To Our Stockholders:

Community Federal Bancorp's first full year as a public company
yielded record financial results and accomplishments of several
objectives, critical to building long-term shareholder value.

Net income for the fiscal year ended September 30, 1997 exceeded
$3 million, eclipsing our 1996 earnings by 41% and setting a new
standard for your company.  These earnings represented a 1.41%
return on average assets and amounted to $.70 on a per share
basis.

Effective management of our capital was, and remains, a priority
of your Board of Directors and management team.  Toward those
ends we paid a special dividend of $10.6 million, or $2.50 per
share, in May of 1997.  A dividend of  7 1/2 cents per share has
been approved for the first quarter of fiscal 1998 and dividend
levels will continue to be evaluated in conjunction with our
operating strategies.  We have also received authorization to
repurchase up to 231,437 shares, or roughly 5.0% of the Company's
outstanding common stock, to be done at management's discretion.

In addition to capital management, our strategic plan for 1997,
and beyond, called for growth through expansion of our retail
banking business and adding to our growing commercial lending
base.  The grand opening of our West Tupelo branch at the corner
of West Main and Rutherford Road in October 1997 was at the
centerpiece of these plans.  Its 3,500 square feet, four drive-up
windows and automatic teller machine will enable us to serve our
customers on a fast, efficient manner and promote growth!

We also added to our already strong customer service team with
the addition of two excellent consumer / commercial lenders and
eight additional employees.  Continued investment in our people
also has taken the form of increased emphasis on training.

Our growth strategy in 1998 will go beyond the expansion of our
retail business described above.  We will institute a disciplined
wholesale growth program, utilizing a diversified mix of
"securitized assets" which look like and are used exactly like
the loans that are currently on our books.  These will be funded
by NOW accounts, short and intermediate certificates of deposits
and Federal Home Loan Bank advances with a goal of growing assets
under this program by a minimum of 25% during fiscal 1998.  We
are confident that this managed program will result in continued
improvement of our return on equity.

Your Company is fortunate to have a group of dedicated, capable,
and energetic employees.   This group has worked diligently
during this year to make the transition from a traditional thrift
to a community bank.  With these enthusiastic employees we can
face the future with high expectations and confidence.  We know
that our shareholders and customers will receive the best in
personal service.

Thank you for your continuing support.  We are dedicated to
adding to the value of your investment in Community Federal.




Jim Ingram 
President and Chief Executive Officer
      


                COMMUNITY FEDERAL BANCORP, INC.
                                
                                
                                
Community Federal Bancorp, Inc. (the "Company") was incorporated
at the direction of management of Community Federal Savings Bank
(the "Bank") for the purpose of serving as a savings institution
holding company of the Bank upon the acquisition of all of the
capital stock issued by the Bank upon its conversion from mutual
to stock form (the "Conversion") effective March 25, 1996.  The
Company is classified as a unitary savings institution holding
company and is subject to regulation by the Office of Thrift
Supervision ("OTS").

The Bank was organized in 1933 as a federally chartered mutual
savings and loan association, at which time it also became a
member of the Federal Home Loan Bank ("FHLB") System and obtained
federal deposit insurance.  The Bank currently operates through
its banking office located in Tupelo, Mississippi.  At
September 30, 1996, the Bank had total assets of $204.0 million,
deposits of $131.7 million, and stockholders' equity of $67.1
million, or 32.9% of total assets.

The Bank's business strategy has been to operate as a profitable
and independent community-oriented savings institution dedicated
to providing quality customer service.  Generally, the Bank has
sought to implement this strategy by using retail deposits as its
sources of funds and maintaining most of its assets in
mortgage-backed securities issued by the Federal Home Loan
Mortgage Corporation ("FHLMC"), the Government National Mortgage
Association ("GNMA") and the Federal National Mortgage
Association ("FNMA"), loans secured by owner-occupied
one-to-four-family residential real estate located in Lee County,
Ms and portions of the surrounding counties, (" the Bank's market
area"), U.S. government and agency securities, interest-earning
deposits, cash and equivalents and consumer loans.  The Bank's
business strategy incorporates the following key elements:  (1)
remaining a community-oriented financial institution while
maintaining a strong core customer base by providing quality
service and offering customers the access to senior management
and services that a community-based institution can offer; (2)
attracting a relatively strong retail deposit base from the
communities served by the Bank's banking offices; (3) maintaining
asset quality by emphasizing investment in local residential
mortgage loans, mortgage-backed securities, and other securities
issued or guaranteed by the U.S. government or agencies thereof;
and (4) maintaining liquidity and capital substantially in excess
of regulatory requirements.

As a federally chartered savings institution, the Bank is subject
to extensive regulation by the OTS.  The lending activities and
other investments of the Bank must comply with various federal
regulatory requirements, and the OTS periodically examines the
Bank for compliance with various regulatory requirements.  The
Federal Deposit Insurance Company ("FDIC") also has the authority
to conduct special examinations.  The Bank must file reports with
OTS describing its activities and financial condition and is also
subject to certain reserve requirements promulgated by the Board
of Governors of the Federal Reserve System ("Federal Reserve 
Board").




                    MARKET FOR COMMON STOCK
                AND RELATED STOCKHOLDER MATTERS
                                
The Company's common stock began trading on the NASDAQ on
March 26, 1996, under the symbol "CFTP."  At September 30, 1997,
there were 4,628,750 shares of the common stock outstanding and
approximately 2,445 stockholders of record.

The payment of dividends on the Common Stock is subject to
determination and declaration by the Board of Directors of the
Company.  The Board of Directors has adopted a policy of paying
quarterly cash dividends on the Common Stock.  In addition, from
time to time, the Board of Directors may determine to pay special
cash dividends in addition to, or in lieu of, regular cash
dividends.  The payment of future dividends will be subject to
the requirements of applicable law and the determination by the
Board of Directors of the Company that the net income, capital,
and financial condition of the Company and the Association,
thrift industry trends, and general economic conditions justify
the payment of dividends, and there can be no assurance that
dividends will be paid or, if paid, will continue to be paid in
the future.

The following table sets forth information as to high and low
sales prices of the Company's common stock and cash dividends per
share of common stock for the calendar quarters indicated.


                     Price Per Share   Dividends Per Share
                     High       Low     Regular   Special
Fiscal 1997:
Fourth quarter     $18.750    $17.250    $.075    $ .000
Third quarter       20.750     16.875     .075     2.500
Second quarter      20.000     16.750     .075      .000
First quarter       17.375     13.375     .075      .000

Fiscal 1996:
Fourth quarter     $13.625    $12.250    $.075    $ .000
Third quarter       13.475     12.375     .075      .000
Second quarter      13.500     11.750     .000      .000






             SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
                                    


                                       Year Ended September 30,
                                1997    1996    1995    1994    1993

INCOME STATEMENT DATA:
Total interest income          14,508  13,150  11,016  10,011  10,275
Total interest expense          7,024   6,950   6,267   6,438   5,312
  Net interest expense          7,484   6,200   4,749   3,573   4,963
Provision for loan losses          20      20      30      25     100
  Net interest income
    after provision for
    loan losses                 7,464   6,180   4,719   3,548   4,863
Noninterest income                227     188     132     752     133
Noninterest expense             2,926   3,036   1,672   1,840   1,508
Income before income taxes      4,765   3,332   3,179   2,460   3,488
Provision for income taxes      1,728   1,184   1,144   1,012   1,171
Cumulative effect of change
 in accounting principle            0       0       0     131       0
Net income                      3,037   2,148   2,035   1,317   2,317

Earnings per share (1)           $.70    $.27     N/A     N/A     N/A



                                        At September 30,             
                          1997      1996      1995      1994      1993

BALANCE SHEET DATA:
Total assets             215,938   204,017   162,042   154,600   147,909
Loans receivable, net    127,335   117,631    97,988    84,269    84,429
Securities:(2)
Available for sale        73,976    75,112    25,125      N/A       N/A
Held to maturity           4,157     4,756    33,837      N/A       N/A
Mortgage-backed and
 related securities(2)      N/A       N/A       N/A     33,755    29,043
Securities(2)               N/A       N/A       N/A     30,146    15,615
Deposits                 132,718   131,740   134,555   131,989   129,035
Stockholders' equity      58,563    67,139    23,427    20,394    17,650


                                       Year Ended September 30,
                                   1997   1996   1995   1994   1993

KEY OPERATING DATA:
Return on average assets            1.5%   1.1%   1.3%   0.9%   1.6%
Return on average equity            4.7    4.4    9.4    7.0   14.0
Average equity to average assets   30.9   26.2   13.6   12.4   11.1
Dividend payout ratio (1)         389.7   57.9    N/A    N/A    N/A
Number of offices                     2      1      1      1      1


(1)  Earnings per share and dividend payout ratios are presented  
     from the conversion date.

(2)  Securities are presented in connection with the Company's    
     adoption of Statement of Accounting Standards No. 115 as of
     October 1, 1994.


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

As is the case with most savings institutions, the profitability
of the Savings Bank depends primarily on its net interest income,
which is the difference between interest and dividend income on
interest-earning assets, principally loans, mortgage-backed
securities and investment securities, and interest expense on
interest-bearing deposits.  The Savings Bank's net earnings also
are dependent, to a lesser extent, on the level of provision for
loan losses, its non-interest income and non-interest expenses,
such as compensation and benefits, occupancy and equipment,
deposit insurance premiums, and miscellaneous other expenses, as
well as provisions for federal and state income tax.

Business Strategy

The Company's goal is to continue to serve its Primary Market
Area as an independent, consumer-oriented financial institution
dedicated to financing home ownership and providing needed
financial services to its customers in an efficient manner.  The
principal components of its business strategy are discussed
below.

Emphasis on Traditional Lending in its Primary Market Area.  The
Savings Bank's primary lending emphasis has been the origination
for portfolio of one-to-four family residential first mortgage
loans in its Primary Market Area.  The Savings Bank believes that
it has a substantial market share in Lee County and competitive
market shares in the other counties in which it operates, both
with respect to deposits and first mortgage loans.  In order to
offer a broader array of loan products to its customers, the
Savings Bank also recently began to originate automobile and
commercial loans.

Interest Rate Risk Management.  The Savings Bank has actively
sought to reduce vulnerability of its operations to changes in
interest rates by managing the imbalance between its
interest-earning assets and interest-bearing liabilities with
shorter-term and more liquid securities and other investments. 
To achieve this goal, the Savings Bank has invested new funds
from deposit growth, earnings and funds from repayments of loans
and securities into mortgage-backed securities and collateralized
mortgage obligations and government-related securities with a
maturity or average life of five years or less.  Moreover, the
automobile and commercial loans that the Savings Bank recently
began to originate will add additional shorter-term loans that
will be held in the Savings Bank's loan portfolio.

Maintain Asset Quality.  Management believes that high asset
quality is a key to long-term financial success.  As a result,
the loans which are emphasized by the Savings Bank and its
related policies and practices are intended to maintain a high
level of asset quality and reduced credit risk.  At September 30,
1997, the Savings Bank's non-performing assets, which consist of
non-accrual loans, accruing loans greater than 90 days delinquent
and real estate acquired through foreclosure or by deed-in-lieu
thereof, amounted to $1.1 million or .5% of the Savings Bank's
total assets.

High Levels of Regulatory Capital and Moderate Growth.  The
Savings Bank seeks to maintain high levels of regulatory capital
to give it maximum flexibility in the changing regulatory
environment and to respond to changes in the market and economic
conditions.  These levels of capital have been achieved through
the conversion and consistent earnings enhanced by low levels of
non-interest expenses at the Savings Bank's single office and
have been maintained at those high levels as a result of its
policies of moderate growth generally confined to its Primary
Market Area.  At September 30, 1997, the Savings Bank's tangible,
core and risk-based capital ratios amounted to 21.5%, 21.5%, and
47.5%, respectively, which exceeded the minimum requirements of
1.5%, 3.0%, and 8.0%, respectively.

Low Levels of Non-Interest Expense.  The Savings Bank's
non-interest expenses were 1.4% of average total assets for the
fiscal year ended September 30, 1997 and have averaged
approximately 1.2% of average total assets annually for each of
the five fiscal years in the period ended September 30, 1997.

Changes in Financial Condition

At September 30, 1997, the Company's assets totaled $215.9
million, as compared to $204 million at September 30, 1996. 
Total assets increased by $11.9 million, or 5.9%, from
September 30, 1996 to September 30, 1997.  The increase in total
assets during this period was principally funded through $18.3
million in advances from the FHLB of Dallas.

The increase in total assets at September 30, 1997 was due
primarily to a $9.7 million, or 8.3% increase in the Savings
Bank's net loans receivable, and a $2.7 million increase in
premises and equipment reflective of the new west Tupelo branch,
which was partially offset by a $1.7 million decrease in
securities.  The $9.7 million increase in loans was the result of
the Company's election to invest a substantial portion of its
excess funds into loans, especially one-to-four family
residential, construction and consumer loans and securities.

During the fiscal year ended September 30, 1997, total deposits
increased by $1.0 million, or .7%, to $132.7 million. The
Company's equity decreased by $8.5 million to $58.6 million at
September 30, 1997 compared to $67.1 million at September 30,
1996 due primarily to a $2.5 million increase in unearned
compensation associated with the ESOP and MRP plans, payment of
regular and special dividends of $11.8 million, and an increase
in unrealized gain on securities available for sale, net of
deferred taxes, of $2.6 million.

Results of Operations for the Years Ended September 30, 1997,
1996, and 1995

The Company had net income of $3.0 million for the year ended
September 30, 1997 compared to net income of $2.1 million for
fiscal 1996.  The $888,000 increase in net income represented a
41.3% increase over fiscal 1996.  The Company's net income of
$2.1 million for the fiscal year ended September 30, 1996
represented an increase of $113,000 or 5.6% over fiscal 1995. 
Net income for fiscal 1996 was materially affected by the
$864,000 one-time special assessment of 65.7 basis points on SAIF
insured deposits as of March 31, 1995.  But for this event, the
Company's net income for fiscal 1996 would have been $3 million
as compared to the $2.1 million reported in the consolidated
statements of income.

Net Interest Income.  The Company's net interest income is
determined by its interest rate spread (i.e., the difference
between the yields earned on its interest-earning assets and the
rates paid on its interest-bearing liabilities) and the relative
amounts of interest-earning assets and interest-bearing
liabilities.

The Company's net interest income increased by $1.3 million, or
20.7%, in fiscal 1997 compared to fiscal 1996.  The increase in
the net interest income rate was primarily the result of an
increase in the Company's average interest-earning assets in 1997
as compared to 1996.

Interest expense on deposits decreased by $280,000, or 4.0%,
during the fiscal year ended September 30, 1997 compared to
fiscal 1996.  Such decrease was due primarily to a decrease in
interest paid on deposits, as a result of a 43 basis point
decrease in the average rate paid.  This decrease in interest
paid on deposits was partially offset by the $374,000 of interest
paid on FHLB advances that the Company obtained from the FHLB of
Dallas during fiscal 1997.  The Company borrowed from the FHLB of
Dallas to meet short-term liquidity needs at interest rates that
were lower than funds then available in its traditional deposit
market.

Total interest income increased by $2.1 million, or 19.4%, in the
fiscal year ended September 30, 1996 compared to fiscal 1995. 
The primary reason for the increase in fiscal 1996 was an 18.2%
increase in interest-earning assets from fiscal 1995 to 1996. 
The increase in average assets is the result of the stock
offering.

Total interest expense increased by $682,000, or 10.9%, in fiscal
1996 compared to fiscal 1995, and was primarily the result of a
50 basis point (1.0% equaling 100 basis points) increase in the
average rate paid on interest bearing liabilities in response to
market conditions.

The Company's net interest income increased by $1.5 million, or
30.6%, in fiscal 1996 compared to fiscal 1995.  The Savings
Bank's interest rate spread was 2.04% in fiscal 1996 as compared
to 2.49% in fiscal 1995.  The changes in the interest rate spread
during the period were primarily the result of a slightly
increasing interest rate environment in which the Company's
interest-earning assets increased less rapidly than
interest-bearing liabilities.

Provision for Loan Losses.  The Savings Bank's provision for loan
losses was $20,000 for the fiscal year ended September 30, 1997
compared to $20,000 and $30,000 during fiscal 1996 and 1995,
respectively.  Provisions for loan losses are charged to earnings
to bring the total allowance to a level deemed appropriate by
management based on the volume and type of lending conducted by
the Savings Bank.  Provisions in fiscal 1996 and 1997 were made
in order to adjust the allowance for the increased volume of
mortgage loans as well as the expansion of consumer and
commercial lending.  Commercial and consumer loans traditionally
have a higher rate of default and are secured by collateral that
often depreciates or is less liquid than the real estate securing
mortgage loan.

The Savings Bank's methodology for evaluating the adequacy of its
allowance for loan losses, which conforms with generally accepted
accounting principles ("GAAP"), considers collateral valuation,
changes in the loan portfolio mix and certain economic
indicators, causing it to be a leading indicator of inherent risk
in the loan portfolio.  Accordingly, it is not necessarily
reflective of past trends in charge-offs and other factors.  The
methodology incorporates economic indicators such as growth in
personal income and unemployment rates as well as other economic
indicators affecting the Savings Bank's market area and considers
higher risk loan groups, including growth in the Savings Bank's
consumer and multi-family and non-residential loan portfolios.

Non-Interest Income.  Non-interest income was $227,000 in fiscal
1997, an increase of $39,000, or 20.7%, compared to non-interest
income of $188,000 in fiscal 1996.  The primary difference in
non-interest income between fiscal 1997 and fiscal 1996 was the
$53,000 decrease in net gain on the sale of securities in fiscal
1997 compared to fiscal 1996; the $25,000 increase in loan
servicing fees in 1997, compared to $67,000 in loan servicing
fees in 1996; and a $67,000 increase in other non-interest
income.  Non-interest income amounted to $188,000 for the fiscal
year ended September 30, 1996 compared to $132,000 for fiscal
1995.  The increase was due primarily to a $55,000 increase in
net gain on sales of securities.

Non-Interest Expenses.  Non-interest expenses decreased $108,000
in fiscal 1997 compared to fiscal 1996 from $3.0 million to $2.9
million.  The primary reasons for the decrease were attributable
to the one-time special assessment of $864,000 to recapitalize
the SAIF in 1996, the $194,000 decrease in regular deposit
insurance premiums; offset by the $810,000 increase in
compensation and benefits resulting from an increase in
personnel, merit raises, and the ESOP and MRP plans, and a
$101,000 increase in other expenses.

The primary reasons for the increase in non-interest expenses in
fiscal 1996 compared to fiscal 1995 were the $864,000 one-time
special assessment and the $314,000 increase in compensation and
benefits which resulted from increased personnel, merit raises,
and $220,000 in ESOP expense which was new in fiscal 1996.

Income Taxes.  The provision for income taxes was $1.7 million,
$1.2 million, and $1.1 million in fiscal 1997, 1996, and 1995,
respectively.  The changes in such respective amounts primarily
reflect the fluctuations in levels of income before income taxes
of the Company during those fiscal years of $4.8 million, $3.3
million, and $3.2 million, respectively.  See Note 11 of the
Notes to Consolidated Financial Statements.

Impact of Inflation and Changing Prices

The financial statements and related financial data presented
herein have been prepared in accordance with GAAP, which requires
the measurement of financial position and operating results in
terms of historical dollars, without considering changes in
relative purchasing power over time due to inflation.

Unlike most industrial companies, virtually all of the Savings
Bank's assets and liabilities are monetary in nature.  As a
result, interest rates generally have a more significant impact
on a financial institution's performance than does the effect of
inflation.

Average Balance, Interest, and Average Yields and Rates

The following table sets forth certain information relating to
the Company's average interest-earning assets and
interest-bearing liabilities and reflects the average yield on
assets and the average cost of liabilities for the periods and at
the date indicated.  Such yields and costs are derived by
dividing income or expense by the average monthly balance of
assets or liabilities, respectively, for the periods indicated.

The tables also present information for the periods indicated and
at September 30, 1997 with respect to the difference between the
weighted average yield earned on interest-earning assets and the
weighted average rate paid on interest-bearing liabilities, or
"interest rate spread," which savings institutions have
traditionally used as an indicator of profitability.  Another
indicator of an institution's net interest income is its "net
yield on interest-earning assets." which is its net interest
income divided by the average balance of interest-earning assets. 
Net interest income is affected by the interest rate spread and
by the relative amounts of interest-earning assets and
interest-bearing liabilities.  When interest-earning assets
approximate or exceed interest-bearing liabilities, any positive
interest rate spread will generate net interest income.


                             As of
                             Sep 30,   Year Ended September 30,
                              1997              1997
                            Weighted   Average           Yield
                           Yield/Rate  Balance  Interest /Rate     
Interest-earning assets:
Loans receivable, net         7.89%   $123,610   $9,797   7.93%
Securities:
Available for sale            6.80      71,645    4,164   5.81
Held to maturity              6.21       4,542      266   5.86
Other interest-earning
 assets(1)                    6.04       5,001      281   5.62
   Total interest-earning
     assets                   7.43%    204,798   14,508   7.08
Non-interest-earning
 assets                                   3,132
   Total assets                        $207,930
Interest-bearing liabilities:   
Transaction accounts          2.96       19,959     589   2.95
Certificates of deposit       5.53      111,745   6,061   5.42
Borrowings                    5.92        6,945     374   5.39
   Total interest-bearing     
     liabilities              5.23      138,649   7,024   5.07
Non-interest-bearing
 liabilities                              5,024
   Total liabilities                    143,673
Equity                                   64,257
   Total liabilities 
     and equity                        $207,930

Net interest income;
 interest rate spread         2.20%              $7,484   2.02%
Net interest margin (2)                                   3.65%
Average interest-earning
 assets to average
 interest-bearing liabilities                           147.71%




                                         Year Ended September 30,
                                                    1996
                                          Average            Yield
                                          Balance  Interest  /Rate
Interest-earning assets:
Loans receivable, net                    $104,425   $8,610   8.25%
Securities:
Available for sale                         56,340    3,249   5.77
Held to maturity                           11,998      825   6.88
Other interest-earning assets(1)            9,242      465   5.03
   Total interest-earning assets          182,005   13,149   7.22
Non-interest-earning assets                 5,214
   Total assets                          $187,219
Interest-bearing liabilities:
Transaction accounts                       26,507      621   2.79
Certificates of deposit                   107,848    6,309   5.85
Borrowings                                    250       19   7.60
   Total interest-bearing liabilities     134,605    6,949   5.16
Non-interest-bearing liabilities            3,531
   Total liabilities                      138,136
Equity                                     49,083
   Total liabilities and equity          $187,219

Net interest income;interest rate spread            $6,200   2.06%
Net interest margin (2)                                      3.41%
Average interest-earning assets to 
 average interest-bearing liabilities                      135.21%


                                         Year Ended September 30,
                                                    1995
                                         Average             Yield
                                         Balance  Interest   /Rate
Interest-earning assets:                
Loans receivable, net                   $ 90,778    $7,041   7.76%
Securities:
Available for sale                        37,260     2,322   6.23
Held to maturity                          21,883     1,432   6.54
Other interest-earning assets(1)           4,149       221   5.33
   Total interest-earning assets         154,070    11,016   7.15
Non-interest-earning assets                5,288
   Total assets                         $159,358
Interest-bearing liabilities:
Transaction accounts                      19,823       549   2.77
Certificates of deposit                  112,278     5,570   4.96
Borrowings                                 2,333       148   6.34
   Total interest-bearing liabilities    134,434     6,267   4.66
Non-interest-bearing liabilities           3,209
   Total liabilities                     137,643
Equity                                    21,715
   Total liabilities and equity         $159,358

Net interest income;interest rate spread            $4,749   2.49%
Net interest margin (2)                                      3.08%
Average interest-earning assets to 
 average interest-bearing liabilities                      114.61%


(1)  Consists primarily of interest-bearing deposits in banks.
(2)  Net interest margin is net interest income divided by        
     average interest-earning assets.


Rate/Volume Analysis

The following tables describe the extent to which changes in
interest rates and changes in volume of interest-related assets
and liabilities have affected the Company's interest income and
expense during the periods indicated.  For each category of
interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in
volume (change in volume multiplied by prior year rate), (ii)
changes in rate (change in rate multiplied by prior year volume),
and (iii) total change in rate and volume.  The combined effect
of changes in both rate and volume has been allocated
proportionately to the change due to rate and the change due to
volume.


                                       Year Ended September 30,
                                        1997 Compared to 1996     
                                Increase      Increase       Total
                               (Decrease)    (Decrease)     Increase
                               Due to Rate  Due to Volume  (Decrease)
Interest-Earning Assets:
Loans                            $(317)        $1,504        $1,187
Securities:
Available for sale                 160            755           915
Held to maturity                  (203)          (356)         (559)
Mortgage-backed and 
  related securities (1)             0              0             0
Securities (2)                       0              0             0
Other interest-earning assets       63           (247)         (184)
Total interest-earning assets    $(297)        $1,656        $1,359

Interest-Bearing Liabilities:
Deposits and borrowings          $(123)        $  198        $   75

Increase (decrease) in 
  net interest income            $(174)        $1,458        $1,284



                                       Year Ended September 30,
                                        1996 Compared to 1995     
                                Increase      Increase       Total
                               (Decrease)    (Decrease)     Increase
                               Due to Rate  Due to Volume  (Decrease)
Interest-Earning Assets:
Loans                             $464         $1,106        $1,570
Securities:
Available for sale                (220)         1,147           927  
Held to maturity                   660         (1,268)         (608)
Mortgage-backed and 
  related securities (1)             0              0             0
Securities (2)                       0              0             0
Other interest-earning assets      (12)           256           244
Total interest-earning assets     $892         $1,241        $2,133

Interest-Bearing Liabilities:
Deposits and borrowings           $674         $    8        $  682

Increase (decrease) in 
  net interest income             $218         $1,233        $1,451



                                       Year Ended September 30,
                                        1995 Compared to 1994     
                                Increase      Increase       Total
                               (Decrease)    (Decrease)     Increase
                               Due to Rate  Due to Volume  (Decrease)
Interest-Earning Assets:
Loans                            $   0         $  588        $  588 
Securities:
Available for sale                   0          2,322         2,322
Held to maturity                     0         (1,717)       (1,717)
Mortgage-backed and 
  related securities (1)           252          1,609         1,861
Securities (2)                    (428)        (1,435)       (1,863)
Other interest-earning assets      178           (363)         (185)
Total interest-earning assets    $   2         $1,004        $1,006

Interest-Bearing Liabilities:
Deposits and borrowings          $(248)        $   77        $ (171)

Increase (decrease) in 
  net interest income            $ 250         $  927        $1,177


(1)  Consists of mortgage-backed and related securities available 
     for sale and held to maturity.
(2)  Consists of securities available for sale and securities     
     held to maturity for 1996 and 1995.
<PAGE>
Liquidity and Capital Resources

The Company continues to maintain a high level of liquid assets
in order to meet its funding requirements.  At September 30,
1997, the Company had approximately $5.4 million in cash on hand
and interest-bearing deposits in other banks, which represented
2.5% of total assets.  At September 30, 1997, the Company's level
of liquid assets, as measured for regulatory compliance purposes
was 9%, or $5.5 million, in excess of the minimum liquidity
requirement of 5%.

At September 30, 1997, the Savings Bank had $48.6 million of
total equity or 23.9% of total assets.  The Savings Bank
continues to exceed its regulatory capital requirements ratios at
September 30, 1997.  Tangible and core capital were $43 million,
which represented 21.5% of adjusted total assets and risk-based
capital was $43.6 million which represented 47.5% of total
risk-weighted assets at September 30, 1997.  Such amounts
exceeded the minimum required ratios of 1.5%, 3%, and 8%,
respectively.  At September 30, 1997, the Savings Bank continued
to meet the definition of a "well-capitalized" institution, the
highest of the five categories under the FDICIA prompt corrective
action standards.



            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                


To Community Federal Bancorp, Inc.:

We have audited the accompanying consolidated statements of
financial condition of COMMUNITY FEDERAL BANCORP, INC. (a
Delaware corporation) AND SUBSIDIARY as of September 30, 1997 and
1996, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years
in the period ended September 30, 1997.  These financial
statements are the responsibility of the Company's management. 
Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the 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 audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Community Federal Bancorp, Inc. and
Subsidiary as of September 30, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years
in the period ended September 30, 1997, in conformity with
generally accepted accounting principles.




Birmingham, Alabama
October 24, 1997



                COMMUNITY FEDERAL BANCORP, INC.
                                
                                
         CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                
               AS OF SEPTEMBER 30, 1997 AND 1996


                             ASSETS
                                
                                          1997          1996
                                
CASH AND CASH EQUIVALENTS             $  3,886,874  $  1,764,355

INTEREST-BEARING DEPOSITS IN BANKS       1,550,129     2,441,324

SECURITIES AVAILABLE FOR SALE,
  at fair value                         73,976,278    75,111,784

SECURITIES HELD TO MATURITY, at 
  amortized cost (estimated fair
  value of $4,122,225 and
  $4,625,305 respectively)               4,156,732     4,755,702

LOANS RECEIVABLE, net                  127,334,958   117,630,885

ACCRUED INTEREST AND DIVIDENDS
  RECEIVABLE                             1,239,777     1,343,947

PREMISES AND EQUIPMENT, net              3,318,561       607,267

OTHER ASSETS                               474,514       361,678

        Total assets                  $215,937,823  $204,016,942



              LIABILITIES AND STOCKHOLDERS' EQUITY
                                
                                
DEPOSITS                              $132,718,390  $131,740,433
FEDERAL HOME LOAN BANK ADVANCES         18,282,186             0
OTHER LIABILITIES:
Accrued interest payable                   731,619       616,422
Advances from borrowers for taxes
  and insurance                            424,356       444,784
Deferred income taxes payable            3,410,146     1,893,037
Accrued expenses and other liabilities   1,808,125     2,183,370
        Total liabilities              157,374,822   136,878,046 
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, no par value;
  2,000,000 shares authorized;
  shares issued and outstanding--none            0             0
Common stock, par value $.01 per
  share; 10,000,000 shares authorized,
  4,628,750 shares issued                   46,288        46,288
Additional paid-in capital              45,113,004    45,006,311
Retained earnings                       13,714,336    22,511,930
Unearned compensation                   (5,998,323)   (3,464,110)
Unrealized gain on securities
  available for sale, net                5,687,696     3,038,477
        Total stockholders' equity      58,563,001    67,138,896
        Total liabilities and
          stockholders' equity        $215,937,823  $204,016,942

  The accompanying notes are an integral part of these statements.
                                  
                                  
                                  
                                  
                                  
                                  
                    COMMUNITY FEDERAL BANCORP, INC.
                                    
                                    
                   CONSOLIDATED STATEMENTS OF INCOME
                                    
         FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
                                    
                                    
                                     1997          1996         1995
INTEREST INCOME:
Interest and fees on loans:
Mortgage loans                  $ 9,010,094   $ 8,217,595   $ 6,706,168
Consumer loans                      325,172       262,356       290,673
Commercial loans                    462,641       130,510        43,870
Interest and dividends
  on securities held to
  maturity                          265,859       824,987     1,432,584
Interest and dividends
  on securities available
  for sale                        4,163,866     3,249,772     2,321,642
Other interest income               280,980       464,598       220,885
      Total interest income      14,508,612    13,149,818    11,015,822
INTEREST EXPENSE:
Deposits                          6,649,961     6,930,124     6,119,346
Other borrowings                    374,366        19,410       147,970
      Total interest expense      7,024,327     6,949,534     6,267,316
      Net interest income         7,484,285     6,200,284     4,748,506

PROVISION FOR LOAN LOSSES            20,000        20,000        30,000
      Net interest income
        after provision for
        loan losses               7,464,285     6,180,284     4,718,506
NONINTEREST INCOME:
Gain on sale of securities 
  available for sale, net             1,967        54,838             0
Loan servicing fees                  92,686        67,254        62,971
Other income                        132,348        65,656        69,428
      Total noninterest income      227,001       187,748       132,399
NONINTEREST EXPENSES:
Compensation and benefits         1,963,349     1,153,133       839,466
Special SAIF assessment                   0       863,835             0
Deposit insurance premium           123,616       317,896       305,811
Occupancy and equipment             144,382       134,745       118,774
(Gain) loss on real estate
  owned, net                          3,279       (15,119)         (217)
Loss on sale of loans, net            9,616            0          1,444
Other expenses                      682,401      580,990        406,587
      Total noninterest expenses  2,926,643    3,035,480      1,671,865
      Income before income taxes  4,764,643    3,332,552      3,179,040
PROVISION FOR INCOME TAXES        1,728,120    1,184,294      1,144,334
NET INCOME                       $3,036,523   $2,148,258     $2,034,706

EARNINGS PER SHARE                     $.70         $.27            N/A


The accompanying notes are an integral part of these statements.
                                
                                
                COMMUNITY FEDERAL BANCORP, INC.
                                
                                
        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                
     FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
                                
                                     
                                
                                         Additional
                                 Common    Paid-In    Retained
                                 Stock     Capital    Earnings

BALANCE, Sep 30, 1994               0            0    18,996,038

Net income                          0            0     2,034,706
Change in unrealized
 gain on securities
 available for sale, net            0            0             0
BALANCE, Sep 30, 1995               0            0    21,030,744

Net income                          0            0     2,148,258
Change in unrealized
 gain (loss) on securities,
 due to the reclassification
 of securities from held to
 maturity to available for
 sale, net                          0            0             0
Issuance of common stock       46,288   44,954,433             0
Change in unrealized gain on
 securities available for
 sale, net                          0            0             0
Amortization of unearned
 compensation                       0       51,878             0
Dividends declared 
 ($.15 per share)                   0            0      (667,072)
BALANCE, September 30, 1996    46,288   45,006,311    22,511,930

Net income                          0            0     3,036,523
Contributions to stock
 plan trusts                        0      (16,922)            0
Change in unrealized gain on
 securities available for 
 sale, net                          0            0             0
Amortization of unearned
 compensation                       0      123,615             0
Dividends declared 
 ($2.80 per share)                  0            0   (11,834,117)
BALANCE, September 30, 1997    46,288   45,113,004    13,714,336



                                          Unrealized
                                            Gain on
                                           Securities
                               Unearned   Available for 
                             Compensation   Sale, Net     Total

BALANCE, Sep 30, 1994                 0      1,398,075   20,394,113

Net income                            0              0    2,034,706
Change in unrealized
 gain on securities
 available for sale, net              0        998,081      998,081
BALANCE, Sep 30, 1995                 0      2,396,156   23,426,900

Net income                            0              0    2,148,258
Change in unrealized
 gain (loss) on securities,
 due to the reclassification
 of securities from held to
 maturity to available for
 sale, net                            0        (28,115)     (28,115)
Issuance of common stock     (3,632,000)             0   41,368,721  
Change in unrealized gain on
 securities available for
 sale, net                            0        670,436      670,436
Amortization of unearned
 compensation                   167,890              0      219,768
Dividends declared 
 ($.15 per share)                     0              0     (667,072)
BALANCE, September 30, 1996  (3,464,110)     3,038,477   67,138,896  

Net income                            0              0    3,036,523
Contributions to stock
 plan trusts                 (3,065,278)             0   (3,082,200)
Change in unrealized gain on
 securities available for 
 sale, net                            0      2,649,219    2,649,219
Amortization of unearned
 compensation                   531,065              0      654,680
Dividends declared 
 ($2.80 per share)                    0              0  (11,834,117)
BALANCE, September 30, 1997  (5,998,323)     5,687,696   58,563,001 


The accompanying notes are an integral part of these statements.



                   COMMUNITY FEDERAL BANCORP, INC.


                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    
         FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
                                    
                                    
                                       1997         1996        1995


CASH FLOWS FROM OPERATING 
 ACTIVITIES:
  Net income                        $3,036,523   $2,148,258  $2,034,706
  Adjustments to reconcile net 
   income to net cash provided
   by operating activities:
     Depreciation                       81,139       63,832      55,961
     Deferred income tax provision
       (benefit)                        71,401     (281,057)      8,634
     Amortization of deferred loan 
       fees and costs, net              32,371       47,949      44,216
     Amortization of discounts and 
       premiums of accretion,net       (48,587)     (84,616)    (96,389)
     Amortization of unearned
       compensation                    654,680      219,768           0
     Provision for losses on loans      20,000       20,000      30,000
     FHLB stock dividends              (75,000)     (72,589)    (70,900)
     Gain on sale of loans               9,616            0       1,444
     Loss on disposal of equipment           0            0       1,299
     Gain on sale of securities 
       available for sale, net          (1,967)     (54,838)          0
     Loss on sale of interest 
       bearing deposits                      0            0         558
     (Gain) loss on sale of repossessed
       assets, net                       3,279      (15,119)       (217)
     Changes in assets and liabilities:
          Decrease (increase)in other
            assets                       4,525     (171,199)      8,727
          Decrease (increase)in 
            interest and dividends
            receivable                 104,170     (184,782)   (178,393)
          Increase in income taxes 
            payable                     71,652       53,588     150,299
          Increase (decrease)in 
            accrued interest payable   115,197      (47,050)    303,178
          Increase (decrease)in 
            accrued expenses and 
            other liabilities         (446,868)   1,728,892     (64,534)
              Total adjustments        595,608    1,222,779     193,883
              Net cash provided by 
               operating activities  3,632,131    3,371,037   2,228,589
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of 
   repossessed assets                   13,000      190,000           0
  Proceeds from maturities and 
   principal collections of 
   securities held to maturity         590,329    1,921,600   3,075,834
  Proceeds from maturities,
   principal collections, and
   calls of securities available
   for sale                         12,998,115   13,165,134   3,595,826
  Proceeds from sales of 
   securities available for sale     5,498,843    2,621,913           0
 (Purchase of) proceeds from
   maturities of interest-bearing
   deposits in banks, net              891,195     (692,324)    490,393
 (Purchase of) proceeds from
   sale of property and
   equipment, net                   (2,792,433)      (6,351)   (227,410)
  Investment in real estate owned       (7,064)      (2,031)      2,464
  Proceeds from sale loans           1,060,138            0     220,856
  Loan (originations) and 
   principal repayments, net       (10,952,774) (19,744,689)(14,015,127)
  Purchase of securities 
   available for sale              (13,132,359) (36,586,411)          0
  Purchase of securities held
   to maturity                               0     (559,141)          0
              Net cash used by
               investing activities (5,833,010) (39,692,300) (6,857,164)
CASH FLOWS FROM FINANCING 
 ACTIVITIES:
  (Decrease) increase in customer
   deposits, net                       977,957    (2,814,071)  2,565,448
  Proceeds from (repayments of)
   FHLB advances, net               18,282,186    (1,000,000)  1,000,000
  (Decrease) increase in advances
   from borrowers for taxes and
   insurance                           (20,428)       51,940      28,055
  Proceeds from stock offering               0    41,368,721           0
  Contributions to stock plan
   trusts                           (3,082,200)            0           0
  Dividends paid                   (11,834,117)     (667,072)          0
              Net cash provided
               by financing
               activities            4,323,398    36,939,518   3,593,503
              Net increase 
              (decrease) in cash
               and cash equivalents  2,122,519       618,255 (1,035,072)

CASH AND CASH EQUIVALENTS,
 beginning of year                  1,764,355     1,146,100   2,181,172
CASH AND CASH EQUIVALENTS,
 end of year                       $3,886,874    $1,764,355  $1,146,100

SUPPLEMENTAL CASH FLOW 
 INFORMATION:
 Cash paid for:
  Interest on deposits and
   other borrowings                $6,909,130    $7,049,843  $5,964,138

  Income taxes                     $1,668,000    $1,185,000  $  975,000

SUPPLEMENTAL NONCASH INVESTING 
 AND FINANCING ACTIVITIES:
  Transfer of loans to 
  repossessed assets               $  126,576    $   33,878  $        0

  Change in unrealized net gain
   on securities available
   for sale, net of deferred 
   taxes                           $2,649,219     $  642,321  $  998,081

  Transfer of securities from 
   held to maturity to available
   for sale at fair value          $        0    $27,758,607  $        0


The accompanying notes are an integral part of these statements.





                COMMUNITY FEDERAL BANCORP, INC.
                                
                                
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                
                  SEPTEMBER 30, 1997 and 1996
                                
                                
1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization, Nature of Operations, and Principles of
Consolidation

Community Federal Bancorp, Inc. (the "Company") was incorporated
in the State of Delaware in November 1995, for the purpose of
becoming a holding company to own all of the outstanding capital
stock of Community Federal Savings Bank (the "Bank") upon the
Bank's conversion from a federally chartered mutual savings
association to a federally chartered stock savings association
(the "Conversion").  The Bank was converted to a federally
chartered stock organization in November 1995, through the sale
of all of its common stock to the Company.  The accounting for
the conversion is in a manner similar to that utilized in a
pooling of interests (see Note 18).

The accompanying consolidated financial statements include the
accounts of the Company and the Bank.  All significant
intercompany balances and transactions have been eliminated in
consolidation.

The Bank is primarily engaged in the business of obtaining funds
in the form of various savings deposits products and investing
those funds in mortgage loans or single family real estate and,
to a lesser extent, in consumer and commercial loans.  The Bank
operates from two offices in Tupelo, Mississippi, and originates
the majority of its loans in its market area.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and 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 those estimates.

Cash and Cash Equivalents

Cash and cash equivalents of $3,886,874 and $1,764,355 at
September 30, 1997 and 1996, respectively, consist of cash on
hand of $797,092 and $155,000 at September 30, 1997 and 1996,
respectively, and cash due from and on deposit with other
financial institutions of $3,089,782 and $1,609,355 at
September 30, 1997 and 1996, respectively.  The cash due from and
on deposit with other financial institutions primarily consisted
of an interest-bearing account with the Federal Home Loan Bank
("FHLB").

Securities

Securities classified as securities held to maturity are carried
at amortized cost, adjusted for amortization of premiums and
accretion of discounts, using the level yield method over the
estimated remaining life.  The Company has the ability and
positive intent to hold these securities to maturity.

All securities not considered held to maturity have been
designated as available for sale and are carried at fair value. 
The unrealized difference between amortized cost and fair value
on securities available for sale is excluded from earnings and is
reported, net of deferred taxes, as a component of equity.
Securities available for sale includes securities that Management
intends to use as part of its asset/liability management
strategy; or that may be sold in response to changes in interest
rates, changes in prepayment risk, liquidity needs, or for other
purposes.

The Company's available for sale portfolio consists of U.S.
Government and federal agencies, mortgage-backed and related
securities, and equity securities.  Also included in securities
available for sale is FHLB common stock, which is carried at cost
and evaluated for impairment, as it is considered a restricted
investment security.

Amortization of premium and accretion of discount are computed
under the interest method.  The adjusted cost of the specific
security sold is used to compute gain or loss on the sale of
securities.

Loans Receivable

Loans receivable are stated at their unpaid principal balances,
less the allowance for loan losses and net deferred loan
origination fees and discounts.

The Bank ceases accrual of interest on substantially all loans
when payment on a loan is in excess of 90 days past due.  An
allowance is established by a charge to interest income equal to
all interest previously accrued but unpaid.  Interest income is
subsequently recognized only to the extent that cash payments are
received until, in management's judgment, the borrower's ability
to make periodic interest and principal payments is in accordance
with the terms of the loan agreement; in which case the loan is
returned to accrual status.

The allowance for loan losses is increased by charges to income
and decreased by loan charge-offs, net of recoveries.  The
allowance for loan losses is maintained at a level which
management considers adequate to absorb losses inherent in the
loan portfolio at each reporting date.  Management's estimation
of this amount includes a review of all loans for which full
collectibility is not reasonably assured and considers, among
other factors, prior years' loss experience, economic conditions,
distribution of portfolio loans by risk class, and the estimated
value of the underlying collateral.  Though management believes
the allowance for loan losses to be adequate, ultimate losses may
vary from their estimates.  However, estimates are reviewed
periodically and, as adjustments become necessary, they are
reported in earnings in periods in which they become known.

The Bank's loan portfolio consists primarily of one-to-four
family residential mortgages and consumer installment loans,
which are exempt from SFAS No. 114 when evaluated collectively
for impairment as is done by the Bank, the Bank had no loans
designated as impaired under the provisions of SFAS No. 114 at
September 30, 1997 and 1996.

Loan Origination Fees and Related Costs

Loan fees and certain direct costs of loan origination are
deferred, and the net fee or cost is recognized as an adjustment
to interest income using the level yield method over the
contractual life of the loan.

Real Estate Owned

Real estate owned consists of properties sold under mortgage
loans to facilitate sales of foreclosed properties.  The
recognition of gains and losses on the sale of real estate owned
is dependent upon whether the nature and terms of the sale and
future involvement of the Bank in the property meet certain
requirements.  If the transaction does not meet these
requirements, income recognition is deferred and recognized under
an alternative method in accordance with SFAS No. 66, Accounting
for Sales of Real Estate.

Real estate owned is carried at the lower of the recorded
investment in the property or the fair value of the property,
less estimated costs of disposition.  Any excess of the recorded
investment in the loan over the fair value of the underlying
property is charged to the allowance for loan losses at the time
of foreclosure.  Subsequent to foreclosure, real estate owned is
evaluated on an individual basis for changes in fair value. 
Declines in the fair value of the asset, less costs of
disposition below its carrying amount, result in a loss provision
to increase the valuation allowance account.  Increases in the
fair value of the asset, less costs of disposition above its
carrying amount, reduce the valuation allowance account, but not
below zero.  Increases or decreases in the valuation allowance
account are charged or credited to income.  Costs relating to
improvement of the property incurred subsequent to acquisition
are capitalized, whereas costs relating to the holding of
property are expensed.  The amounts expensed in fiscal years
1997, 1996, and 1995 were $521, $8,929, and $457, respectively. 
The amounts capitalized in 1997, 1996, and 1995, were $7,064,
$2,031, and $0, respectively.

Premises and Equipment

Land is carried at cost.  Buildings, furniture, fixtures, and
equipment are carried at cost, less accumulated depreciation. 
Buildings, furniture, fixtures, and equipment are depreciated
using the straight-line or accelerated methods over the estimated
useful lives of the assets.  The estimated useful lives for
furniture, fixtures, and equipment range from 3 to 20 years and
for buildings and improvements range from 10 to 40 years.

Income Taxes

Provisions for income taxes are based on taxes payable or
refundable for the current year (after exclusion of nontaxable
income) and deferred income taxes on temporary differences
between the tax bases of assets and liabilities and their
reported amounts in the financial statements.  Deferred tax
assets and liabilities are included in the financial statements
at currently enacted income tax rates applicable to the period in
which the deferred tax assets are enacted, deferred tax assets
and liabilities are adjusted through the provision for income
taxes in the period of enactment.

Pending Accounting Pronouncements

In February 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 129, Disclosure of Information About
Capital Structure.  This Statement establishes standards for
disclosing information about an entity's capital structure.  It
applies to all entities.  This Statement continues the previous
requirements to disclose certain information about an entity's
capital structure found in Accounting Principles Board ("APB")
Opinions No. 10, Omnibus Opinion--1996, and APB No. 15, Earnings
Per Share, and SFAS No. 47, Disclosure of Long-Term Obligations,
for entities that were subject to the requirements of those
standards.  SFAS No. 129 eliminates the exemption of nonpublic
entities from certain disclosure requirements of APB No. 15 as
provided by SFAS No. 21, Suspension of the Reporting of Earnings
Per Share and Segment Information by Nonpublic Enterprises.  It
supersedes specific disclosure requirements of APB Nos. 10 and 15
and SFAS No. 47 and consolidates them in this Statement for ease
of retrieval and for greater visibility to nonpublic entities. 
SFAS No. 129 is effective for financial statements for periods
ending after December 15, 1997.  It contains no change in
disclosure requirements for entities that were previously subject
to the requirements of APB Nos. 10 and 15 and SFAS No. 47.

In June 1997, the FASB issued SFAS No. 130, Reporting of
Comprehensive Income.  This Statement established standards for
reporting and display of comprehensive income and its components
(revenues, expenses, gains, and losses) in a full set of
financial statements.  This Statement also requires that all
items that are required to be recognized under accounting
standards as components of comprehensive income, be reported in
financial statements and are displayed with the same prominence
as other financial statements.  This Statement is effective for
fiscal years beginning after December 15, 1997.  Earlier
application is permitted.  Reclassification of financial
statements for earlier periods provided for comparative purposes
is required.

In June 1997, FASB issued SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information.  This
Statement establishes standards for the way that public business
enterprises report information about operating segments in annual
financial statements and requires that those enterprises report
selected information about operating segments in interim
financial reports issued to stockholders.  This Statement also
establishes standards for related disclosures about products and
services, geographic areas, and major customers.  This Statement
requires the reporting of financial and descriptive information
about an enterprise's reportable operating segments.  This
Statement is effective for financial statements for periods
beginning after December 15, 1997.  In the initial year of
application comparative information for earlier years is to be
restated.

Management believes there will be no material effect on the
consolidated financial statements from the adoption of these
pronouncements.

Earnings Per Share

Earnings per share are computed based on the weighted average
number of shares of common stock and common stock equivalents
outstanding during the period.  Common stock equivalents for
earnings per share include the number of shares that could have
been purchased with the proceeds from the exercise of the options
related to the Management Recognition ("MRP") and the Incentive
Stock Option ("Stock Option") plans, based on the average market
price of common stock during the period.  All allocated shares
held in the Employee Stock Ownership Plan ("ESOP") Trust are
considered outstanding for earnings per share calculations.

Earnings per share for the period from March 25, 1996, the date
of Conversion, to September 30, 1996, have been computed based on
the earnings during that period and on the weighted average
number of shares of common stock and common stock equivalents
outstanding during that period.  The weighted average number of
shares used for the period from March 25, 1996 through
September 30, 1996, was 4,265,638.  If earnings per share had
been computed on a retroactive basis for the year ended
September 30, 1996, recognizing earnings for the entire year,
earnings per share would have been $.50 per share as compared to
the $.27 per share reported in the accompanying consolidated
statements of income.

In February 1997, the FASB issued SFAS No. 128, Earnings Per
Share.  SFAS No. 128 establishes standards for computing and
presenting earnings per share ("EPS") and applies to entities
with publicly held common stock or potential common stock.  This
Statement simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15, Earnings Per Share,
and makes them comparable to international EPS standards.  It
replaces the presentation of primary EPS with a presentation of
basic EPS and requires dual presentation of basic and diluted EPS
on the face of the income statement for all entities with complex
capital structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator of
the basic EPS computation to the numerator and denominator of the
diluted computation.

This Statement is effective for financial statements issued for
periods ending after December 15, 1997, including interim
periods; earlier application is not permitted.  This Statement
requires restatement of all prior-period EPS data presented.  The
Company will adopt the Statement in fiscal 1998.

Assuming the adoption of SFAS No. 128 had been consummated at
March 25, 1996, the date of conversion, the earnings per share
amounts for 1997 and 1996, on a pro forma basis, would have been
as follows:



                                                        Per Share
                                   Income     Shares      Amount

1997:
Net income                       $3,036,253               
Basic earnings per share:
   Income available to common 
     shareholders                 3,036,253  4,215,679    $.72
Dilutive securities:
   Management recognition 
     plan shares                          0     86,555
   Stock option plan shares               0     51,151
Dilutive earnings per share:
   Income available to common
     shareholders plus assumed
     conversions                 $3,036,253  4,353,385    $.70
1996:
Net income                       $1,152,177
Basic and dilutive earnings 
 per share:
   Income available to common
     shareholders                $1,152,177  4,265,638    $.27


Financial Statement Reclassification

The financial statements for prior years have been reclassified
in order to conform with the 1997 financial statement
presentation.  The reclassification did not change total assets
or net income in the prior year.

2.     SECURITIES AVAILABLE FOR SALE

The amortized cost, gross unrealized gains and losses, and
estimated fair value of securities available for sale at
September 30, 1997 and 1996 are summarized as follows:


                                           1997
                                       Gross      Gross
                       Amortized     Unrealized  Unrealized   Estimated
                          Cost          Gains      Losses     Fair Value
U.S. government and 
 federal agencies
 bonds and notes      $ 8,000,000  $    3,720   $ (25,650)   $ 7,978,070
State and local
 bonds and notes          682,787           0     (73,962)       608,825
Total bonds and
 notes                  8,682,787       3,720     (99,612)     8,586,895
Mortgage-backed and
 related securities:
GNMA certificates       3,159,433      39,251           0      3,198,684
FHLMC certificates      9,033,574     140,292           0      9,173,866
FNMA certificates      11,257,885      13,514           0     11,271,399
Collateralized
 mortgage obligations  26,318,085      47,288    (140,603)    26,224,770
Total mortgage-
 backed and related
 securities            49,768,977     240,345    (140,603)    49,868,719
Equity securities:
FNMA preferred          1,010,000      32,400           0      1,042,400
FHLMC common              457,927   5,935,838           0      6,393,765
FNMA common               734,975   3,194,225           0      3,929,200
FHLB common             1,319,500           0           0      1,319,500
Total equity 
 securities             3,522,402   9,162,463           0     12,684,865
Mutual funds            2,828,377       7,422           0      2,835,799
Total                 $64,802,543  $9,413,950   $(240,215)   $73,976,278



                                          1996
                                        Gross      Gross
                       Amortized     Unrealized  Unrealized   Estimated
                          Cost          Gains      Losses     Fair Value
U.S. government and 
 federal agencies
 bonds and notes      $14,989,610  $    1,620   $ (121,030)  $14,870,200
State and local
 bonds and notes        1,121,920           0     (158,380)      963,540
Total bonds and
 notes                 16,111,530       1,620     (279,410)   15,833,740
Mortgage-backed and
 related securities:
GNMA certificates       1,015,328      27,161            0     1,042,489
FHLMC certificates     14,118,927      99,323     (179,651)   14,038,599
FNMA certificates       8,759,029       2,789     (156,029)    8,605,789
Collateralized
 mortgage obligations  23,196,504          54     (665,451)   22,531,107
Total mortgage-
 backed and related
 securities            47,089,788     129,327   (1,001,131)   46,217,984
Equity securities:
FNMA preferred          1,010,000           0      (10,000)    1,000,000
FHLMC preferred           500,000       7,400            0       507,400
FHLMC common              457,926   4,038,678            0     4,496,604
FNMA common               734,975   2,159,257            0     2,894,232
FHLB common             1,244,500           0            0     1,244,500
US League common           55,880      45,496            0       101,376
Total equity 
 securities             4,003,281   6,250,831      (10,000)   10,244,112
Mutual funds            2,828,377           0      (12,429)    2,815,948
Total                 $70,032,976  $6,381,778  $(1,302,970)  $75,111,784



The amortized cost and fair value of debt securities available
for sale by contractual maturity are shown below.  Expected
maturities may differ from contractual maturities because issuers
may have the right to call or prepay obligations with or without
call or prepayment penalties.

                                  September 30, 1997
                              Amortized     Estimated
                                 Cost       Fair Value

Due in one year or less      $ 4,000,000   $ 3,974,350
Due from one to five years   $14,094,456    14,071,505
Due from five to ten years     9,275,085     9,274,463
Due after ten years           31,082,223    31,135,296
                              58,451,764    58,455,614
Equity securities              3,522,402    12,684,865
Mutual funds                   2,828,377     2,835,799
Total                        $64,802,543   $73,976,278


Gross realized gains on the sale of securities available for sale
totaled $43,468 and $63,397, and gross realized losses totaled
$41,501 and $8,559 at September 30, 1997 and 1996, respectively.

3.  SECURITIES HELD TO MATURITY

The amortized cost, gross unrealized gains and losses, and
estimated fair values of securities designated as held to
maturity at September 30, 1997 and 1996 are summarized as
follows.

     
                                         Gross      Gross      
                           Amortized  Unrealized  Unrealized  Estimated
1997:                         Cost       Gains      Losses    Fair Value
Collateralized mortgage 
  obligations             $4,156,732       0      $(34,507)  $4,122,225

1996:
Collateralized mortgage
  obligations             $4,755,702       0     $(130,397)  $4,625,305



Collateralized mortgage obligations designated as held to
maturity at September 30, 1997 bear interest at fixed and
adjustable rates ranging from 5.5% to 7.0%.  The collateralized
mortgage obligations contractually mature at various dates
ranging from April 2001 to July 2023.

The carrying value and fair value of debt securities held to
maturity by contractual maturity are shown below.  Expected
maturities may differ from contractual maturities because issuers
may have the right to call or prepay obligations with or without
call or prepayment penalties.


                                  September 30, 1997
                                Carrying    Estimated
                                  Value     Fair Value

Due from one to five years     $1,002,152   $  993,480
Due from five to ten years      1,782,312    1,767,303
Due after ten years             1,372,268    1,361,442
                               $4,156,732   $4,122,225


4.  LOANS RECEIVABLE, NET

Loans receivable at September 30, 1997 and 1996 are summarized as
follows:



                                          1997           1996
Mortgage loans:
 Principal balances:
  Secured by 1-4 family residences    $108,628,196   $102,020,850 
  Secured by multifamily and
    nonresidential properties           6,081,926      7,165,559
  Construction loans                    3,147,984      3,336,971
                                      117,858,106    112,523,380

  Less:
    Undisbursed portion of 
      mortgage loans                    1,388,223      1,355,841
    Unearned discounts and net
      deferred loan origination fees      437,937        428,466
Total mortgage loans                  116,031,946    110,739,073

Commercial loans                        7,332,223      3,253,228

Consumer loans:
 Principal balances:
  Loans secured by automobiles            815,324      1,318,211
  Loans secured by savings accounts       981,703      1,369,201
  Other                                 2,763,762      1,523,172
Total loans                           127,924,958    118,202,885
  Less allowance for loan losses          590,000        572,000
Loans receivable, net                $127,334,958   $117,630,885



As a savings bank, the Bank has a credit concentration in 1-4
family residential real estate mortgage loans.  Substantially all
of the Bank's 1-4 family residential mortgage loan customers are
located in its trade area of Lee, Itawamba, Prentiss, and
Pontotoc Counties, Mississippi, which have a local unemployment
rate at or slightly below the average for the state.  Although
the Bank has generally conservative underwriting standards,
including a collateral policy calling for low loan to collateral
values, the ability of its borrowers to meet their residential
mortgage obligations is dependent upon local economic conditions.

In the normal course of business, loans are made to officers,
directors, and employees of the Company and subsidiary.  These
loans are made on substantially the same terms, including
interest rates and collateral, as those prevailing for comparable
transactions with others.  Such loans do not involve more than
the normal risk of collectibility, nor do they present other
unfavorable features.  As of September 30, 1997 and 1996,
$2,081,135 and $1,666,839, respectively, of these loans were
outstanding.  During fiscal year 1997, $1,078,541 of new loans
and advances were made, principal repayments totaled $664,250.

Activity in the allowance for loan losses is summarized as
follows:

                                  1997       1996       1995

Balance at beginning of year    $572,000   $552,000   $522,000
Provision charged to income       20,000     20,000     30,000
Charge-offs                        2,000          0          0
Recoveries                             0          0          0
Balance at end of year          $590,000   $572,000   $552,000



The Bank had loans on nonaccrual status at September 30, 1997 and
1996 in the amounts of approximately $969,000 and $717,000,
respectively.  Interest income forgone on nonaccrual loans was
approximately $50,000 and $38,000 for fiscal years 1997 and 1996,
respectively.

5.    LOAN SERVICING

In 1984, the Bank sold first mortgage single-family residential
loans to the Federal National Mortgage Association ("FNMA") with
full recourse which are not included in the accompanying
statements of financial condition.  The total principal balances
outstanding under these mortgages were $1,518,887, $2,212,865,
and $2,932,955 at September 30, 1997, 1996, and 1995,
respectively.  Custodial escrow balances maintained in connection
with the foregoing loan servicing were $37,115, $45,805, and
$106,938, at September 30, 1997, 1996, and 1995, respectively. 
In the event of default, the Bank must pay the principal and
interest under default to FNMA.  The Bank would bear the burden
of foreclosure losses in the event of default.  Because of the
Bank's credit policies, foreclosure losses in the event of
default have not been significant and losses under this recourse
obligation are not expected to be significant.  At September 30,
1997, none of these loans were past due 90 days or more. 
Accordingly, no provision has been made in the financial
statements for any future losses that may result from this
recourse arrangement.

  6.  ACCRUED INTEREST AND DIVIDENDS RECEIVABLE

Accrued interest and dividends receivable at September 30, 1997
and 1996 are as follows:


                                      1997        1996

Securities available for sale     $  472,199  $  641,277
Securities held to maturity           21,504       2,276
Loans receivable                     729,505     683,557
Other                                 16,569      16,837
    Total                         $1,239,777  $1,343,947




7.    PREMISES AND EQUIPMENT, NET

Premises and equipment at September 30, 1997 and 1996 are
summarized as follows:

                                        1997          1996

Land                                $1,322,912   $   137,068
Building and improvements            1,847,918       579,456
Furniture, fixtures, and equipment     715,273       377,146
     Total                           3,886,103     1,093,670
Less accumulated depreciation          567,542       486,403
Premises and equipment, net         $3,318,561   $   607,267



8.    DEPOSITS

Deposits at September 30, 1997 and 1996, the related ranges of
interest rates payable for deposits at September 30, 1997, and
the weighted average rates paid during 1997 are summarized as
follows:



                                       1997                 1996
                                 Amount    Percent    Amount    Percent

NOW accounts, 2.5% to 5.00%    13,391,564   10.09   12,519,798   9.50
Savings accounts, 2.75%         6,741,456    5.08    6,873,038   5.22
                               20,133,020   15.17   19,392,836  14.72

Certificates of deposit:
4% to 4.99%                    15,965,857   12.03   20,952,130  15.90
5% to 5.99%                    61,189,886   46.11   67,348,478  51.12
6% to 6.99%                    35,322,441   26.61   23,945,222  18.18
7% to 7.99%                       107,186     .08      101,767   0.08
                              112,585,370   84.83  112,347,597  85.28
   Total                      132,718,390  100.00  131,740,433 100.00



The aggregate amounts of jumbo certificates of deposit with a
minimum balance of $100,000 were approximately $37,353,716 and
$33,504,337 at September 30, 1997 and 1996, respectively. 
Deposits in excess of $100,000 are not federally insured.

Scheduled maturities of certificates of deposit at September 30,
1997 are as follows:



Years ending September 30:
1998                         $ 85,785,377
1999                           17,536,297
2000                            5,713,048
2001                            3,550,648
2002                                    0
       Total                 $112,585,370



Interest expense on deposits for the years ended September 30,
1997, 1996, and 1995 is summarized as follows:


                              1997          1996          1995

Savings accounts          $  187,628    $  260,564    $  246,963
NOW accounts                 402,199       360,598       302,300
Certificates of deposit    6,060,134     6,308,962     5,570,083
    Total                 $6,649,961    $6,930,124    $6,119,346



9.    COMPENSATION AND EMPLOYEE BENEFITS

Employee Stock Ownership Plan

In connection with the Conversion, the Bank established an ESOP
for eligible employees.  The ESOP purchased 363,200 shares of the
Company's common stock with the proceeds of a $3,632,000 note
payable from the Bank to the Company and secured by the Common
Stock owned by the ESOP.  Interest and principal under the note
are due in quarterly installments through June 2013; interest is
payable quarterly based on the average daily outstanding balance
of principal at the rate of 8.25% per annum.  Impact of this
financing is eliminated in the consolidated financial statement
presentation.

Expense related to the ESOP for the years ended September 30,
1997 and 1996 was approximately $348,000 and $220,000,
respectively.  Unearned compensation related to the ESOP was
approximately $3,240,000 and $3,464,000 at September 30, 1997 and
1996, respectively, and is shown as a reduction of stockholders'
equity in the accompanying consolidated statements of financial
condition.  Unearned compensation is amortized into compensation
expense based on employee services rendered in relation to shares
which are committed to be released.

Management Recognition Plan

During fiscal 1997, the Bank established a MRP which purchased
174,450 shares of the Company's common stock on the open market
subsequent to the Conversion.  The MRP provides for awards of
common stock to directors and officers of the Bank.  The
aggregate fair market value of the shares purchased by the MRP is
considered unearned compensation at the time of purchase and
compensation is earned ratably over the stipulated vesting
period.  The expense related to the MRP was approximately
$307,000 for 1997.  Unearned compensation related to the MRP was
approximately $2,758,000 and is shown as a reduction to
stockholders' equity in the accompanying consolidated statements
of financial condition.

Stock Option Plan

During fiscal 1997, the Company established a stock option plan
to provide incentive stock options to employees and non-incentive
stock options to non- employee directors.  The Company accounts
for the Plan under the provisions of Accounting Principles Board
Opinion ("APB") No. 25, Accounting for Stock Issued to Employees
(see Note 10).

Defined Benefit Pension Plan

The Bank has a qualified, noncontributory defined benefit pension
plan covering substantially all its employees.  Benefits are
based on each employee's years of service up to a maximum of 40
years and the average of that employee's compensation for the
highest five consecutive calendar years out of the last ten years
prior to retirement.  An employee becomes fully vested upon
completion of five years of qualifying service.  The Bank's
funding policy is to make annual contributions equal to or
greater than the required minimum under ERISA.  The funds are
primarily invested in short-term certificates of deposit with the
Bank.

The following sets forth the plan's funded status and amounts
recognized in the Bank's statement of financial condition at
September 30, 1997 and 1996:


                                            1997        1996
Actuarial present value of 
  benefit obligations:
Accumulated benefit 
  obligation:
     Vested                             $2,011,979   $1,900,209
     Nonvested                              55,209       49,085
Total                                    2,067,188    1,949,294
Additional benefit based on 
  estimated future salary levels           567,359      472,917
Projected benefit obligation for
  service rendered to date               2,643,547    2,422,211
Plan assets at fair market value         2,254,819    2,018,315
Unfunded projected benefit obligation     (388,728)    (403,896)
Unrecognized net loss from past
  experience different from that
  assumed and effects of changes in
  assumptions                              364,104      442,654
Unrecognized net transition obligation
  (asset from adoption of SFAS No. 87)
   being amortized over 20 years          (109,181)    (118,279)
Unfunded pension cost liability
  (included in other liabilities)       $  133,805   $   79,521



The components of net periodic pension expense for the years
ended September 30, 1997, 1996, and 1995 are as follows:




                                       1997      1996      1995
Service cost--benefits earned
 during the period                  $ 63,033  $ 57,591  $ 64,357
Interest cost on the projected
 benefit obligation                  156,320   147,926   139,246
Actual return on plan assets        (200,378) (120,002)  (71,001)
Net asset gain (loss) during
 the period deferred for 
 later recognition                     9,779    13,507    14,485
Amortization of unrecognized 
 net obligation                       (9,098)   (9,098)   (9,099)
Net periodic pension cost           $ 19,656  $ 89,924  $137,988

Assumptions used to develop 
 the net periodic pension 
 cost were:
    Weighted average discount
      rate                              6.50%    6.50%     6.50%
    Weighted average rate of
      compensation increase             5.00     5.00      5.00
    Weighted average expected
      long-term rate of return
      on plan assets                    4.00     4.00      4.00



Directors' Retirement Plan

During fiscal 1993, the Bank established the Directors'
Retirement Plan ("DRP") whereby directors or their beneficiaries
will be provided specific amounts of quarterly retirement
benefits for a period of ten years following retirement. 
Directors are eligible under the plan upon the completion of ten
years of service.  The related compensation expense for the DRP
was $33,199, $52,791, and $42,177, for fiscal years 1997, 1996,
and 1995, respectively.  The related accrued compensation is
included in "accrued expenses and other liabilities" in the
accompanying consolidated statements of financial condition.

For fiscal year 1997 and 1996, the projected benefit obligations
related to the DRP were approximately $496,000 and $483,000; the
accumulated benefit obligations, which were accrued for and
included in "accrued expenses and other liabilities," were
approximately $325,000 and $309,000; and the service costs were
approximately $33,000 and $53,000, respectively.  The weighted
average discount rate used was 6.5% for 1997 and 1996.

10.   STOCK-BASED COMPENSATION PLANS

Effective July 1, 1996, the Company adopted SFAS No. 123,
Accounting for Stock-Based Compensation.  This Statement
establishes financial accounting and reporting standards for
stock-based employee compensation plans.  Those plans include all
arrangements by which employees receive shares of stock or other
equity instruments of the employer or the employer incurs
liabilities to employees in amounts based on the price of the
employer's stock.  Examples are stock purchase plans, stock
options, restricted stock and stock appreciation rights.  The
accounting requirements of this Statement are effective for
transactions entered into in fiscal years that begin after
December 15, 1995.

The Company has a stockholder approved Option Plan.  The Option
Plan provides for the grant of incentive stock options ("ISO") to
employees and nonincentive stock options ("non-ISO") to
non-employee directors.  The Company accounts for this plan under
APB No. 25, under which no compensation cost has been recognized.

The Company may grant options up to 462,875 shares under the
Option Plan and has granted options outstanding of 440,859 shares
through September 30, 1997.  Under the Option Plan, the option
exercise price equals the stock's market price at the date of
grant.  The options vest 20% per year and become exercisable upon
the participant's completion of each of five years of service.

Had compensation costs for these plans been determined consistent
with SFAS No. 123, the Company's net income and earnings per
share would have been reduced to the following pro forma amounts
for the year ended September 30, 1997:


          Net income:
             As reported          $3,036,523
             Pro forma             2,745,844

          Earnings per share:
             As reported                $.70
             Pro forma                   .63


Because the SFAS No. 123 method of accounting has not been
applied to options granted prior to March 25, 1996, the resulting
pro forma compensation costs may not be representative of that to
be expected in future years.

At September 30, 1997, unearned compensation related to the
Option Plan has not been recorded, as the Company has not
purchased shares of the Company's common stock to fund the Option
Plan Trust.  A summary of the status of the Company's stock
option plan at September 30, 1997 and the changes during the year
then ended is as follows:

                                     Weighted
                                      Average       Option
                                     Exercise        Price
                             Shares    Price       Per Share
Outstanding at beginning 
  of year                        0    
    Granted                440,859    $15.42    $15.19--$15.94
    Forfeitures                  0
    Exercised                    0
Outstanding at end 
  of year                  440,859    $15.42    $15.19--$15.94

Exercisable at end
  of year                        0    $ 0.00 

Weighted average fair
  value of the options
  granted                    $6.92


The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option pricing model with the
following weighted-average assumptions used for grants in 1997: 
risk-free interest rates of 6.70% and 6.76%; expected life of the
options is 20% per year over the next five years and expected
volatility and dividend yields of 21% and 30%, respectively.

11.   INCOME TAXES

The provisions for income taxes for the years ended September 30,
1997, 1996, and 199 were as follows:


                   1997          1996         1995
Current:
  Federal      $1,500,326    $1,324,389   $  984,313
  State           156,393       140,962      151,387
                1,656,719     1,465,351    1,135,700
Deferred           71,401      (281,057)       8,634
      Total    $1,728,120    $1,184,294   $1,144,334 


The differences between the provisions for income taxes and the
amounts computed by applying the statutory federal income tax
rate of 34% to income before income taxes at September 30, 1997,
1996, and 1995 were as follows:



                                     1997         1996        1995
Expected income tax expense
 at federal tax rate             $1,619,979   $1,133,068   $1,080,874
Increase (decrease) resulting 
 from:
   State income tax, net            107,588       75,840       99,580
   Dividend received deduction      (55,452)     (47,997)     (35,425)
   Tax-exempt interest income             0       (5,798)      (8,500)
   Other                             56,005       29,181        7,805
                                 $1,728,120   $1,184,294   $1,144,334

Effective income tax rate               36%          35%          36%


Temporary differences between the financial statement carrying
amounts and tax bases of assets and liabilities that give rise to
significant portions of the net deferred tax liability as of
September 30, 1997 and 1996 relate to the following:


                                            1997          1996

SAIF assessment                        $         0   $   331,911
Book allowance for loan loss               224,200       217,360
Retirement plan                            123,580       118,640
Accrued bonuses                             54,792        42,066
Employee benefit plans                     201,805             0
Deferred loan fees and costs, net                0         4,848
Other                                       50,902        25,775
Deferred tax asset                         655,279       740,600

Unrealized gain on securities 
  available for sale                    (3,486,038)   (2,040,330)
Tax bad debt reserve in excess 
  of base year                            (324,778)     (389,734)
FHLB dividends                            (129,766)     (101,266)
Accretion of bond discount                 (37,667)      (20,302)
Deferred loan fees and costs, net          (49,857)            0
Other                                      (37,319)      (82,005)
Deferred tax liability                  (4,065,425)   (2,633,637)
Net deferred tax liability             $(3,410,146)  $(1,893,037)


Thrift institutions, in determining taxable income, had
historically been allowed special bad debt deductions based on
specified experience formulae or on a percentage of taxable
income before such deductions.  On August 2, 1996, Congress
passed the Small Business Job Protection Act that, among other
things, repealed the tax bad debt reserve method for thrifts
effective for taxable years beginning after December 31, 1995. 
As a result, thrifts must recapture into taxable income the
amount of their post-1987 tax bad debt reserves over a six-year
period beginning after 1995.  At September 30, 1997, the Bank's
post-1987 tax bad debt reserve, subject to recapture, was
approximately $855,000.  The Bank recaptured approximately
$171,000 of this reserve into taxable income in the current year. 
The recapture did not have any effect on the Bank's net income
because the related tax expense has already been accrued.

Because of such repeal, thrifts such as the Bank may only use the
same tax bad debt reserve that is allowed for commercial banks. 
Accordingly, a thrift with assets of $500 million or less may
only add to its tax bad debt reserves based upon its moving
six-year average experience of actual loan losses (i.e., the
experience method).

The portion of a thrift's tax bad debt reserve that is not
recaptured under this new law is only subject to recapture at a
later date under certain circumstances.  These include stock
repurchases, redemptions by the thrift or if the thrift converts
to a type of institution (such as a credit union) that is not
considered a commercial bank for tax purposes.  However, no
further recapture would be required if the thrift converted to a
commercial bank charter or was acquired by a commercial bank. 
The Bank does not anticipate engaging in any transactions at this
time that would require the recapture of its pre-1988 tax bad
debt reserves of approximately $4,650,000.

12.   FEDERAL HOME LOAN BANK ADVANCES

The Company is required by its blanket floating lien agreement
with the Federal Home Loan Bank ("FHLB") to pledge its portfolio
of first mortgage collateral, demand deposit accounts, capital
stock, and certain other assets.  At of September 30, 1997, the
Company had $18,282,186 in FHLB advances outstanding at a
weighted average variable rate of 5.93%.

13.   REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies.  Failure to meet
minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Bank's
financial statements.  Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must
meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting
practices.  The Bank's capital amounts and classifications 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 Bank to maintain minimum amounts and ratios
(set forth in the table which follows) of total and Tier 1
capital (as defined in the regulations) to risk-weighted assets
(as defined), and of Tier 1 capital (as defined) to average
assets (as defined).  Management believes, as of September 30,
1997 and 1996, that the Bank meets all capital adequacy
requirements to which it is subject.

As of September 30, 1997 and 1996, the most recent notification
from the regulatory authorities categorized the Bank as well
capitalized under the regulatory framework for prompt corrective
action.  To be categorized as well capitalized, the Bank must
maintain minimum total risk-based, Tier 1 risk-based, Tier 1
leverage ratios as set forth in the table which follows.

Actual capital amounts and ratios are presented in the table
below for the Bank:

                                               
                                                     To Be Well
                                                  Capitalized Under
                                    For Capital   Prompt corrective
                       Actual    Adequacy Purpose  Action Provision      
                    Amount  Ratio  Amount  Ratio    Amount   Ratio
                     ($)     (%)     ($)     (%)      ($)      (%)
September 30,1997
                   
Total Capital
 (To risk weighted 
  Assets)           43,555   47.5    7,335   8.0     9,169     10.0

Tier 1 (core)
  capital (to risk
  weighted assets)  42,965   46.9     N/A     N/A     5,502     6.0  

Tier 1 (core)
  capital (to 
  adjusted total
  assets)           42,965   21.5    6,000    3.0     9,999     5.0 

Tangible Capital
 (to adjusted 
  total assets)     42,965   21.5    3,000    1.5       N/A      N/A  

September 30, 1996

Total capital
 (to risk weighted 
  assets)           42,406   50.8     6,679   8.0      8,349    10.0 

Tier 1 (core)
  capital (to risk
  weighted assets)  41,834   50.1      N/A    N/A      5,009     6.0   

Tier 1 (core)
  capital (to 
  adjusted total     
  assets)           41,834   22.8      5,496   3.0     9,160     5.0  

Tangible Capital
 (to adjusted 
  total assets)     41,834   22.8      2,748   1.5      N/A       N/A


The following table is a reconciliation of the Bank's
stockholder's equity to tangible, Tier 1, and risk-based capital
as required by the OTS:

                                      1997       1996

Stockholder's equity               $ 48,604   $ 45,163
Unrealized gain on securities
 available for sale                  (5,639)    (3,329)
Tangible and Tier 1 capital          42,965     41,834
Allowance for loan losses               590        572
Total risk based capital           $ 43,555   $ 42,406

Total assets                       $205,627   $186,538
Adjusted total assets               199,988    183,209
Total risk weighted assets           91,693     83,487


The Company's principal source of funds for dividend payments is
dividends from the Bank.  Pursuant to OTS regulations, an
institution that exceeds all fully phased-in capital requirements
before and after a proposed capital distribution and has not been
advised by the OTS that it is in need of more than the normal
supervision can, after prior notice but without the approval of
the OTS, make capital distributions during a calendar year equal
to the greater of (i) 100% of its net income to date during the
calendar year plus the amount that would reduce by one-half its
"surplus capital ratio" (the excess capital over its fully
phased-in capital requirements) at the beginning of the calendar
year, or (ii) 75% of its net income over the most recent
four-quarter period.  Any additional capital distributions
require prior regulatory approval.

14.   COMMITMENTS AND CONTINGENCIES

Loan Commitments

At September 30, 1997, the Bank had outstanding commitments to
originate loans in the amount of $2,955,025.  Of these
outstanding amounts, commitments of $1,106,600 were at fixed
rates ranging between 7.25% and 8.25%; terms for these
outstanding commitments are up to 360 days.  Commitments to
extend credit include exposure to some credit loss in the event
of nonperformance of the customer.  The Bank's credit policies
and procedures for credit commitments are the same as those for
extensions of credit that are recorded on the statement of
financial condition.

Litigation

The Company is a defendant in certain claims and legal actions
arising in the ordinary course of business.  In the opinion of
management, after consultation with legal counsel, the ultimate
disposition of these matters is not expected to have a material
adverse effect on the consolidated financial position of the
Company.

15.   INTEREST RATE SENSITIVITY

A portion of the Bank's interest-earning assets are long-term
fixed rate mortgage loans and mortgage-backed and related
securities (approximately 54%), while its principal source of
funds is savings deposits with maturities of three years or less
(approximately 91%).  Because of the short-term nature of the
savings deposits, their cost generally reflects returns currently
available in the market.  Accordingly, the savings deposits have
a high degree of interest rate sensitivity, while the mortgage
loan portfolio, to the extent of fixed rate loans, is relatively
fixed and has much less sensitivity to changes in current market
rates.  Although these conditions are somewhat mitigated by the
Bank's risk management strategies of selling certain long-term
fixed rate loans and plans to increase amounts of short-term
consumer loans originated, changes in market interest rates tend
to directly affect the level of net interest income.

At June 30, 1997, based on the most recent available information
provided by the Office of Thrift Supervision ("OTS"), it was
estimated, on an unaudited basis, that the Bank's net portfolio
value ("NPV") (the net present value of the Bank's cash flows
from assets, liabilities, and off-balance sheet items) would
decrease 6%, 13%, 20%, and 27% and increase 5%, 6%, 7%, and 11%
in the event of 1%, 2%, 3%, and 4% increases and decreases in
market interest rates, respectively.  These calculations indicate
that the Bank's NPV could be adversely affected by increases in
interest rates but could be favorably affected by decreases in
interest rates.  Computations of prospective effects of
hypothetical interest rate changes are based on numerous
assumptions, including relative levels of market interest rates,
prepayments, and deposit run-offs and should not be relied upon
as indicative of actual results.  Certain shortcomings are
inherent in such computations.  In order to mitigate its interest
rate risk, the Bank maintains substantial capital levels that
management believes are sufficient to sustain unfavorable
movements in market interest rates.

16.   FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, Disclosures About Fair Value of Financial
Instruments, requires disclosure of fair value information about
financial instruments, whether or not recognized in the statement
of condition, for which it is practicable to estimate that value. 
In cases where quoted market prices are not available, fair
values are based on estimates using present value or other
valuation techniques.  Those techniques are significantly
affected by the assumptions used, including the discount rate and
estimates of future cash flows.  In that regard, the derived fair
value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in
immediate settlement of the instrument.  The use of different
market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.  Also, the
fair value estimates presented herein are based on pertinent
information available to Management as of September 30, 1997. 
Such amounts have not been comprehensively revalued for purposes
of these financial statements since those dates and, therefore,
current estimates of fair value may differ significantly from the
amounts presented herein.

The following methods and assumptions were used by the Company in
estimating its fair values disclosures for financial instruments:

Investment Securities

Fair values for investment securities are primarily based on
quoted market prices.  If a quoted market price is not available,
fair value is estimated using market prices for similar
securities.

Loans

For equity lines and other loans with short-term or variable rate
characteristics, the carrying value reduced by an estimate for
credit losses inherent in the portfolio is a reasonable estimate
of fair value.  The fair value of all other loans is estimated by
discounting their future cash flows using interest rates
currently being offered for loans with similar terms, reduced by
an estimate of credit losses inherent in the portfolio.  The
discount rates used are commensurate with the interest rate and
prepayment risks involved for the various types of loans.

Deposits

The fair value disclosed for demand deposits (e.g., interest and
non-interest bearing demand, savings and money market savings),
are, as required by SFAS No. 107, equal to the amounts payable on
demand at the reporting date (i.e., their carrying amounts). 
Fair values for certificates of deposits are estimated using a
discounted cash flow calculation that applies interest rates
currently being offered on certificates to a schedule of
aggregated monthly maturities.

Commitments to Extend Credit

The value of these unrecognized financial instruments is
estimated based on the fee income associated with the commitments
which, in the absence of credit exposure, is considered to
approximate their settlement value.  As no significant credit
exposure exists and because such fee income is not material to
the Company's financial statements at September 30, 1997 and
1996, the fair value of these commitments is not material.

Many of the Company's assets and liabilities are short-term
financial instruments whose carrying amounts reported in the
statement of condition approximate their fair values.  These
items include cash and due from banks, interest-bearing bank
balances, interest receivable and payable, and similar assets. 
The estimated fair values of the Company's remaining on-balance
sheet financial instruments as of September 30, 1997 and 1996,
are summarized below:

                                1997                 1996
                         Carrying  Estimated  Carrying Estimated
                           Value   Fair Value   Value  Fair Value
Financial Assets:
Securities available
  for sale                 73,976    73,976    75,112    75,112
Securities held to
  maturity                  4,157     4,122     4,756     4,625
Loans, net                127,335   127,123   117,631   116,996
Financial Liabilities:
Deposits                  132,718   132,599   131,740   131,648


SFAS No. 107 excludes certain financial instruments and all
nonfinancial instruments from its disclosure requirements.  The
disclosures also do not include certain intangible assets, such
as customer relationships, deposit base intangibles and goodwill. 
Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.

17.   FDIC ASSESSMENT

The deposits of the Bank are currently insured by the Savings
Association Insurance Fund ("SAIF").  Both the SAIF and the Bank
Insurance Fund ("BIF"), the federal deposit insurance fund that
covers the deposits of state and national banks and certain state
savings banks, are required by law to attain and thereafter
maintain a reserve ratio of 1.25% of insured deposits.  The BIF
has achieved the required reserve rate, and, as discussed below,
during the past year the FDIC reduced the average deposit
insurance premium paid by BIF-insured banks to a level
substantially below the average premium paid by savings
institutions.

Banking legislation was enacted September 30, 1996 to eliminate
the premium differential between SAIF-insured institutions and
BIF-insured institutions.  The FDIC Board of Directors
established a special assessment necessary to recapitalize the
SAIF at 65.7 basis points of SAIF assessable deposits held by
affected institutions as of March 31, 1995.  Based upon its level
of SAIF deposits as of March 31, 1995, the Bank recorded its
special assessment of approximately $864,000 during the year
ended September 30, 1996.  Upon recapitalization of the SAIF,
premiums paid by SAIF-insured institutions were reduced.  The
legislation also provides for the merger of the BIF and the SAIF,
with such merger being conditioned upon the prior elimination of
the thrift charter.

18.   STOCK CONVERSION

On September 15, 1995, the Conversion of the Bank from a
federally-chartered mutual institution to a federally-chartered
stock savings bank through amendment of its charter and issuance
of common stock to the Company was completed.  Related thereto,
the Company sold 4,628,750 shares of common stock, par value $.01
per share, at an initial price of $10 per share in subscription
and community offerings.  Costs associated with the Conversion
were approximately $1,285,000, including underwriting fees. 
These conversion costs were deducted from the gross proceeds of
the sale of the common stock.

In connection with the Offering, the Bank established a
liquidation account in an amount equal to its regulatory capital
as of the latest practicable date prior to consummation of the
Offering.

The Company's ability to pay dividends will be largely dependent
upon dividends to the Company from the Bank.  Pursuant to OTS
regulations, the Bank will not be permitted to pay dividends on
its capital stock or repurchase shares of its stock if its
stockholders' equity would be reduced below the amount required
for the liquidation account or if stockholders' equity would be
reduced below the amount required by the OTS.

19.   SIGNIFICANT EVENT

On May 2, 1997, the Company's Board of Directors declared a
special dividend of $2.50 per share.  The dividend, payable
May 30, 1997, to shareholders of record as of May 16, 1997,
totaled approximately $10.6 million.

20.   PARENT COMPANY FINANCIAL STATEMENTS

Separate condensed financial statements of Community Federal
Bancorp, Inc. (the "Parent Company") as of and for the year ended
September 30, 1997 and 1996 are presented below:

                                
                                
                Statement of Financial Condition
                  September 30, 1997 and 1996
                 (Dollar amounts in thousands)


                                      1997       1996
ASSETS:
Cash and cash equivalents           $ 5,902    $ 1,633
Securities available for
 sale                                11,260     17,091
Investment in subsidiary             48,604     45,163
ESOP loan receivable                  3,368      3,498
Premises and equipment                  811          0
Other assets                            313        388
Total assets                        $70,258    $67,773

LIABILITIES:
FHLB advances                       $10,500    $     0
Other liabilities                     1,195        635
Total liabilities                    11,695        635

STOCKHOLDERS' EQUITY:        
Preferred stock                           0          0
Common stock                             46         46
Additional paid-in capital           45,113     45,006
Retained earnings                    13,714     22,512
Unearned compensation                (5,998)    (3,464)
Unrealized gain on securities
 available for sale, net              5,688      3,038
Total stockholder's equity           58,563     67,138
Total liabilities and
 stockholders' equity               $70,258    $67,773



                                
                      Statement of Income
         For the Year Ended September 30, 1997 and 1996
                 (Dollar amounts in thousands)



                                          1997       1996
INTEREST INCOME:
Interest and dividends on
 securities available for sale           $  963     $  561      
Interest income from subsidiary             415        207
Total income                              1,378        768

INTEREST EXPENSE                            232          0
Net interest income                       1,146        768
NONINTEREST EXPENSE:
Loss on sale of securities                   29          0
Other operating expenses                    165         24
INCOME BEFORE INCOME TAXES AND
 EQUITY IN UNDISTRIBUTED CURRENT
 YEAR SUBSIDIARY EARNINGS                   952        744

INCOME TAXES                                347        280
INCOME BEFORE EQUITY IN UNDISTRIBUTED
 CURRENT YEAR SUBSIDIARY EARNINGS           605        464

EQUITY IN UNDISTRIBUTED CURRENT 
 YEAR SUBSIDIARY EARNINGS                 2,431      1,684
Net income                               $3,036     $2,148



                    Statement of Cash Flows
             For the Year Ended September 30, 1997
                 (Dollar amounts in thousands)


                                          1997       1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                               $3,036     $2,148
Equity in undistributed current
 year earnings of subsidiary             (2,431)    (1,684)
                                            605        464
Adjustments to reconcile net income
 to net cash provided by operating
 activities: 
Loss on sale of securities available
 for sale                                    29          0
Amortization of premiums and discounts,
 net                                         13          0
(Increase) decrease in other assets          75       (388)
Increase in other liabilities               530        635
Net cash provided by operating
 activities                               1,252        711
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of available
 for sale securities                      5,397          0 
Purchase of property and equipment         (811)         0
Purchase of securities available 
 for sale                                (1,920)   (18,089)
Proceeds from maturities, principal
 collections and calls on securities
 available for sale                       2,682        708
Net cash used by investing activities     5,348    (17,381)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from FHLB advances, net         10,500          0
Contributions to stock plan trusts       (1,127)         0
Proceeds from issuance of common
 stock                                        0     41,368
Purchase of Bank's common stock               0    (22,532) 
Payments received on ESOP loan              130        134
Dividends paid                          (11,834)      (667)
Net cash provided by financing 
 activities                              (2,331)    18,303
NET INCREASE IN CASH AND CASH
 EQUIVALENTS                              4,269      1,633

CASH AND CASH EQUIVALENTS, 
 beginning of year                        1,633          0
CASH AND CASH EQUIVALENTS, 
 end of year                             $5,902     $1,633


Earnings are presented on a retroactive basis, recognizing
earnings of the subsidiary for the year ended September 30, 1996. 
This presentation is based on the accounting for the Conversion
at historical cost, in a manner similar to that utilized in a
pooling of interests.




Directors

Medford M. Leake                   Robert R. Black, Sr.
Chairman of the Board              Retired--Periodontist
President--Steel City Lumber Co.   Tupelo, MS
Birmingham, AL

Jim Ingram                         Michael R. Thomas
President and Chief Executive      President--Washington
  Officer                            Furniture Mfg., Inc.
Community Federal Bancorp, Inc./   Houlka, MS
Community Federal Savings Bank
Tupelo, MS

Charles V. Imbler, Sr.             Robert W. Reed III
President and Chief Executive      Account Executive--Reed
  Officer--Truck Center, Inc.        Mfg. Co.
Tupelo, MS                         Tupelo, MS

J. Leighton Pettis                 Officers
Ophthalmologist
Tupelo, MS                         Gill Simmons, Vice President
                                   Jack Johnson, Vice President
L.F. Sams, Jr.                     Mark Burleson, Vice President
Partner, Law Firm                  Terry Baker, Assistant Vice
Mitchell, McNutt, Threadgill,        President
Smith & Sams                       Lynda Riley, Treasurer
Tupelo, MS                         Judy Ballard, Secretary
                                   Sherry McCarty, Controller

Corporate Headquarters             Independent Public Accountants
333 Court Street                   Arthur Andersen LLP
Tupelo, MS 38801                   Birmingham, AL
(601) 842-3981

Transfer Agent                     Special Counsel
Registrar and Transfer Co.         Elias, Matz, Tiernan and
Cranford, NJ                         Herrick, LLP
(800) 368-5948                     Washington, DC


Listing of Common Stock            Special Counsel
Traded Over-the-Counter            Mitchell, McNutt, Threadgill,
NASDAQ National Market               Smith & Sams, PA
 System/ Symbol: CFTP              Tupelo, MS

                                   10-K Information
                                   This report is available to
                                   stockholders upon request to:
                                   The Controller
                                   PO Box F
                                   Tupelo, MS 38802
                                   (601) 840-0302



Annual Meeting

The 1998 Annual Meeting of the Stockholders of Community Federal
Bancorp, Inc. will be held at 5:00 p.m. on January 22, 1998, in
the Lobby of Community Federal Savings Bank, 333 Court Street,
Tupelo, Mississippi.