EXHIBIT 13.a. 
 
                               MARKET INFORMATION 

 
 
 
COMMON STOCK 
 
The Company's common stock is traded in the over-the-counter market under  
the symbol "FFBS" and is quoted on the OTC Bulletin Board.  The stock
traded in a range from $18.00 to $26.00 during the fiscal year 1998, and
dividends were declared semi-annually in June and December.  A special
dividend of $1.00 per share was paid in August, 1995, and a $2.00 per 
share special dividend was paid in August, 1997. 
 
 
 
                                 EXHIBIT 13.b. 
 
                            SELECTED FINANCIAL DATA 
 
 
                                   Years Ended June 30, 
                   _____________________________________________________
                      1998       1997       1996       1995       1994
                   _________  _________  _________  _________  _________
                                      (In Thousands) 
INCOME DATA
 
Interest income    $  10,450  $   9,454  $   8,929  $   8,430  $   7,793 
Interest expense       5,728      4,763      4,563      3,854      3,339
                   _________  _________  _________  _________  _________  
 Net interest  
  income               4,722      4,691      4,366      4,576      4,454
 
Less Provision 
 for losses on 
 loans                     5          0          0        (50)       (52)
                   _________  _________  _________  _________  _________  
 
Net interest  
 income after  
 provision for  
 losses on loans       4,717      4,691      4,366      4,626      4,506
                   _________  _________  _________  _________  _________  
 
Non-interest  
 income: 
  Loan fees &  
   service  
   charges               243        238        192        118        164 
  NOW account  
   fees                  305        301        286        238        204 
  Other                  137         95        111         83        102
                   _________  _________  _________  _________  _________  
   Total non- 
    interest  
    income               685        634        589        439        470 
                   _________  _________  _________  _________  _________
  
Other expenses: 
 Compensation &  
  benefits             1,731      1,434      1,415      1,331      1,277   
 Occupancy,  
  furniture &    
  equipment              191        189        173        131        123  
 Deposit 
  insurance 
  premiums                66        731        215        206        205  
 Data processing         172        149        155        146        108 
 Other                   676        576        531        576        802
                   _________  _________  _________  _________  _________  
 
  Total Other  
   Expenses            2,836      3,079      2,489      2,390      2,515 
                   _________  _________  _________  _________  _________  
 
Income before  
 taxes                 2,566      2,246      2,466      2,675      2,461 
Income tax 
 expense                 986        768        804        909        729 
                   _________  _________  _________  _________  _________  
 
  Net Income       $   1,580  $   1,478  $   1,662  $   1,766  $   1,732 
                   =========  =========  =========  =========  ========= 
    
NET INCOME PER 
 SHARE  
   Basic          $    1.06  $    1.00  $    1.12  $    1.18  $    1.05
   Diluted        $    1.03  $     .97  $    1.09  $    1.14  $    1.04

                  

FINANCIAL DATA           
 
Shares  
 Outstanding          1,576      1,557      1,572      1,592      1,648
Total assets      $ 150,806  $ 130,762  $ 125,228  $ 118,970  $ 116,601 
Loans Recv.,net      98,918     92,760     83,528     80,391     74,009 
Int-bearing  
 deposits &  
 federal funds  
 sold                 9,705      5,059      4,223      3,421     11,719
Investment  
 securities          17,021     18,814     27,741     26,710     23,721

Mortgage-backed & 
 related  
 securities          16,428      7,268      2,506      2,011      2,775 
Foreclosed real  
 estate net of  
 related allowance 
 for losses             -          -          555        -          - 
Deposits            114,538    103,798     99,148     92,576     91,510 
Total  
 stockholders' 
 equity              23,254     25,142     24,638     25,141     24,361 
Total number of  
 full service  
 offices                  4          3          3          3          2     

SELECTED RATIOS 
 
Return on avgerage  
 assets               1.13%      1.16%      1.37%      1.51%      1.54%
Return on average  
 equity               6.89%      5.95%      6.89%      7.06%      7.13%
Capital to assets    15.42%     19.23%     19.67%     21.13%     21.08% 
Efficiency ratio      52.44%     57.80%     50.23%     51.66%     51.08%
Net interest  
 margin               3.66%      3.93%      3.79%      4.04%      3.97% 
 
PER SHARE DATA 
Net Income:            
   Basic          $    1.06  $    1.00  $    1.12  $    1.18  $    1.05
   Diluted        $    1.03  $     .97  $    1.09  $    1.14  $    1.04
   Dividends           2.55        .50       1.45        .40        .35


Book value 
 (end of year)    $   15.29  $   16.97  $   16.61  $   16.87  $   14.87 
Average Basic
 Shares 
  Outstanding     1,494,152  1,475,279  1,478,209  1,495,192  1,649,838
Average Diluted
 Shares 
 Outstanding      1,530,802  1,517,542  1,526,359  1,549,214  1,669,267
 

 

                               EXHIBIT 13.c.
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


GENERAL

FFBS Bancorp, Inc. (the "Company") was incorporated under the laws of the
State of Delaware in March 1993 to acquire all of the capital stock of
First Federal Bank for Savings (the "Bank") upon its conversion from the
mutual to stock form of ownership.  The Holding Company may acquire or 
organize other operating subsidiaries, including other financial
institutions, although there are currently no specific plans regarding
such activities by the Holding Company.


First Federal Bank for Savings descended from Columbus Building and Loan
Association, which dated back to 1892.  In 1934, First Federal 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").  First Federal offers a variety of financial services to
meet the financial service needs of its community through its main office
and three branch offices.  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.

The following discussion reviews the Company's financial condition and
results of operations.  This discussion should be read in conjunction with
the consolidated financial statements included in this  Annual Report.

FINANCIAL CONDITION

At June 30, 1998, the Company's total assets amounted to $150.8 million 
as compared to $130.8 million at June 30, 1997,  an increase of $20.0
million, or 15.3%.  Total assets of the Company have increased $34.2
million, or 29.3%, over the past five years.

Loans are the Company's largest and most profitable component of
interest-earning assets.  Total loans increased $6.2 million, or 6.6%, 
to $98.9 million at June 30, 1998, compared to $92.8 million at June 30,
1997.  The portfolio mix at June 30, 1998 consisted of 85% real estate
loans, 11% consumer loans, and 4% commercial loans.  The Company prides
itself in its conservative lending policies which have consistently
produced a good asset quality.  Net charge-offs were $58,000, or .06% of
average loans for the fiscal year ended June 30, 1998, which compares
favorably to its peer group.  During the five years noted in the summary,
total loans have increased $24.9 million, or 33.7%.

The securities portfolio is utilized to provide a quality investment
alternative for available funds as well as a stable source of interest
income.  Investment securities, along with mortgage-backed and related
securities, totalled $33.4 million at June 30, 1998, an increase of $7.4
million, or 28.2%, compared to June 30, 1997.  The Company used advances
from the Federal Home Loan Bank to leverage the purchase of mortgage-
backed and related securities during the fiscal year ended June 30, 1998. 
Advances from the Federal Home Loan Bank amounted to $11.0 million at
June 30, 1998.  Mortgage-backed and related securities increased $9.2
million, or 126%, to $16.4 million at June 30, 1998 compared to June 30,
1997. 

Deposits are the Company's primary source of funds to support its earning
assets.  Total deposits were $114.5 million at June 30, 1998, an increase
of $10.7 million, or 10.3%, over June 30, 1997.  The deposit mix has
remained substantially unchanged with the exception of a slight shift
toward more time deposits. Over the five years noted in the summary,
deposits have increased $23.0 million, or 25.1%.

At June 30, 1998, stockholders' equity totaled $23.3 million, or 15.4%, of
assets.  This represents a decrease of $1.9 million, or 7.5%, compared to
June 30, 1997.  The Company paid a $2.00 per share special dividend in
addition to its regular dividends for the fiscal year ended June 30, 1998. 
This special dividend decreased capital $3.1 million.  Net income continued
to be a strong contributor to stockholders' equity during fiscal 1998 as
the Company's net income amounted to $1.6 million.

The book value per share amounted to $15.29 per share at June 30, 1998,
with the exclusion of 55,138 unallocated shares held by the Employee Stock
Ownership Plan (ESOP) and after the payment of a special dividend of $3.1
million, or $2.00 per share.  At June 30, 1997, the book value per share
was $16.97, excluding 76,176 unallocated shares held by the ESOP.  At 
June 30, 1996, the book value per share was $16.61, with the exclusion of
88,872 unallocated shares held by the ESOP.

RESULTS OF OPERATIONS

The Company had consolidated net earnings of $1.6 million for the fiscal
year ended June 30, 1998, representing a return on average assets of 1.13%
and diluted earnings per share of $1.03.   For the fiscal year ended 
June 30, 1997, the Company's net income amounted to $1.5 million with
diluted earnings per share of $.97.  The lower level of earnings in fiscal
1997 was primarily the result of the one-time assessment by the Federal
Deposit Insurance Corporation (FDIC) to fully capitalize the Savings
Association Insurance Fund, which reduced earnings $376,000 after taxes. 
Return on average assets, a primary measure of earnings strength, has been
above 1.1% for all five years shown in the summary. 


Net interest income is the largest component of the Company's net income
and represents the income earned on interest-earning assets less the cost
of interest-bearing liabilities.  This major source of income represents
the earnings from the Company's primary business of gathering funds from
deposit sources and investing those funds in loans and securities.  
Changes in net interest income can be broken down into two components, the
change in average-earning assets and the change in net interest spread. 
The Company's level of net interest income stabilized at $4.7 million for
fiscal 1998 and 1997.   The net interest margin for fiscal 1998 was 3.66%,
a decrease from the 3.93% for fiscal 1997 due primarily to decreased
spreads.  The Company's cost of funds increased at a faster pace than its
yield on average-earning assets.  Average-earning assets for fiscal 1998
increased to $133.4 million from $122.5 million for fiscal 1997, an
increase of $10.9 million, or 8.9%.  Despite increases in average-earning
assets for fiscal 1998, net interest income remained stable due to the
decrease in the net interest spread.  During fiscal 1997, the Company's
level of net interest income increased 7.5%, or $325,000 when compared to
fiscal 1996.  This increase can be attributed to a combination of the
Company's yield on average-earning assets increasing $4.3 million, and the
Company's yield on average-earning assets increasing at a faster pace than
its cost of funds.

The Company maintains its reserve for loan losses at a level that is
considered sufficient to absorb potential losses in the loan portfolio. 
The Company's provision for loan losses is utilized to replenish its
reserve for loan losses on its balance sheet.  The reserve for loan losses
amounted to $523,000 at June 30, 1998, or .53% of total loans outstanding,
which is an amount that management considers to be sufficient to protect
against potential future loan losses.

Non-interest revenues are a growing source of income representing 12.7% of
total net revenues for fiscal 1998, up from 11.9% in fiscal 1997.   Total
non-interest revenues increased 7.9% to $685,000 in fiscal 1998, compared
to $634,000 in fiscal 1997.  Growth occurred primarily in the other income
category for service release premiums on fixed-rate mortgage loans that
were sold.  The Company sells most of the permanent fixed-rate mortgage
loans that it originates to lower interest rate risk associated with those
types of loans.

A key measure used in the banking industry to assess the level of
non-interest expense is the efficiency ratio, which is defined as
non-interest expense divided by the sum of net interest income plus
non-interest income.  The efficiency ratio measures the level of expense
required to generate one dollar of revenue.  With the exception of fiscal
1997, the efficiency ratio has been approximately 50% for the years noted
in the summary.   For fiscal 1997, the efficiency ratio rose to 57.8%, due
to the impact of the FDIC one-time special assessment. 

Non-interest expense decreased $244,000, or 7.9%, to $2.8 million in fiscal
1998 compared to fiscal 1997.   Compensation and benefits increased
$297,000, or 20.7%, to $1.7 million due primarily to expenses associated
with the valuation of stock released from the Employee Stock Ownership
Plan, added employees for expanded branch operations, and increased
participation in benefit plans  The deposit insurance premium decreased
$666,000, or 91.0% due primarily to the one-time assessment of $599,000 by
the FDIC to fully capitalize the Savings Association Insurance Fund. 
General and administrative expenses were increased $100,000, or 17.3%, to
$676,000 due primarily to more advertising expenses associated with
promotion of checking accounts and the new branch, contributions, and
expenses associated with the operation of the automated teller machines.

The provision for income taxes was $986,000, $768,000, and $804,000, in
fiscal 1998, 1997, and 1996,  respectively.  The changes in such 
respective amounts primarily reflect the fluctuations in levels of income
before income taxes of the Company during those fiscal years of $2.6
million, $2.2 million, and $2.5 million, respectively.  Nondeductible
expenses related to the excess of fair market value of allocated ESOP
shares over cost of $231,000, $184,000, and $168,000, respectively, also
affected the provision for income taxes.  Deferred taxes were higher during
fiscal 1997 primarily due to timing differences associated with stock
plans.  See Note J of the Notes to Consolidated Financial Statements.


LIQUIDITY-ASSET/LIABILITY MANAGEMENT

A major objective of asset/liability management is to structure the
Company's assets and liabilities in such a way as to maximize and stabilize
the spread between interest earned and interest paid while maintaining an
adequate liquidity position.  During each of the years noted in the
summary, the Company has maintained a consistent asset/liability management
policy, which focuses on interest rate risk and rate sensitivity.  The
adherence to such policy has an obvious material impact on the structure of
the Company's balance sheet and, to a degree, on its liquidity position.

The Company is required to maintain minimum levels of liquid assets as
defined by OTS regulations.  This requirement, which may be varied at the
direction of the OTS depending upon economic conditions and deposit flow,
is based upon a percentage of short-term deposits and short-term
borrowings.  The required minimum liquidity ratio is currently 4.0%.  At
June 30, 1998, the Bank's liquidity ratio was 22.02%.

The Company has experienced no problem meeting liquidity requirements
during any of the years noted in the summary and foresees no problems
meeting liquidity requirements in the future.  An adequate liquidity
position enables the Company to meet cash flow requirements created by
decreases in deposits and/or other sources of funds or increases in loan
demand.  The Company's traditional sources of funds from deposit increases,
maturing loans and investments, and earnings have allowed it to
consistently generate sufficient funds for liquidity needs. 


REGULATORY CAPITAL

The banking subsidiary's current capital position is well in excess of the
minimum regulatory requirements.  The regulations require institutions to
have a minimum regulatory tangible capital equal to 1.5% of total assets
and a minimum 3% leverage (core) capital ratio.  At June 30, 1998, the
Bank's tangible and core capital was 13.4%.  Additionally, institutions are
required to meet a risk-based capital requirement equaling 8% of the amount
of risk-weighted assets. At June 30, 1998, the Bank's risk-based capital
was 23.6%.


REGULATORY DEVELOPMENTS

See Notes A-12 and A-13 of the Notes to Consolidated Financial Statements.

Year 2000

The Company is aware of the issues associated with the programming code in
existing computer systems as the Year 2000 approaches.  The Year 2000 issue
is the result of computer programs being written to store and process data
using two digits rather than four to define the applicable year.  Computer
programs that have time sensitive coding may recognize a date using "00" as
the year 1900 rather than the year 2000.  Systems that do not properly
recognize such information could generate erroneous data or cause a system
to fail. 


The Bank has conducted a review of its computer systems to identify the
systems that could be affected by the Year 2000 Issue and has developed an
implementation plan to resolve the issue.  The majority of the Bank's data
processing is provided by a third party service bureau.  The service bureau
is actively involved in resolving Year 2000 issues and has provided the
Bank with frequent updates regarding their progress.  The service bureau
has advised the Bank that it expects to have the majority of the Year 2000
issues resolved during the third quarter of 1998 to allow the Bank to test
their system for Year 2000 compliance during the fourth quarter of 1998. 
The Bank presently believes that, based on the progress of the Bank's
service bureau, the Year 2000 problem will not pose significant operational
problems for the Bank's computer system.  The total cost of Year 2000
projects are not estimated to be material to the financial performance of
the Company.


COMMON STOCK MARKET INFORMATION

The Company's common stock is traded in the over-the-counter market under
the symbol "FFBS" and is quoted on the OTC Bulletin Board.  The stock
traded in a range from $18.00 to $26.00 per share during the fiscal year
1998, and regular dividends were declared semi-annually in June and
December.  A special dividend of $1.00 per share was paid in August, 1995,
and a $2.00 per share special dividend was paid in August, 1997.





                              EXHIBIT 13.d.

                    CONSOLIDATED FINANCIAL STATEMENTS


                           FFBS BANCORP, INC.

                    CONSOLIDATED FINANCIAL STATEMENTS

                                   AND

            INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT

                         JUNE 30, 1998 AND 1997



                                REPORT OF
                 INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors and Stockholders
FFBS Bancorp, Inc.
Columbus, Mississippi 


We have audited the accompanying consolidated statements of financial
condition of FFBS Bancorp, Inc., and Subsidiary as of June 30, 1998 and
1997, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended June 30, 1998.  These consolidated financial statements are
the responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of FFBS
Bancorp, Inc., and Subsidiary as of June 30, 1998 and 1997, and the results
of their operations and their cash flows for each of the years in the
three-year period ended June 30, 1998, in conformity with generally
accepted accounting principles.

                                         /S/ T. E. LOTT & COMPANY

Columbus, Mississippi
July 22, 1998


      
                             FFBS BANCORP, INC.                       

                              AND SUBSIDIARY

               CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                                        June 30,
                                               __________________________
         ASSETS                                     1998         1997 
                                               ____________  ____________

Cash                                           $  4,616,045  $  3,347,511
Interest-bearing deposits due from banks          9,705,397     5,058,945
                                               ____________  ____________
     Total cash and cash equivalents             14,321,442     8,406,456
Available-for-sale securities (Note B)           13,901,495     1,221,505
Held-to-maturity securities (Note B)             19,547,537    24,860,516
Federal Home Loan Bank stock, at cost (Note E)      851,000       801,900
Loans receivable, net (Note C)                   98,917,846    92,760,267
Properties and equipment (Note D)                 1,906,215     1,354,677
Accrued interest receivable (Note F)              1,279,518     1,064,535
Other assets (Note G)                                81,279       292,445
                                               ____________  ____________
     
                                               $150,806,332  $130,762,301
                                               ============  ============
LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Deposits (Note H)                            $114,537,907  $103,798,255
  Advances from borrowers for taxes
    and insurance                                   286,311       277,749
  Accrued interest payable on deposits              891,954       763,339
  Borrowed funds (Note I)                        10,961,000           -   
  Accrued expenses and other liabilities            875,032       781,370
                                               ____________  ____________
     Total liabilities                          127,552,204   105,620,713

  Commitments and contingencies
    (Notes N and S)

  Stockholders' equity (Notes K, L, M and R):
  Cumulative preferred stock, $.01 par value, 
    500,000 shares authorized; shares issued 
    and outstanding - none                              -             -
  Common stock, $.01 par value, 2,000,000 
    shares authorized; 1,575,735 and 
    1,565,595 shares issued and outstanding
    at June 30, 1998 and 1997, respectively          15,757        15,656
  Additional paid in capital                     15,457,458    15,371,923
  Retained earnings                               8,485,228    10,692,318
  Unrealized gain (loss) on available-for-
    sale securities                                 (18,457)        4,789
  Unearned compensation                            (132,250)          - 
  Loan receivable from ESOP                        (551,380)     (761,760)
  Treasury stock, at cost (100 shares and 
    8,150 shares, respectively)                      (2,228)     (181,338)
                                               ____________  ____________
     Total stockholders' equity                  23,254,128    25,141,588

                                               ____________  ____________

                                               $150,806,332  $130,762,301
                                               ============  ============

     The accompanying notes are an integral part of these statements.



                             FFBS BANCORP, INC.

                               AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF OPERATIONS
 


                                             Years Ended June 30,
                                      __________________________________
                                         1998        1997        1996 
                                      __________  __________  __________
INTEREST INCOME
  Interest and fees on loans          $8,257,279  $7,466,019  $7,074,289
  Interest on mortgage-backed and 
    related securities                   752,792     308,935     139,858
  Interest on investment securities    1,010,587   1,323,621   1,356,933
  FHLB stock dividends                    49,246      45,492      45,137
  Interest on federal funds sold             -        10,624      60,051
  Interest on deposits due from banks    380,187     298,983     252,412
                                      __________  __________  __________

                                      10,450,091   9,453,674   8,928,680
INTEREST EXPENSE
  Interest on deposits                 5,369,174   4,762,604   4,562,988
  Interest on borrowed funds             359,125         -           - 
                                      __________  __________  __________

Net interest income                    4,721,792   4,691,070   4,365,692
Provision for losses on loans
 (Note C)                                  5,000         -           - 
                                      __________  __________  __________
  

Net interest income after provision 
  for losses on loans                  4,716,792   4,691,070   4,365,692

NON-INTEREST INCOME
  Loan fees and service charges          243,104     238,099     191,696
  NOW account fees                       304,677     301,361     285,826
  Other                                  137,045      94,928     111,383
                                      __________  __________  __________
                                         684,826     634,388     588,905
NON-INTEREST EXPENSE               
  Compensation and benefits            1,731,289   1,433,945   1,415,254
  Occupancy and equipment                190,716     189,155     172,615
  Deposit insurance premium (Note L)      65,561     731,485     214,967
  Data processing                        171,968     148,428     155,404
  Other                                  675,845     575,978     531,003
                                      __________  __________  __________
                                       2,835,379   3,078,991   2,489,243

                                      __________  __________  __________

Income before income taxes             2,566,239   2,246,467   2,465,354

Income tax expense (Note J):            
  Current                                968,699     618,199     733,257
  Deferred                                17,346     149,980      70,500
                                      __________  __________  __________
                                         986,045     768,179     803,757
                                      __________  __________  __________

Net Income                            $1,580,194  $1,478,288  $1,661,597
                                      ==========  ==========  ==========   

Net Income Per Share:
  Basic                                    $1.06       $1.00       $1.12
  Diluted                                   1.03         .97        1.09

     The accompanying notes are an integral part of these statements.



                           FFBS BANCORP, INC. 

                             AND SUBSIDIARY

        CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                YEARS ENDED JUNE 30, 1998, 1997 AND 1996


<TABLE>
 <C>  <C> <C>    <C>      <C>          <C>          <C>        <C>         <C>          <C> <C>     <C>
                                                 
                                                               Unrealized
                                                               Gain (Loss)     Loan       
                           Additional               Unearned   Available-   Receivable
                  Common    Paid in      Retained    Compen-    For-Sale       From     Treasury     
                   Stock    Capital      Earnings    sation    Securities      ESOP       Stock       Total              
                 _______  ___________  ___________  _________  __________  ___________  _________  ____________

Balance, 
 July 1, 1995    $15,922  $15,285,124  $10,858,415  $(158,700) $     -     $(1,015,680) $      -   $ 24,985,081

Net income           -            -      1,661,597        -          -             -           -      1,661,597
Purchase and 
 retirement of 
 stock              (200)    (199,700)    (150,776)       -          -             -           -       (350,676)
Cash dividends,
 $1.45 per 
 share               -            -     (2,265,091)       -          -             -           -     (2,265,091)
Amortization of 
 unearned 
 compensation        -            -            -      158,700        -             -           -        158,700
Reduction of 
 ESOP loan           -            -            -          -          -         126,960         -        126,960
Adjustment to 
 unrealized 
 gain (loss)
 on  available-
 for-sale 
 securities          -            -            -          -       (2,333)          -           -         (2,333)
Excess of fair 
 market value 
 of allocated
 ESOP shares 
 over cost           -        168,222          -          -          -             -           -        168,222
                 _______  ___________  ___________  _________  __________  ___________  _________  ____________
Balance, 
 June 30, 1996    15,722   15,253,646   10,104,145        -       (2,333)     (888,720)        -     24,482,460

Net income           -            -      1,478,288        -          -             -           -      1,478,288
Purchase and 
 retirement 
 of stock           (106)    (105,444)    (117,292)       -          -             -           -       (222,842)
Purchase of 
 treasury stock      -            -            -          -          -             -     (181,338)     (181,338)
Cash dividends, 
 $.50 per share      -            -       (772,823)       -          -             -           -       (772,823)
Reduction of 
 ESOP loan           -            -            -          -          -         126,960         -        126,960
Adjustment to 
 unrealized 
 gain (loss) on
 available-
 for-sale 
 securities          -            -            -          -        7,122           -           -          7,122
Stock option 
 shares 
 exercised            40       39,630          -          -          -             -           -         39,670
Excess of fair
 market value 
 of allocated
 ESOP shares 
 over cost           -        184,091          -          -          -             -           -        184,091
                 _______  ___________  ___________  _________  __________  ___________  __________  ___________
Balance, 
 June 30, 1997    15,656   15,371,923   10,692,318        -         4,789     (761,760)   (181,338)  25,141,588

Net income           -            -      1,580,194        -           -            -           -      1,580,194
Purchase of 
 treasury stock      -            -            -          -           -            -      (270,332)    (270,332)
Cash dividends, 
 $2.55 per 
 share               -            -     (3,787,284)       -           -            -           -     (3,787,284)
Reduction of 
 ESOP loan           -            -            -          -           -        210,380         -        210,380
Adjustment to 
 unrealized 
 gain (loss) on
 available-for-
 sale securities     -            -            -          -       (23,246)         -           -        (23,246)    
Stock awards         -            -            -     (158,700)        -            -           -       (158,700)
Amortization of 
 unearned 
 compensation        -            -            -       26,450         -            -           -         26,450
Stock option 
 shares 
 exercised           101     (145,883)         -          -           -            -       449,442      303,660
Excess of fair 
 market value 
 of allocated
 ESOP shares 
 over cost           -        231,418          -          -           -            -           -        231,418
                 _______  ___________  ___________  _________  __________  ___________  __________  ___________
          
Balance, 
 June 30, 1998   $15,757  $15,457,458  $ 8,485,228  $(132,250) $  (18,457) $  (551,380) $   (2,228) $23,254,128
                 =======  ===========  ===========  =========  ==========  ===========  ==========  ===========

     The accompanying notes are an integral part of these statements.

</TABLE>



                             FFBS BANCORP, INC.
 
                              AND SUBSIDIARY

                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                           Years Ended June 30,          
                                 ________________________________________
                                     1998          1997          1996  
                                 ____________  ____________  ____________

CASH FLOWS FROM OPERATING 
ACTIVITIES
  Net income                     $  1,580,194  $  1,478,288  $  1,661,597 
  Adjustments to reconcile 
    net income to net cash:  
      Depreciation of properties
        and equipment                 106,550        83,880        93,497
      Amortization of unearned 
        compensation                   26,450           -         158,700
      Accretion of discount on 
        loans                         (12,270)      (12,218)      (10,965)
      Deferred income taxes            17,346       149,980        70,500
      FHLB stock dividends            (49,100)      (45,400)      (44,900)
      Provision for losses on 
        loans                           5,000           -             - 
      Provision for losses on 
        foreclosed real estate            -             -          10,452
      Sale of loans                 8,093,000     4,656,000     5,655,000 
      Loans originated for sale    (8,093,000)   (4,656,000)   (5,655,000)
      (Increase) decrease in 
        accrued interest 
        receivable                   (214,983)       61,456      (105,876)
      (Increase) decrease
        in other assets                45,699       164,082      (717,263)
      Increase in accrued 
        interest payable on
        deposits                      128,615        68,232        97,098
      Increase (decrease) in
        accrued expenses and 
        other liabilities               5,292        (8,506)      (40,049)
      Excess of fair market 
       value of allocated ESOP 
       shares over cost               231,418       184,091       168,222   
                                 ____________  ____________  ____________

  Net cash provided by 
    operating activities            1,870,211     2,123,885     1,341,013

CASH FLOWS FROM INVESTING
ACTIVITIES
  Decrease in other interest-
    bearing deposits due from
    banks                                 -             -         100,000
  Loan originations               (52,492,000)  (54,949,000)  (38,953,000)
  Purchase of loans                       -             -        (117,000)
  Purchase of mortgage-backed 
    and related securities        (13,422,203)   (5,522,800)     (984,900)
  Purchase of investment 
    securities                    (10,807,786)   (5,566,627)  (20,771,985)
  Principal repayment of 
    loans                          45,957,691    45,729,102    35,943,815
  Principal repayments of 
    mortgage-backed and 
    related securities              4,179,436       761,533       484,290
  Proceeds from calls and 
    maturities of investment  
  securities                       12,650,000    14,500,000    19,744,348
  Sale of foreclosed real 
    estate                            384,000       457,539       190,501
  Purchase of properties and 
    equipment                        (651,321)     (343,134)      (59,708)
  Repayment of ESOP loan              210,380       126,960       126,960 
                                 ____________  ____________  ____________
 
  Net cash used in investing 
    activities                    (13,991,803)   (4,806,427)   (4,296,679)  
  

CASH FLOWS FROM FINANCING 
ACTIVITIES
  Increase in deposits             10,739,652     4,650,147     6,571,941
  Increase (decrease) in 
    advances from borrowers 
    for taxes and insurance             8,562        18,647        (9,597)
  Increase in borrowed funds       10,961,000           -             - 
  Acquisition of stock               (270,332)     (404,180)     (350,676)
  Cash dividends paid              (3,705,964)     (776,508)   (2,190,480)
  Exercise of stock options           303,660        39,670           -    

Net cash provided by 
  financing activities             18,036,578     3,527,776     4,021,188   
  
Net increase in cash and 
  cash equivalents                  5,914,986       845,234     1,065,522

Cash and cash equivalents at 
  beginning of period               8,406,456     7,561,222     6,495,700
                                 ____________  ____________  ____________
 
Cash and cash equivalents at 
  end of period                  $ 14,321,442  $  8,406,456  $  7,561,222 
                                 ============  ============  ============

Cash paid during the period for:
  Interest                       $  5,599,684  $  4,694,372  $  4,465,890 
  Income taxes                        932,500       642,000       721,692
   
Supplemental disclosure of 
  noncash activities:
    Acquisition of real estate 
      in settlement of loans          415,385           -         755,468



     The accompanying notes are an integral part of these statements.




                          FFBS BANCORP, INC.

                           AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE A - SUMMARY OF ACCOUNTING POLICIES

FFBS Bancorp, Inc., (the Company), and its wholly-owned subsidiary, First
Federal Bank for Savings (the Bank), follow generally accepted accounting
principles, including, where applicable, general practices within the
thrift industry.

A summary of the significant accounting policies consistently applied in
the preparation of the accompanying consolidated financial statements
follows.

 1.  Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and the Bank.  Significant intercompany accounts and transactions have 
been eliminated in consolidation.

 2.  Nature of Operations

The Company is a holding company which was formed for the purpose of
acquiring all of the capital stock of the Bank as part of the Bank's
conversion from a mutual to a federally chartered stock savings bank on
June 30, 1993.  Its most significant asset is its investment in the 
capital stock of the Bank.

The Bank's principal business activity is to provide deposit account
services to the general public and investing those deposits, together with
funds from operations, primarily in family residential mortgage loans and,
to a lesser extent, consumer loans, securities, and other assets.

 3.  Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and that affect the reported amounts of revenues and
expenses during the reporting period.  Actual results could differ from
those estimates.

 4.  Securities

Investments in securities are classified in accordance with Financial
Accounting Standards Board (FASB) Statement No. 115, Accounting for Certain
Investments in Debt and Equity Securities.  Statement No. 115 requires that
securities be classified as either trading, available-for-sale, or
held-to-maturity.  Management determines the appropriate classification at
the time of purchase.


Trading securities are held for resale for profit and are accounted for at
their fair values.  Realized and unrealized gains and losses are reported
in earnings.  At June 30, 1998 and 1997, the Company and the Bank had no
securities classified as trading.

Securities available-for-sale are carried at their fair values.  Any
unrealized difference between the amortized cost and the fair value is
reported as a component of stockholders' equity, net of deferred income
taxes.

Securities classified as held-to-maturity are carried at amortized cost and
includes those securities which management has the positive intent and the
Company and the Bank have the ability to hold until maturity.

Amortization of premiums and accretion of discounts are determined using
the level yield method.  The adjusted cost of the specific security sold is
used to compute any gain or loss on securities sold.
 
The yield on, and recoverability of, the carrying value of mortgage-backed
and related securities may be affected by changes in interest rates and
prepayments.  Management periodically evaluates the effects of matters such
as rate changes and prepayments and adjusts yields as necessary.

 5.  Loans Receivable, Net 

Loans receivable, net are stated at unpaid principal balances, less the
allowance for loan losses.

Discounts on first mortgage loans are amortized to income using the
interest method over the remaining period to contractual maturity, adjusted
for anticipated prepayments.  Discounts on consumer loans are recognized
over the lives of the loans using methods that approximate the interest
method.

The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries).  The allowance for loan
losses is maintained 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 loan 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. 
Allowances for any impaired loans are generally determined based on
collateral values.  Although management believes the allowance for loan
losses to be adequate, ultimate losses may vary from estimates used in
management's evaluation.


Interest on loans that are contractually past due 90 or more days is
generally charged off, or an allowance is established based on management's
periodic evaluation unless the obligation is well secured and in the
process of collection.  The allowance is established by a charge to
interest income equal to all interest previously accrued.  Additionally, an
allowance is established for interest on loans delinquent less than 90
days, but which in management's opinion may become uncollectible in part or
in full.

Mortgage loans originated and intended for sale in the secondary market are
carried at the lower of cost or estimated market value in the aggregate. 
Mortgage loans held for sale at June 30, 1998 and 1997, were immaterial.

Direct loan costs and any related loan origination fees are recognized
currently as period costs and income, respectively, and do not vary
materially from the results that would be recorded using the deferral
method prescribed by FASB Statement No. 91, Accounting for Nonrefundable
Fees and Costs Associated with Originating or Acquiring Loans and Initial
Direct Costs of Leases.

 6.  Foreclosed Real Estate

Real estate acquired in settlement of loans is reported in accordance with
AICPA Statement of Position 92-3 ("SOP 92-3") Accounting for Foreclosed
Assets.  SOP 92-3 requires that other real estate be carried at the lower
of (i) fair value minus estimated cost to sell or (ii) cost (the recorded
investment in the related loan or loans plus acquisition costs).  An
allowance for losses is maintained to reflect declines, if any, in net fair
values below the recorded amounts.  Additions to the allowance are charged
to operations.  Costs of holding real estate acquired in settlement of
loans are reflected as expense currently.  Subsequent gains or losses on
foreclosed real estate are reported in other operating income or expenses.

 7.  Properties and Equipment

Properties and equipment are stated at cost less accumulated depreciation. 
Depreciation is computed primarily on a straight-line basis over the
estimated useful life of each type of asset.  Expenditures for maintenance
and repairs which do not materially prolong the useful life of the assets
are charged to operating expenses as incurred, and improvements are
capitalized.  Gains and losses on sale of assets are reflected in current
operations.




( Continued )

     FFBS BANCORP, INC.

     AND SUBSIDIARY

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE A - SUMMARY OF ACCOUNTING POLICIES  (Continued)

 8.  Deferred Income Taxes

Deferred income taxes are accounted for in accordance with FASB Statement
No. 109, Accounting for Income Taxes.  Statement No. 109 requires the
asset-and-liability method of accounting for income taxes.  Under the
asset-and-liability method, deferred income taxes are recognized for the
tax consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and
liabilities.  Under Statement No. 109, the effect on deferred taxes of a
change in tax rates is recognized in income in the period that includes the
enactment date. 

 9.  Stock-Based Compensation

The Company and the Bank have elected not to adopt the recognition
provisions of FASB Statement No. 123, Accounting for Stock-Based
Compensation which requires a fair-value based method of accounting for
stock options and similar equity awards.  The Company and the Bank elected
to continue applying Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees and related interpretations in accounting for
its stock compensation plans and, accordingly, do not recognize
compensation cost.
 
10.  Statement of Cash Flows

For purposes of the consolidated statement of cash flows, all highly liquid
debt instruments with an original maturity of three months or less are
considered to be cash equivalents.  Cash equivalents consist of balances
due from banks and federal funds sold.

11.  Off-Balance Sheet Financial Instruments

In the ordinary course of business the Bank enters into off-balance sheet
financial instruments consisting of commitments to extend credit,
commercial letters of credit and commitments to purchase securities.  Such
financial instruments are recorded in the financial statements when they
are exercised.

12.  Accounting Pronouncements

In June, 1997, the FASB issued Statement No. 130, Reporting Comprehensive
Income which establishes standards for reporting and display of
comprehensive income and its components in a full set of financial
statements.  Comprehensive income is defined as the change in equity during
a period for non-owner transactions and is divided into net income and
other comprehensive income.  Other comprehensive income includes revenues,
expenses, gains, and losses that are excluded from earnings under current
accounting standards.  This statement does not change or modify the
reporting or display in the income statement. Statement No. 130 is
effective for interim and annual periods beginning after December 31, 1997. 
Comparative financial statements provided for earlier periods are required
to be classified to reflect the application of this statement.  

In February, 1998, the FASB issued Statement No. 132, Employers Disclosures
About Pensions and Other Postretirement Benefits.  This statement
standardizes the disclosure requirements of pensions and other
postretirement benefits.  This statement does not change any measurement or
recognition provisions, and thus will not materially impact the Company. 
This statement is effective for fiscal years beginning after December 15,
1997.

In June, 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities.  This statement establishes accounting
and reporting standards for derivative instruments and for hedging
activities.  It requires that an entity recognize all derivatives as either
assets or liabilities in its financial statements and that those
instruments be measured at fair value.  Implementation is required for all
fiscal quarters of fiscal years beginning after June 15, 1999.  The Company
has not determined the impact the adoption of this statement may have on
its consolidated financial statements.

13.  Net Income Per Share

The Company adopted FASB Statement No. 128, Earnings Per Share as of
December 31, 1997.  Statement No. 128 superseded Accounting Principles
Board Opinion No. 15, Earnings Per Share (APB No. 15) which the Company had
followed until the adoption of Statement No. 128.  This statement requires
that two earnings per share amounts be disclosed:  Basic Earnings Per Share
and Diluted Earnings Per Share.  Basic Earnings Per Share is calculated by
dividing net income available to common stockholders by the weighted
average number of common stock shares outstanding during the period.  The
Basic Earnings Per Share computation for the Company is the same method the
Company previously used to calculate and report earnings per share under
APB No. 15.  Diluted Earnings Per Share is computed by assuming the
issuance of common shares for all dilutive potential common shares
outstanding during the reporting period.  Currently, the Company's only
dilutive potential common stock issuances relate to options that have been
issued under the Company's stock option and recognition and retention
plans.  In computing Diluted Earnings Per Share, it is assumed that all
such dilutive stock is exercised during the reporting period at their
respective exercise prices, with the proceeds from the exercises used by
the Company to buy back stock in the open market at the average market
price in effect during the reporting period.  The difference  between the
number of shares assumed to be exercised and the number of shares bought
back is added to the number of weighted average common shares outstanding
during the period.  The sum is used as the denominator to calculate Diluted
Earnings Per Share for the Company.  As required by Statement No. 128, all
prior year earnings per share amounts have been restated and computed under
the provisions of the new standard.  

The following is a reconciliation of the numerators and denominators used
in computing basic and diluted net income per share:

                                                    1998
                                   _____________________________________
                                      Income       Shares      Per Share
                                   (Numerator)  (Denominator)   Amount
                                   ___________  _____________  _________

                                  (In Thousands, Except Per Share Amounts)

  Basic EPS:
    Income available to common 
      shareholders                 $     1,580          1,494  $    1.06
                                                               =========
  Effect of dilutive stock 
    options                                -               37      
                                   ___________  _____________
  Diluted EPS:
    Income available to common
      shareholders plus assumed
      exercise                     $     1,580          1,531  $    1.03 
                                   ===========  =============  =========



                                                    1997
                                   _____________________________________
                                      Income       Shares      Per Share
                                   (Numerator)  (Denominator)   Amount
                                   ___________  _____________  _________

                                  (In Thousands, Except Per Share Amounts)

  Basic EPS:
    Income available to common 
      shareholders                 $     1,478          1,475  $    1.00
                                                               =========
  Effect of dilutive stock 
    options                                -               43      
                                   ___________  _____________
  Diluted EPS:
    Income available to common
      shareholders plus assumed
      exercise                     $     1,478          1,518  $     .97 
                                   ===========  =============  =========


                                                    1996
                                   _____________________________________
                                      Income       Shares      Per Share
                                   (Numerator)  (Denominator)   Amount
                                   ___________  _____________  _________

                                  (In Thousands, Except Per Share Amounts)

  Basic EPS:
    Income available to common 
      shareholders                 $     1,662          1,478  $    1.12
                                                               =========
  Effect of dilutive stock 
    options                                -               51      
                                   ___________  _____________
  Diluted EPS:
    Income available to common
      shareholders plus assumed
      exercise                     $     1,662          1,529  $    1.09 
                                   ===========  =============  =========


14.  Financial Statement Reclassification

The financial statements for prior years have been reclassified in order 
to conform with the 1998 financial statement presentation.  The
reclassification did not change total assets or net income.


NOTE B - SECURITIES

The amortized cost, gross unrealized gains, gross unrealized losses, and
estimated market values of investment securities and mortgage-backed and
related securities are as follows:

                                            June 30, 1998         
                          ________________________________________________  
                                          Gross       Gross     Estimated
                           Amortized   Unrealized  Unrealized     Market
      Description             Cost        Gains      Losses       Value     
________________________  ___________  __________  __________  ___________

Held-to-Maturity:
  Securities of other
    U.S. Government
    agencies              $12,690,869  $    7,541  $   10,702  $12,687,708
  Obligations of states
    and political
    subdivisions            1,000,310         -           310    1,000,000
  Mortgage-backed 
    securities              4,839,571      49,897         -      4,889,468
  REMICS                    1,016,787         -        13,656    1,003,131
                          ___________  __________  __________  ___________

                          $19,547,537  $   57,438  $   24,668  $19,580,307
                          ===========  ==========  ==========  ===========
Available-for-Sale:
  Securities of other 
    U. S. Government
      agencies            $ 1,507,429  $    7,573  $      -    $ 1,515,002
  Mortgage-backed 
    securities              3,721,703       4,850       8,247    3,718,306
  REMICS                    6,885,437       5,965      37,732    6,853,670
  Marketable equity 
    securities              1,814,517         -           -      1,814,517 
                          ___________  __________  __________  ___________

                          $13,929,086  $   18,388  $   45,979  $13,901,495  
                          ===========  ==========  ==========  ===========



                                            June 30, 1997         
                          ________________________________________________  
                                          Gross       Gross     Estimated
                           Amortized   Unrealized  Unrealized     Market
      Description             Cost        Gains      Losses       Value     
________________________  ___________  __________  __________  ___________
               
Held-to-Maturity:
  Securities of other 
    U.S. Government
    obligations           $15,586,350  $    2,024  $   51,905  $15,536,469
  Obligations of states
    and political
    subdivisions            2,006,540         249       6,540    2,000,249
  Mortgage-backed and 
    relatedsecurities       7,267,626      15,847      26,651    7,256,822
                          ___________  __________  __________  ___________

                          $24,860,516  $   18,120  $   85,096  $24,793,540
                          ===========  ==========  ==========  ===========

Available-for-Sale:
  Marketable equity
    securities            $ 1,221,505  $      -    $      -    $ 1,221,505

The carrying values and estimated market values of investment debt
securities by contractual maturities as of June 30, 1998, are shown below. 
The equity securities have been excluded from the maturity table because
they do not have contractual maturities associated with debt securities. 
Expected maturities will differ from contractual maturities because issuers
may have the right to call or prepay obligations with or without call or
prepayment penalties.

                                         June 30, 1998  
                       __________________________________________________
                           Held-to-Maturity         Available-For-Sale  
                       ________________________  ________________________
                                     Estimated                 Estimated 
                        Amortized      Market     Amortized      Market    
                          Cost         Value         Cost        Value
                       ___________  ___________  ___________  ___________
Due in one year or 
  less                 $11,693,160  $11,690,208  $      -     $       -     
Due after one year 
  through five years       997,709      997,500    1,507,429    1,515,002   
Due after ten years      1,000,310    1,000,000          -            -  
Mortgage-backed
  securities and 
  REMICS                 5,856,358    5,892,599   12,421,657   12,386,493   
                       ___________  ___________  ___________  ___________
     
                       $19,547,537  $19,580,307  $13,929,086  $13,901,495
                       ===========  ===========  ===========  ===========

Investment securities with a carrying value of $930,000 and $925,000 at
June 30, 1998 and 1997, respectively, were pledged for various purposes as
required by law.  Also, at June 30, 1998, securities with a carrying value
of $2,637,388 had been pledged as collateral on advances from the Federal
Home Loan Bank.

Mortgage-backed securities were issued or are guaranteed by an agency of
the U. S. Government. REMICS consist of securities backed by securities of
U. S. Government agencies.  Although mortgage-backed and related securities
and REMICS are initially issued with a stated maturity date, the underlying
mortgage collateral may be prepaid by the mortgagee and, therefore, such
securities may not reach their maturity date.  At June 30, 1998 and 1997,
there were no material concentrations of credit risk.

There were no sales of securities during the years ended June 30, 1998,
1997 and 1996.

 
NOTE C - LOANS RECEIVABLE, NET

Loans receivable, net are summarized as follows:
                                                         (In Thousands)
                                                             June 30,  
                                                       __________________
                                                         1998      1997
                                                       ________  ________
Mortgage Loans    

  Principal balances:
    One-to-four family residential                     $ 67,562  $ 67,198
    Multi-family                                            229       982
    Commercial real estate                               10,946     8,706
    Construction and land                                 5,865     4,834
                                                       ________  ________
      Total mortgage loans                               84,602    81,720
                                                       ________  ________

Consumer and Other Loans

  Principal balances:
    Loans on deposit accounts                             1,530     1,090   
    Home improvement and education                            5        43
    Automobile                                            4,685     4,271
    Commercial - collateralized                           3,658     1,678
    Commercial - unsecured                                  505       333
    Other                                                 4,457     4,215
                                                       ________  ________
      Total consumer and other loans                     14,840    11,630
                                                       ________  ________

Total loans receivable                                   99,442    93,350


Less unearned discount                                        1        14

Less allowance for loan losses                              523       576
                                                       ________  ________

Loans receivable, net                                  $ 98,918  $ 92,760
                                                       ========  ========

Activity in the allowance for loan losses is as follows:

                                                       (In Thousands)
                                                        Years Ended
                                                          June 30,          
                                                   ______________________
                                                    1998    1997    1996    
                                                   ______  ______  ______

  Balance at beginning of period                   $  576  $  666  $  705

  Additions:
    Provision for losses on loans                       5     -       - 
    Recoveries                                          7       7       5
                                                   ______  ______  ______

                                                      588     673     710
  Deductions:
    Loans charged off                                  65      97      44
                                                   ______  ______  ______

  Balance at end of period                         $  523  $  576  $  666
                                                   ======  ======  ======

The Bank adopted FASB Statement No. 114, Accounting by Creditors for
Impairment of a Loan and Statement No. 118, Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures as of July 1,
1995.  These Statements require that loans determined to be impaired be
measured based on the present value of expected future cash flows or, as a
practical expedient, on the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent.  If the
measurement of the impaired loan is less than the recorded investment in
the loan, a valuation allowance is recorded.  The Bank had previously
determined its allowance for loan losses using methods similar to those
prescribed in the statements.  The Bank's loan portfolio consists
principally of family residential mortgage loans and consumer installment
loans, which are exempt from the requirements of the Statements if
evaluated collectively, as is done by the Bank.  At June 30, 1998 and 1997,
any loans designated as impaired were not significant.  

Loans receivable delinquent are as follows:
                                                           (In Thousands)
                                                              June 30,
                                                           ______________   
                                                            1998    1997 
                                                           ______  ______

  Past due 30-89 days and still accruing                   $6,727  $6,511
  Past due 90 days or more and still accruing               1,382     446
                                                           ______  ______
                                                            8,109   6,957
  Nonaccrual loans                                              1     -     
                                                           ______  ______
               
                                                           $8,110  $6,957
                                                           ======  ======

NOTE D - PROPERTIES AND EQUIPMENT

Properties and equipment consist of the following:


                                                        June 30,      
                                               __________________________
                                                    1998         1997 
                                               ____________  ____________

  Land                                         $    536,775  $    518,789
  Buildings                                       1,696,486     1,139,652
  Furniture and equipment                           634,136       571,195
                                               ____________  ____________
                                                  2,867,397     2,229,636
  Less accumulated depreciation                     961,182       874,959
                                               ____________  ____________

                                               $  1,906,215  $  1,354,677
                                               ============  ============

Depreciation expense totaled $106,550, $83,880, and $93,497 for the years
ended 1998, 1997 and 1996, respectively.  


NOTE E - FEDERAL HOME LOAN BANK STOCK

The Bank is a member of the Federal Home Loan Bank system.  Investment in
stock of a Federal Home Loan Bank is required by law of every federally
chartered savings bank.  No ready market exists for the stock, and it has
no quoted market value; therefore, the stock is assumed to have a market
value which is equal to its cost.


NOTE F - ACCRUED INTEREST RECEIVABLE  

Accrued interest receivable consisted of interest accrued on the following:

                                                         June 30,        
                                               __________________________
                                                   1998          1997 
                                               ____________  ____________

  Loans                                        $    998,295  $    821,643
  Mortgage-backed and related securities             68,200        37,512
  Investment securities                             213,023       205,380
                                               ____________  ____________

                                               $  1,279,518  $  1,064,535
                                               ============  ============



NOTE G - OTHER ASSETS

Other assets consist of the following:
                                                        June 30, 
                                               __________________________
                                                   1998          1997 
                                               ____________  ____________

  Organization costs                           $       -     $      6,767
  Prepaid income taxes                                7,500        45,724
  Prepaid expenses and other assets                  73,779       239,954
                                               ____________  ____________

                                               $     81,279  $    292,445
                                               ============  ============

NOTE H - DEPOSITS

Approximate deposit balances by interest rates are summarized as follows:

                                     ($ In Thousands)
                                          June 30,             
                    ______________________________________________________  
                               1998                      1997
                    __________________________ ___________________________
                             Percent  Weighted          Percent  Weighted
                                Of    Average              Of    Average
                               Total  Nominal            Total    Nominal
                     Amount  Deposits   Rate    Amount  Deposits   Rate 
                    ________ ________ ________ ________ ________ _________  
 
Demand accounts:
  Checking          $  4,817    4.21%    0.00% $  3,557    3.43%     0.00%
  NOW                  9,979    8.71%    1.94%    9,350    9.00%     2.07%
  Savings              6,787    5.93%    2.83%    6,186    5.96%     2.84%
  Money market         4,970    4.33%    3.85%    5,626    5.42%     3.57%
                    ________ ________ ________ ________ ________ _________  
                      26,553   23.18%    2.17%   24,719   23.81%     2.31%
                    ________ ________ ________ ________ ________ _________  

Certificate 
  accounts:
    Maturing 
     0 -  3 months    16,204   14.15%    5.56%   17,486   16.85%     5.33%
   Maturing 
     3 -  6 months    18,826   16.44%    5.69%   16,288   15.69%     5.53%
   Maturing 6 - 12 
     months           30,223   26.39%    5.74%   27,621   26.61%     5.59%
   Maturing 1 -  2
     years            16,407   14.32%    5.99%   12,374   11.92%     6.01%
   Maturing 2 -  3 
     years             3,507    3.06%    6.37%    2,886    2.78%     6.27%
   Maturing 3 -  4
     years             2,321    2.03%    6.28%    1,948    1.88%     6.37%
   Maturing over 
     4 years             497     .43%    6.93%      476     .46%     6.70%
                    ________ ________ ________ ________ ________ _________  
                      87,985   76.82%    5.79%   79,079   76.19%     5.64%
                    ________ ________ ________ ________ ________ _________  

  Total deposits    $114,538  100.00%    4.95% $103,798  100.00%     4.85%
                    ======== ======== ======== ======== ======== =========


A summary of certificate accounts by interest rate follows:
 
                         June 30, 1998             June 30, 1997            
                   __________________________ __________________________    
                                      Average                    Average
   Interest Rate   Number    Balance  Balance Number   Balance   Balance   
__________________ ______ __________ _______ ______ ___________ _______

Less than 3.00%         7 $    65,000 $ 9,234     11 $   338,000 $30,727
4.01% - 5.00%         388   6,329,000  16,311  1,054  14,654,000  13,903
5.01% - 6.00%       2,423  59,588,000  24,593  1,787  49,926,000  27,938
6.01% - 7.00%         422  20,857,000  49,424    283  13,383,000  47,290
7.01% - 8.00%          12   1,146,000  95,483     11     778,000  70,727
                   ______ ___________ _______ ______ ___________ _______  

                    3,252 $87,985,000 $27,056  3,146 $79,079,000 $25,136    
                   ====== =========== ======= ====== =========== =======

The aggregate amount of certificates of deposit with a minimum denomination
of $100,000 was approximately $19,043,000 and $17,086,000 at June 30, 1998
and 1997, respectively.  

Interest expense on deposits is summarized as follows:

                 (In Thousands)
                  Years Ended
                    June 30,            
                                                 1998     1997     1996 
                                                ______   ______   ______

  NOW accounts                                  $  199   $  194   $  203
  Savings                                          171      175      168
  Money market                                     205      198      227
  Certificate accounts                           4,794    4,196    3,965
                                                ______   ______   ______

                                                $5,369   $4,763   $4,563
                                                ======   ======   ======


NOTE I - BORROWED FUNDS

Borrowed funds consist solely of FHLB advances.  Fixed-rate advances
(bearing interest rates from 5.00% to 5.973%) consist of the following at
June 30, 1998, by scheduled maturity:

                              Year Due       Amount    
                              ________     ___________

                                1998       $ 2,611,000
                                1999           450,000
                                2000           900,000
                                2008         7,000,000
                                           ___________
   
                                           $10,961,000
                                           ===========
 
The $7,000,000 advance is a short option advance and has a first call
option date of March, 1999, and quarterly call option dates until the
maturity date of March, 2008.

The FHLB advances are secured by FHLB stock, a blanket pledge of
residential mortgage loans and certain U. S. Government agency securities.

     
NOTE J - INCOME TAXES

The provision for federal income taxes differs from that computed at the
statutory 34 percent federal corporate tax rate as follows:

                                                       Years Ended
                                                         June 30,   
                                                  ______________________
                                                   1998    1997    1996 
                                                  ______  ______  ______

  Federal income tax rates                           34%     34%     34%
  Change in taxes resulting from:
    Nontaxable income                                (2%)    (5%)    (3%)
    State income tax, net                             1%      1%      2%    
    Excess of fair market value of 
      allocated ESOP shares over cost                 3%      3%      2%
    Other                                             2%      1%     (2%) 
                                                  ______  ______  ______
     
                                                     38%     34%     33%  
                                                  ======  ======  ======

The sources of timing differences and the resulting deferred income tax
expense (benefit) follow:

                                                       (In Thousands)
                                                         Years Ended
                                                           June 30,
                                                  ______________________
                                                   1998    1997    1996 
                                                  ______  ______  ______  
  Provision for losses on loans
    and foreclosed real estate                        20  $   59  $   51
  Discount accretion                                 (24)      5     (10) 
  Stock option plans                                 (10)     59      - 
  Depreciation                                        13       8      15   
  FHLB stock                                          18      17      17
  Other, net                                          -        2      (2)
                                                  ______  ______  ______  

                                                  $   17  $  150  $   71
                                                  ======  ======  ======
   

Significant components of the net deferred income tax liability included
in other liabilities at June 30, 1998 and 1997, are as follows:
   
                                                       1998      1997 
                                                    _________  _________  
  Deferred income tax assets:
    Stock options                                   $   9,866  $     -   
    Unrealized gain (loss) on available-
      for-sale securities                              10,725        -    
                                                    _________  _________  

        Total deferred income tax assets               20,591        -    

  Deferred income tax liabilities:
    Premises and equipment                             42,795     30,235    
    Allowance for loan losses                         160,597    140,920   
    Securities                                         13,624      8,030
    Loans                                                 -       28,504
    FHLB stock                                        142,374    124,060
                                                    _________  _________  
      Total deferred income tax liabilities           359,390    331,749
                                                    _________  _________  

  Net deferred income tax liability                 $(338,799) $(331,749) 
                                                    =========  =========


In October, 1996, Congress passed the Small Business Job Protection Act
("the Act") which included a provision repealing the tax bad debt reserve
method that had been available to thrift institutions in determining
income subject to income tax.  Because of the repeal, institutions must
recapture the post-1987 tax bad debt reserve into taxable income over a
six-year period.  The recapture can be deferred for a two year period if
the institution meets a residential loan portfolio test.  The Bank
satisfies the residential loan portfolio requirements and is expected to
recapture the tax bad debt reserve of approximately $954,000 over a
six-year period beginning in the year ended June 30, 1999.  The recapture
will not have an effect on net income since the related tax expense has
been accrued.  The pre-1988 tax bad debt reserve that is not recaptureable
under the Act is subject to recapture at a later date only if certain
events occur.  These events include, but are not limited to, a conversion
to a type of institution that is not a commercial bank. Management does 
not anticipate engaging in any transactions that would require recapture 
of its pre-1988 tax bad debt reserve of approximately $1,600,000.


NOTE K - TREASURY STOCK

In February, 1994, the Company's Board of Directors authorized the 
purchase of Company common stock under a Stock Repurchase Program.  
Shares repurchased are retired or held in treasury and reserved for
reissuance to satisfy the exercise of stock options.

During the years ended June 30, 1998, 1997, and 1996, the Company
repurchased 12,176, 18,705, and 19,990 shares, respectively.  These 
shares were repurchased at an average cost of $22.20, $21.85, and $17.54
per share, respectively.

During the year ended June 30, 1998, the Company reissued 20,226 shares 
of common stock from treasury stock with a cost basis of $449,442.  These
shares were issued upon the exercise of stock options by employees or
directors.  During the years ended June 30, 1997 and 1996, the Company
retired 10,555 and 19,990 treasury shares, respectively.


NOTE L - REGULATORY MATTERS 

The Bank is subject to various regulatory capital requirements administered
by federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory, and possibly additional discretionary
actions by regulators that, if undertaken, could have a direct material
effect on the consolidated financial statements.  Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-balance sheet
items as calculated under regulatory accounting practices.  The Bank's
capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weighing, and other
factors.

To ensure capital adequacy, quantitative measures have been established by
the Bank's primary regulator, the Office of Thrift Supervision (OTS). 
Current OTS standards require that the Bank maintain tangible capital (as
defined) equal to at least 1.5% of tangible assets, core capital (as
defined) equal to at least 3% of adjusted total assets, and risk-based
capital (as defined) equal to at least 8% of risk-weighted assets.
Management believes, as of June 30, 1998, that the Company and the Bank
exceed all capital adequacy requirements.

At June 30, 1998, the Bank was categorized by regulators as
well-capitalized under the regulatory framework for prompt corrective
action.  A financial institution is deemed to be well-capitalized if it 
has total risk-based capital of 10% or more, has a Tier 1 risk-based
capital ratio of 6% or more, and has a Tier 1 leverage capital ratio of 5%
or more.  At June 30, 1998, the Bank's capital exceeded all of the capital
standards of a well-capitalized institution.  There are no conditions or
anticipated events that, in the opinion of management, would change the
category.

The Bank's actual capital amounts and ratios at June 30, 1998 and 1997, 
are presented in the following table.  No amount was deducted from capital
for interest-rate risk exposure.

                                             ($ In Thousands)
                                     June 30, 1998       June 30, 1997 
                                    ________________   _________________
                                    Amount    Ratio     Amount    Ratio     
                                    _______  _______    _______  _______

  Tangible capital                  $19,931    13.4%    $20,548    16.2%
  Core/leverage capital              19,931    13.4%     20,548    16.2%
  Tier 1 risk-based capital          19,931    23.0%     20,548    29.1%
  Total risk-based capital           20,454    23.6%     21,114    29.9%
     

The minimum amounts of capital and ratios as established by regulations for
capital adequacy purposes at June 30, 1998 and 1997, were as follows:
 
                                              ($ In Thousands)
                                      June 30, 1998       June 30, 1997     
                                    ________________    ________________  
                                     Amount   Ratio     Amount    Ratio     
                                    _______  _______    _______  _______

  Tangible capital                  $ 2,232     1.5%    $ 1,904     1.5%
  Core/leverage capital               4,466     3.0%      3,808     3.0%
  Total risk-based capital            6,919     8.0%      5,655     8.0%

Regulations also include restrictions on loans to one borrower, on certain
types of investments and loans, on loans to officers, directors, and
principal shareholders, on brokered deposits and on transactions with
affiliates.

To qualify under the Qualified Thrift Lender (QTL) test, approximately 65%
of assets must be maintained in housing related finance and other specified
areas.  If the QTL test is not met, limits are placed on growth, branching,
new investments, FHLB advances, and dividends or the Bank must convert to a
commercial bank charter.  

In September, 1996, banking legislation was enacted requiring that all
institutions with SAIF (Savings Association Insurance Fund) deposits pay a
one-time special assessment.  This assessment was $598,653 and is included
in deposit insurance premiums in the statement of income for the year ended
June 30, 1997.


NOTE M - EMPLOYEE BENEFITS AND STOCK OPTIONS

The Bank participates in a multiemployer, noncontributory defined benefit
pension plan for substantially all of its full-time employees by being a
member of the Financial Institutions Retirement Fund, a non-profit,
tax-exempt pension trust which is administered by a Board of Directors
comprised of presidents of FHLB and officers of various participating
associations.  The Fund invests the contributions made to it and, under its
Comprehensive Retirement Program, it pays out retirement, disability and
death benefits.  The multiemployer plan's assets exceed the actuarially
computed value of vested benefits at June 30, 1997, the most recent
valuation date.  There is no unfunded liability for past service.  Plan
benefits are fully vested after five years of service and are based on an
employee's years of service and a percentage of the employee's average
salary, using the five highest consecutive years preceding retirement.  The
Bank's funding policy is to make contributions to the plan equal to the
amount accrued as pension expense.  The plan was fully funded for 1998,
1997 and 1996, and, accordingly, no contributions were made.

The Bank also provides a profit sharing plan with a (401-K) provision which
allows eligible employees to defer up to 15% of their compensation, as
defined, by making a contribution to the plan.  The plan allows the Bank to
make a matching contribution equal to the deferred compensation of the
participants, but not in excess of 50% of each participant's contribution
and also provides for an "Excess Contribution" which can be made at the
discretion of the Board of Directors.  The expense for the plan included in
the accompanying financial statements was $36,062, $23,940, and $11,205 for
the years ended June 30, 1998, 1997 and 1996, respectively. 

The Bank has an Employee Stock Ownership Plan (ESOP) for eligible
employees.  Upon formation, the ESOP borrowed $1,269,600 from the Company
to purchase 126,960 shares of Company common stock. The ESOP shares were
pledged as collateral for the debt.  The loan obligation is considered
unearned employee benefit expense and, as such, is recorded  as a reduction
of the Company's stockholders' equity. Both the loan obligation and the
unearned benefit expense are reduced by the amount of any loan repayments
made by the ESOP.  Cash contributions to the ESOP are determined based on
its total debt service less any dividends paid on ESOP shares.  The Bank
has adopted Statement of Position 93-6 (SOP 93-6), Employers' Accounting
for Employee Stock Ownership Plans.  As the debt is repaid, shares are
released from collateral and allocated to qualified employees, based on the
proportion of debt service paid for the year. As shares are released from
collateral, an expense is recorded equal to the fair market value of the
shares, and the shares become outstanding for earnings per share
computations.  Dividends on allocated ESOP shares are recorded as a
reduction of retained earnings, while dividends on unallocated shares are
recorded as a reduction of debt.  The tax benefit of tax-deductible
dividends are reported as a reduction of income tax expense.  ESOP expense
for the years ended June 30, 1998, 1997 and 1996, totaled $425,032,
$311,052, and $295,180, respectively.  The ESOP shares as of June 30, 1998
and 1997, were as follows:

                                                          June 30, 
                                                  ______________________
                                                     1998        1997 
                                                  __________  __________

  Allocated shares                                    50,784      38,088    
  Shares released for allocation                      21,038      12,696    
  Unreleased shares                                   55,138      76,176
                                                  __________  __________

  Total ESOP shares                                  126,960     126,960
                                                  ==========  ==========

  Fair value of unreleased shares at June 30      $1,323,310  $1,866,312
                                                  ==========  ==========

The Bank has established Recognition and Retention Plans as a method of
providing directors of the Bank with a proprietary interest in the Company
in a manner designed to encourage such persons to remain with the Bank. 
The terms of each Plan are identical, only the participants vary.   Awards
to directors are fixed and are granted in the form of shares of Common
Stock to be held in trust.  Awards are nontransferable and nonassignable. 
When shares become vested and are actually distributed in accordance with
the Plans, the participants also receive amounts equal to any accrued
dividends with respect thereto.  Upon establishment of the plans in 1993,
63,480 shares of Company common stock were made available, of which 47,610
shares were awarded and have vested.  During the year ended June 30, 1998,
the remaining 15,870 shares were awarded.  These shares vest in equal
amounts over a three-year period.  The cost of the shares purchased by the
plan is considered to be unearned compensation at the time of the award and
compensation is earned ratably over the vesting term.  Expense for these
plans was $26,450 in 1998, $ -0- in 1997, and $158,700 in 1996. 

The Company has various stock option plans covering specified employees and
outside directors of the Company and the Bank.  Under the 1993 Incentive
Stock Option Plan (the "Option Plan"), 79,350 of authorized but unissued
shares of common stock have been reserved for issuance to specified
employees of the Company and its subsidiary bank.  The Option Plan is
administered by a committee of outside directors.  The Option Plan
authorizes the grant of (i) options to purchase Company Common Stock
intended to qualify as incentive stock options, (ii) options that do not so
qualify ("non-statutory options") and (iii) limited rights which are
exercisable only upon a change in control of the Company.  The exercise
price is at least 100% of the fair market value at the time of the grant of
the underlying common stock. Options become exercisable in whole or in part
at such times (no later than 10 years from the date of grant) as the
committee determines.  In 1993, options to purchase 47,608 shares were
granted, and during the year ended June 30, 1998 and 1997, 17,193 and
3,967, respectively, were exercised at the option price of $10 per share. 
Unexercised options totaled 26,448 shares at June 30, 1998.

The 1993 Stock Option Plan for Outside Directors (the "Directors' Option
Plan") of the Company and its subsidiary provides for the granting of
79,350 shares of Common stock shares.  Authorized but unissued shares or
treasury shares may be used to satisfy an exercise of an option, resulting
in an increase in the number of shares outstanding.  The exercise price per
share of each option is equal to the fair market value of the shares of
Common Stock on the date the option is granted.  All options granted expire
upon the earlier of 10 years following the date of grant or one year
following the date the optionee ceases to be a director.  In 1993, 52,688
shares were granted, and during the year ended June 30, 1998, 13,172 were
exercised at the option price of $10 per share.  Unexercised options
totaled 39,516 shares at June 30, 1998.

FASB Statement No. 123,  Accounting for Stock Based Compensation requires a
fair value method of accounting for stock-based compensation arrangements. 
However, the adoption of the fair value method was not required, and if
Statement No. 123 had been adopted for the years ended June 30, 1998, 1997,
and 1996, there would have been no significant impact on pro forma net
income or net income per share. 


NOTE N - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers. 
These financial instruments include commitments to extend credit and
standby letters of credit.  These instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount
recognized in the statements of financial condition.

The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual notational
amount of these instruments.  The Bank uses the same credit policies in
making commitments and conditional obligations as it does for balance sheet
instruments.

Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract. 
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee.  Standby letters of credit and
financial guarantees written are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party.  The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loans to customers.

Approximate contract or notational amounts of financial instruments whose
contract amounts represent credit risk at June 30, 1998, are (in
thousands):                   

  Unused lines of credit                       $  1,182
  Mortgage construction loans                     2,665
  Commitments to extend credit secured by
    mortgages on dwelling units:
  Adjustable rate                                 1,033
  Fixed rate                                        910

The commitments to originate fixed rate mortgage loans represent amounts
the Bank plans to fund within a period of 60 to 120 days.  These
commitments were made with interest rates ranging from 6.75% to 7.50%.



NOTE O - CONCENTRATION OF CREDIT RISK

Over ninety-five percent of the Bank's loans and commitments have been
granted to customers in the Bank's market area.  Generally, such customers
are also depositors of the Bank.  The concentrations of credit by type of
loan are set forth in Note C.  The distribution of commitments to extend
credit approximates the distribution of loans outstanding.  

At June 30, 1998, the Company and the Bank had deposits with financial
institutions in excess of federally insured limits by approximately
$12,700,000.  Of this amount, approximately $10,200,000 was on deposit at
The Federal Home Loan Bank of Dallas, an instrumentality of the U. S.
Government.


NOTE P - RELATED PARTY TRANSACTIONS

In the normal course of business, the Bank makes loans to its directors and
executive officers and to companies in which they have a significant
ownership interest.  These loans, totaling $1,896,327 at June 30, 1998, and
$869,067 at June 30, 1997, are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons.


NOTE Q - FINANCIAL INSTRUMENTS

The Company and its subsidiary adopted FASB Statement No. 107, Disclosures
About Fair Value of Financial Instruments.  The Statement requires
disclosure of fair value information about financial instruments, whether
or not recognized in the financial statement.  In cases where quoted market
prices are not available, fair values are based on estimates using present
value or other valuation techniques.  Those techniques are significantly
affected by the assumptions used, including the discount rate and estimates
of future cash flows.  In that regard, the derived fair value estimates
cannot be substantiated by comparison to independent markets and, in many
cases, could not be realized in immediate settlement of the instruments.
Statement No. 107 excludes certain financial instruments and all
nonfinancial instruments from its disclosure requirements.  Accordingly,
the aggregate fair value amounts presented do not represent the underlying
value of the Company and its subsidiary.  The carrying amounts presented
are the amounts at which the financial instruments are reported in the
consolidated financial statements.

The following methods and assumptions were used in estimating fair value
disclosures for financial instruments:

Cash and cash equivalents:  The carrying amounts reported in the statement
of financial condition for cash and cash equivalents approximate those
assets' fair value.
 
Investment securities (including mortgage-backed securities):  Fair values
for investment securities are based on quoted market prices, where
available.  If quoted market prices are not available, fair values are
based on quoted market prices of comparable instruments.

Loans:  For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
amounts.  The fair values for other loans (for example, fixed rate
commercial real estate and rental property mortgage loans and commercial
and industrial loans) are estimated using discounted cash flow analysis,
based on interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality.  Loan fair value estimates
include judgments regarding future expected loss experience and risk
characteristics.

Deposits:  The fair values of demand deposit accounts (i.e.,
interest-bearing and noninterest-bearing checking accounts and money market
and regular savings accounts) are equal to the face amount.  The fair value
of fixed-rate time deposits is estimated using a discounted cash flow
calculation that applies interest rates offered by the Corporation as of
the measurement date to a schedule of aggregate contractual maturities of
such deposits as of the same dates.

Borrowed Funds:  The fair value of borrowings is based on the discounted
value of contractual cash flows using as discount rates the rates that were
available to the Bank at June 30, 1998, for similar borrowings.

Off-Balance Sheet Financial Instruments:  Off-balance sheet instruments
consist of any commitments to extend credit, letters of credit, etc. 
Generally, these commitments have a term of 30 to 120 days.  Management is
of the opinion the estimated fair value is not significantly different than
the contractual or notational amounts.

The estimated fair values of the financial instruments at June 30, 1998 and
1997, are as follows (in thousands):

                                     1998                 1997 
                             ____________________  ___________________
                                   Estimated             Estimated
                              Carrying    Fair      Carrying    Fair
                               Value      Value      Value      Value     
                             _________  _________  _________  _________

  Financial assets:
    Cash and cash 
      equivalents            $  14,321  $  14,321  $   8,406  $   8,406
    Investment securities       33,449     33,482     26,082     26,015
    Federal Home Loan Bank 
      stock                        851        851        802        802
    Loans, net of allowance     98,918    100,238     92,760     93,168

  Financial liabilities:
    Deposits                   114,538    114,866    103,798    103,403
          
  Borrowed funds                10,961     10,555        -          -   
  Financial instruments          5,790      5,790      2,841      2,841


NOTE R - CONVERSION TO STOCK FORM OF OWNERSHIP

On June 30, 1993, the Bank converted from a federally-chartered mutual
institution to a federally-chartered stock savings bank with 100% of the
stock of the Bank issued to the Company which was formed in connection with
the conversion.  Sources of cash flow to the Company are dependent upon
earnings from investment of net proceeds retained by it in the conversion
and any dividends received from the Bank.

At conversion, the Bank established a liquidation account in an amount
equal to the total net worth of the Bank as of the date of the latest
balance sheet contained in the final offering circular.  Each eligible
account holder will be entitled to a proportionate share of this account in
the event of a complete liquidation of the Bank, and only in such event. 
This share will be reduced if the account holders' deposit falls below the
amount on the dates of record and will cease to exist if the account is
closed.  The liquidation account is not increased despite any increase
after conversion in the related deposit balance of an eligible account
holder.  

The Bank may not declare or pay cash dividends on any of its stock if the
effect thereof would cause the Bank's net worth to be reduced below the
amount required for federal regulatory capital requirements.  The Company,
as a Delaware Corporation, is subject to Delaware law which limits
dividends to an amount equal to the excess of the Company's net assets over
its statutory capital or, if there is no excess, to its net profits for the
current and/or immediately preceding fiscal year.


NOTE S - LEGAL PROCEEDINGS

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.


NOTE T - CONDENSED PARENT COMPANY STATEMENTS

Balance sheets as of June 30, 1998 and 1997, and statements of income and
cash flows for the years then ended, of FFBS Bancorp, Inc. (parent company
only) are presented below.

  Balance Sheets                                        June 30, 
                                                ________________________
                                                    1998         1997 
                                                ___________  ___________
    Assets:
      Cash                                      $   257,168  $   396,399
      Interest-bearing deposit due from banks     1,119,998    2,275,485 
      Investment securities                       1,747,357    1,500,000 
      Investment in First Federal Bank for 
        Savings                                  19,697,019   20,553,810    
      Other assets                                  905,306      805,255   
                                                ___________  ___________
          
                                                $23,726,848  $25,530,949    
                                                ===========  ===========
    Liabilities and Stockholders' Equity:
      Dividend payable                          $   472,720  $   389,361
      Stockholders' equity                       23,254,128   25,141,588    
                                                ___________  ___________
          
                                                $23,726,848  $25,530,949    
                                                ===========  ===========



                                                      Years Ended
                                                        June 30,   
                                                ________________________
                                                    1998         1997 
                                                ___________  ___________
  Statements of Income     

  Income:
    Dividends from subsidiary bank              $ 2,500,000  $       -   
    Interest on investment securities               109,051      153,816
    Other                                           114,308      137,634
                                                ___________  ___________
                                                  2,723,359      291,450   

  Expense                                            60,001       51,458

  Income before income taxes and equity 
    in undistributed earnings of subsidiary       2,663,358      239,992   

  Income taxes expense (benefit)                     (8,250)      67,250
                                                ___________  ___________

  Income before equity in undistributed 
    earnings of subsidiary                        2,671,608      172,742
  
  Equity in undistributed earnings of 
    subsidiary                                   (1,091,414)   1,305,546
                                                ___________  ___________

  Net Income                                    $ 1,580,194  $ 1,478,288
                                                ===========  ===========



                                                      Years Ended
                                                        June 30,   
                                                ________________________
                                                    1998         1997 
                                                ___________  ___________
Statements of Cash Flows 

  Cash flows from operating activities:
    Net income                                  $ 1,580,194  $ 1,478,288
    Equity in earnings of subsidiary              1,091,414   (1,305,546)
    Other, net                                     (256,713)      45,741
                                                ___________  ___________

  Net cash provided by operating activities       2,414,895      218,483


  Cash flows from investing activities:
    Repayment on ESOP loan                          210,380      126,960
    Purchase of securities                       (1,747,357)  (1,491,126)
    Proceeds from maturities of securities        1,500,000    4,000,000
                                                ___________  ___________

    Net cash provided by (used in) investing 
      activities                                    (36,977)   2,635,834
 
  Cash flows from financing activities:
    Exercise of stock options                       303,660       39,670
    Treasury stock acquisition                     (270,332)    (404,180)
    Cash dividends paid                          (3,705,964)    (784,445)
                                                ___________  ___________

  Net cash used in financing activities          (3,672,636)  (1,148,955)
                                                ___________  ___________

  Net increase (decrease) in cash and cash 
    equivalents                                  (1,294,718)   1,705,362 
                                                ___________  ___________

  Cash and cash equivalents at beginning 
    of period                                     2,671,884      966,522
                                                ___________  ___________

  Cash and cash equivalents at end of 
    period                                      $ 1,377,166  $ 2,671,884
                                                ===========  ===========