRREA and 
FDICIA (1) restrict the use of borrowed deposits by troubled savings 
institutions that are not well-capitalized, (2) prohibit the acquisition 
of any corporate debt security that is not rated in one of the four 
highest rating categories, (3) restrict the aggregate amount of loans 
secured by non-residential real estate property to 400% of capital, (4) 
permit savings and loan holding companies to acquire up to 5% of the 
voting shares of non-subsidiary savings institutions or savings and loan 
holding companies without prior approval, (5) permit bank holding 
companies to acquire healthy savings institutions and (6) require the 
federal banking agencies to establish by regulation loan-to-loan value 
limitations on real estate lending.  However, the Bank does not have the 
authority under the HOLA to make certain loans or investments, not 
exceeding 5.0% of its total assets, on each of (i) non-conforming loans 
(loans in excess of the specific limitations of the HOLA) and (ii) 
construction loans without security for the purpose of financing what is 
or is expected to be residential property.  To assure repayment of such 
loans, the Bank relies substantially on the borrower's general credit 
standing, personal guarantees and projected future income on the 
properties. 
 
Federal Taxation 
 
General.  The following discussion of tax matters is intended only as a 
summary and does not purport to be a comprehensive description of the 
tax rules applicable to the Association. 
 
Historically, for federal income tax purposes, the Association has 
reported its income and expenses on the accrual method of accounting and 
has filed consolidated federal income tax returns on this basis.  The 
Association is subject to the rules of federal income taxation 
applicable to corporations.  Generally, the Code requires that all 
corporations, including the Association, compute taxable income under 
the accrual method of accounting.  For its taxable year ending 1998, the 
Association was subject to a maximum federal income tax rate of 34%.   
 
Bad Debt Reserves.  Beginning with the year ending June 30, 1997, the 
Association began determining its tax bad debt reserve based upon the 
six-year historical average method as provided in the Internal Revenue  
Code.  Previously, the Association had used the "percentage-of-taxable- 
income" method.  See Small Business Job Protection Act. 
 
Earnings appropriated for bad debt reserves and deducted for federal 
income tax purposes cannot be used by the Association to pay cash 
dividends to the Holding Company without the payment of income taxes by
the Association at the then current income tax rate on the amount deemed 
distributed, which would include the amount of any federal income taxes 
attributable to the distribution.  Thus, any dividends to the Holding 
Company that would reduce amounts appropriated to the Association's bad 
debt reserves and deducted for federal income tax purposes could create 
a tax liability for the Association.  The Association does not intend to 
pay dividends that would result in a recapture of its bad debt reserves. 
 
The income tax law requires the recapture of the Association's base year 
tax bad debt reserves in the following cases: 
 
      1.  Certain excess distributions to shareholders; 
      2.  certain redemption of shareholders, and 
      3.  the liquidation of the Association. 
 
Additionally, if the Association, or its successors, should fail to qualify 
as a bank, as defined by the Internal Revenue Code, it would be required to 
recapture its base year tax bad debt reserves.  Regulations to be written 
will address the recapture requirements, if any, in the case of spin-offs, 
mergers, acquisitions, and other reorganizations. 
 
State Taxation 
 
Mississippi Taxation.  The Holding Company and the Association are 
subject to the Mississippi corporate income tax and franchise tax to the 
extent that such corporations are engaged in business in the State of 
Mississippi or have income that is generated in the state.  A franchise 
tax is imposed at a rate of $2.50 per $1,000, or fractional part  
thereof, of capital, surplus, undivided profits and reserves employed in 
Mississippi.  An income tax is imposed at a rate of 3% on the first 
$5,000 of taxable income, 4% on the next $5,000 of taxable income and 5% 
on taxable income in excess of $10,000.  A Mississippi combination 
return of corporate income and franchise tax must be filed annually.  
For these purposes, "taxable income" generally means federal taxable 
income, subject to certain adjustments (including the addition of 
interest income on non-Mississippi state and municipal obligations and 
the exclusion of interest income on U. S. Treasury obligations).  The 
exclusion of income on U. S. Treasury obligations has the effect of 
reducing the Mississippi taxable income of savings institutions. 
 
Delaware Taxation.  As a Delaware holding company not earning income in 
Delaware, the Holding Company is exempted from Delaware corporate income 
tax but is required to file an annual report with and pay an annual 
franchise tax to the State of Delaware. 
 

Competition 
 
The Company and the Bank currently serve Lowndes County, Mississippi, 
and adjacent counties in Mississippi and Alabama.  Over this same area, 
the Bank competes directly in Lowndes County with approximately 7 
banking institutions and many credit unions, financial companies, 
brokerage firms, mortgage companies and insurance companies.  The 
institution is the only savings association in the immediate area.  The 
slogan, "Local People with Local Interests," identifies the Bank as a 
community-oriented financial institution, which management considers as 
its major competitive advantage in attracting and retaining customers in 
its market area. 
 
Research and Development 
 
For the years ended June 30, 1997, and 1998, the Company and the Bank 
had no expenditures for research and development. 
 
Dependence on Customers 
 
The Company and the Bank are not dependent on one or a few major 
customers. 
 
Environmental Laws 
 
Compliance with environmental laws has not had a significant impact on 
the financial condition of the Company or the Bank. 
 
Number of Employees 
 
At June 30, 1998, the Company had no employees.  At June 30, 1998, the 
Bank had 37 employees of which 32 were full-time. 
 
 
 
ITEM 2 - DESCRIPTION OF PROPERTY 
 
The Bank conducts its business through its main office in Columbus and 
three branch offices in Columbus, Mississippi. 
 
 
 
                        Date     Net Book Value at    Leased or 
      Location        Acquired   June 30, 1998 (1)      Owned 
____________________  _________  _________________  _______________ 

                               (Dollars in Thousands) 
 
Main Office 
1121 Main Street         1979           $761        Leased/Owned (2) 
Columbus,  
  Mississippi 
 
Branch Office 
420 Alabama Street       1971           $130            Owned 
Columbus,  
  Mississippi 
 
Branch Office 
2024 Highway 45          1987           $293            Owned 
  North 
Columbus,  
  Mississippi              
 
Branch Office 
58 Center Road           1998           $622            Owned 
 (New Hope) 
Columbus,  
  Mississippi               
 
(1)  Includes value of premises and equipment. 
 
(2)  The main office building is owned by the Bank but is situated on 
     property that is leased from the Columbus School Board and,   
     pursuant to Statue, the lease has a 99 year term which is renewable 
     forever, subject to an upward adjustment to the rent paid.  This 
     lease is subject to litigation which may result in an increase in 
     rent paid prior to the expiration date.  Management does not 
     currently believe that any increase will have a material impact on 
     the Bank's financial condition or results of operations. 
 
The Bank also owns two pieces of property in Lowndes County for the future 
operation of a branch office. 
 
 
ITEM 3 - LEGAL MATTERS 
 

The Bank is a defendant in a pending case in which the plaintiff is seeking
damages growing out of an alleged breach of a lease associated with
foreclosed properties.  In a related case, the Bank is a defendant in
which the plaintiff is seeking recovery of attorney fees. The cases are
being vigorously contested and management believes, based on the advice of
legal counsel, that the final resolution of these proceedings will not
have a material impact on the Company's consolidated financial position or
results of operations.
 
 
 
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY MATTERS 
 
None 
 
 
                                   PART II 
 
 
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS 
 
A)  The Company's common stock is traded in the over-the-counter market 
    under the symbol "FFBS" and is quoted on the Over-the-Counter Bulletin
    Board. 
 
B)  The conversion from the mutual form of ownership to a stock 
    institution was effective June 30, 1993.  The offering price was $10 
    per share.  The stock traded in a range from $18.00 to $26.00 during 
    the fiscal year 1998. 
 
C)  Dividends of $2.55 per share were declared on the common stock for 
    the year ended June 30, 1998.  
 
D)  As described in Item 1 - Regulation, the payment of dividends are 
    subject to approval and/or restrictions by governmental regulations. 
 
E)  At June 30, 1998, the Company had approximately 666 shareholders.  
    The Bank is 100% owned by the Company. 
 
 
ITEM 6 - SELECTED FINANCIAL DATA 
 
The information titled "Selected Financial Data" and contained on Pages 
6-7 of the Company's annual report to the shareholders for the year 
1998 is incorporated herein by reference in response to this item.  
 
 
 
                SUPPLEMENTAL STATISTICAL INFORMATION 
 
  I.  Distribution of Assets, Liabilities, and Stockholders' Equity: 
      Interest Rates and Interest Differential 

 
      A.  Average Balance Sheets (Consolidated) and Analysis of Net 
          Interest Earnings: 
 
                                        Year Ended June 30 
                       ___________________________________________________
                                  1997                      1998      
                       _________________________ _________________________ 
                                         Average                   Average 
                        Average           Yield/ Average            Yield/ 
                        Balance Interest  Cost   Balance  Interest   Cost 
                       ________ ________ _______ ________ ________ _______ 
                                      (Dollars in Thousands)        
 Assets: 
 Interest-earning 
  assets:  
   Mortgage loans, 
    net            (1) $ 78,026 $  6,507   8.34% $ 86,358 $  7,222   8.36% 
   Other loans     (1)    9,771      959   9.81%   10,926    1,035   9.47% 
   Mortgage-backed 
    and related 
    securities     (1)    4,991      309   6.19%   11,969      753   6.29%
   Interest-
    bearing 
    deposits       (1)    5,735      310   5.41%    6,900      380   5.51% 
   Investment  
   securities      (1)   23,171    1,324   5.71%   17,280    1,011   5.85%
   FHLB stock      (6)      776       45   5.80%      819       49   5.98%
                       ________ ________         ________ ________  
 Total interest- 
  earning assets        122,470    9,454   7.72%  134,252   10,450   7.78%
 
Non-interest-
 earning assets           4,623                     6,167 
                       ________                  ________ 
 Total Assets      (6) $127,093                  $140,419 
                       ========                  ======== 
 
Liabilities and 
 Retained Earnings: 
  Interest-bearing 
   liabilities: 
    Deposits: 
     Passbook 
      accounts     (2) $  6,192 $    175   2.83% $  6,148 $    171   2.78% 
     Now accounts  (1)   12,055      194   1.61%   12,986      199   1.53% 
     Money market 
      accounts     (1)    5,758      198   3.44%    5,425      205   3.78%
     Certificate  
      accounts     (1)   76,200    4,196   5.51%   83,281    4,794   5.76% 
    Borrowed funds            0        0   0.00%    6,536      359   5.49%
                       ________ ________ _______ ________ ________ _______ 
    Total interest- 
     bearing  
     liabilities        100,205    4,763   4.75%  114,376    5,728   5.01% 
  Other liabilities       2,022                     3,101 
                       ________                  ________ 
                               
  Total liabilities(6)  102,227                   117,477 
   
  Retained earnings(6)   24,866                    22,942 
                       ________                  ________ 
 
   Total liabilities 
    and retained 
    earnings       (6) $121,093                  $140,419 
                       ========                  ======== 
 
Net interest
 income/interest 
 rate spread       (3)          $  4,691   2.97%          $  4,722   2.77% 
                                ========                  ======== 
 
Net earning 
 assets/net 
 interest margin   (4) $ 22,265            3.83% $ 19,876            3.52% 
                       ========                  ======== 
 
Interest-earning  
 assets to 
 interest-bearing 
 liabilities            122.22%                   117.38%
  
 
          (1)  Based upon or derived from daily balances. 
          (2)  Based upon quarterly balances. 
          (3)  Interest rate spread represents the difference  
               between the average rate on interest-earning  
               assets and the average cost of interest-bearing 
               liabilities. 
          (4)  Net interest margin represents net interest income  
               before the provision for loan losses divided by  
               average interest-earning assets. 
          (5)  For the purposes of these computations, nonaccruing  
               loans are included in the average loan balances  
               outstanding. 
          (6)  Based upon or derived from monthly balances. 

 
 
      B.  Rate/Volume Analysis: 
 
          The following table describes the extent to which changes in  
          interest rates and changes in the volume of interest-related
          assets and liabilities have affected the Company's interest 
          income and expense during the periods indicated.  Information 
          is provided in each category with respect to (i) changes  
          attributable to changes in volume (changes in average balance 
          multiplied by prior average interest rate), (ii) changes  
          attributable to changes in rate (changes in average interest  
          rate multiplied by prior average balance), and (iii) the net 
          change.  The changes attributable to the combined impact of 
          volume and rate have been allocated proportionately to the 
          changes due to volume and the changes due to rate. 
  
                                   Year Ended              Year Ended 
                                  June 30, 1996           June 30, 1997    
                                   Compared to             Compared to 
                                   Year Ended              Year Ended 
                                  June 30, 1997           June 30, 1998 
                            ______________________  ______________________ 
                               Increase                Increase 
                             (Decrease) in           (Decrease) in 
                             Net Interest            Net Interest 
                            Income Due to           Income Due to 
                            ______________          ______________ 
                            Volume   Rate     Net   Volume   Rate    Net 
                            ______  ______  ______  ______  ______  ______ 
 
                                            (Dollars in Thousands) 
         Interest-earning  
          assets: 
           Mortgage loans,  
            net             $  402  $(111)  $  291  $  699  $   16  $  715 
           Consumer and  
            other loans         (8)   109      101     110     (34)     76 
           Mortgage-backed  
            and related  
            securities         166      3      169     439       5     444 
           Interest-bearing  
            deposits            (7)     5       (2)     64       6      70 
           Investment  
            securities        (162)   129      (33)   (343)     30   (313)
           FHLB stock            3     (3)       0       2       2       4
                            ______  ______  ______  ______  ______  ______ 
            Total              394     132     526     971      25     996 
                            ______  ______  ______  ______  ______  ______ 
           
          Interest-bearing  
           liabilities: 
            Passbook  
             accounts       $    3  $    4  $    7  $   (1) $   (3) $   (4)
            Now accounts        11     (20)     (9)     15     (10)      5 
            Money market 
             accounts          (23)    ( 6)     (29)   (18)     25       7 
            Certificate  
             accounts          238      (7)     231    401     197     598
            Borrowings          -       -        -     359      -      359
                            ______  ______  ______  ______  ______  ______ 
           Total               229     (29)    200     756     209     965 
                            ______  ______  ______  ______  ______  ______ 
  
         Net change in  
          interest income   $  165  $  161  $  326  $  215  $ (184) $   31 
                            ======  ======  ======  ======  ======  ====== 
 
 
 II.  Investment Portfolio and Mortgage-Backed and Related Securities 
 
      A.  The following table sets forth the carrying amount of investment 
          securities at the dates indicated: 
 
                                                          June 30, 
                                                       1997      1998  
                                                     ________  ________ 
                                                       (In Thousands)       
          Held-to-Maturity: (1)
          U. S. Treasury and other U. S.  
           Government agencies                       $ 15,586  $ 12,691 
          States and political subdivisions             2,006     1,000 
          Mortgage-backed and related securities        7,268     5,856 
          Marketable equity securities                                  
                                                     ________  ________ 
 
                                                     $ 24,860  $ 19,547 
                                                     ========  ======== 

          Available-for-Sale: (2)
           U. S. Treasury and other U. S.  
            Government agencies                      $     -   $  1,515 
           Mortgage-backed and related securities          -     10,572
           Marketable equity securities                 1,222     1,814    
                                                     ________  ________ 
 
                                                     $  1,222  $ 13,901 
                                                     ========  ======== 

 
      B.  The following table sets forth the securities of debt investment 
          securities at June 30, 1998, and the weighted average yields of  
          such securities: 
 
                                          Maturing 
                   _______________________________________________________
                                   After One    After Five 
                       Within      But Within   But Within      After     
                      One Year     Five Years   Ten Years     Ten Years
                   _____________ _____________ _____________ _____________
                   Amount  Yield Amount  Yield Amount  Yield Amount  Yield 
                   _______ _____ _______ _____ _______ _____ _______ _____ 
                                       (In Thousands) 
Held-to-
 Maturity:(1)
  U.S. Treasury 
   and other U. S.
   Government 
   agencies        $ 4,695 5.59% $ 7,996 6.12% $   -     - % $    -    - %
  States and 
   political  
   subdivisions        -     - %     -     - %     -     - %   1,000 5.00%
  Mortgage Backed 
   and related 
   securities          -     - %   1,684 6.10%  1,515  6.60%   2,657 6.66%
                   _______ _____ _______ _____ ______ ______ _______ _____ 
 
                   $ 4,695 5.59% $ 9,680 6.12% $1,515  6.60% $ 3,657 6.21% 
                  ________ _____ _______ _____ ______ ______ _______ _____
 
Available-for-
 Sale:(2)
  U.S. Treasury 
   and other 
   U. S. Govern-  
   ment agencies   $    -    - % $ 1,515 6.66% $   -     - % $   -     - %  
Mortgage-backed
 and related
 securities             -    - %      -    - %     -     - %  10,572 6.19%
Marketable equity 
 securities          1,814 5.63%      -    - %     -     - %     -     - %
                   _______ _____ _______ _____ _______ _____ _______ _____


                     1,814 5.63%   1,515 6.66%     -     - % $10,572 6.19%
                   _______ _____ _______ _____ _______ _____ _______ _____
 Total
 Securities        $ 6,509 5.60% $11,195 6.19% $ 1,515 6.60% $14,229 6.20%
                   ======= ===== ======= ===== ======= ===== ======= ===== 

(1) The carrying value is the amortized cost of the security at each
    reporting date.
(2) The carrying value is the approximate fair value of the security at
    each reporting date.



Tax equivalent adjustments have not been made in calculating yields on  
obligations of states and political subdivisions. 
 
 
III.  Loan Portfolio 
 
      A.  Types of Loan 
 
          Reference is made to Note C of the consolidated financial  
          statements. 
 
      B.  Maturities and sensitivities of loans to changes in  
          interest rates.  The following table shows the maturity  
          of the Association's loan portfolio at June 30, 1998.   
          Loans that have adjustable rates are shown as amortizing 
          to final maturity rather than in the period during which 
          the interest rates are next subject to change.  The table 
          does not include prepayments but does reflect scheduled 
          principal amortization. 
 
                                              (In Thousands) 
                                              June 30, 1998 
                                    __________________________________ 
                                                 Maturing 
                                    __________________________________ 
                                     Within 
                                      One      1-5     Over 
                     Type             Year    Years   5 Years   Total 
          ________________________  _______  _______  _______  _______ 
 
          One-to-Four Family        $ 8,946  $ 8,015  $50,601  $67,562 
          Other Mortgage Loans        1,665    3,046   12,329   17,040 
          Consumer and Other Loans    6,136    7,847      857   14,840 
                                    _______  _______  _______  _______ 

 
                                    $16,747  $18,908  $63,787  $99,442 
                                    =======  =======  =======  ======= 
 
          Loans with: 
            Predetermined interest 
              rates                 $15,403  $18,180  $26,871  $60,454 
           Adjustable interest  
              rates                   1,344      728   36,916   38,988 
                                    _______  _______  _______  _______ 
 
                                    $16,747  $18,908  $63,787  $99,442 
                                    =======  =======  =======  ======= 
 
      C.  Non-performing Loans: 
 
          1.  The following table sets forth information regarding non- 
              accrual loans, loans which are 90 or more delinquent and  
              still accruing, and foreclosed properties at the dates 
              indicated.  At June 30, 1998, there are no potential problem 
              loans except as included in the table below. 
 
                                                           (In Thousands) 
                                                                 At 
                                                          June 30  June 30 
                                                          _______  _______ 
 
                                                            1997    1998 
                                                          _______  _______ 
 
              Non-accrual mortgage loans                  $     0  $     0 
              Non-accrual other loans                           0        1 
                                                          _______  _______ 
 
              Total non-accrual loans                           0        1
 
              Loans 90 days or more delinquent, 
                and still accruing                            446    1,382
                                                          _______  _______ 
 
              Total non-performing loans                      446    1,383
 
              Total foreclosed real estate, net of 
                related allowance for losses                    0        0
                                                          _______  _______ 

 
              Total non-performing assets                 $   446  $ 1,383 
                                                          =======  ======= 
 
              Troubled debt restructured                  $    39  $    31
                                                          =======  ======= 
 
              Non-performing loans to total loans            .48%    1.40% 
       
              Total non-performing assets to total assets    .34%     .92% 
 
          2.  There were no loan concentrations in excess of 10% of total 
              loans at June 30, 1998. 
 
          3.  There were no outstanding foreign loans at June 30, 1998. 
 
          4.  Loans classified for regulatory purposes or for internal  
              credit review purposes that have not been disclosed in the 
              above table do not represent or result from trends or  
              uncertainties that management expects will materially impact 
              the financial condition of the Company or its subsidiary  
              bank, or their future operating results, liquidity, or  
              capital resources. 
 
          5.  If all nonaccrual loans have been current throughout their  
              terms, interest income for 1998 and 1997 would have been  
              increased/(decreased) by approximately $0 and $6, 
              respectively. 
 
          6.  Management stringently monitors assets that are classified 
              as non-performing.  Non-performing assets include nonaccrual 
              loans, loans past due 90 days or more, and foreclosed  
              properties.  Management places loans on a nonaccrual status 
              when it is determined that the borrower is unable to meet 
              his contractual obligations or when interest or principal is 
              90 days or more past due, unless the loan is adequately  
              secured by way of collateralization, guarantees, or other 
              security. 
 
          7.  At June 30, 1998, management was not aware of any potential 
              problem loans not previously disclosed. 
 
      D.  Other interest-bearing assets: 
 
          There were no other interest-bearing non-performing assets at  

          June 30, 1998. 
 
 
 IV.  Summary of Loan Loss Experience 
 
      A.  Allowance for Loan Losses: 
 
          The allowance for loan losses is established through a provision 
          for loan losses based on management's periodic evaluation of the 
          adequacy of the allowance for loan losses.  Such evaluation,  
          which includes a review of all loans on which full collectibility 
          may not be reasonably assured, considers among other matters  
          known and inherent risks in the portfolio, prevailing market 
          conditions, management's judgment as to collectibility, the  
          estimated net realizable value of the underlying collateral,  
          historical loan loss experience and other factors that warrant 
          recognition in providing for an adequate loan loss allowance. 
 
                                                               For the 
                                                             Year Ended   
                                                               June 30 
                                                           ______________ 
                                                            1997    1998 
                                                           ______  ______   

    
                                                           (In Thousands) 
 
          Balance at beginning of period                   $  666  $  576 
          Provision (benefits) for loan losses                  0       5 
          Charge-offs: 
            Mortgage loans                                     46       0 
            Other loans                                        51      63 
          Recoveries: 
            Mortgage loans                                     3        1 
            Other loans                                        4        4 
                                                           ______  ______   

    
           Balance at end of period                        $  576  $  523 
                                                           ======  ====== 
 
          Ratio of net charge-offs during the period 
            to average loans outstanding during the  
            period                                          0.11%   0.06% 
 
          Ratio of allowance for loan losses to non- 
            performing loans at the end of the period     129.15%  37.82% 
 
          Ratio of allowance for loan losses to net  
            loans receivable at the end of the period       0.62%   0.53% 
 
          Ratio of allowance for loan losses and fore- 
            closed real estate to total non-performing 
            assets at the end of the period               129.15%  37.82% 
 
 
      B.  Allocation of the Allowance for Loan Losses 
 
                                       At June 30, 1997   At June 30, 1998 
                                      
                                       ________________   ________________
                                               Percent            Percent 
                                                  Of                 Of 
                                               Loans to           Loans to 
                                                Total              Total 
                                       Amount   Loans     Amount   Loans 
                                       ______  ________   ______  ________  

    
          At end of period allocated  
            to: 
              One-to-four family       $  305    71.99%   $  300    67.94% 
              Commercial real estate 
                and multi-family          197    10.38%      143    11.24% 
              Construction and land         0     5.18%        0     5.90% 
              Consumer and other  
                loans                      74    12.45%       80    14.92% 
                                       ______  ________   ______  ________ 
 
              Total allowance          $  576   100.00%   $  523   100.00% 
                                       ======  ========   ======  ======== 
 
  V.  Deposits 
 
      A.  Distribution of Deposit Accounts 
 
          The following table sets forth the distribution of the Bank's  
          deposit accounts at the dates indicated and the weighted average  
          interest rates on each category of deposits presented.  The Bank 
          does not have a significant amount of deposits from out-of-state. 

 
          Management does not believe that the use of year end balances 
          instead of average balances resulted in any material difference 

          in the information presented. 
 
                                                   
                                          At June 30,
                      ___________________________________________________   

                                1996                      1997 
                      _________________________ __________________________ 
                                       Weighted                  Weighted 
                              Percent   Average         Percent   Average 
                              Of Total  Nominal         Of Total  Nominal 
                      Amount  Deposits   Rate   Amount  Deposits   Rate 
                      _______ ________ ________ _______ _________ ________  
  
                                         (Dollars in thousands) 
Transaction  
 accounts: 
  Interest-bearing 
   checking  
   accounts           $10,383   10.47%    2.26% $ 9,350     9.00%   2.07% 
  Money market 
   accounts             6,057    6.11%    3.46%   5,626     5.42%   3.57% 
  Non-interest- 
   bearing checking 
   accounts             2,851    2.88%    0.00%   3,557     3.43%   0.00% 
                      _______ ________ ________ _______ _________ _______ 
 
Total transaction  
 accounts              19,291   19.46%    2.30%  18,533    17.85%   2.13% 
Regular passbook 
 accounts               6,330    6.38%    2.76%   6,186     5.96%   2.84% 
                      _______ ________ ________ _______ _________ _______ 
Total transaction 
 and passbook  
 accounts              25,621   25.84%    2.42%  24,719    23.81%   2.31% 
                      _______ ________ ________ _______ _________ _______ 
Certificate  
 accounts: 
  One-year  
   certificates 
   and under           45,931   46.33%    5.21%  44,192    42.58%   5.45% 
  Over one-year  
   thru three-year 
   certificates        22,512   22.70%    5.80%  29,132    28.07%   5.81% 
  Greater than  
   three-year 
   certificates         5,084    5.13%    6.00%   5,743     5.54%   6.29% 
                      _______ ________ ________ _______ _________ _______ 

    Total  
     certificate 
     accounts          73,527   74.16%    5.44%   79,079   76.19%   5.64% 
                      _______ ________ ________ ________ ________ _______ 
 
Total Deposits        $99,148  100.00%    4.66% $103,798  100.00%   4.85% 
                      ======= ======== ======== ======== ======== ======= 
 
                                                        At June 30, 
                                              
                                              _____________________________ 
                                                            1998
                                              _____________________________ 
                                                                   Weighted 
                                                          Percent   Average 
                                                          Of Total  Nominal 
                                                 Amount   Deposits    Rate  
                                               _________  ________ ________ 
  
                                                   (Dollars in thousands) 
Transaction  
 accounts: 
  Interest-bearing 
   checking                                        
   accounts                                     $  9,979     8.71%    1.94% 
  Money market 
   accounts                                        4,970     4.33%    3.85% 
  Non-interest- 
   bearing checking 
   accounts                                        4,817     4.21%    0.00% 
                                                ________  ________  _______ 
 
Total transaction  
 accounts                                         19,766    17.25%    1.95% 
Regular passbook 
 accounts                                          6,787     5.93%    2.83% 
                                                ________  ________  _______ 
Total transaction 
 and passbook  
 accounts                                         26,553    23.18%    2.17% 
                                                ________  ________  _______ 
Certificate  
 accounts: 
  One-year  
   certificates 
   and under                                      47,969    41.88%    5.59% 
  Over one-year  

   thru three-year 
   certificates                                   33,433    29.19%    5.95% 
  Greater than  
   three-year 
   certificates                                    6,583     5.75%    6.50% 
                                                ________  ________  _______ 
    Total  
     certificate 
     accounts                                     87,985    76.82%    5.79% 
                                                ________  ________  _______ 
 
   Total Deposits                               $114,538   100.00%    4.95% 
                                                ========  ========  ======= 
 
      B.  Other categories 
  
          None 
 
      C.  Foreign deposits 
 
          None 
 
      D.  Time certificates of deposit of $100,000 or more and maturities 
          at June 30, 1998:
 
                                                    3        6 
                                           3     Through  Through   Over 
                                        Months      6       12       12 
                                Total   Or Less  Months   Months   Months 
                               _______  _______  _______  _______  _______ 
                                              (In Thousands) 
            Time certificates 
             of deposit of 
             $100,000 or more  $19,795  $ 2,836  $ 4,335  $ 9,929  $ 2,695  
                               =======  =======  =======  =======  ======= 
 
      E.  Foreign office time deposits of $100,000 or more: 
     
            Not applicable. 
 
 
 VI.  Return on Equity and Assets 
 
      The following financial ratios are presented for analytical purposes: 
 

                                                               June 30, 
                                                           ________________ 
                                                             1997     1998 
                                                           _______  _______ 

    
        Return on assets (net income divided by total 
          average assets)                                    1.16%    1.13% 
 
        Return on equity (net income divided by average 
          equity)                                            5.95%    6.89% 
 
        Dividend payout ratio (dividends per share  
          divided by net income per share)                  51.55%  247.57%
            
        Equity to asset ratio (average equity divided  
          by average total assets)                          19.57%   16.34% 
 
 
 VII. Short-Term Borrowings 
 
      The Company may obtain advances from the FHLB of Dallas upon the
      security of its FHLB of Dallas stock and certain of the Savings
      Bank's residential mortgage loans, provided certain standards 
      related to creditworthiness have been met.  Such advances are made
      pursuant to several credit programs, each of which has its own
      interest rate and range of maturities.  Such advances are generally
      available to meet seasonal and other withdrawals of deposit accounts
      and to permit increased lending and investing.

      The Company had $11.0 million in FHLB advances outstanding at 
      June 30, 1998. The following table sets forth the maximum month-end
      balance and average balance of the Bank's FHLB advances during the
      periods indicated.  See also, Note I to the Consolidated Financial
      Statements.  


                                                    Year Ended June 30, 
                                                    __________________
                                                       1998     1997
                                                     _______  _______
                                                  (Dollars in Thousands)

      Maximum balance                                $13,402  $    0
      Average balance                                  6,536       0
      Weighted average interest rate of
        FHLB advances                                  5.49%       0%

      The following table sets forth certain information as to the Bank's
      long-term (terms to maturity in excess of 90 days) and short-term
      (terms to maturity of 90 days or less) FHLB advances at the dates 
      indicated:

                                                      1998     1997
                                                    _______  _______
                                                 (Dollars In Thousands)

      FHLB long-term advances                        $ 8,350  $    0
      Weighted average interest rate                   5.16%       0%
      FHLB short-term advances                         2,611       0
      Weighted average interest rate                   5.57%       0%
                                   
VIII. Capital Adequacy Data of Subsidiary Bank: 
 
                          
                                        At June 30, 1998 
                      ____________________________________________________ 
 
                              Tangible             Core        Risk-Based 
                               Capital            Capital        Capital    
                      ________________  ________________  ________________ 
                      Amount   Percent  Amount   Percent  Amount   Percent 
                      _______  _______  _______  _______  _______  _______ 
                    
       First Federal  $19,931   13.40%  $19,931   13.40%  $20,454   23.60% 
       OTS Require- 
         ment           2,232    1.50%    4,466    3.00%    6,919    8.00%
                      _______  _______  _______  _______  _______  _______ 
 
       Excess         $17,699   11.90%  $15,465   10.40%  $13,535   15.60% 
                      =======  =======  =======  =======  =======  ======= 
 
 
      The OTS capital regulations require savings institutions to meet
      three capital standards:  a 1.5% tangible capital standard; a 3%
      leverage (core capital) ratio; and an 8% risk-based capital 
      standard.  Core capital is defined as common stockholders' equity 
      (including retained earnings), noncumulative perpetual preferred
      stock and related surplus, minority interest in equity accounts of
      consolidated subsidiaries less intangibles other than certain
      qualifying supervisory intangible assets and certain purchased
      mortgage servicing rights.  The OTS regulations also require that, 
      in meeting the leverage ratio, tangible and risk-based capital
      standards institutions must deduct investments in and loans to  
      subsidiaries engaged in activities not permissible for a national
      bank.  The Bank currently has no subsidiaries engaged in such
      activities.  At June 30, 1997 and 1998, the Bank exceeded each of 
      its capital requirements. 
 
 
 IX.  Interest Rate Sensitivity Analysis 

 
      The matching of assets and liabilities may be analyzed by examining  
      the extent to which such assets and liabilities are "interest rate 
      sensitive"  and by monitoring an institution's interest rate  
      sensitivity "gap."  An asset or liability is said to be interest 
      rate sensitive within a specific time period if it will mature or
      reprice within that time period.  The interest rate sensitivity gap 
      is defined as the difference between the amount of interest-earning
      assets anticipated, based upon certain assumptions, to mature or
      reprice within a specific time period and the amount of interest-
      bearing liabilities anticipated, based upon certain assumptions, to
      mature or reprice within that time period.  A gap is considered
      positive when the amount of interest rate sensitive assets exceeds
      the amount of interest rate sensitive liabilities.  A gap is
      considered negative  when the amount of interest rate sensitive
      liabilities exceeds the amount of interest rate sensitive assets.
      Generally, during a period of rising interest rates, a negative gap
      would adversely affect net interest income while a positive gap 
      would result in an increase in net interest income, while 
      conversely during a period of falling interest rates, a negative 
      gap would result in an increase in net interest income and a 
      positive gap would negatively affect net interest income. 
 
      Over the years the Bank has taken steps to reduce or control its gap  
      by emphasizing adjustable-rate loans, originating conforming fixed- 
      rate loans for sale, and maintaining investments with shorter terms  
      to maturity.  At June 30, 1998, total interest-earning assets  
      maturing or repricing within one year exceeded total interest-bearing
      liabilities maturing or repricing in the same time period by $1.7
      million representing a positive cumulative one-year gap ratio of
      (1.15%).  Thus, during periods of falling interest rates, it is 
      expected that the cost of the Bank's interest-bearing liabilities  
      would fall more quickly than the yield on its interest-earning
      assets, which would positively affect net interest income.  In
      periods of rising interest rates, the opposite effect on net 
      interest income is expected.  In periods of substantial interest 
      rate declines, the Bank could experience increased prepayments of 
      its mortgage loans which may result in the reinvestment of such
      proceeds at market rates which are lower than current rates.  
      During 1997, the market dictated that adjustable rate mortgages 
      carry a shorter initial time period before the loan can reprice,
      which resulted in these assets repricing faster than the year 
      before, thus decreasing the 1 year negative interest sensitivity
      gap.  During 1998, interest-earning asets repricing within 1 year
      increased substantially due to the purchase of adjustable-rate
      mortgage-backed and related securities that were funded with
      short-term advances from the FHLB, which also increased interest-
      bearing liabilities repricing within 1 year.
 
      Management of the Bank believes that, given the level of capital of 
      the Bank and the excess of interest-earning assets over interest- 
      bearing liabilities, the increased net income resulting from a  
      mismatch in the maturity of its asset and liability portfolios  
      provides sufficient returns during periods of declining or stable  
      interest rates to justify the increased vulnerability to sudden and 
      unexpected increases in interest rates. 
 
      The following table sets forth the amounts of interest-earning assets 
      and interest-bearing liabilities outstanding at June 30, 1998, which  
      are anticipated by the Bank, based upon certain assumptions, to  
      reprice or mature in each of the future time periods shown.  Except 
      as stated below, the amount of assets and liabilities shown which  
      reprice or mature during a particular period were determined in 
      accordance with the contractual terms of the assets or liability.   
      Loans that have adjustable interest rates are shown as being due in  
      the period during which the interest rates are next subject to
      change. 
 
      Decay rates for deposits are assumed to indicate the annual rate at  
      which an interest-bearing liability will be withdrawn in favor of an 
      account or other investment with a more favorable return.  Decay  
      rates have been assumed for regular passbook, NOW and other checking 
      accounts, and money market accounts.  The decay rates assumed in this 
      evaluation are as follows: 
 
                                          Annual Decay Rate 
                            _______________________________________________ 
 
                             Less                                    More 
                             Than     1 to      3 to       5 to      Than 
                            1 Year   3 Years   5 Years   10 Years  10 Years 
                           ________  ________  ________  ________  ________ 
 
      Regular Passbook       17.00%    17.00%    16.00%    14.00%    14.00% 
      NOW and Other  
        Checking             37.00%    32.00%    17.00%    17.00%    17.00% 
      Money Market           79.00%    31.00%    31.00%    31.00%    31.00% 
 
      The above prepayment and decay rates are those national assumptions 
      published by the OTS as of December 31, 1992.  The assumptions used  
      at the dates indicated, although standardized, may not be indicative 
      of actual prepayments and withdrawals experienced by the Bank. 
 
      Certain shortcomings are inherent in the method of analysis presented
      in the foregoing table.  For example, although certain assets and 
      liabilities may have similar maturities or periods to repricing, they 
      may react in different degrees to changes in market interest rates.  
      Also, the interest rates on certain types of assets and liabilities  
      may fluctuate in advance of changes in market interest rates, while 
      interest rates on other types may lag behind changes in market rates. 

      Additionally, certain assets, such as ARM loans, have features which 
      restrict changes in interest rates on a short-term basis and over the 
      life of the asset.  Further, in the event of a change in interest  
      rates, prepayment and early withdrawal levels would likely deviate 
      significantly from those assumed in calculating the table.  Finally,  
      the ability of many borrowers to service their debt may decrease in  
      the event of an interest rate increase. 
 
                                      At June 30, 1998 
                  _______________________________________________________ 
                             More Than  More Than 
                    Within   1 Year to  5 Years To  More Than 
                    1 Year    5 Years    10 Years   10 Years     Total   
                  _________  _________  __________  _________  _________ 
                                      (In Thousands) 
 
Interest-earning 
 assets: 
  Mortgage loans  $  44,166  $  15,172  $   11,041  $  14,223  $  84,602    
  Other loans         6,159      8,019         411        251     14,840 
  Interest- 
   bearing 
   deposits           9,705          0           0          0      9,705 
  Mortgage-backed  
   and related 
   securities        11,835      1,684       1,515      1,394     16,428
  Investment  
   securities        13,507      2,513           0      1,000     17,020
  FHLB stock              0          0           0        851        851
                  _________  _________  __________  _________  _________ 
Total interest- 
 earning assets      85,372     27,388      12,967     17,719    143,446 
                  _________  _________  __________  _________  _________ 
Less: 
 Unearned  
  discount and 
  deferred fees          (1)         0           0          0         (1)
                  _________  _________  __________  _________  _________ 
Net interest- 
 earning assets      85,371     27,388      12,967     17,719    143,445 
                  _________  _________  __________  _________  _________ 
Interest-bearing 
 liabilities: 
  Passbook  
   accounts           1,154      2,895       1,451      1,287      6,787
  NOW accounts        3,692      4,284       1,215        788      9,979
  Money market 
   accounts           3,926        807         200         37      4,970
  Certificate 
   accounts          65,253     22,732           0          0     87,985
 Borrrowings          9,611      1,350           0          0     10,961
                  _________  _________  __________  _________  _________ 
 Total interest- 
  bearing  
  liabilities        83,636     32,068       2,866      2,112    120,682
                  _________  _________  __________  _________  _________ 
Interest 
 sensitivity gap  $   1,735  $  (4,680) $   10,101  $  15,607  $  22,763
                  =========  =========  ==========  =========  ========= 
 
Cumulative  
 interest  
 sensitivity gap  $   1,735  $  (2,945) $    7,156  $  22,763 
                  =========  =========  ==========  ========= 
 
Cumulative  
 interest  
 sensitivity gap 
 as a percentage 
 of total assets      1.15%     (1.95%)      4.75%     15.09%
 
Cumulative net 
 interest-earning  
 assets as a  
 percentage of 
 cumulative  
 interest- 
 sensitive 
 liabilities        102.07%     97.45%     106.04%    118.86%
 
 
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS 
 
The information contained on Pages 2 - 7 of the Company's 1998 annual 

report to shareholders is incorporated herein by reference in response  
to this item and included in this report as Exhibit 13.c. 
 
 
ITEM 8 - FINANCIAL STATEMENTS 
 
The consolidated financial statements of the Company, together with 
the report of T. E. Lott & Company, independent accountants, are set 
forth on Pages 8 - 41 of the Company's 1998 annual report to shareholders 
which is incorporated herein by reference and included in this report as 
Exhibit 13.d. 
 
 
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE 
 
For the year ended June 30, 1998, the Company and its subsidiary bank 
had no changes in or disagreements with its accountants concerning 
accounting and financial disclosures. 
 
 
 
                                   PART III 
 
 
ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 
 
Reference is made to the captions "Security Ownership of Certain 
Beneficial Owners" and "Filing of Beneficial Ownership Reports" on Page 
2 and "Information with Respect to Nominees, Continuing Directors and 
Executive Officers" Page 4 of the Company's proxy statement which is 
incorporated herein by reference. 
 
 
ITEM 11 - EXECUTIVE COMPENSATION 
 
Reference is made to the captions "Directors' Compensation" and "Summary 
Compensation Table" Pages 5 - 7 of the Company's proxy statement which 
is incorporated herein by reference. 
 
 
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
MANAGEMENT 
 

Reference is made to the captions "Security Ownership of Certain 
Beneficial Owners" Page 2 and "Information with Respect to Nominees, 
Continuing Directors and Executive Officers" Page 4 of the Company's 
proxy statement which is incorporated herein by reference. 
 
 
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 
 
Reference is made to the caption "Transactions with Certain Related 
Persons" Pages 7 - 9 of the Company's proxy statement which is 
incorporated herein by reference. 
 
 
 
                                   PART IV 
 
 
ITEM 14 - EXHIBITS AND REPORTS ON FORM 8-K 
 
A)  Documents filed as part of this report: 
 
    1.  The consolidated financial statements of FFBS Bancorp, Inc., as 
        of June 30, 1997 and 1998, together with the report of T. E.  
        Lott & Company, independent certified public accountants, dated 
        July 22, 1998, appearing on Pages 8 - 41 of the 1998 Company's 
        annual report, together with the "Five Year Summary of  
        Operations" on Pages 6 - 7 of the annual report to shareholders 
        are attached as Exhibit 13.d. to this Form 10KSB Annual Report. 
 
    2.  Financial Statement Schedules 
 
        Schedules not included have been omitted because they are not 
        applicable or the required information is shown in the financial 
        statements or notes thereto. 
 
    3.  Exhibits: 
 
        1. - 2.  None. 
 
           3.    Articles of Incorporation and By-Laws (Reference is 
                 made to Exhibits 3.1, 3.2 and 3.3 of the Company's 
                 registration statement on Form S-1 filed on March 30, 
                 1993, with the Securities and Exchange Commission - No. 
                 33-60308). 
 

        4. - 12. None. 
 
          13.    Annual report to shareholders - deemed filed herewith 
                 only to the extent it is incorporated elsewhere herein. 
 
          13.a.  Market for company's common stock - Page 5 of the  
                 annual report to stockholders. 
 
          13.b.  Selected financial data - Pages  6 - 7 of the annual
                 report to stockholders.   
 
          13.c.  Management's discussion and analysis of financial 
                 condition and results of operations - Pages 2 - 5 of the 
                 annual report to stockholders. 
 
          13.d.  Consolidated financial statements - Pages 8 - 41 of the 
                 annual report to stockholders. 
  
          14.    Earnings per share - Reference is made to Note A-13 of the 

                 consolidated financial statement which is incorporated 
                 herein by reference. 
 
       15. - 21. None. 
 
          22.    Subsidiaries of Company (IV-2). 
 
       23. - 26. None. 
 
          27.    Financial Data Schedule. 
 
       28. - 29. None. 
 
B)  No reports on Form 8-K were filed during the quarter ended June 30,  
    1998. 
 
 
 
 
                               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. 
 

 
 
                           FFBS BANCORP, INC. 
                              (Registrant) 
 
 
                    By  _________________________________ 
                        E. Frank Griffin, III 
                        President and Chief Executive  
                          Officer 
 
 
                    By  _________________________________  
                        Sherry L. Boyd 
                        Vice President - Controller 
                        (Chief Financial and Accounting  
                          Officer) 
 
 
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 capacity and on the dates indicated. 
 
 
 
________________________________       ______________________________ 
            (Director)                            (Director) 
 
 
 
________________________________        
            (Director)                             
 
 
 
Date: