TABLE OF CONTENTS


                                                                            Page

MESSAGE TO OUR SHAREHOLDERS                                                   1

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA                                2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS                                                     4

SELECTED QUARTERLY FINANCIAL DATA                                            11

COMMON STOCK AND RELATED MATTERS                                             11

CORPORATE INFORMATION                                                        13

STOCKHOLDER INFORMATION                                                      14
<PAGE>

                [LETTERHEAD OF ALAMOGORDO FINANCIAL CORPORATION]



Dear Shareholder,

As I look back over my 20 years of service, I am reminded of countless important
milestones, including our stock conversion in 2000 and our success over the past
three years as a public company. One thing that has been constant throughout the
history of this company has been our commitment to our customers. Our focus on
meeting and exceeding the needs of our customers starts with the personal
commitment of each of our employees. Our very capable management team is focused
and committed to a clear and constant mission to carry this tradition forward,
knowing that satisfied customers and shareholder value are inseparable. I am
grateful for the opportunity to lead this great company and remain confident in
its future success.

Alamogordo Financial Corp. (AFC) completed a successful year in 2003. Our
business continued to grow with revenues up 18.41% and total assets surpassing
$156 million. In achieving financial targets this past year, AFC reported net
income of $656,000. This represents an increase over 2002 results. Our net
income per share, diluted for 2003, stands at $.51. Minority shareholders of the
corporation were paid a cash dividend of $.68 per share on the 373,772 shares of
common stock outstanding at June 30, 2003. Cash dividends of $.13 per share were
paid on the 918,000 shares held by AF Mutual Holding Company. AF Mutual Holding
Company waived receiving the balance of its dividends.

(Highlights of Our Business)

Alamogordo Federal Savings and Loan Association (Alamo Fed) is the foundation of
AFC's success. Alamo Fed has consistent earnings and a very strong balance
sheet. Alamo Fed had deposits at June 30, 2003 of $119 million and showed total
loans of $101 million, decreases of 9.29% and 13.68% respectively. Equity
capital amounted to $28 million or 17.88% of total assets. During the 12 months
ending June 30th, Alamogordo Federal originated more than $20 million in new
loans for its own portfolio. They additionally purchased $2.5 million in loans,
primarily in El Paso and Albuquerque during this same time frame. Payoffs,
principal repayments and loans sold to other financial institutions totaled $39
million. Deposits and interest credited to customers' accounts totaled $243
million while withdrawals stood at $255 million dollars.

Entering 2004, we remain committed to our long-term business objectives while
keeping a watch on the economic climate. Our favorable results of the past year
reflect our commitment to our customers and to disciplined growth. We are loyal
to the practices and fundamentals that have brought us to where we are today and
confidently look to this year as another good year for our customers and
shareholders.

Sincerely,

/s/ R. Miles Ledgerwood

R. Miles Ledgerwood
President & Chief Executive Officer

<PAGE>

                 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

         The following table sets forth certain financial and other data of
Alamogordo Financial Corporation at the dates and for the periods indicated. For
additional information about Alamogordo Financial, reference is made to
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of Alamogordo Financial
and related notes included elsewhere herein.

<TABLE>
<CAPTION>
                                                               At June 30,
                                     ---------------------------------------------------------------
                                        2003         2002         2001         2000          1999
                                     ----------   ----------   ----------   ----------    ----------
                                                             (In Thousands)
<S>                                  <C>          <C>          <C>          <C>           <C>
Selected Financial Condition Data
Total assets .....................   $  156,999   $  159,570   $  146,579   $  148,394    $  156,158
Loans receivable, net ............      100,595      116,543      122,995      116,782       115,949
Mortgage-backed securities:
 Held to maturity ................           --           --          127          211           319

 Available for sale ..............        1,775        2,857        2,159        2,551         3,114
Securities:

 Held to maturity ................        5,108          725        1,175        1,626         3,154

 Available for sale ..............       26,062        7,084        3,506       12,918        13,916
Deposits .........................      118,823      130,989      118,257      116,298       122,469

Total borrowings .................        8,907           --           --        5,000        10,000
Equity ...........................       28,077       27,292       26,817       25,814        22,441
</TABLE>

<TABLE>
<CAPTION>
                                                           Year Ended June 30,
                                     ---------------------------------------------------------------
                                        2003         2002         2001         2000          1999
                                     ----------   ----------   ----------   ----------    ----------
                                                 (In Thousands Except Per Share Data)
<S>                                  <C>          <C>          <C>          <C>           <C>
Selected Operating Data:
Total interest income ............   $    9,104   $    9,718   $   10,191   $   10,567    $   11,016
Total interest expense ...........        4,842        5,893        6,348        6,668         7,279
                                     ----------   ----------   ----------   ----------    ----------
Net interest income ..............        4,262        3,825        3,843        3,899         3,737
Provision (credit) for loan losses          390          130           --          (50)           --
                                     ----------   ----------   ----------   ----------    ----------
Net interest income after
provision for loan losses ........        3,872        3,695        3,843        3,949         3,737
                                     ----------   ----------   ----------   ----------    ----------

Other income .....................          519          433          426          384           260
Other expenses ...................        3,356        3,282        3,058        3,076         3,022
                                     ----------   ----------   ----------   ----------    ----------
Income before income taxes .......        1,035          846        1,211        1,257           975
                                     ----------   ----------   ----------   ----------    ----------
Provision for income taxes .......          379          292          435          428           296
                                     ----------   ----------   ----------   ----------    ----------
Net income .......................   $      656   $      554   $      776   $      829    $      679
                                     ==========   ==========   ==========   ==========    ==========
Net income per share-basic .......   $     0.52   $     0.44   $     0.62   $     0.67           N/M
                                     ==========   ==========   ==========   ==========    ==========
Net income per share-diluted .....   $     0.51   $     0.44   $     0.62   $     0.67           N/M
                                     ==========   ==========   ==========   ==========    ==========
Dividends per share ..............   $     0.68   $     0.64   $     0.41   $     0.11           N/M
                                     ==========   ==========   ==========   ==========    ==========
</TABLE>
---------------------
N/M Not meaningful; no public shareholders during the year.

                                        2
<PAGE>

<TABLE>
<CAPTION>
                                                                  At or for the Year Ended June 30,
                                                      --------------------------------------------------------
                                                        2003        2002        2001        2000        1999
                                                      --------    --------    --------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>         <C>
Key Operating Ratios and Other Data:

Performance Ratios:
Return on assets (ratio of net income to
   average total assets) ......................          0.41%       0.35%       0.53%       0.53%       0.42%
Return on equity (ratio of net income to
   average equity) ............................          2.39        2.05        2.97        3.67        3.03
Average interest rate spread ..................          2.37        2.03        2.13        2.32        2.06
Interest rate spread at end of period .........          2.42        2.00        2.10        2.16        2.19
Net interest margin (1) .......................          2.85        2.65        2.87        2.77        2.53
Ratio of operating expenses to average total
   assets .....................................          2.08        2.10        2.10        1.98        1.89
Ratio of average interest-earning assets to
   average interest-bearing liabilities .......        114.90      115.29      115.65      109.41      109.54
Efficiency ratio (2) ..........................         70.19       77.08       71.63       71.82       75.61
Dividend payout ratio .........................        131.27      144.14       65.01       16.15(3)       --

Asset Quality Ratio:
Non-performing assets to total assets .........          0.74        1.69        0.74        0.52        0.33
Allowance for loan losses to non-performing
   loans ......................................         87.66       22.34       43.02       58.68       88.72
Allowance for loan losses to gross loans
   receivable .................................          0.53        0.46        0.33        0.35        0.39

Capital Ratios:
Equity to total assets at end of period .......         17.88       17.10       18.30       17.40       14.37
Average equity to average assets ..............         17.03       17.31       17.93       14.53       13.96

Other Data:
Number of full-service offices ................             2           2           2           2           2
</TABLE>
-----------------------
(1)      Net interest income divided by average interest-earning assets.
(2)      The efficiency ratio represents the ratio of operating expenses divided
         by the sum of net interest income and non-interest income less gain on
         sales of investments.
(3)      Includes only one quarterly dividend declared.

                                        3
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

Forward-Looking Statements

         This discussion and analysis reflects Alamogordo Financial's
consolidated financial statements and other relevant statistical data and is
intended to enhance your understanding of our financial condition and results of
operations. You should read the information in this section in conjunction with
Alamogordo Financial's consolidated financial statements and their notes and the
other statistical data provided in this Annual Report. This Annual Report
contains certain "forward-looking statements" which may be identified by the use
of such words as "believe," "expect," "anticipate," "should," "planned,"
"estimated" and "potential." Examples of forward-looking statements include, but
are not limited to, estimates with respect to our financial condition, results
of operations and business that are subject to various factors that could cause
actual results to differ materially from these estimates and most other
statements that are not historical in nature. These factors include, but are not
limited to, general and local economic conditions, changes in interest rates,
deposit flows, demand for mortgage and other loans, real estate values, and
competition; changes in accounting principles, policies, or guidelines; changes
in legislation or regulation; and other economic, competitive, governmental,
regulatory, and technological factors affecting our operations, pricing,
products and services. Alamogordo Financial does not undertake, and specifically
disclaims any obligation, to publicly release the result of any revisions that
may be made to any forward-looking statements to reflect events or circumstances
after the date of such statements or to reflect the occurrence of anticipated or
unanticipated events.

General

         Alamogordo Financial's results of operations depend primarily upon the
results of operations of its wholly-owned subsidiary, Alamogordo Federal Savings
and Loan Association. Alamogordo Federal's results of operations depend
primarily on net interest income. Net interest income is the difference between
the interest income we earn on our interest-earning assets, consisting primarily
of loans and investment and mortgage-backed securities, and the interest we pay
on our interest-bearing liabilities, primarily savings accounts, time deposits
and other borrowings. Our results of operations are also affected by our
provision for loan losses, other income and other expense. Other expense
consists primarily of non-interest expenses, including salaries and employee
benefits, occupancy, data processing fees, deposit insurance premiums,
advertising and other expenses. Other income consists primarily of non-interest
income, including service charges and fees, gain (loss) on sale of real estate
owned and other income. Our results of operations may also be affected
significantly by general and local economic and competitive conditions,
particularly those with respect to changes in market interest rates, government
policies and actions of regulatory authorities.

Critical Accounting Policies

         Our accounting and reporting policies are prepared in accordance with
accounting principles generally accepted in the United States of America and
conform to general practices within the banking industry. Accounting policies
considered critical to our financial results include the allowance for loan
losses, accounting for deferred income taxes and the recognition of interest
income.

         The methodology for determining the allowance for loan losses is
considered by management to be a critical accounting policy due to the high
degree of judgment involved, the subjectivity of the assumptions utilized and
the potential for changes in the economic environment that could result in
changes to the amount of the allowance for loan losses considered necessary. We
evaluate our assets at least quarterly, and review their risk components as a
part of that evaluation. See Note 1, Summary of Significant Accounting

                                        4
<PAGE>

Policies--Loans in our Notes to Consolidated Financial Statements for a
discussion of the risk components. We consistently review the risk components to
identify any changes in trends.

         We use the asset and liability method of accounting for income taxes.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. If current available information raises doubt as to the
realization of the deferred tax assets, a valuation allowance is established.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. We exercise significant
judgment in evaluating the amount and timing of recognition of the resulting tax
liabilities and assets, including projections of future taxable income. These
judgments and estimates are reviewed on a continual basis as regulatory and
business factors change.

         Interest income on loans, securities and other interest-earning assets
is accrued monthly unless management considers the collection of interest to be
doubtful. Loans are placed on nonaccrual status when payments are contractually
past due 90 days or more, or when management has determined that the borrower is
unlikely to meet contractual principal or interest obligations. At such time,
unpaid interest is reversed by charging interest income. Interest payments
received on nonaccrual loans (including impaired loans) are recognized as income
unless future collections are doubtful. Loans are returned to accrual status
when collectibility is no longer considered doubtful (generally, when all
payments have been brought current).


Management of Market Risk

         General. As with other savings and loan holding companies, our most
significant form of market risk is interest rate risk. Our assets, consisting
primarily of mortgage loans, have longer maturities than our liabilities,
consisting primarily of deposits. As a result, a principal part of our business
strategy is to manage interest rate risk and reduce the exposure of our net
interest income to changes in market interest rates. Accordingly, Alamogordo
Federal's Board of Directors has established an Asset/Liability Management
Committee which is responsible for evaluating the interest rate risk inherent in
Alamogordo Federal's assets and liabilities, determining the level of risk that
is appropriate given its business strategy, operating environment, capital,
liquidity and performance objectives, and managing this risk consistent with the
guidelines approved by the Board of Directors. The Asset/Liability Management
Committee consists of senior management operating under a policy adopted by the
Board of Directors and meets at least quarterly to review Alamogordo Federal's
asset/liability policies and interest rate risk position.

         Although we originate a significant amount of 30-year fixed rate loans,
we believe that the interest rate risk generally associated with these loans is
mitigated by the transient nature of the persons employed in our market area.
Because our local economy is heavily dependent on two U.S. Government military
installations located in Otero County, many of our borrowers are employed by the
federal government in positions that require frequent relocation. When these
borrowers relocate, they often sell the homes securing the loan, and prepay the
mortgage loan. As a result, we believe our one- to four-family residential real
estate loans, particularly if the borrower is employed by the United States
Government, remain outstanding for a shorter period of time than the national
average for 30-year fixed-rate one- to four-family residential real estate
loans. In addition, from time to time we have and may continue to purchase
adjustable-rate mortgage loans, and adjustable-rate and shorter-term securities.
We do not engage in trading activities or use derivative instruments to control
interest rate risk.

                                        5
<PAGE>

         Alamogordo Financial's current investment strategy is to maintain a
securities portfolio that provides a source of liquidity and that contributes to
our overall profitability and asset mix within given quality and maturity
considerations. The securities portfolio consists primarily of federal
government and government sponsored corporation securities. A portion of
Alamogordo Financial's investment securities, other than Federal Home Loan Bank
stock, are classified as available for sale to provide management with the
flexibility to make adjustments to the portfolio in the event of changes in
interest rates, to fulfill unanticipated liquidity needs, or to take advantage
of alternative investment opportunities.

         Net Portfolio Value. We measure interest rate sensitivity by computing
the amounts by which the net present value of an our cash flow from assets,
liabilities and off balance sheet items (our net portfolio value or "NPV") would
change in the event of a range of assumed changes in market interest rates.
These computations estimate the effect on our NPV from instantaneous and
permanent 100 to 300 basis point increases and 100 basis point decreases in
market interest rates. Given the current low level of market interest rates and
the low probability of further significant declines in absolute rates, we did
not calculate NPV for interest rate decreases of greater than 100 basis points.
A basis point equals one one-hundredth of one percentage point, and 100 basis
points equals one percentage point. A change in interest rates to 8% from 7%
would mean, for example, a 100 basis point increase in the "Changes in Market
Interest Rates" column below.

         The following table presents Alamogordo Federal's NPV at June 30, 2003,
as calculated by the Office of Thrift Supervision (the "OTS"), which is based
upon quarterly information that Alamogordo Federal provided to the OTS.

                Percentage Change in Net Portfolio Value
       ---------------------------------------------------------
         Changes in
           Market          Projected    Estimated      Amount of
       Interest Rates      Change(1)       NPV          Change
       --------------      ---------    ---------      ---------
       (basis points)             (Dollars in Thousands)

            300               (17)%       25,694        (5,150)
            200                (9)        28,183        (2,660)
            100                (3)        30,061          (782)
             --                --         30,843            --
           (100)                1         31,196           353


(1)      Calculated as the amount of change in the estimated NPV divided by the
         estimated NPV assuming no change in interest rates.

         Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurement. Modeling changes in NPV requires making certain
assumptions which may or may not reflect the manner in which actual yields and
costs respond to changes in market interest rates. In this regard, the NPV table
presented assumes that the composition of Alamogordo Federal's interest
sensitive assets and liabilities existing at the beginning of a period remain
constant over the period being measured and assumes that a particular change in
interest rates is reflected uniformly across the yield curve regardless of the
duration or re-pricing of specific assets and liabilities. Accordingly, although
the NPV table provides an indication of Alamogordo Federal's interest rate risk
exposure at a particular point in time, such measurements are not intended to
and do not provide a precise forecast of the effect of changes in market
interest rates on its net interest income, and will differ from actual results.
Additionally, the guidelines established by the Board of Directors are not
strict limitations. While a goal of the Asset/Liability Management Committee and
the Board of Directors is to limit projected NPV changes within the Board's
guidelines, Alamogordo Federal will not necessarily limit projected changes in
NPV if the required action would present disproportionate risk to Alamogordo
Federal's continued profitability.

                                        6
<PAGE>

Average Balance Sheet

         The following table presents for the periods indicated the total dollar
amount of interest income from average interest-earning assets and the resultant
yields, as well as the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates. No tax equivalent adjustments were made.
All average balances are daily average balances. Non-accruing loans have been
included in the table as loans carrying a zero yield. Interest income includes
fees that are considered adjustments to yields.

<TABLE>
<CAPTION>
                                                                                     Years Ended June 30,
                                                             ---------------------------------------------------------------------
                                                                           2003                                2002
                                                             ---------------------------------   ---------------------------------
                                                             Average                 Average     Average                 Average
                                                             Balance     Interest   Yield/Cost   Balance     Interest   Yield/Cost
                                                             --------    --------   ----------   --------    --------   ----------
                                                                                    (Dollars in Thousands)
<S>                                                          <C>         <C>             <C>     <C>         <C>             <C>
Interest-earning assets:
  Loans receivable (1) ...................................   $108,935    $  8,136        7.47%   $119,025    $  9,038        7.59%
  Mortgage-backed securities (2) .........................      2,336          94        4.02       3,146         141        4.48
  Securities (2) .........................................     21,294         598        2.81       2,812         107        3.81
  Other interest-earning assets (3) ......................     16,764         276        1.65      19,284         432        2.24
                                                             --------    --------                --------    --------
    Total interest-earning assets ........................    149,329       9,104        6.10     144,267       9,718        6.74
                                                                         --------                            --------
Non-interest-earning assets ..............................     11,726                              12,167
                                                             --------                            --------
      Total assets .......................................   $161,055                            $156,434
                                                             ========                            ========

Interest-bearing liabilities:
  Transaction and savings deposits .......................   $ 19,891         107        0.54%   $ 18,172         238        1.31%
  Certificate accounts ...................................    102,763       4,520        4.40     106,964       5,655        5.29
  Borrowings .............................................      7,306         215        2.94          --          --          --
                                                             --------    --------                --------    --------
    Total interest-bearing liabilities ...................    129,960       4,842        3.73     125,136       5,893        4.71
                                                                         --------                            --------
Non-interest bearing liabilities .........................      3,667                               4,226
                                                             --------                            --------
      Total liabilities ..................................   $133,627                            $129,362
    Equity ...............................................   $ 27,428                            $ 27,072
                                                             --------                            --------
      Total liabilities and equity .......................   $161,055                            $156,434
                                                             ========                            ========
Net interest income ......................................               $  4,262                            $  3,825
                                                                         ========                            ========
Net interest rate spread (4) .............................                               2.37%                               2.03%
                                                                                     ========                            ========
Net interest-earning assets ..............................   $ 19,369                            $ 19,131
                                                             ========                            ========
Net yield on average interest-earning assets (5) .........                   2.85%                               2.65%
                                                                         ========                            ========

Average interest-earning assets to average interest-
  bearing liabilities ....................................     114.90%                             115.29%
                                                             ========                            ========
</TABLE>
------------------------

(1)      Amounts are net of allowance for loan losses but include non-accrual
         loans. Interest is recognized on non-accrual loans only as and when
         received.
(2)      Securities are included at carrying value.
(3)      Other interest-earning assets include Federal Home Loan Bank of Dallas
         stock.
(4)      Net interest rate spread represents the difference between the weighted
         average yield on interest-earning assets and the weighted average cost
         of interest-bearing liabilities.
(5)      Net interest margin represents net interest income as a percentage of
         average interest-earning assets. .

                                        7
<PAGE>

Rate/Volume Analysis

         The following table presents the dollar amount of changes in interest
income and interest expense for major components of interest-earning assets and
interest-bearing liabilities. It distinguishes between the changes related to
outstanding balances and that due to the changes in interest rates. For each
category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume (i.e.,
changes in volume multiplied by old rate), (ii) changes in rate (i.e., changes
in rate multiplied by old volume), and (iii) changes in rate/volume (change in
rate multiplied by change in volume).

<TABLE>
<CAPTION>
                                                    2003 vs. 2002                                    2002 vs. 2001
                                  -----------------------------------------------  -----------------------------------------------
                                         Increase/(Decrease)                              Increase/(Decrease)
                                                Due To                                           Due To
                                  -----------------------------------    Total     -----------------------------------    Total
                                                             Rate/      Increase                               Rate/     Increase
                                    Volume       Rate        Volume    (Decrease)    Volume       Rate         Volume   (Decrease)
                                  ----------  ----------   ----------  ----------  ----------  ----------   ----------  ----------
                                                                          (In Thousands)
<S>                               <C>         <C>          <C>         <C>         <C>         <C>          <C>         <C>
Interest-earning assets:
  Loans receivable ............   $      302  $     (299)  $     (905) $     (902) $      620  $      (28)  $     (680) $      (88)
  Mortgage-backed securities ..            4         (12)         (39)        (47)         14         (53)          24         (15)
  Investment securities .......           (1)        388          104         491           2          58         (591)       (531)
  Other interest-earning
    assets.....................           22        (183)           5        (156)        200      (2,120)       2,081         161
                                  ----------  ----------   ----------  ----------  ----------  ----------   ----------  ----------
    Total interest-earning
    assets ....................          327        (106)        (835)       (614)        836      (2,143)         834        (473)
                                  ----------  ----------   ----------  ----------  ----------  ----------   ----------  ----------

Interest-bearing liabilities:
  Transactions and savings
  deposits ....................           10        (149)           8        (131)         31        (225)         (10)       (204)
  Certificate accounts ........          192        (952)        (375)     (1,135)        425        (320)        (215)       (110)
  Borrowings ..................           --         215           --         215          --          --         (141)       (141)
                                  ----------  ----------   ----------  ----------  ----------  ----------   ----------  ----------
Total interest-bearing
liabilities ...................          202        (886)        (367)     (1,051)        456        (545)        (366)       (455)
                                  ----------  ----------   ----------  ----------  ----------  ----------   ----------  ----------

Net interest income ...........   $      125  $     (780)  $     (468) $      437  $      380  $   (1,598)  $    1,200  $      (18)
                                  ==========  ==========   ==========  ==========  ==========  ==========   ==========  ==========
</TABLE>

Financial Condition

         Alamogordo Financial's total assets decreased by $2.6 million, or 1.6%,
to $157.0 million at June 30, 2003, from $159.6 million at June 30, 2002. The
decrease resulted primarily from a decrease in cash and cash equivalents and
loans receivable, partially offset by an increase in securities. Cash and cash
equivalents decreased by $9.1 million, or 41.6%, to $12.8 million from $21.9
million primarily due to the purchase of securities and a decrease in deposits,
partially offset by a decrease in loans receivable and an increase in advances.
Securities, including mortgage-backed securities, increased by $22.2 million, or
207.5%, to $32.9 million from $10.7 million as a result of purchases, partially
offset by maturities and repayments. Loans receivable decreased by $15.9
million, or 13.6%, to $100.6 million from $116.5 million as a result of
principal repayments and loan payoffs exceeding new loan originations.

         Total deposits decreased by $12.2 million, or 9.3%, to $118.8 million
at June 30, 2003 from $131.0 million at June 30, 2002. The decrease resulted
primarily from a $14.5 million, or 13.1%, decrease in certificate accounts to
$95.8 million from $110.3 million, partially offset by a $2.2 million increase,
or 12.0%, in transaction and savings deposits to $20.5 million from $18.3
million. The decrease in certificate accounts resulted from maturities
surpassing new account openings. Total borrowings increased to $8.9 million at
June 30, 2003 as compared to none for the previous period as advances from the
Federal Home Loan Bank (the "FHLB") were obtained in order to meet future
liquidity needs, take advantage of low advance rates, and participate in the
FHLB's "Community Investment Program".

Equity increased by $785,000, or 2.9%, to $28.1 million at June 30, 2003 from
$27.3 million at June 30, 2002. The increase resulted primarily from earnings
over the period of $656,000, a $232,000 increase in accumulated other
comprehensive income related to unrealized gains on securities available for
sale, the amortization of $54,000 of unearned stock awards, and the exercise of
$134,000 of stock options, partially offset by dividends paid to stockholders of

                                        8
<PAGE>

$355,000. As of June 30, 2003, Alamogordo Federal had $26.3 million of tangible
capital or 16.8% of tangible assets, $26.3 million of core capital or 16.8% of
total adjusted assets, and $26.7 million of risk-based capital or 36.2% of
risk-weighted assets. Comparison of Operating Results for the Years Ended June
30, 2003 and 2002

         General. Net income increased by $102,000, or 18.4%, to $656,000 for
the fiscal year ended June 30, 2003, from $554,000 for the fiscal year ended
June 30, 2002. The increase resulted from an increase in net interest income
after the provision for loan losses and an increase in total other income,
partially offset by an increase in total other expense and an increase in the
provision for income taxes.

         Total Interest Income. Total interest income decreased by $614,000, or
6.3%, to $9.1 million for the fiscal year ended June 30, 2003 from $9.7 million
for the fiscal year ended June 30, 2002. The decrease resulted from decreases in
interest and fees on loans receivable and interest on other interest-earning
assets, and was partially offset by an increase in interest on securities.
Interest and fees on loans receivable decreased by $902,000, or 10.0%, to $8.1
million from $9.0 million. The decrease resulted from a 12 basis point decrease
in the average yield on the loan portfolio to 7.47% from 7.59% and a $10.1
million, or 8.5%, decrease in the average balance of loans receivable to $108.9
million from $119.0 million. Interest on securities (including mortgage-backed
securities) increased by $444,000, or 179.0%, to $692,000 from $248,000. This
increase resulted from a $17.6 million, or 293.3%, increase in the average
balance of securities, partially offset by a 123 basis point decrease in the
average yield from 4.16% to 2.93%. Interest on other interest-earning assets
decreased by $156,000, or 36.1%, to $276,000 from $432,000. This decrease
resulted from a $2.5 million decrease in the average balance of other
interest-earning assets and a decrease in the average yield of 59 basis points.
The decrease in the average yield on the Company's interest-earning assets was
due to a general decrease in market rates of interest.

         Interest Expense. Interest expense on deposits decreased by $1.3
million or 22.0%, to $4.6 million for the fiscal year ended June 30, 2003 from
$5.9 million for the fiscal year ended June 30, 2002. Interest expense on
transaction and savings accounts decreased to $107,000 from $238,000, as the
average cost decreased to 0.54% from 1.31%, and was partially offset by an
increase in the average balance of transaction and savings accounts to $19.9
million from $18.2 million. Interest expense on certificate accounts decreased
by $1.1 million as the average cost decreased to 4.40% from 5.29% and the
average balance decreased to $102.8 million from $107.0 million. The decrease in
the average cost of deposits is a result of a general decrease in market rates
of interest. Interest expense on borrowings increased by $215,000 as the average
balance of Federal Home Loan Bank advances was $7.3 million for the year ended
June 30, 2003, as compared to none for the prior period.

         Net Interest Income. Net interest income increased by $437,000 or
11.5%, to $4.2 million for the fiscal year ended June 30, 2003 from $3.8 million
for the fiscal year ended June 30, 2002. Net interest rate spread, the
difference between the yield on average total interest-earning assets and the
cost of average total interest-bearing liabilities, increased by 34 basis points
to 2.37% from 2.03%, and net interest margin, or net interest income as a
percentage of average interest-earning assets, increased by 20 basis points to
2.85% from 2.65%.

         Provision for Loan Losses. We establish provisions for loan losses,
which are charged to operations, in order to maintain the allowance for loan
losses at a level that we believe is appropriate to absorb future charge-offs of
loans deemed uncollectible. In determining the appropriate level of the
allowance for loan losses, management considers loss experience, evaluations of
real estate collateral, economic conditions, volume and type of lending and the
levels of nonperforming and other classified loans. The amount of the allowance
is based on estimates and the ultimate losses may vary from such estimates.
Management assesses the allowance for loan losses on a quarterly basis and makes
provisions for loan losses as necessary in order to maintain the adequacy of the
allowance. In addition, various regulatory agencies, as an integral part of

                                        9
<PAGE>

their examination process, periodically review the allowance for loan losses and
may require us to recognize additional provisions based on their judgment of
information available to them at the time of their examination. Based on our
evaluation of these factors, a provision of $390,000 was made for the year ended
June 30, 2003, and a provision of $130,000 was made for the year ended June 30,
2002. The allowance for loan losses was $540,000, or 87.7% of total
nonperforming loans at June 30, 2003, and $540,000, or 22.3% of total
nonperforming loans at June 30, 2002. Management analyzes the allowance for loan
losses on a quarterly basis and will recommend an additional expense if its
review indicates the need for additional reserves.

         Other Income. Total other income increased by $86,000, or 19.9%, to
$519,000 from $433,000. Service charges and fees increased by $43,000, or 14.5%,
primarily due to an increase in deposit account service charges. Loss on sale of
real estate owned totaled $10,000 for the year ended June 30, 2003 as compared
to a gain on sale of real estate owned of $2,000 for the previous period. Gain
on sale of loans totaled $62,000 as compared to no gain for the previous period
as $5.1 million of loans were sold in the secondary market during the current
period. Other income decreased by $7,000.

         Other Expense. Total other expense increased by $74,000, or 2.3%, to
$3.4 million for the fiscal year ended June 30, 2003 from $3.3 million for the
year ended June 30, 2002. Increases in salaries and benefits, occupancy, data
processing, insurance, and other were partially offset by a decrease in
advertising.

         Provision for Income Taxes. The provision for income taxes increased to
$379,000, or 36.6% of net income before income taxes, from $292,000, or 34.5% of
net income before income taxes. The increase in the provision resulted from an
increase in income before income taxes.


Liquidity and Capital Resources

         Our liquidity management objective is to ensure the availability of
sufficient cash flows to meet all financial commitments and to capitalize on
opportunities for expansion. Liquidity management addresses the ability to meet
deposit withdrawals on demand or at contractual maturity, to repay borrowings as
they mature, and to fund new loans and investments as opportunities arise. Our
primary sources of internally generated funds are principal and interest
payments on loans receivable, cash flows generated from operations, and cash
flows generated by investments. External sources of funds include increases in
deposits and advances from the FHLB of Dallas.

         Alamogordo Federal is required by OTS regulations to maintain
sufficient liquidity to ensure its safe and sound operation. This requirement,
which varies from time to time depending upon economic conditions and deposit
flows, is based upon a percentage of deposits and short-term borrowings. At June
30, 2003, Alamogordo Federal's liquidity, as measured for regulatory purposes,
was 32.3 %.

         At June 30, 2003, Alamogordo Federal had loan commitments of $3.8
million and unused lines of credit of $1.4 million. Alamogordo Federal believes
that it has adequate resources to fund loan commitments as they arise. If
Alamogordo Federal requires funds beyond its internal funding capabilities,
additional advances from the FHLB of Dallas are available. At June 30, 2003,
approximately $43.5 million of time deposits were scheduled to mature within a
year, and we expect that a portion of these time deposits will not be renewed
upon maturity.

         Alamogordo Financial has not and does not currently intend to engage in
any significant business activity other than owning the common stock of
Alamogordo Federal. In order to provide sufficient funds for its operations,
Alamogordo Financial retained and invested 50% of the net proceeds of the stock

                                       10
<PAGE>

offering remaining after making the loan to the ESOP. In the future, Alamogordo
Financial's primary source of funds, other than income from its investments and
principal and interest payments received with respect to the ESOP loan, is
expected to be dividends from Alamogordo Federal. As a stock savings and loan
association, Alamogordo Federal is subject to regulatory limitations on its
ability to pay cash dividends.

Impact of Inflation and Changing Prices

         The consolidated financial statements and related notes of Alamogordo
Financial have been prepared in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). GAAP generally requires the
measurement of financial position and operating results in terms of historical
dollars without consideration for changes in the relative purchasing power of
money over time due to inflation. The impact of inflation is reflected in the
increased cost of our operations. Unlike industrial companies, our assets and
liabilities are primarily monetary in nature. As a result, changes in market
interest rates have a greater impact on performance than the effects of
inflation.


                        SELECTED QUARTERLY FINANCIAL DATA

         A summary of selected quarterly financial data for the years ended June
30, 2003 and 2002 is as follows:

                                     First     Second      Third     Fourth
                                    Quarter    Quarter    Quarter    Quarter
                                    --------   --------   --------   --------
                                       (In Thousands Except Per Share Data)
Fiscal 2003
-----------
Interest income .................   $  2,356   $  2,377   $  2,233   $  2,138
Net interest income .............      1,023      1,093      1,083      1,063
Provision for losses ............        182         22         36        150
Income before provision for
  income taxes ..................         72        355        378        230
Net income ......................         56        223        239        138

Net income per common share:

  Basic .........................        .04        .18        .19        .11

  Diluted .......................        .04        .17        .19        .11


Fiscal 2002
-----------
Interest income .................   $  2,525   $  2,405   $  2,428   $  2,360
Net interest income .............        957        851      1,024        993
Provision for losses ............         --         --         --        130
Income before provision for
  income taxes ..................        231        113        374        128
Net income ......................        148         79        240         87

Net income per common share:

  Basic .........................        .12        .06        .19        .07

  Diluted .......................        .12        .06        .19        .07


                        COMMON STOCK AND RELATED MATTERS

         Alamogordo Financial's common stock trades over-the-counter on the OTC
Bulletin Board under the symbol "ALMG." As of September 17, 2003, Alamogordo
Financial had 145 stockholders of record (excluding the number of persons or
entities holding stock in street name through various brokerage firms) and
1,299,555 shares outstanding, including 918,000 shares held by AF Mutual Holding
Company.

                                       11
<PAGE>

         The following table sets forth market price and dividend information
for the common stock for the last two fiscal years.

  Fiscal Year Ended                                          Cash Dividends
    June 30, 2003                High          Low              Declared
--------------------------    ---------     ---------       ----------------
First quarter                 $   29.75     $   24.25       $  .17 per share
Second quarter                $   24.75     $   23.00       $  .17 per share
Third quarter                 $   26.75     $   23.25       $  .17 per share
Fourth quarter                $   30.00     $   27.00       $  .17 pershare


  Fiscal Year Ended                                          Cash Dividends
    June 30, 2002                High          Low              Declared
--------------------------    ---------     ---------       ----------------
First quarter                 $   21.00     $   18.50       $  .15 per share
Second quarter                $   24.75     $   18.00       $  .15 per share
Third quarter                 $   25.50     $   20.00       $  .17 per share
Fourth quarter                $   32.50     $   23.55       $  .17 per share


         Payment of dividends on Alamogordo Financial's common stock is subject
to determination and declaration by the Board of Directors and will depend upon
a number of factors, including capital requirements, regulatory limitations on
the payment of dividends, Alamogordo Financial's results of operations and
financial condition, tax considerations and general economic conditions.
Alamogordo Financial may look to Alamogordo Federal as a source of funds with
which to pay dividends. Alamogordo Federal is limited by the OTS in the amount
of and the circumstances under which it may distribute capital to Alamogordo
Financial. No assurance can be given that dividends will be declared or, if
declared, what the amount of dividends will be, or whether such dividends, once
declared, will continue. Cash dividends of $.13 were paid on the 918,000 shares
held by AF Mutual Holding Company at June 30, 2003 and 2002. AF Mutual Holding
Company waived receiving the balance of its dividends.

                                       12
<PAGE>


                        ALAMOGORDO FINANCIAL CORPORATION



INDEPENDENT AUDITORS' REPORTS.................................................1

FINANCIAL STATEMENTS

        Consolidated Balance Sheets...........................................3

        Consolidated Statements of Income.....................................4

        Consolidated Statements of Changes in Equity..........................5

        Consolidated Statements of Cash Flows.................................7

        Notes to Consolidated Financial Statements............................9

<PAGE>

                          Independent Auditors' Report


Board of Directors
Alamogordo Financial Corporation


We have audited the accompanying consolidated balance sheet of Alamogordo
Financial Corporation and Subsidiaries (Company) as of June 30, 2003, and the
related consolidated statements of income, changes in equity, and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The
financial statements of Alamogordo Financial Corporation for the year ended June
30, 2002, were audited by other auditors whose report dated August 16, 2002,
expressed an unqualified opinion on those statements.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Alamogordo Financial
Corporation and Subsidiaries as of June 30, 2003, and the results of their
operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.


/s/ Neff + Ricci LLP

Albuquerque, New Mexico
July 25, 2003

                                        1
<PAGE>

              [letterhead of Accounting & Consulting Group, L.L.P.]



               Report of Independent Certified Public Accountants
               --------------------------------------------------


The Board of Directors
Alamogordo Financial Corporation
Alamogordo, New Mexico

We have audited the consolidated balance sheet of Alamogordo Financial
Corporation and subsidiary (the Company) as of June 30, 2002 and the related
consolidated statements of income, changes in equity and cash flows for the year
ended June 30, 2002. 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit 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 audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Alamogordo Financial
Corporation and subsidiary as of June 30, 2002 and the results of its operations
and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.

                                       \s\ Accounting & Consulting Group, L.L.P.

                                       Accounting & Consulting Group, L.L.P.
                                       Certified Public Accountants

August 16, 2002
Alamogordo, New Mexico

                                       2
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 2003 and 2002

<TABLE>
<CAPTION>
ASSETS                                                                2003               2002

<S>                                                              <C>                <C>
Cash and due from banks                                          $   3,059,413          2,955,943
Interest-bearing deposits with banks                                 9,736,728         18,967,850
Securities
    Available-for-sale                                              27,836,508          9,940,777
    Held-to-maturity                                                 5,108,000            725,010
Loans, net                                                         100,594,994        116,542,717
Real estate owned                                                      544,388            280,102
Premises and equipment, net                                          7,610,972          7,842,044
Stock in Federal Home Loan Bank, at cost, restricted                 1,610,400          1,568,000
Accrued interest receivable                                            545,307            629,605
Income taxes receivable                                                204,961                 --
Prepaid and other assets                                               146,975            118,342
                                                                 -------------      -------------

          Total assets                                           $ 156,998,646        159,570,390
                                                                 =============      =============

LIABILITIES AND EQUITY

Liabilities
    Deposits                                                     $ 118,822,912        130,989,181
    FHLB advances                                                    8,907,392                 --
    Escrows                                                            796,210            968,036
    Accrued interest and other liabilities                              96,984            184,522
    Deferred income taxes                                              298,014            134,882
    Income taxes payable                                                    --              1,363
                                                                 -------------      -------------

          Total liabilities                                        128,921,512        132,277,984
                                                                 -------------      -------------

Commitments and Contingencies

Equity
    Preferred Stock                                                         --                 --
    Common stock, $.10 par value, 20,000,000 shares
       authorized, 1,291,772 and 1,278,793
       issued and outstanding at 2003 and 2002, respectively           129,177            127,879
    Treasury stock, at cost, 441 shares                                (11,113)                --
    Additional paid in capital                                       3,405,990          3,177,140
    Unearned ESOP shares and stock awards                             (279,374)          (361,481)
    Retained earnings, substantially restricted                     24,573,321         24,322,149
    Accumulated other comprehensive income                             259,133             26,719
                                                                 -------------      -------------

          Total equity                                              28,077,134         27,292,406
                                                                 -------------      -------------

          Total liabilities and equity                           $ 156,998,646        159,570,390
                                                                 =============      =============
</TABLE>

See Notes to Consolidated Financial Statements.

                                        3
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Years Ended June 30, 2003 and 2002
                                                         2003           2002
Interest Income
    Interest and fees on loans                       $ 8,136,446      9,037,953
    Interest on securities                               597,629        107,298
    Interest on mortgage-backed securities                94,110        141,189
    Interest on other interest-earning assets            276,087        431,478
                                                     -----------    -----------
          Total interest income                        9,104,272      9,717,918
                                                     -----------    -----------

Interest Expense
    Interest on deposits                               4,626,760      5,893,003
    Interest on FHLB and other borrowings                214,964             --
                                                     -----------    -----------
          Total interest expense                       4,841,724      5,893,003
                                                     -----------    -----------

          Net interest income                          4,262,548      3,824,915

Provision for loan losses                                390,392        130,000
                                                     -----------    -----------
          Net interest income after provision
             for loan losses                           3,872,156      3,694,915
                                                     -----------    -----------

Other Income (Loss)
    Service charges and fees                             340,396        297,438
    (Loss) gain on sale of other real estate owned       (10,185)         2,046
    Loss on repossessed assets                           (10,125)            --
    Gain on sale of mortgage loans                        61,679             --
    Loss on disposition of non-mortgage loans                 --        (11,563)
    Other                                                137,595        145,170
                                                     -----------    -----------
          Total other income                             519,360        433,091
                                                     -----------    -----------

Other Expenses
    Salaries and benefits                              1,628,332      1,597,905
    Occupancy                                            680,015        666,879
    Data processing fees                                 289,018        261,448
    Federal insurance premiums and other
       insurance expense                                  72,644         67,850
    Advertising                                           36,965         41,632
    Other                                                649,462        646,475
                                                     -----------    -----------
          Total other expenses                         3,356,436      3,282,189
                                                     -----------    -----------

          Income before income taxes                   1,035,080        845,817

Provision for income taxes                               378,795        291,522
                                                     -----------    -----------

          Net income                                 $   656,285        554,295
                                                     ===========    ===========

Net income per common share - basic                  $      0.52           0.44

Net income per common share - diluted                       0.51           0.44

Weighted average number of common shares
    outstanding-basic                                  1,266,503      1,248,994
Weighted average number of common shares
    outstanding-dilutive                               1,284,475      1,264,091


See Notes to Consolidated Financial Statements.

                                        4
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>

                                                              Common Stock
                                                        -------------------------    Treasury
                                                          Shares        Amount         Stock
<S>                                                     <C>           <C>           <C>

Balances at June 30, 2001                                 1,275,000   $   127,500            --

    Stock awards vested                                       3,793           379            --
    Stock awards adjustment                                      --            --            --
    Amortization of stock awards                                 --            --            --
    Release of ESOP stock                                        --            --            --
    Dividends declared and paid to stockholders                  --            --            --



Comprehensive income

    Net income                                                   --            --            --
    Unrealized gain on available-for-sale securities,
        net of taxes                                             --            --            --


           Total comprehensive income                            --            --            --
                                                        -----------   -----------   -----------

Balances at June 30, 2002                                 1,278,793       127,879            --

    Stock awards vested                                       5,741           574            --
    Reclassification of prior release of ESOP stock              --            --            --
    Stock issued on exercise of stock options                 7,238           724            --
    Acquisition of common stock by the Company                   --            --       (11,113)
    Amortization of stock awards                                 --            --            --
    Release of ESOP stock                                        --            --            --
    Dividends declared and paid to stockholders                  --            --            --



Comprehensive income

    Net income                                                   --            --            --
    Unrealized gain on available-for-sale securities,
        net of taxes                                             --            --            --


           Total comprehensive income
                                                        -----------   -----------   -----------

           Balances at June 30, 2003                      1,291,772   $   129,177       (11,113)
                                                        ===========   ===========   ===========
</TABLE>

See Notes to Consolidated Financial Statements.

                                        5
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
Years Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                                        Unearned                     Accumulated
                                                        Additional     ESOP Shares                      Other
                                                          Paid In        & Stock       Retained     Comprehensive      Total
                                                          Capital         Awards       Earnings     (Loss) Income     Equity
<S>                                                     <C>            <C>            <C>            <C>            <C>

Balances at June 30, 2001                               $ 3,187,379       (558,705)    24,070,627         (9,692)    26,817,109

    Stock awards vested                                        (379)            --             --             --             --
    Stock awards adjustment                                  (9,860)         9,860             --             --             --
    Amortization of stock awards                                 --        158,804             --        158,804
    Release of ESOP stock                                        --         28,560         37,851             --         66,411
    Dividends declared and paid to stockholders                  --             --       (340,624)            --       (340,624)
                                                                                                                    -----------
                                                                                                                     26,701,700
                                                                                                                    -----------
Comprehensive income

    Net income                                                   --             --        554,295             --        554,295
    Unrealized gain on available-for-sale securities,
        net of taxes                                             --             --             --         36,411         36,411
                                                                                                                    -----------

           Total comprehensive income                            --             --             --             --        590,706
                                                        -----------    -----------    -----------    -----------    -----------

Balances at June 30, 2002                                 3,177,140       (361,481)    24,322,149         26,719     27,292,406

    Stock awards vested                                        (574)            --             --             --             --
    Reclassification of prior release of ESOP stock          50,277             --        (50,277)            --             --
    Stock issued on exercise of stock options               133,178             --             --             --        133,902
    Acquisition of common stock by the Company                   --             --             --             --        (11,113)
    Amortization of stock awards                                 --         53,547             --             --         53,547
    Release of ESOP stock                                    45,969         28,560             --             --         74,529
    Dividends declared and paid to stockholders                  --             --       (354,836)            --       (354,836)
                                                                                                                    -----------
                                                                                                                     27,188,435
                                                                                                                    -----------
Comprehensive income

    Net income                                                   --             --        656,285             --        656,285
    Unrealized gain on available-for-sale securities,
        net of taxes                                             --             --             --        232,414        232,414
                                                                                                                    -----------

           Total comprehensive income                                                                                   888,699
                                                        -----------    -----------    -----------    -----------    -----------

           Balances at June 30, 2003                    $ 3,405,990       (279,374)    24,573,321        259,133     28,077,134
                                                        ===========    ===========    ===========    ===========    ===========
</TABLE>

See Notes to Consolidated Financial Statements.

                                        6
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                                         2003              2002
<S>                                                                 <C>               <C>

Cash Flows From Operating Activities
     Net income                                                     $    656,285           554,295

     Adjustments to reconcile net income to net cash
        provided by operating activities
           Depreciation                                                  368,140           372,957
           Stock dividend on FHLB stock                                  (42,400)          (48,400)
           Net amortization of premiums and discounts
             on securities                                                40,141            38,789
           Loss (gain) on sales of other real estate owned                10,185            (2,046)
           Loss on repossessed assets                                     10,125                --
           Provision (benefit) on deferred income taxes                    8,188           (96,587)
           Gain on sale of loans                                         (61,679)               --
           Release of ESOP stock                                          74,529            66,411
           Amortization of stock awards                                   53,547           158,804
           Provision for loan losses                                     390,392           130,000
           Changes in assets and liabilities
               Accrued interest receivable                                84,298           151,877
               Prepaid and other assets                                  (38,758)          142,286
               Income taxes                                             (206,324)           16,224
               Accrued interest payable and other liabilities            (87,538)          (25,760)
                                                                    ------------      ------------

               Net cash provided by operating activities               1,259,131         1,458,850
                                                                    ------------      ------------

Cash Flows From Investing Activities
     Proceeds from maturities, calls and principal payments
        of securities available-for-sale                               1,088,486         4,737,888
     Proceeds from maturities and principal payments of
        securities held-to-maturity                                      500,000           576,231
     Purchases of securities available-for-sale                      (18,636,990)       (9,015,709)
     Purchases of securities held-to-maturity                         (4,883,000)               --
     Net decrease in loans                                            15,619,010         6,322,384
     Purchases of premises and equipment                                (137,068)          (31,071)
     Net proceeds from sales of other real estate owned                 (274,471)         (145,069)
                                                                    ------------      ------------

               Net cash (used) provided by investing activities       (6,724,033)        2,444,654
                                                                    ------------      ------------
</TABLE>

See Notes to Consolidated Financial Statements.

                                        7
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Years Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                                            2003              2002
<S>                                                                     <C>               <C>

Cash Flows From Financing Activities
     Net (decrease) increase in deposits                                $(12,166,269)       12,732,127
     Net decrease in escrows                                                (171,826)          (95,252)
     Proceeds from FHLB advances                                           8,907,392                --
     Repurchase of Company stock                                             (11,113)               --
     Cash dividends paid on common stock                                    (354,836)         (340,624)
     Exercise of stock options                                               133,902                --
                                                                        ------------      ------------

               Net cash (used) provided by financing activities           (3,662,750)       12,296,251
                                                                        ------------      ------------

Net (decrease) increase in cash and cash equivalents                      (9,127,652)       16,199,755

Cash and cash equivalents, beginning of year                              21,923,793         5,724,038
                                                                        ------------      ------------

Cash and cash equivalents, end of year                                  $ 12,796,141        21,923,793
                                                                        ============      ============


Noncash investing and financing activities
     Transfers of loans to real estate owned                            $    668,417           413,568
     Net change in unrealized gain on available-for-sale securities          232,414            36,411

Supplemental disclosures
     Cash paid during the year for
        Income taxes                                                         575,400           395,200
        Interest on deposits and advances                                  4,929,262         5,885,956
</TABLE>

See Notes to Consolidated Financial Statements.

                                        8
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the
preparation of the accompanying statements follows:

Nature of Operations. Alamogordo Financial Corporation is a stock holding
company that owns 100% of Alamogordo Federal Savings and Loan Association
(Association). The Association is a federally chartered stock savings
association and has a wholly owned subsidiary, Space Age City Service
Corporation. Space Age City Service Corporation was organized to hold, purchase
and sell real estate assets. Alamogordo Financial Corporation (Company) was
incorporated on April 30, 1997 and is a majority owned subsidiary of AF Mutual
Holding Company.

The Company provides a variety of banking services to individuals and businesses
through its location in Alamogordo, New Mexico. The primary deposit products are
demand deposits, certificates of deposit, NOW and money market accounts. The
primary lending products are real estate mortgages and commercial loans. The
Company is subject to competition from other financial institutions and to
regulation by certain federal agencies and undergoes periodic examinations by
these regulatory authorities.

Over 75% of the Company's loans are secured by real estate in Otero County, New
Mexico. Otero County's economy is heavily dependent on two U.S. Government
military installations located in the county. Accordingly, the ultimate
collectibility of the Company's loan portfolio is susceptible to changes in
market conditions in southern New Mexico. In addition, the Company's investment
portfolio is directly impacted by fluctuations in market interest rates.

Rising and falling interest rate environments can have various impacts on an
association's net interest income, depending on the short-term interest rate gap
that an association maintains, the relative changes in interest rates that occur
when an association's various assets and liabilities reprice, unscheduled
repayments of loans, early withdrawals of deposits, and other factors.

Basis of Consolidation. The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.

Basis of Financial Statement Presentation. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.

                                        9
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
            (CONTINUED)

Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for losses on loans and the
valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the allowances
for losses on loans are foreclosed real estate, management obtains independent
appraisals for significant properties.

Cash and Cash Equivalents. For the purpose of reporting cash flows, the Company
defines cash and cash equivalents as cash on hand, cash items, amounts due from
banks, amounts held with the Federal Reserve, interest-bearing deposits with the
Federal Home Loan Bank, and investments in certificates of deposits with
original maturities of three months or less.

Securities. The Company's investments in securities are classified in two
categories and accounted for as follows:

     Securities Held-to-Maturity: Bonds, notes and debentures for which the
     Company has the positive intent and ability to hold to maturity are
     reported at cost, adjusted for amortization of premiums and accretion of
     discounts which are recognized in interest income using the interest method
     over the period to maturity.

     Securities Available-for-Sale: Securities available-for-sale consists of
     bonds, notes, debentures, and certain equity securities not classified as
     securities to be held-to-maturity. These securities are carried at
     estimated fair value. Discounts and premiums are accreted or amortized
     using the interest method.

Unrealized holding gains and losses, net of tax, on securities
available-for-sale are reported as a net amount in a separate component of
equity until realized. Gains and losses on the sale of securities
available-for-sale are determined using the specific-identification method.

Loans. Loans are stated at unpaid principal net of loan participations sold, the
allowance for loan losses and net deferred loan fees. Interest on loans is
accrued based on the principal amounts outstanding. Unearned interest on home
improvement loans is amortized into income by the interest method. The Company
discontinues accruing interest on loans when the loans become ninety days past
due and when management believes that the borrower's financial condition is such
that collection of interest is doubtful.

Because some loans may not be repaid in full, an allowance for loan losses is
maintained. Increases to the allowance are recorded by a provision for loan
losses charged to expense. Estimating the risk of loss and the amount of loss on
any loan is necessarily subjective. Accordingly, the valuation allowance is
maintained at levels considered adequate to cover

                                       10
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
            (CONTINUED)

losses based on delinquencies, property appraisals, past loss experience,
general economic conditions, information about specific borrower situations
including their financial position, and other factors and estimates which are
subject to change over time. While management may periodically allocate portions
of the allowance for specific problem loan situations, including impaired loans
discussed below, the whole allowance is available for any charge-offs that
occur. Additionally, regulatory agencies, as part of their examination process,
periodically review the allowance and may require additions to the allowance
based on their judgments of information available during their examinations.

Loans considered to be impaired are reduced to the lower of present value of
expected future cash flows or to the fair value of collateral, by allocating a
portion of the allowance for loan losses to such loans. If these allocations
cause the allowance for loan losses to require increase, such increase is
reported as a provision for loan losses.

Smaller balance homogenous loans are defined as residential first mortgage loans
secured by one-to-four-family residences, residential construction loans, and
share loans and are evaluated collectively for impairment. Commercial real
estate loans are evaluated individually for impairment. Normal loan evaluation
procedures, as described in the second preceding paragraph, are used to identify
loans, which must be evaluated for impairment. Depending on the relative size of
the credit relationship, late or insufficient payments of 30 to 90 days will
cause management to reevaluate the credit under its normal loan evaluation
procedures. The factors, which identify a credit for consideration for
measurement of impairment or non-accrual, are similar, however, the measurement
considerations differ. A loan is impaired when management believes it is
probable they will be unable to collect all amounts due according to the
contractual terms of the loan agreement. A loan is placed on non-accrual when
payments are more than 90 days past due unless the loan is adequately
collateralized and in the process of collection.

Premises and Equipment. Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are
computed using the straight line method in amounts sufficient to relate the cost
of depreciable assets to operations over the estimated useful lives of the
assets which range from three to seven years for equipment and fifteen to forty
years for leasehold improvements and buildings. Maintenance and repairs that do
not extend the useful lives of premises and equipment are charged to expense as
incurred.

Real Estate Owned. Real estate properties acquired through, or in lieu of, loan
foreclosures are initially recorded at the lower of cost or fair value, less
estimated selling expenses, at the date of foreclosure. Costs relating to
improvement of property are capitalized, whereas costs relating to the holding
of property are expensed.

                                       11
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
            (CONTINUED)

Income Taxes. The Company records income tax expense based on the amount of
taxes due on its tax return, plus deferred taxes computed based on the expected
future tax consequences of temporary differences between the carrying amounts
and tax basis of assets and liabilities, using enacted tax rates.

Loan Origination Fees and Costs. Loan origination fees and certain direct
origination costs are capitalized and recognized as an adjustment of the yield
over the contractual life of the related loan.

Comprehensive Income. Comprehensive income consists of net income and unrealized
gains and losses on securities available for sale.

Reclassifications. Certain reclassifications have been made to the 2002
financial statements to conform to the 2003 presentation.

Investment in Federal Home Loan Bank Stock. The Association, as a member of the
Federal Home Loan Bank System, is required to maintain an investment in its
capital stock of the Federal Home Loan Bank (FHLB) in an amount equal to the
greater of 1% of its outstanding mortgage related assets or 5% of advances from
the FHLB. No ready market exists for the Federal Home Loan Bank Stock, and it
has no quoted market value.

Segment Reporting. The Company is required to report information about operating
segments in and related disclosures about products and services, geographic
areas and major customers. The Company only has one operating segment.

Recent Accounting Developments. In October of 2002, the Financial Accounting
Standards Board (FASB) issued SFAS No. 147, Acquisitions of Certain Financial
Institutions - an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9. FASB Statement No. 72, Accounting for Certain Acquisitions
of Banking or Thrift Institutions, and FASB Interpretation No. 9, Applying APB
Opinions No. 16 and 17 When a Savings and Loan Association or a Similar
Institution is Acquired in a Business Combination Accounted for by the Purchase
Method, to provide interpretive guidance on the application of the purchase
method to acquisitions of financial institutions. Except for transactions
between two or more mutual enterprises, this Statement removes acquisitions of
financial institutions from the scope of both Statement 72 and Interpretation 9
and requires that those transactions be accounted for in accordance with FASB
Statements No. 141, Business Combinations, and No. 142, Goodwill and Other
Intangible Assets. Thus, the requirement in paragraph 5 of Statement 72 to
recognize (and subsequently amortize) any excess of the fair value of
liabilities assumed over the fair value of tangible and identifiable intangible
assets acquired as an unidentifiable intangible asset no longer applies to
acquisitions within the scope of the Statement. In addition, this Statement
amends FASB Statement No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, to include in its scope long-term customer-relationship
intangible assets of financial institutions such as depositor - and borrower -

                                       12
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
            (CONTINUED)

relationship intangible assets and credit cardholder intangible assets.
Consequently, those intangible assets are subject to the same undiscounted cash
flow recoverability test and impairment loss recognition and measurement
provisions that Statement 144 requires for other long-lived assets that are held
and used. The adoption of this statement did not impact the Company's financial
position or results of operations.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123. This Statement amends FASB Statement No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
Statement 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The adoption
of this statement did not impact the Company's financial position or results of
operations.

The Company applies APB Opinion No. 25 and related Interpretations in accounting
for its stock option plan. Accordingly, no compensation cost has been recognized
at the date of grant. Under SFAS No. 123, Accounting for Stock-Based
Compensation, the compensation cost will be determined based on the fair value
at the grant date for awards under the plan. Compensation cost reported as of
June 30, 2003 and 2002 under SFAS No. 123 was zero. Had compensation cost for
the stock option plans been determined based on the fair value method of FASB
Statement 123, the Company's net income and earnings per share would have been
reduced to the pro-forma amounts indicated below:

                                                          2003          2002

    Net income (as reported)                          $   656,285       554,295
      Net income (pro-forma)                              643,402       539,204

    Basic earnings per share (as reported)                    .52           .44
      Basic earnings per share (pro-forma)                    .51           .43

    Diluted earnings per share (as reported)                  .51           .44
      Diluted earnings per share (pro-forma)                  .50           .43


                                       13
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
            (CONTINUED)

The fair value of each option grant was estimated using the Black-Scholes option
pricing model with the following assumptions:

                                                        2003            2002

    Expected dividend yield                              .98%             .90%
    Expected stock price volatility                       19%              17%
    Risk free rate of return                            3.42%            4.84%
    Expected life of options                           10 years       10 years

In April 2003, the FASB issued SFAS No, 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.
The adoption of this statement will not impact the Company's financial position
or results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This Statement
establishes standards for how an issuer classifies and measurers certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. Some of the provisions of this Statement
are consistent with the current definition of liabilities in FASB Concepts
Statement No. 6, Elements of Financial Statements. The remaining provisions of
this Statement are consistent with the Board's proposal to revise that
definition to encompass certain obligations that a reporting entity can or must
settle by issuing its own equity shares, depending on the nature of the
relationship established between the holder and the issuer. While the Board
still plans to revise that definition through an amendment to Concepts Statement
6, the Board decided to defer issuing that amendment until it has concluded its
deliberations on the next phase of this project. That next phase will deal with
certain compound financial instruments including puttable shares, convertible
bonds, and dual-indexed financial instruments. This Statement concludes the
first phase of the Board's redeliberations of the Exposure Draft, Accounting for
Financial Instruments with Characteristics of Liabilities, Equity, or Both. The
adoption of this statement did not impact the Company's financial position or
results of operations.


                                       14
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 2.     SECURITIES

The amortized cost and fair values of investment securities are as follows:

<TABLE>
<CAPTION>
Available-for-sale

                                                       Gross            Gross
                                     Amortized       Unrealized       Unrealized         Fair
                                        Cost           Gains            Losses           Value
<S>                                 <C>             <C>              <C>              <C>

    June 30, 2003
    U.S. Treasury securities        $ 4,987,146         280,667               --        5,267,813
    Mortgage-backed securities
        FHLMC                           337,086              --           (1,687)         335,399
        GNMA                            914,194           9,940               --          924,134
        FNMA                            493,267          21,916               --          515,183
        FHLB Note                     5,305,615         121,048               --        5,426,663
    Mutual funds                     15,367,313               3               --       15,367,316
                                    -----------     -----------      -----------      -----------

                                    $27,404,621         433,574           (1,687)      27,836,508
                                    ===========     ===========      ===========      ===========

    June 30, 2002
    U.S. Treasury securities        $ 1,984,950          42,550               --        2,027,500
    Mortgage-backed securities
        FHLMC                           487,895              --           (6,679)         481,216
        GNMA                          1,592,691              --          (11,038)       1,581,653
        FNMA                            784,092           9,612               --          793,704
    Mutual funds                      5,046,618          10,086               --        5,056,704
                                    -----------     -----------      -----------      -----------

                                    $ 9,896,246          62,248          (17,717)       9,940,777
                                    ===========     ===========      ===========      ===========

Held-to-maturity

    June 30, 2003
    Securities issued by
        states and political
        subdivisions                $   225,000             450               --          225,450
    Certificates of deposit           4,883,000          25,000               --        4,908,000
                                    -----------     -----------      -----------      -----------

                                    $ 5,108,000          25,450               --        5,133,450
                                    ===========     ===========      ===========      ===========

    June 30, 2002
    Securities held-to-maturity
        Securities issued by
           states and political
           subdivisions             $   725,010           5,303               --          730,313
                                    ===========     ===========      ===========      ===========
</TABLE>

                                       15
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 2.     SECURITIES (CONTINUED)

Securities, carried at approximately $2,180,000 and $2,570,000 at June 30, 2003
and 2002, respectively, are pledged to secure public deposits. At June 30, 2003,
the public depositors were Otero County and the Otero District Court Clerk. At
June 30, 2002, the public depositors were Otero County and the City of
Alamogordo.

No securities were sold during the year ended June 30, 2003 and 2002.

Amortized cost and fair value of securities by contractual maturity for June 30,
2003, are shown below. Expected maturities may differ from contractual
maturities because borrowers may call or prepay obligations.

                                                 Amortized            Fair
                                                    Cost             Value

    Due in one year or less                    $   3,108,000         3,108,450
    Due in one to five years                       6,987,146         7,292,813
    Due after five years to ten years              5,305,615         5,426,663
    Mortgage-backed securities                     1,744,547         1,774,716
    Mutual funds                                  15,367,313        15,367,316
                                               -------------     -------------

                                               $  32,512,621        32,969,958
                                               =============     =============

NOTE 3.     LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Loans reflected in the consolidated balance sheets consist of the following as
of June 30:

                                                    2003              2002
    Mortgage loans
        One-to-four family                     $  79,455,992       100,709,872
        Multi-family and nonresidential           14,039,759         8,534,667
        Construction                               2,664,429         2,583,629
        Land                                          93,274           129,558
                                               -------------     -------------
           Total first mortgage loans             96,253,454       111,957,726
                                               -------------     -------------

    Consumer and other loans
        Second mortgage                            1,304,810         1,584,689
        Consumer                                   1,745,852         1,260,606
        Commercial                                 1,923,964         2,223,358
        Deposit account                            1,144,586         1,066,606
                                               -------------     -------------
           Total consumer and other loans          6,119,212         6,135,259
                                               -------------     -------------

    Gross loans                                  102,372,666       118,092,985
           Deferred loan fees and discounts         (430,475)         (600,622)
           Loans in process                         (806,941)         (410,495)
           Allowance for loan loss                  (540,256)         (539,151)
                                               -------------     -------------
           Net loans                           $ 100,594,994       116,542,717
                                               =============     =============

                                       16
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 3.     LOANS AND THE ALLOWANCE FOR LOAN LOSSES
            (CONTINUED)

An analysis of the allowance for loan losses follows:

                                                   2003          2002

    Balance at beginning of year                $ 539,151       409,128
        Provision for loan losses                 390,392       130,000
        Loans charged off, net of recoveries     (389,287)           23
                                                ---------     ---------
    Balance at end of year                      $ 540,256       539,151
                                                =========     =========

Included in net loans were loans on non-accrual status. Such loans approximated
$616,000 and $2,175,000 at June 30, 2003 and 2002, respectively. For the years
ended June 30, 2003 and 2002, gross interest income which would have been
recorded had the non-accruing loans been current in accordance with their
original terms amounted to $57,600 and $49,900, respectively. No amounts were
included in interest income on such loans for the years ended June 30, 2003 and
2002, respectively.

The total recorded investment in impaired loans, all of which had allowances
determined in accordance with SFAS No. 114 and No. 118, amounted to
approximately $1,627,000 and $1,814,000 at June 30, 2003 and 2002, respectively.
The allowance for loan losses related to impaired loans amounted to
approximately $180,000 and $350,000 at June 30, 2003 and 2002, respectively.
Interest income on impaired loans of $81,868 and $147,724 were recognized for
cash payments received in 2003 and 2002, respectively.

Loans sold during the year ended June 30, 2003 were $5,095,000. There were no
loans sold during the year ended June 30, 2002.

At June 30, 2003, fixed and variable rate loans were $95,299,898 and $7,072,768,
respectively. At June 30, 2002, fixed and variable rate loans were $112,166,026
and $5,926,960, respectively.


NOTE 4.     PREMISES AND EQUIPMENT

Premises and equipment reflected in the consolidated balance sheets consist of
the following as of June 30:

                                  Useful Life        2003            2002

    Land                                         $   895,330         895,330
    Buildings                        40 years      7,467,903       7,467,903
    Leasehold improvements         5-15 years        214,178         214,178
    Furniture and equipment         3-7 years      1,369,408       1,232,340
                                                 -----------     -----------
                                                   9,946,819       9,809,751
    Accumulated depreciation                      (2,335,847)     (1,967,707)
                                                 -----------     -----------

           Balance at end of year                $ 7,610,972       7,842,044
                                                 ===========     ===========

                                       17
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 5.     DEPOSITS

The composition of deposits is as follows:

                                                  2003            2002

    Demand deposits, noninterest bearing      $  2,514,762       2,326,548
    NOW and money market accounts               14,381,831      12,601,236
    Savings deposits                             6,097,670       5,744,599
    Time certificates, $100,000 or more         26,954,000      34,410,000
    Other time certificates                     68,874,649      75,906,798
                                              ------------    ------------

           Total                              $118,822,912     130,989,181
                                              ============    ============

At June 30, 2003, the scheduled maturities of time deposits were as follows:

               2004                                           $ 43,489,347
               2005                                             29,894,518
               2006                                             19,461,194
               2007                                              2,463,955
               2008                                                519,635
                                                              ------------
                                                              $ 95,828,649
                                                              ============

Interest expense on deposits is summarized
as of June 30:
                                                  2003            2002

    Transaction and saving deposits           $    106,448         238,135
    Certificate accounts                         4,520,312       5,654,868
                                              ------------    ------------
                                              $  4,626,760       5,893,003
                                              ============    ============

Deposits accounts exceeding $100,000 totaled $26,954,000 and $34,410,000 at June
30, 2003 and 2002, respectively. Deposits greater than $100,000 per account may
not be federally insured. The Company held deposits of approximately $2,391,000
and $2,296,000 for related parties at June 30, 2003 and 2002, respectively. The
related parties consist of officers and directors of the Company and are made on
the same terms and conditions as other non-related parties.

                                       18
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 6.     ADVANCES FROM FEDERAL HOME LOAN BANK

The Association has the ability to borrow funds from the Federal Home Loan Bank
of Dallas (FHLB) up to 50% of total assets. Advances are secured by a
blanket-floating lien on qualifying 1-4 family first mortgage loans and
commercial loans. At June 30, 2003, the Bank had $8,907,392 in outstanding
advances with the FHLB. There were no advances at June 30, 2002. The advances
bear interest at fixed rates, which range from 2.84% to 2.99%, and mature as
follows:

Maturities for the fiscal years ending June 30:

        2004                                              $     1,917,038
        2005                                                    1,974,037
        2006                                                    2,032,730
        2007                                                    2,093,169
        2008                                                      890,418
                                                          ---------------
                                                          $     8,907,392
                                                          ===============


NOTE 7.     EMPLOYEE RETIREMENT BENEFIT PLAN

The Company has established a profit-sharing 401(k) type salary reduction plan
for all employees that meet the necessary eligibility requirements for
participation in the plan. Participants fully vest after six years of service.
Annual contributions are at the discretion of the Board of Directors of the
Company. The Company made contributions to the plan of $13,178 and $13,964 for
the periods ended June 30, 2003 and 2002, respectively.

The Company also participates in a multi-employer defined benefit pension plan.
The pension plan is available to all employees completing one year of service.
Segregated statements of plan assets or separate actuarial valuations are not
available. Total pension expense was $3,992 and $5,912 for the periods ended
June 30, 2003 and 2002, respectively.


NOTE 8.     CONTINGENT LIABILITIES AND COMMITMENTS

In the normal course of business, various commitments are outstanding, such as
commitments to extend credit. These financial instruments with off-balance sheet
risk are not reflected in the consolidated financial statements. Management does
not anticipate any significant losses as a result of these transactions. The
following summarizes these financial instruments as of June 30:

                                                    2003              2002

    Commitments to extend credit              $     3,848,000           825,000
    Unused lines-of-credit                          1,389,000         1,046,000

                                       19
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 8.     CONTINGENT LIABILITIES AND COMMITMENTS (CONTINUED)

Since certain commitments to make loans and fund lines of credit expire without
being used, the amounts do not necessarily represent future cash commitments. In
addition, commitments used to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in the contract.
The Company's exposure to credit loss in the event of nonperformance by the
other party to these financial instruments is represented by the contractual
amount of these instruments. The Company follows the same credit policy to make
such commitments as is followed for those loans recorded on the consolidated
balance sheet.

As of June 30, 2003, variable rate and fixed rate commitments to make loans
amounted to approximately $0 and $3,848,000, respectively. The interest rates on
variable and fixed rate commitments ranged from 5.00% to 6.00%. As of June 30,
2002, variable rate and fixed rate commitments to make loans amounted to
approximately $189,000 and $636,000, respectively. The interest rates on fixed
rate commitments ranged from 4.75% to 7.5%.

The Company is required by regulatory authorities to maintain certain daily cash
balances. The Company's reserve requirements were met through vault cash at June
30, 2003 and 2002.


NOTE 9.     INCOME TAXES

The Company and subsidiaries file a consolidated income tax return. The Company
recognizes deferred tax assets and liabilities for future tax consequences of
events that have been previously recognized in the Company's financial
statements or tax returns. The measurement of deferred tax assets and
liabilities is based on provisions of the currently enacted tax law. The effects
of future changes in tax laws or rates are not anticipated.

The provision for income taxes consists of the following:

                                                    2003           2002

    Current
        Federal                                 $   334,089        359,173
        State                                        36,518         28,936
                                                -----------    -----------
                                                    370,607        388,109
                                                -----------    -----------
    Deferred
        Federal                                       6,960        (82,082)
        State                                         1,228        (14,505)
                                                -----------    -----------
                                                      8,188        (96,587)
                                                -----------    -----------
                                                $   378,795        291,522
                                                ===========    ===========
    Effective tax rate                                 36.6%          34.5%
                                                ===========    ===========

                                       20
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 9.     INCOME TAXES (CONTINUED)

The income tax differs from the amounts computed by applying the statutory
federal income tax rate of 34% to income before income taxes as of June 30, is
as follows:

<TABLE>
<CAPTION>
                                                                  2003             2002

<S>                                                           <C>              <C>
    Expense at statutory rate                                 $    351,928          287,578
    State income taxes, net of federal tax benefit                  32,087           16,877
    Nontaxable municipal interest income                            (4,463)          (8,502)
    Other, net                                                        (757)          (4,431)
                                                              ------------     ------------
                                                              $    378,795          291,522
                                                              ============     ============
</TABLE>

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities as of June 30, are as follows:

<TABLE>
<CAPTION>
                                                                  2003             2002

<S>                                                           <C>              <C>
    Deferred tax assets
        Bad debt reserve                                      $    302,763          302,322
        Reorganization expenses                                      8,128            8,128
        Non-accrual loan interest                                   23,025           19,947
                                                              ------------     ------------
               Total deferred tax assets                           333,916          330,397
                                                              ------------     ------------

    Deferred tax liabilities
        Unrealized gain on available-for-sale securities           172,755           17,813
        FHLB stock dividends                                       365,039          348,078
        Loan origination costs                                      51,686           55,132
        Book/tax depreciation                                       42,450           44,256
                                                              ------------     ------------
               Total deferred tax liabilities                      631,930          465,279
                                                              ------------     ------------

               Net deferred tax liabilities                   $   (298,014)        (134,882)
                                                              ============     ============
</TABLE>

Equity of the Association at June 30, 2003 and 2002 includes approximately
$2,700,000 of bad debt deductions for tax years prior to 1987 for which no
deferred federal income tax liability has been recorded.

                                       21
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 10.    CONCENTRATIONS OF CREDIT RISK

All of the Company's loans, commitments, and standby letters of credit have been
granted to customers in the Company's market area. Investments in state and
municipal securities also involve governmental entities within the Company's
market area. The concentrations of credit by type of loan are set forth in Note
3. The distribution of commitments to extend credit approximates the
distribution of loans outstanding. Standby letters of credit were granted
primarily to commercial borrowers.

The Company maintains certain cash balances with other institutions. The
balances on deposit with other banks are insured by the Federal Deposit
Insurance Corporation up to $100,000. The Company's uninsured cash balances at
June 30, 2003 totaled $4,688,000. There were no uninsured cash balances at June
30, 2002.


NOTE 11.       REGULATORY CAPITAL

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

Quantitative measures established by regulation to ensure capital adequacy
require the Association to maintain minimum amounts and ratios (set forth below)
of total and Tier I capital (as defined in the regulations) to risk-weighted
assets (as defined) and of Tier I capital (as defined) to average assets (as
defined). Management believes, as of June 30, 2003 and 2002, that the
Association meets all capital adequacy requirements to which it is subject.

As of June 30, 2003, the most recent notification from the Office of Thrift
Supervision (OTS) categorized the Association as well capitalized under the
regulatory framework for prompt corrective action. There are no conditions or
events since that notification that management believes have changed the
Association's category.

                                       22
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 11.    REGULATORY CAPITAL (CONTINUED)

The following is a reconciliation of the Association's equity under accounting
principles generally accepted in the United States of America (GAAP) to
regulatory capital as of June 30:

<TABLE>
<CAPTION>
                                                            2003             2002

<S>                                                     <C>              <C>
    GAAP equity                                         $ 26,836,943       25,769,954
    Investment in subsidiary                                (284,551)        (290,235)
    Unrealized gain on securities available-for-sale        (259,133)         (26,719)
                                                        ------------     ------------
        Tier I (Core) capital                             26,293,259       25,453,000
    Equity investments and other assets required to
        be deducted                                               --          (40,034)
    General allowance for loan losses                        360,332          539,151
                                                        ------------     ------------
           Total risk-based capital                     $ 26,653,591       25,952,117
                                                        ============     ============
</TABLE>

The Association's OTS capital ratios are (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                                Requirements
                                                                                                 to be well
                                                                      Requirements               Capitalized
                                                                          to be                 Under Prompt
                                                                       Adequately             Corrective Action
                                            Actual                     Capitalized               Provisions
                                   -------------------------   -------------------------  -------------------------
                                       Amount     Percentage      Amount     Percentage     Amount      Percentage
<S>                                 <C>           <C>          <C>           <C>          <C>           <C>
June 30, 2003
   Tier 1 capital (to adjusted
     total assets)                  $    26,293     16.8%      $     4,686     3.0%       $    7,811      5.0%
   Tier 1 capital (to risk
     weighted assets)                    26,293     35.7             2,946     4.0             4,418      6.0
   Total risk-based capital
     (to risk weighted assets)           26,653     36.2             5,891     8.0             7,364     10.0
   Tangible capital (to adjusted
     total assets)                       26,293     16.8               N/A     N/A             2,343      1.5
</TABLE>

                                       23
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 11.    REGULATORY CAPITAL (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                Requirements
                                                                                                 to be well
                                                                      Requirements               Capitalized
                                                                          to be                 Under Prompt
                                                                       Adequately             Corrective Action
                                            Actual                     Capitalized               Provisions
                                   -------------------------   -------------------------  -------------------------
                                       Amount     Percentage      Amount     Percentage     Amount      Percentage
<S>                                 <C>           <C>          <C>           <C>          <C>           <C>
June 30, 2002
   Tier 1 capital (to adjusted
     total assets)                  $    25,453     16.0%      $     4,778     3.0%       $    7,963      5.0%
   Tier 1 capital (to risk
     weighted assets)                    25,453     31.0%            3,285     4.0%            4,927      6.0%
   Total risk-based capital
     (to risk weighted assets)           25,952     31.6%            6,570     8.0%            8,212     10.0%
   Tangible capital (to adjusted
     total assets)                       25,453     16.0%              N/A     N/A             2,389      1.5%
</TABLE>


NOTE 12.    DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL
            INSTRUMENTS

Statement of Financial Accounting Standards No. 107, Disclosures about Fair
Value of Financial Instruments (FAS 107) requires that the Company disclose
estimated fair values for its financial instruments. Fair value estimates,
methods and assumptions are set forth below for the Company's financial
instruments.

Cash and Cash Equivalents. The carrying amount approximates fair value because
of the short maturity of these instruments.

Securities. The fair value of securities is estimated based on market values
received from a securities broker.

Loans. The fair value of one-to-four-family, fixed, and adjustable-rate
mortgages is calculated by using the option-based pricing approach that makes
use of the Monte Carlo simulation. The Monte Carlo model uses an interest rate
simulation program to generate numerous random interest rate paths that, in
conjunction with a prepayment model, are used to estimate mortgage cash flows
along each path. The fair value of other loans in the portfolio is calculated by
using the static discounted cash flow approach. Under the static discounted cash
flow approach, the economic value of a financial instrument is estimated by
calculating the present value of the instrument's expected cash flows. The
present value is determined by discounting the cash flows the instrument is
expected to generate by the yield currently available to investors from an
instrument of comparable risk and duration.

                                       24
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 12.    DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL
            INSTRUMENTS (CONTINUED)

Deposits. The fair value of deposits with no stated maturity, such as
non-interest bearing demand deposits, NOW accounts, money market demand and
savings accounts, is equal to the amount payable on demand. The fair value of
certificate accounts is based on the static discounted cash flow approach. The
discount rate is estimated using the rates currently offered for deposits of
similar remaining maturities.

Advances from the Federal Home Loan Bank (FHLB). The fair value of the advance
from the FHLB is based on the static discounted cash flow approach. Monthly cash
flows are discounted by the LIBOR appropriate to each month.

Off-Balance Sheet Financial Instruments. The fair value of financial instruments
with off-balance sheet risk is based on the credit quality and relationship,
probability of funding and other requirements. Fair values of off-balance sheet
financial instruments are not material to the consolidated financial statements.

Limitations. Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument. Because no market exists for a significant portion of the
Company's financial instruments, fair value estimates are based on judgments
regarding future expected loss experience, current economic conditions, risk
characteristics of various financial instruments and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on-and off-balance sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities that are not considered
financial instruments. For example, significant assets that are not considered
financial instruments include premises and equipment. In addition, the tax
ramifications related to the realization of the unrealized gains and losses can
have a significant effect on fair value estimates and have not been considered
in any of the estimates.

                                       25
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 12.    DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL
            INSTRUMENTS (CONTINUED)

The estimated fair values of the Company's financial instruments are as follows:

<TABLE>
<CAPTION>
                                                June 30, 2003                       June 30, 2002
                                    -----------------------------------  ---------------------------------
                                                           Estimated                          Estimated
                                         Carrying            Fair             Carrying          Fair
                                           Value             Value              Value           Value
<S>                                    <C>                <C>                <C>              <C>

    Financial Assets
        Cash and due
           from banks                  $  3,059,413         3,059,413         2,955,943         2,955,943
        Interest-bearing deposits
           with banks                     9,736,728         9,736,728        18,967,850        18,967,850
        Securities                       32,944,508        32,969,958        10,665,787        10,671,090
        Loans                           100,594,994       106,303,851       116,542,717       120,540,318
        Accrued interest                    545,307           545,307           629,605           629,605

    Financial Liabilities
        Deposits                        118,822,912       122,659,171       130,989,181       133,963,832
        Escrows                             796,210           794,657           968,036           966,752
        Accrued interest                     46,807            46,807            41,147            41,147
        Advances from FHLB                8,907,392         9,125,987                --                --
</TABLE>

                                       26
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 13.    NET INCOME AND DIVIDENDS PER SHARE

Basic earnings per share are computed by dividing earnings available to common
stockholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflect per share amounts that would have
resulted if dilutive potential common stock had been converted to common stock.
The following reconciles amounts reported in the financial statements:

<TABLE>
<CAPTION>
                                                                     Year Ended June 30, 2003
                                                   -------------------------------------------------------
                                                                             Weighted
                                                                              Average
                                                          Income              Shares          Per-Share
                                                        (Numerator)        (Denominator)       Amount
<S>                                                <C>                 <C>                <C>

    Basic Net Income Per Share
        Income available to common
           stockholders                            $       656,285           1,266,503    $            .52
                                                                                          ================

    Effect of Dilutive Securities
        Stock options and stock awards                          --              17,972
                                                   ---------------     ---------------

    Diluted Net Income Per Share
        Income available to common
           stockholders                            $       656,285           1,284,475    $            .51
                                                   ===============     ===============    ================

<CAPTION>
                                                                     Year Ended June 30, 2002
                                                   -------------------------------------------------------
                                                                             Weighted
                                                                              Average
                                                          Income              Shares          Per-Share
                                                        (Numerator)        (Denominator)       Amount
<S>                                                <C>                 <C>                <C>

    Basic Net Income Per Share
        Income available to common
           stockholders                            $       554,295           1,248,994    $            .44
                                                                                          ================

    Effect of Dilutive Securities
        Stock options and stock awards                          --              15,147
                                                   ---------------     ---------------

    Diluted Net Income Per Share
        Income available to common
           stockholders                            $       554,295           1,264,091    $            .44
                                                   ===============     ===============    ================
</TABLE>

                                       27
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 13.    NET INCOME AND DIVIDENDS PER SHARE (CONTINUED)

Minority shareholders were paid cash dividends per share of $.68 on their
373,772 shares of common stock outstanding at June 30, 2003 and $.64 on their
360,793 shares of common stock outstanding at June 30, 2003. Cash dividends of
$.13 were paid on the 918,000 shares held by AF Mutual Holding Company at June
30, 2003 and 2002. AF Mutual Holding Company waived receiving the balance of its
dividends.


NOTE 14.    STOCK-BASED COMPENSATION PLANS

The Company adopted an employee stock ownership plan (ESOP) effective January 1,
2000 for all employees meeting certain age and service requirements.
Participants begin vesting after three years of employment and fully vest after
seven years of service. The plan acquired 28,560 shares of the Company's common
stock at $10 per share during the Company's initial public offering. The
Association borrowed $285,600 from the Company which is payable at $28,560 per
year with interest at 8% through June 30, 2009. Per statement of position 93-6
Employer's Accounting for Stock Ownership Plans, the unpaid balance of the ESOP
loan has not been reported in the consolidated statements of financial position.
The ESOP shares are held in trust and released to the Plan pro rata as principal
payments are made. On June 30, 2003 and 2002, the trust allocated 2,856 shares
of stock to participant accounts.

The Company's unallocated shares are accounted for as a reduction of
stockholders' equity and amounted to $171,360, and $199,920, at June 30, 2003
and 2002, respectively.

The following information relates to the ESOP for the years ended June 30, 2003
and 2002:

                                                      2003           2002

    Shares committed to be released                       2,856          2,856
    Average fair value of shares committed
        to be released                            $      26.097         23.253
    Compensation expense                                 74,529         66,411

                                       28
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 14.    STOCK-BASED COMPENSATION PLANS (CONTINUED)

Shares held by the ESOP at June 30 are as follows:

                                                  2003              2002

    Allocated shares                                11,424             8,568
    Unallocated shares                              17,136            19,992
                                             -------------     -------------

           Total ESOP shares                        28,560            28,560
                                             =============     =============

The Company adopted a Stock Option Plan effective June 25, 2001. Under the terms
of the plan, the Company authorized for the awarding of 35,700 shares of the
Company's common stock to directors and key employees at an exercise price of
$18.50 per share. The directors are 100% vested in the options becoming
exercisable as of June 25, 2001. The options become exercisable for the key
employees at a vesting rate of 20% per year over five years beginning July 1,
2002 and have an exercise date of ten years from the date of grant. The exercise
price equaled the market price on the date the options were granted. The
weighted average remaining life of common stock options at June 30, 2003 and
2002 is eight and nine years, respectively. A summary of common stock options
under the Stock Option Plan follows:

                                                         Weighted
                                              Price       Average      Options
                                Options       Range        Price     Exercisable

    Balance, June 30, 2001         35,700   $   18.50    $   18.50        18,750
                                                                     ===========
        Granted                        --          --           --
        Forfeited                      --          --           --
        Exercised                      --          --           --
                              -----------

    Balance, June 30, 2002         35,700       18.50        18.50        18,750
                                                                     ===========
        Granted                        --          --           --
        Forfeited                      --          --           --
        Exercised                  (7,238)      18.50        18.50
                              -----------

    Balance, June 30, 2003         28,462   $   18.50    $   18.50        15,262
                              ===========                            ===========

                                       29
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 14.    STOCK-BASED COMPENSATION PLANS (CONTINUED)

The Company adopted a Recognition and Retention Plan (RRP) effective June 25,
2001. In 2001, the Company contributed $320,365 allowing the RRP to acquire
17,317 shares of common stock of the Company, at $18.50 per share, awarded to
directors and key employees. Stock awards for 7,586 shares to the directors
vested 50% on November 1, 2001 and 50% on November 1, 2002. Stock awards for
9,731 shares to key employees vest at 20% per year over five years beginning
July 1, 2002. The un-amortized cost of shares not yet earned (vested) is
reported as a reduction of stockholders' equity. RRP compensation expense was
$53,547 and $158,804 for the years ended June 30, 2003 and 2002, respectively.


NOTE 15.    PARENT COMPANY ONLY FINANCIAL INFORMATION

Balance Sheets - Parent Company Only
June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                                      2003              2002
<S>                                                               <C>               <C>

ASSETS

Cash in subsidiary bank                                           $    820,829         1,151,168
Investment in subsidiaries                                          27,084,306        26,030,559
Income taxes receivable                                                170,913           111,808
Other assets                                                             1,086                --
                                                                  ------------      ------------

                  Total assets                                    $ 28,077,134        27,293,535
                                                                  ============      ============

LIABILITIES AND EQUITY

Liabilities
    Accrued interest and other liabilities                        $         --             1,126
                                                                  ------------      ------------

Commitments and Contingencies

Equity
    Preferred stock                                                         --                --
    Common stock, $.10 par value, 20,000,000 shares
        authorized, $1,291,772 and $1,278,793
        issued and outstanding at 2003 and 2002, respectively          129,177           127,879
    Treasury stock, at cost, 441 shares                                (11,113)               --
    Additional paid in capital                                       3,405,990         3,177,140
    Unearned ESOP shares and stock awards                             (279,374)         (361,481)
    Retained earnings, substantially restricted                     24,832,454        24,348,871
                                                                  ------------      ------------

                  Total equity                                      28,077,134        27,292,409
                                                                  ------------      ------------

                  Total liabilities and equity                    $ 28,077,134        27,293,535
                                                                  ============      ============
</TABLE>

                                       30
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 15.    PARENT COMPANY ONLY FINANCIAL INFORMATION
            (CONTINUED)

Statements of Income - Parent Company Only
Years Ended June 30, 2003 and 2002

                                                      2003             2002

Operating Income
    Income on investment in subsidiaries          $    706,499          589,335
    Interest on other interest-earning assets           20,193           34,860
                                                  ------------     ------------

                  Total interest income                726,692          624,195
                                                  ------------     ------------

Operating Expense
    Insurance fees                                       4,188            1,500
    Outside services                                    90,790           83,054
    Dues and subscriptions                               1,270              425
    Stationary                                           1,385            1,574
    Other                                                   --               25
                                                  ------------     ------------

                  Total operating expense               97,633           86,578
                                                  ------------     ------------

                  Income before income taxes           629,059          537,617

Benefit for income taxes                                27,226           16,678
                                                  ------------     ------------

                  Net income                      $    656,285          554,295
                                                  ============     ============

                                       31
<PAGE>

ALAMOGORDO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003



NOTE 15.    PARENT COMPANY ONLY FINANCIAL INFORMATION
            (CONTINUED)

Statements of Cash Flows - Parent Company Only
Years Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                                    2003             2002
<S>                                                             <C>              <C>

Cash Flows From Operating Activities
    Net income                                                  $   656,285          554,295

    Adjustments to reconcile net income to net cash
        used by operating activities
           Equity in undistributed income of subsidiaries        (1,053,747)      (1,111,567)
           Release of ESOP stock                                     74,529           66,411
           Unrealized gain on available-for-sale securities         232,414           36,411
           Amortization of stock awards                              53,547          158,804
           Changes in assets and liabilities
               Other assets                                          (1,086)             930
               Accrued interest and other liabilities                (1,129)           1,129
               Income taxes                                         (59,105)          39,703
                                                                -----------      -----------

                  Net cash used by operating activities             (98,292)        (253,884)
                                                                -----------      -----------

Cash Flows From Financing Activities
    Note receivable from subsidiary                                      --          228,480
    Repurchase of Company stock                                     (11,113)              --
    Cash dividends paid on common stock                            (354,836)        (340,624)
    Exercise of stock options                                       133,902               --
                                                                -----------      -----------

                  Net cash used by financing activities            (232,047)        (112,144)
                                                                -----------      -----------

Net decrease in cash and cash equivalents                          (330,339)        (366,028)

Cash and cash equivalents, beginning of year                      1,151,168        1,517,196
                                                                -----------      -----------

Cash and cash equivalents, end of year                          $   820,829        1,151,168
                                                                ===========      ===========
</TABLE>

                                       32
<PAGE>
                              CORPORATE INFORMATION

DIRECTORS

Robert W. Hamilton                         S. Thomas Overstreet
Chairman                                   Vice Chairman
Alamogordo Financial Corporation           Alamogordo Financial Corporation
Retired Owner                              Attorney at Law
Hamilton Funeral Home                      Overstreet and Associates, P.C.


Earl E. Wallin                             Jimmie D. Randall
Retired President                          Retired Owner
Alamogordo Federal Savings and Loan        Sacramento Motors


R. Miles Ledgerwood
President
Alamogordo Financial Corporation


OFFICERS

R. Miles Ledgerwood
President

Julia A. Eggleston
Vice President, Secretary

Norma J. Clute
Chief Financial Officer, Treasurer


EXECUTIVE OFFICES

Alamogordo Federal Savings & Loan Association
2nd Floor
500 Tenth Street
Alamogordo, New Mexico 88310
(505) 437-9334


BANKING OFFICES

Main Office                                Branch Office
500 Tenth Street                           233 S. New York
Alamogordo, New Mexico 88310               Alamogordo, New Mexico 88310


                             STOCKHOLDER INFORMATION

Annual Meeting                                  Independent Auditors

The Annual Meeting of Stockholders will be      Neff + Ricci LLP
held at 11:00 a.m., on November 19, 2003, at    6100 Uptown Blvd. NE, Suite 400
Alamogordo Federal's office at 500 10th         Albuquerque, NM  87110
Street, Alamogordo, New Mexico.

Counsel                                         Transfer Agent

Overstreet & Associates, P.C.                   Computershare
1011 New York Avenue                            P.O. Box 1596
Alamogordo, New Mexico 88310                    Denver, Colorado 80201-1596

Special Securities Counsel                      Stock Listing

Luse Gorman Pomerenk & Schick, P.C.             Alamogordo Financial's Common
5335 Wisconsin Avenue, N.W.                     Stock trades over-the-counter
Washington, D.C.  20015                         on the OTC Bulletin Board under
                                                the symbol "ALMG."
Stockholder Relations
                                                Annual Report on Form 10-KSB
Norma J. Clute
Chief Financial Officer & Treasurer             A copy of Alamogordo Financial's
Alamogordo Financial Corporation                Form 10-KSB for the fiscal year
500 Tenth Street                                ended June 30, 2003, will be
Alamogordo, New Mexico 88310                    furnished to stockholders,
(505) 437-9334                                  without charge, upon written
                                                request to Alamogordo Financial
                                                Corporation, 500 10th Street,
                                                Alamogordo, New Mexico 88310,
                                                Attn: Norma J. Clute.