SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One):

|X|      ANNUAL  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE  ACT OF 1934 [FEE  REQUIRED]  For the fiscal year ended
         September 30, 1999,
         ------------------

|_|      TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE
         SECURITIES  EXCHANGE  ACT OF 1934  [NO FEE  REQUIRED]  For the
         transition period from                 to                .
                                ---------------    ---------------

Commission File No. 0-27714

                     CRAZY WOMAN CREEK BANCORP INCORPORATED
                     --------------------------------------
                 (Name of Small Business Issuer in Its Charter)

Wyoming                                                          83-0315410
---------------------------------------------                 ------------------
(State or Other Jurisdiction of Incorporation                  I.R.S. Employer
or Organization)                                              Identification No.

106 Fort Street, Buffalo, Wyoming                                 82834
---------------------------------                                 -----
(Address of Principal Executive Offices                       (Zip Code)

Issuer's Telephone Number, Including Area Code:              (307) 684-5591
                                                             --------------

Securities registered pursuant to Section 12(b) of the Act:       None
                                                                  ----

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

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

         Check  whether  the issuer:  (1) has filed all  reports  required to be
filed by Section 13 or 15(d) of the  Securities  Exchange Act of 1934 during the
past 12 months (or for such shorter  period that the  registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. YES  X    NO    .
                  ---      ---

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-B is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. |X|

         State issuer's revenues for its most recent fiscal year. $4,374,502

         As of December  17,  1999,  there were issued and  outstanding  863,798
shares of the registrant's Common Stock.

         The  Registrant's  voting  stock trades on the Nasdaq  SmallCap  Market
under the symbol "CRZY." The aggregate  market value of the voting stock held by
non-affiliates  of the  registrant,  based on the average bid and asked price of
the registrant's Common Stock on December 17, 1999, was $6,043,050 ($10.0000 per
share based on 604,305 shares of Common Stock outstanding).

Transition Small Business Disclosure Format (check one)         YES      NO  X
                                                                    ---     ---

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal Year ended
     September 30, 1999. (Parts I, II, and IV)
2.   Portions of the Proxy  Statement  for the Annual  Meeting of  Stockholders.
     (Part III)
<PAGE>

ITEM I

         Crazy Woman Creek Bancorp Incorporated (the "Company") may from time to
time make written or oral  "forward-looking  statements",  including  statements
contained in the Company's fillings with the Securities and Exchange  Commission
(including this Annual Report on Form 10-KSB and the exhibits  thereto),  in its
reports to stockholders and in other  communications  by the Company,  which are
made in good faith by the Company pursuant to the "safe harbor" provision of the
Private Securities Litigation Reform Act of 1995.

         These forward-looking statements involve risks and uncertainties,  such
as statements of the Company's  plans,  objective,  expectations,  estimates and
intentions,  that are subject to change based of various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and the strength of the local economy in which the Company conducts  operations;
the effects of, and changes in,  trade,  monetary and fiscal  policies and laws,
including  interest  rate  policies  of the board of  governors  of the  federal
reserve system, inflation, interest rates, market and monetary fluctuations; the
timely development of and acceptance of new products and services of the Company
and the  perceived  overall  value of these  products  and  services  by  users,
including the features,  pricing and quality  compared to competitors'  products
and services;  the willingness of users to substitute  competitors' products and
services for the Company's products and services;  the success of the Company in
gaining  regulatory  approval of its products and services,  when required;  the
impact of changes in financial  services' laws and  regulations  (including laws
concerning taxes,  banking,  securities and insurance);  technological  changes;
acquisitions; changes in consumer spending and saving habits; and the success of
the Company at managing the risks resulting from these factors.

         The Company  cautions that the listed  factors are not  exclusive.  The
Company does not  undertake  to update any  forward-looking  statement,  whether
written  or oral,  that may be made  from  time to time by or on  behalf  of the
Company.

Business of the Company

         The Company is a Wyoming corporation  organized in December 1995 at the
direction  of Buffalo  Federal  Savings  Bank (the "Bank") to acquire all of the
capital stock that the Bank issued upon its conversion  from the mutual to stock
form of ownership on March 29, 1996.  The Company is a unitary  savings and loan
holding company which,  under existing laws,  generally is not restricted in the
types of  business  activities  in which it may  engage  provided  that the Bank
retains a specified  amount of its assets in  housing-related  investments.  The
Company does not conduct any active business other than the investment in mutual
funds.  The Company does not employ any persons other than officers but utilizes
the support staff of the Bank from time to time.

Business of the Bank

         The Bank  attracts  deposits  from the  general  public  and uses  such
deposits  primarily to originate  fixed-rate loans secured by first mortgages on
one-to-four-family  residences  in its  market  area.  The Bank also  originates
consumer  loans,  commercial  loans and loans secured by savings  accounts.  The
principal sources of funds for the Bank's lending  activities are deposits,  the
amortization,  repayment,  and  maturity of loans and FHLB  advances.  Principal
sources  of  income  are  interest  on  loans,  mortgage-backed  securities  and
investment securities and the principal expense is interest paid on deposits and
FHLB advances.


                                       2
<PAGE>

         The Bank's  primary  market  area  consists  of all of Johnson  County,
Wyoming.  The Bank also attracts  customers from the Banner/Story  area which is
located in southern Sheridan County. The Johnson County economy has its roots in
the agriculture  and mining  industries.  Agriculture  continues to play a major
role in overall  Johnson County  revenues,  most notably in the cattle and sheep
industries. In fact, Johnson County has the largest concentration of sheep among
all of the counties in Wyoming.  Mining has steadily  declined as an  employment
sector in Johnson  County,  a reflection of the general  decline of the U.S. oil
and gas industry over the past decade. Most of the  non-agricultural  employment
in  Johnson  County is found in and around  Buffalo,  primarily  within  service
industries,  state and local government,  and retail trade. The largest employer
in Johnson  County is the public school  system,  followed by the Johnson County
Memorial  Hospital.  Tourism also provides a major boost to jobs in services and
retail  trade in  Johnson  County,  as Buffalo is located at the edge of the Big
Horn National  Forest and the area is a popular  destination  for people seeking
outdoor  recreation.  The  three-way  junction of Interstate 90 and 25 and State
Highway 16 also brings a large number of travelers through Buffalo.

         Buffalo, the largest town in Johnson County, has a population estimated
at 3,900, with  approximately 51 percent of the county population resides in the
Buffalo area. Because Johnson County is primarily a rural area where most of the
land is used for  agricultural  purposes,  Buffalo acts as somewhat of a hub for
commerce in Johnson  County.  Economic  growth in the Bank's market area remains
dependent upon the local economy. In addition,  the deposit and loan activity of
the Bank is significantly affected by economic conditions in its market area.

Competition

         The Bank is the only savings and loan association in its primary market
area.  There are,  however,  two commercial  banks  headquartered in the primary
market area and a branch of a larger out-of-area commercial bank and a branch of
a credit union. The Bank believes it is a primary source of residential mortgage
loans in the  community.  The  Bank has  competition  from  all  three  banks in
originating  residential  mortgage loans along with some  competition from a few
out of area mortgage bankers. All of the competition sells the majority of their
residential  mortgage loans on the secondary  market,  while Buffalo Federal has
been traditionally placing mortgage loan originations in their portfolio.

         There is also healthy competition for deposits.  Based on data provided
periodically by the Office of Thrift  Supervision  ("OTS"),  Buffalo Federal has
been able to maintain a market share of approximately  22% of the total deposits
in financial  institutions in the community.  Insurance companies and securities
dealers offer further competition for deposits.  The competition for deposits is
expected to continue in the future.



                                       3
<PAGE>
Lending Activities

         Analysis of Loan Portfolio.  The following table sets forth information
on the  composition  of the  Bank's  loan  portfolio  in dollar  amounts  and in
percentages of the total loan portfolio (before deductions for loans in process,
net deferred  loan  origination  fees and  allowance  for loan losses) as of the
dates indicated.
<TABLE>
<CAPTION>
                                                                                 At September 30,
                                                             -------------------------------------------------------
                                                                         1999                       1998
                                                             ---------------------------  --------------------------
                                                                              Percent                    Percent
                                                                Amount        of Total       Amount      of Total
                                                                ------        --------       ------      --------
                                                                              (In Thousands)
<S>                                                           <C>            <C>           <C>          <C>
Type of Loans:
  One-to-four-family                                          $ 24,625          81.10%     $ 23,162        74.45%
  Residential construction                                         473           1.56           331         1.08
  Multi-family                                                     322           1.06           443         1.44
  Commercial real estate(1)                                      1,938           6.38         3,110        10.13
  Commercial                                                       253           0.83           203         0.66
  Consumer:
    Automobile                                                   1,068           3.52         1,136         3.70
    Home equity/Line of credit                                     835           2.75         1,465         4.77
    Share                                                          159           0.52           276         0.90
    Other                                                          692           2.28           573         1.87

      Total consumer                                             2,754           9.07         3,450        11.24

      Total loans                                               30,365         100.00%       30,699       100.00%
                                                                ------         ======        ------       ======

Less:
  Loans in process....................................            (200)                        (271)
   Net deferred loan origination fees.................            (189)                        (158)
  Allowance for loan losses...........................            (249)                        (284)
                                                                ------                       ------
Total loans, net......................................         $29,727                      $29,986
                                                                ======                       ======
</TABLE>
-------------
(1)      Includes agricultural real estate loans.

         Origination, Purchase and Sale of Loans. The following table sets forth
the Bank's loan  originations  and loan sales and principal  repayments  for the
periods indicated.

                                                        Year Ended September 30,
                                                        ------------------------
                                                           1999           1998
                                                           ----           ----
                                                               (In Thousands)
Total gross loans receivable at beginning of              $ 30,699      $ 29,184
                                                          ========      ========
period
Loans originated:
  One-to-four-family                                      $  7,080      $  6,730
  Commercial real estate                                       288         1,609
  Construction                                                 662           801
  Commercial                                                   416           229
  Consumer                                                   1,772         2,173
                                                          --------      --------
Total loans originated                                    $ 10,218      $ 11,542
                                                          --------      --------
Loans sold:
Total loans sold                                          $   --        $   --
                                                          --------      --------
Principal Repayments:
Loan principal repayments                                 $ 10,552      $ 10,027
                                                          --------      --------
Net loan activity                                         $   (334)     $  1,515
                                                          --------      --------
Total gross loans receivable at end of period             $ 30,365      $ 30,699
                                                          ========      ========


                                       4
<PAGE>




         Loan Maturity  Tables.  The following  table sets forth the maturity of
Buffalo  Federal's  loan  portfolio  at September  30, 1999.  The table does not
include prepayments or scheduled principal repayments. Prepayments and scheduled
principal  repayments on loans totaled $10.3 million and $10.0 million,  for the
years ended September 30, 1999 and 1998, respectively.  Adjustable-rate mortgage
loans are shown as maturing based on contractual maturities.
<TABLE>
<CAPTION>
                                                        Commercial
                            1-4 Family    Multi-family  Real Estate   Construction    Business     Consumer        Total
                          ------------- ---------------------------- --------------- ---------- ------------     ---------
                                                                     (In Thousands)
<S>                          <C>           <C>           <C>           <C>           <C>           <C>           <C>
Non-performing loans ....     $  --         $  --         $    66       $  --         $  --         $     2       $    68
                              -------       -------       -------       -------       -------       -------       -------

Amounts Due:
Within 3 months .........         354          --            --             473            21           404         1,252

3 months to 1 Year ......         195          --              10          --              67           260           532

After 1 year:
    1 to 3 years ........         616          --             347          --              27           807         1,797
    3 to 5 years ........       1,277          --             221          --              78           761         2,337
    5 to 10 years .......       5,735           322           263          --              60           300         6,680
    10 to 20 years ......      16,141          --           1,031          --            --             220        17,392
    Over 20 years .......         307          --            --            --            --            --             307
                              -------       -------       -------       -------       -------       -------       -------
Total due after one .....      24,076           322         1,862          --             165         2,088        28,513
year
                              -------       -------       -------       -------       -------       -------       -------

Total amount due ........      24,625           322         1,938           473           253         2,754        30,365
                              -------       -------       -------       -------       -------       -------       -------

Less:
Allowance for loan loss           126             8            45             4             7            59           249
Loans in process ........        --            --               2           193             5          --             200
Deferred loan fees ......         179             4             4          --            --               2           189
                              =======       =======       =======       =======       =======       =======       =======
  Loans receivable, net..     $24,320       $   310       $ 1,887       $   276       $   241       $ 2,693       $29,727
                              =======       =======       =======       =======       =======       =======       =======
</TABLE>

         The next table sets forth at September  30, 1999,  the dollar amount of
all loans due after September 30, 2000 which have

fixed interest rates and have floating or adjustable interest rates.

                                                  Floating or
                                     Fixed         Adjustable
                                     Rates            Rates        Total
                                     -----            -----        -----
                                                  (In Thousands)
One-to-four-family..........           $24,009         $ 67       $24,076
Multi-family................               322            -           322
Commercial real estate......             1,862            -         1,862
Commercial..................               165            -           165
Consumer....................             1,820          268         2,088
                                        ------       ------         -----
     Total..................           $28,178      $   335       $28,513
                                        ======       ======        ======

                                       5
<PAGE>



         One-to-Four-Family   Residential  Loans.  The  Bank's  primary  lending
activity consists of the origination of one-to-four-family  residential mortgage
loans secured by property  located in the Bank's  primary  market area. The Bank
generally originates one-to-four-family residential mortgage loans in amounts up
to 80% of the lesser of the  appraised  value or selling  price of the mortgaged
property. Loans in excess of 80% of the lesser of the appraised value or selling
price of property  require  private  mortgage  insurance for the  borrower.  The
Bank's  strategy is to originate for its portfolio  adjustable-rate  loans,  and
five-year  balloon  loans  as  well as  20-year  or less  fixed-rate  loans  for
retention in its portfolio. The Bank intends to broker, for a third party, loans
with  maturities of greater than 20 years for a one percent fee. During 1999, no
loans were brokered to a third party.

         The Bank  offers  adjustable-rate  mortgage  loans  using  primarily  a
one-year constant maturity treasury interest rate index. During fiscal 1999, the
Bank did not  originate any  adjustable  rate loans.  Interest  rates charged on
mortgage  loans are  competitively  priced  based on market  conditions  and the
Bank's cost of funds. Generally, the Bank's standard underwriting guidelines for
mortgage loans conform to secondary market guidelines.  It is the current policy
of the Bank to primarily remain a portfolio  lender.  At September 30, 1999, the
Bank serviced loans for others totaling $70,000.

         Loan  originations  are generally  obtained  from  existing  customers,
members of the local community,  and referrals from realtors, past customers and
contractors  within the Bank's lending area.  Mortgage loans originated and held
by the Bank in its portfolio generally include due-on-sale clauses which provide
the Bank with the contractual right to deem the loan immediately due and payable
in the event that the borrower  transfers  ownership of the property without the
Bank's consent.

         The Bank  originates  five-year  balloon  mortgage loans with a 30-year
amortization  period.  Management  believes  that  balloon  loans have a pricing
characteristic  that helps offset the detrimental affect that rising rates could
have on net interest income.  At September 30, 1999,  balloon  mortgages totaled
$2.08 million, or 6.91% of the Bank's loan portfolio.

         Residential Construction Loans. Residential construction loans are made
on one-to-four-family  residential properties to the individuals who will be the
owners and occupants upon completion of construction.  These loans are made on a
short  term  basis and  permanent  long-term  financing  is  available  to these
borrowers.  No principal  payments are required during the construction  period,
however,  interest is due monthly.  The maximum  loan-to-value  ratio is 80%. If
permanent  financing  is obtained  from the Bank,  these loans are made on terms
similar  to those of the  Bank's  single  family  residential  loans  and may be
amortized over terms of up to 30 years.

         In addition to loans originated for the construction of a residence for
which the ultimate  purchaser has been  identified,  the Bank on a limited basis
originates  speculative  loans to  residential  builders  who  have  established
business relationships with the Bank. These speculative loans are typically made
for a 12 month period and require  interest only payments during the term of the
loan. In  underwriting  such loans,  the Bank considers the number of units that
the  builder  has on a  speculative  bid basis that  remain  unsold.  The Bank's
experience  during the past four years has been that most speculative  loans are
repaid  well  within  the 12  month  period.  Speculative  loans  are  generally
originated with a loan-to-value ratio that does not exceed 80%. At September 30,
1999, there were no speculative construction loans.


                                       6
<PAGE>



         Construction lending is generally considered to involve a higher degree
of credit risk than long-term  financing of residential  properties.  The Bank's
risk of loss on a  construction  loan is dependent  largely upon the accuracy of
the initial  estimate of the property's  value at completion of  construction or
development  and  the  estimated  cost  of  construction.  If  the  estimate  of
construction  cost and the  marketability of the property upon completion of the
project prove to be inaccurate,  the Bank may be compelled to advance additional
funds to complete the development.  Furthermore, if the estimate of value proves
to be inaccurate, the Bank may be confronted, at or prior to the maturity of the
loan,  with a  property  with a  value  that  is  insufficient  to  assure  full
repayment.  For  speculative  loans  originated to builders,  the ability of the
builder to sell  completed  dwelling units will depend,  among other things,  on
demand,  pricing  and  availability  of  comparable  properties,   and  economic
conditions.

         Commercial  Real  Estate  Loans.  In order to serve its  community  and
enhance yields on its assets,  the Bank  originates  loans secured by commercial
real  estate.  The  commercial  real estate  loans  originated  by the Bank have
generally been made to individuals, small businesses, and partnerships. They are
primarily secured by first mortgages on a motel and restaurant, office buildings
and other properties  located in its primary market area. The Bank benefits from
originating  such  loans  due  to  higher  origination  fees  and  shorter  term
maturities.  Buffalo  Federal's  commercial real estate loans are fixed-rate and
balloon  loans with  terms of 20 years or less,  with  loan-to-value  ratios not
exceeding 75%.

         Loans secured by  commercial  real estate  generally  involve a greater
degree of risk than  residential  mortgage loans and carry larger loan balances.
This  increased  credit  risk is a result  of  several  factors,  including  the
concentration  of  principal  in a limited  number of loans and  borrowers,  the
effects of general economic conditions on income producing  properties,  and the
increased  difficulty  of  evaluating  and  monitoring  these  types  of  loans.
Furthermore,  the  repayment  of loans  secured  by  commercial  real  estate is
typically  dependent  upon the  successful  operation of the related real estate
project. If the cash flow from the project is reduced, the borrower's ability to
repay the loan may be impaired. See also "--Non-performing and Problem Assets --
Classified  Assets." To minimize these risks,  Buffalo Federal  generally limits
loans  of this  type to its  market  area  and to  borrowers  with  which it has
substantial  experience or who are otherwise  well known to the Bank. The Bank's
underwriting  procedures require  verification of the borrower's credit history,
income,  financial statements,  banking  relationships,  credit references,  and
income projections for the property. It is the Bank's current practice to obtain
personal  guarantees  from all principals  obtaining this type of loan. The Bank
also  obtains   appraisals  on  each  property  in  accordance  with  applicable
regulations and appraisal policies. All appraisals on commercial real estate are
reviewed by the Bank's management.

         Agricultural Loans. Buffalo Federal engages in lending on improved farm
land  with  no  dwelling,  building  lots  and  building  acreage  sites.  These
properties must have good road access. The loan-to-value  ratio for this type of
loan is 75% or less with a maximum loan term of 15 years.

         Buffalo  Federal  also  engages  in loans for  improved  farm land with
dwelling.  The  loan-to-value  ratio for this type of loan is 75% or less with a
maximum term of 20 years. These loans can be set up with payment of intervals of
interest  collected  semi-annually  and  principal  annually  as well as monthly
principal and interest  payments.  As of September 30, 1999,  agricultural  land
loans constituted approximately $671,000, or 2.26% of the Bank's loan portfolio.
Agricultural  land loans are included in the commercial  real estate loan total.
See also "-- Commercial Real Estate Loans."


                                       7
<PAGE>



         Multi-Family Loans. The Bank also makes multi-family  loans,  including
loans  on  apartment  complexes  located  in the  Bank's  primary  market  area.
Multi-family  loans generally provide higher interest rates than can be obtained
from  single-family  mortgage  loans.  Multi-family  lending,  however,  entails
significant  additional  risks  compared  with  one-to-four-family   residential
lending. For example,  multi-family loans typically involve larger loan balances
to single borrowers or groups of related  borrowers,  the payment  experience on
such loans typically is dependent on the successful operation of the real estate
project,  and these  risks can be  significantly  impacted  by supply and demand
conditions  in the  market for  multi-family  residential  units and  commercial
office, retail and warehouse space.

         Consumer Loans.  The Bank's consumer loans consist of home equity loans
secured by second  mortgages on  single-family  residences  in the Bank's market
area, automobiles, demand loans secured by savings accounts at the Bank, student
loans and other loans.  The Bank has increased its emphasis on consumer  lending
in recent years,  including  new and used  automobile  loans,  to provide a wide
range of financial  services to the Bank's customers while increasing the Bank's
portfolio yields.

         The  Bank  makes  second  mortgage  loans  secured  by  the  borrower's
residence.  These loans, combined with the first mortgage loan, which usually is
from the  Bank,  generally  are  limited  to 80% of the  appraised  value of the
residence.

         The Bank  generally  makes  savings  account loans for up to 90% of the
balance of the account. The interest rate on these loans generally is indexed to
the rate paid on the secured savings  account,  and interest is due at maturity.
These loans are payable on demand, and the account must be pledged as collateral
to secure the loan.

         Consumer loans  generally  involve more risk than first mortgage loans.
Repossessed  collateral for a defaulted loan may not provide an adequate  source
of repayment  of the  outstanding  loan  balance as a result of damage,  loss or
depreciation,  and the  remaining  deficiency  often  does not  warrant  further
substantial   collection  efforts  against  the  borrower.  In  addition,   loan
collections are dependent on the borrower's continuing financial stability,  and
thus are more likely to be adversely affected by job loss,  divorce,  illness or
personal bankruptcy. Further, the application of various federal and state laws,
including federal and state bankruptcy and insolvency laws, may limit the amount
which can be recovered. These loans may also give rise to claims and defenses by
a borrower  against  the Bank and a borrower  may be able to assert  against the
Bank  claims and  defenses  which it has  against  the seller of the  underlying
collateral.  In underwriting  consumer loans,  the Bank considers the borrower's
credit history,  an analysis of the borrower's  income,  expenses and ability to
repay the loan and the value of the collateral.

         Commercial Loans. The Bank on occasion will originate commercial loans,
primarily  to existing  customers.  At  September  30,  1999,  commercial  loans
consisted  primarily of small  business loans  (primarily  secured by livestock,
office equipment, and machinery).

         Loan  Approval  Authority,  Underwriting  and  Fees.  The  Bank's  Loan
Committee, which consists of the three senior officers, has authority to approve
loans up to $125,000.  Loans in excess of $125,000 require approval by the Board
of Directors. Individual loan officers have lending authority for consumer loans
up to $20,000.


                                       8
<PAGE>



         Upon  receipt  of a  completed  loan  application  from  a  prospective
borrower,  a credit report is ordered,  income and certain other  information is
verified and, if necessary,  additional financial  information is requested.  An
appraisal  of the real estate  intended to be used as security  for the proposed
loan is obtained.  Appraisals are conducted by four independent appraisers which
have been approved by the Bank. The Bank makes  construction/permanent  loans on
individual properties.  Funds advanced during the construction phase are held in
a loan-in-process  account and disbursed based upon various stages of completion
in  accordance  with the  results  of  inspection  reports  that are based  upon
physical  inspection  of the  construction  by a loan  officer.  For real estate
loans, the Bank requires a title commitment. Borrowers must also obtain fire and
casualty  insurance  (for  loans on  property  located  in a flood  zone,  flood
insurance is required) prior to the closing of the loan.

         The Bank  receives  fees in  connection  with loan  originations,  loan
modifications,   late  payments  and  changes  of  property  ownership  and  for
miscellaneous   services  related  to  its  loans.  Loan  origination  fees  are
calculated as a percentage of the loan  principal.  The Bank typically  receives
fees of up to 2 points (one point being equivalent to 1% of the principal amount
of  the  loan)  in  connection   with  the   origination   of   fixed-rate   and
adjustable-rate  residential  mortgage  loans.  The  excess,  if  any,  of  loan
origination fees over direct loan origination  expenses is deferred and credited
into income over the contractual life of the loan using the level-yield  method.
If a loan is prepaid,  refinanced  or sold,  all  remaining  deferred  fees with
respect to such loan are taken into income at such time.

         Loan  Commitments.  The Bank issues verbal  commitments  to prospective
borrowers on all approved real estate loans. Generally,  the commitment requires
acceptance  within 60 days of the date of issuance.  At September 30, 1999,  the
Bank  had  $410,000  of  commitments  to  cover  originations  and  $200,000  in
undisbursed funds for loans in process.  Management  believes that virtually all
of the Bank's commitments will be funded.

         Loans-to-One  Borrower.  Regulations limit loans-to-one  borrower in an
amount equal to 15% of unimpaired  capital and  unimpaired  surplus of the Bank.
The Bank is authorized to lend up to an additional 10% of unimpaired capital and
unimpaired   surplus  if  the  loan  is  fully  secured  by  readily  marketable
collateral. The Bank's maximum loan-to-one borrower limit was approximately $1.7
million at September 30, 1999.

         At September 30, 1999, the Bank's largest lending relationship involved
two loans secured by residential  and commercial  real estate  properties  loans
aggregating  approximately $771,000. The loans are located in the Bank's primary
market area and were performing at September 30, 1999.

Non-Performing and Problem Assets

         Loan Delinquencies.  The Bank's collection procedures provide that when
a mortgage  loan is 30 days past due,  a notice of  nonpayment  is sent.  If the
payment is still  delinquent  after 60 days,  the customer will receive a letter
and/or telephone call and may receive a visit from a representative of the Bank.
If the delinquency  continues,  similar subsequent efforts are made to eliminate
the delinquency. If the loan continues in a delinquent status until 90 days past
due and no  repayment  plan is in effect,  a notice of right to cure  default is
mailed to the customer  giving 30 additional  days to bring the account  current
before foreclosure is commenced. The loan committee meets regularly to determine
when  foreclosure  proceedings  should be initiated and the customer is notified
when foreclosure has been commenced. At September 30, 1999, loans past due 30 to
89 days totaled $382,000, and loans past 90 days were $68,000.


                                       9
<PAGE>



         Loans are  reviewed on a monthly  basis and are  generally  placed on a
non-accrual  status when the loan becomes more than 90 days  delinquent or when,
in the  opinion of  management,  the  collection  of  principal  or  interest is
doubtful.  Interest  accrued  and  unpaid  at  the  time  a loan  is  placed  on
non-accrual  status is charged  against  interest  income.  Subsequent  interest
payments,  if any, are either applied to the  outstanding  principal  balance or
recorded  as  interest  income,  depending  on the  assessment  of the  ultimate
collectibility of the loan.

         Non-Performing  Assets.  The  following  table sets  forth  information
regarding  non-accrual  loans,  real estate owned, and certain other repossessed
assets and loans.


                                                      At September 30,
                                                     ------------------
                                                      1999        1998
                                                      ----        ----
                                                       (In Thousands)
Loans accounted for on a non-accrual basis:
  One-to-four-family .........................        $--          $115
  Commercial real estate .....................          65           68
  Construction ...............................         --           --
  Commercial .................................         --           --
  Consumer ...................................           3           73
                                                      ----         ----
Total Non-performing loans ...................          68          256
                                                      ----         ----
Real estate owned (REO) ......................          73          --
                                                      ----         ----
Other non-performing assets ..................         --           --
                                                      ----         ----
Total non-performing assets ..................        $141         $256
                                                      ====         ====
Total non-performing loans to net loans ......        0.23%        0.86%
                                                      ====         ====
Total non-performing assets to total assets...        0.22%        0.41%
                                                      ====         ====

         Interest income that would have been recorded on loans accounted for on
a non-accrual  basis under the original  terms of such loans was  immaterial for
the year ended  September  30,  1999.  Amounts  included in the Bank's  interest
income for the year ended September 30, 1999 were, likewise, immaterial.

         Classified Assets. OTS regulations provide for a classification  system
for problem  assets of insured  institutions  which  covers all problem  assets.
Under this  classification  system,  problem assets of insured  institutions are
classified  as  "substandard,"  "doubtful,"  or "loss."  An asset is  considered
substandard if it is inadequately  protected by the current net worth and paying
capacity of the obligor or of the collateral pledged, if any. Substandard assets
include  those  characterized  by the  "distinct  possibility"  that the insured
institution  will sustain  "some loss" if the  deficiencies  are not  corrected.
Assets  classified  as  doubtful  have all of the  weaknesses  inherent in those
classified  substandard,  with the  added  characteristic  that  the  weaknesses
present  make  "collection  or  liquidation  in full," on the basis of currently
existing facts,  conditions,  and values,  "highly questionable and improbable."
Assets  classified  as loss are  those  considered  "uncollectible"  and of such
little value that their  continuance  as assets without the  establishment  of a
specific  loss  reserve  is not  warranted.  Assets may be  designated  "special
mention"  because  of  potential   weaknesses  that  do  not  currently  warrant
classification in one of the aforementioned categories.


                                       10
<PAGE>



         When  an  insured  institution  classifies  problem  assets  as  either
substandard or doubtful,  it may establish general allowances for loan losses in
an amount  deemed  prudent by  management.  General  allowances  represent  loss
allowances which have been established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets. When an insured  institution  classifies
problem assets as loss, it is required either to establish a specific  allowance
for losses equal to 100% of that portion of the asset so classified or to charge
off such amount. An institution's  determination as to the classification of its
assets and the amount of its  valuation  allowances  is subject to review by the
OTS, which may order the  establishment  of additional  general or specific loss
allowances.  A portion  of  general  loss  allowances  established  to cover the
possible  losses related to assets  classified as substandard or doubtful may be
included in  determining an  institution's  regulatory  capital,  while specific
valuation  allowances  for loan losses  generally  do not qualify as  regulatory
capital.

         At September  30, 1999,  the Bank had $253,000 of assets  classified as
special   mention   (which   consisted   of  one   commercial   loan  and  seven
one-to-four-family  home  loans).  The Bank had $9,000 of assets  classified  as
substandard (which consisted of two consumer loans).  Furthermore,  the Bank had
$400 of assets  classified as doubtful or loss (which  consisted of one consumer
loans).

         Foreclosed Real Estate. Real estate acquired by the Bank as a result of
foreclosure  or by deed in lieu of  foreclosure is classified as REO until it is
sold. When property is acquired, it is recorded at the fair value at the date of
foreclosure less estimated costs of disposition. At September 30, 1999, the Bank
had one REO property with a fair value of $73,000.

         Allowance  for Loan Losses.  It is  management's  policy to provide for
inherent losses on loans in its loan  portfolio.  A provision for loan losses is
charged to operations  based on management's  evaluation of the potential losses
that may be  incurred  in the Bank's  loan  portfolio.  Such  evaluation,  which
includes  a review of all loans of which full  collectibility  of  interest  and
principal  may not be  reasonably  assured,  considers the Bank's past loan loss
experience,  known and inherent risks in the portfolio,  adverse situations that
may affect the borrower's  ability to repay,  estimated  value of any underlying
collateral and current economic conditions.

         The  amount  of   provisions   recorded   in  future   periods  may  be
significantly  greater  or less  than  the  provisions  taken in the  past.  The
allowance for loan losses,  as a ratio of total net loans was 0.84% at September
30, 1999.

         Management  will  continue  to review  the  entire  loan  portfolio  to
determine the extent, if any, to which further additional loss provisions may be
deemed  necessary.  There can be no assurance that the allowance for losses will
be adequate to cover losses which may in fact be realized in the future and that
additional  provisions  for losses will not be required.  Subsequent to year end
there has been  approximately  $26,000 of loans  recovered that had been written
off during the year ended September 30, 1999.

                                       11
<PAGE>



         Allocation of Allowance for Loan Losses. The following table sets forth
the allocation of the Bank's  allowance for loan losses by loan category and the
percent of loans in each  category  to total  loans  receivable  for the periods
indicated.  The  portion  of the loan  loss  allowance  allocated  to each  loan
category does not represent the total available for future losses that may occur
within the loan  category  because the total loan loss  allowance is a valuation
reserve applicable to the entire loan portfolio.

<TABLE>
<CAPTION>
                                                               At September 30,
                                             --------------------------------------------------------
                                                    1999                              1998
                                             -------------------------      -------------------------
                                                          Percent of                      Percent of
                                                           Loans to                         Loans to
                                             Amount       Total Loans        Amount       Total Loans
                                             ------       -----------        ------       -----------
                                                                 (Dollars in Thousands)
<S>                                          <C>           <C>              <C>            <C>
At end of period allocated to:
One-to four-family............                 $126           81.10%           $130           75.45%
Multi-family..................                    8            1.06              11            1.44
Commercial real estate........                   45            6.38              62           10.13
Construction..................                    4            1.56               2            1.08
Commercial....................                    7            0.83              12            0.66
Consumer......................                   59            9.07              68           11.24
                                                ---          ------             ---          ------
Total allowance...............                 $249          100.00%           $302          100.00%
                                                ===          ======           ======         ======

</TABLE>

         Analysis of the  Allowance for Loan Losses.  The  following  table sets
forth  information  with respect to the Bank's  allowance for loan losses at the
dates indicated:



                                                      Year Ended September 30,
                                                      ------------------------
                                                          1999        1998
                                                          ----        ----
                                                       (Dollars in Thousands)
         Total loans outstanding ....................   $ 30,365    $ 30,699
                                                        ========    ========

         Allowance for loan losses (at beginning of
         period) ....................................   $    284    $    302
         Provision for loan losses ..................          6          18
         Net charge-offs (recoveries):
           One-to-four-family .......................          7           2
           Commercial real estate ...................       --          --
           Commercial ...............................         (1)        (37)
           Consumer .................................         35          (1)
                                                        --------    --------
             Net charge-offs ........................         41          36
                                                        --------    --------
         Allowance for loan losses (at end of period)
                                                        $    249    $    284
                                                        ========    ========
         Allowance for loan losses to total
           loans, net ...............................       0.82%       0.92%
                                                        ========    ========
         Net charge-offs  to loans receivable, net ..       0.14%       0.12%
                                                        ========    ========

                                       12
<PAGE>

Investment Activities

         General.  Buffalo  Federal is required  under  federal  regulations  to
maintain a minimum  amount of liquid  assets  which may be invested in specified
short-term  securities  and  certain  other  investments.  See  also  " --  Bank
Regulation  --  Federal  Home  Loan  Bank  System."  The Bank has  maintained  a
liquidity portfolio in excess of regulatory  requirements.  Liquidity levels may
be increased or decreased  depending upon the yields on investment  alternatives
and upon  management's  judgment  as to the  attractiveness  of the yields  then
available in relation to other opportunities and its expectation of future yield
levels,  as well as  management's  projections as to the  short-term  demand for
funds  to be used in the  Bank's  loan  origination  and  other  activities.  At
September 30, 1999, the Bank's investment  portfolio policy allowed  investments
in only U.S.  Treasury  obligations,  U.S.  Agency  securities,  mortgage-backed
securities,  municipal  securities,  federally-insured  certificates of deposit,
federal  funds,  FHLMC stock and FHLB  overnight and term  deposits.  Investment
decisions are made by the Bank's Investment Committee, which is comprised of the
three  senior  officers.  Two of the three  committee  members must agree on all
decisions. The Board of Directors may authorize additional investments.

         In  1997,  the  Board  of  Directors  of  the  Company  authorized  the
investment  in quality  mutual funds.  At September 30, 1999,  the Company had a
total investment of $1.0 million, with dividends reinvested of $73,000, in three
different  mutual  funds.  The market value of these funds was $1.41  million at
that date. The Board of Directors has established a maximum  initial  investment
limit of $1.0 million in such funds.  The mutual funds  purchased by the Company
invest in equity  securities  and  accordingly,  the mutual funds are subject to
market risk including potential loss of principal.

         Mortgage-Backed Securities. Primarily to supplement lending activities,
Buffalo   Federal   invests   in   residential    mortgage-backed    securities.
Mortgage-backed  securities can serve as collateral for borrowings and,  through
repayments, as a source of liquidity.

         Mortgage-backed securities represent a participation interest in a pool
of  single-family  mortgages,  the principal and interest  payments on which are
passed  from  the  mortgage  originators,   through  intermediaries   (generally
quasi-governmental agencies) that pool and repackage the participation interests
in  the   form  of   securities,   to   investors   such  as  the   Bank.   Such
quasi-governmental  agencies,  which  guarantee  the  payment of  principal  and
interest  to  investors,  primarily  include  the  Federal  Home  Loan  Mortgage
Corporation  ("FHLMC"),  Government National Mortgage Association ("GNMA"),  and
Federal  National  Mortgage  Association  ("FNMA").   Pass-through  certificates
typically  are issued with stated  principal  amounts,  and the  securities  are
backed by pools of mortgages  that have loans with interest rates and maturities
that are within a specified  range.  The  underlying  pool of  mortgages  can be
composed  of either  fixed-rate  mortgage  loans or ARM  loans.  Mortgage-backed
securities are generally referred to as mortgage  participation  certificates or
pass-through  certificates.  As a result, the interest rate risk characteristics
of the underlying pool of mortgages,  (i.e.,  fixed-rate or  adjustable-rate) as
well as prepayment risk, are passed on to the certificate  holder. The life of a
mortgage-backed  pass-through  security  is equal to the life of the  underlying
mortgages.  Mortgage-backed  securities issued by FHLMC, FNMA and GNMA make up a
majority of the pass-through market.

         Mortgage-backed  securities  provide for monthly  payments of principal
and interest and generally have contractual  maturities  ranging from five to 30
years.  However,  due to expected repayment terms being  significantly less than
the underlying mortgage loan pool contractual maturities, the estimated lives of
these securities could be significantly shorter.


                                       13
<PAGE>



         The Bank also purchases mortgage-backed securities issued by government
agencies  which are  currently  qualified  under the Internal  Revenue  Code, as
amended  (the "Code") as Real Estate  Mortgage  Investment  Conduit  ("REMICs").
REMICs  have been  developed  in response to  investor  concerns  regarding  the
uncertainty  of  cash  flows  associated  with  the  prepayment  option  of  the
underlying  mortgagor  and  are  typically  issued  by  governmental   agencies,
governmental sponsored enterprises and special purpose entities, such as trusts,
corporations  or  partnerships,  established by financial  institutions or other
similar  institutions.  Some REMIC  instruments are most like  traditional  debt
instruments because they have stated principal amounts and traditionally defined
interest-rate terms.  Purchasers of certain other REMIC instruments are entitled
to the excess,  if any, of the issuer's  cash  inflows,  including  reinvestment
earnings,  over the cash outflows for debt service and administrative  expenses.
These  mortgage  related  instruments  may  include  instruments  designated  as
residual  interests,  which  represent  an  equity  ownership  interest  in  the
underlying  collateral,  subject to the first lien of the investors in the other
classes of the REMIC.  Certain residual REMIC interests may be riskier than many
regular  REMIC  interests  to the extent that they could result in the loss of a
portion of the original investment. Moreover, cash flows from residual interests
are  very  sensitive  to  prepayments  and,  thus,  contain  a  high  degree  of
interest-rate risk.

         At September 30, 1999, all of the Bank's investment in REMICs consisted
of regular interests and did not include any residual interests or interest-only
or principal-only securities. As a matter of policy, the Bank does not invest in
residuals or interest-only and principal-only securities. The REMICs held by the
Bank at  September  30,  1999  consisted  solely  of  fixed-rate  tranches.  The
securities are backed by mortgages on one-to-four-family residential real estate
and have contractual maturities up to 30 years. The securities are PACs (Planned
Amortization  Classes)  and are  designed  to provide a specific  principal  and
interest cash-flow.

         At September 30, 1999,  the Bank had REMICs with an aggregate  carrying
amount  (including  discounts  and  premiums)  of  $692,000,  of which none were
privately issued.

         During periods of rising  mortgage  interest rates, if the coupon rates
of the underlying mortgages are less than that of the prevailing market interest
rates offered for mortgage loans,  refinancings  generally decrease and slow the
prepayment of the underlying  mortgages and the related securities.  Conversely,
during periods of falling  mortgage  interest  rates, if the coupon rates of the
underlying  mortgages  exceed the prevailing  market  interest rates offered for
mortgage loans,  refinancing  generally increases and accelerates the prepayment
of  the   underlying   mortgages   and  the  related   securities.   Under  such
circumstances,  the Bank may be  subject  to  reinvestment  risk  because to the
extent that the Bank's  mortgage-related  securities  amortize or prepay  faster
than  anticipated,  the Bank may not be able to  reinvest  the  proceeds of such
repayments and prepayments at a comparable rate.


                                       14
<PAGE>


         Investment  Securities  Portfolio.  The following  table sets forth the
amortized  cost of the Company's  investment  securities  portfolio,  securities
available for sale portfolio, short-term investments and FHLB stock at the dates
indicated.

                                                  At September 30,
                                                  ----------------
                                                  1999        1998
                                                  ----        ----
                                                  (In Thousands)

Investment securities held to maturity:
 U.S. Agency securities ......................   $  --     $   845
 Municipal securities ........................      --         572
 Mortgage-backed securities:
   GNMA ......................................      --         996
   FNMA ......................................      --         543
   FHLMC .....................................      --         982
                                                 -------   -------
   Total investment securities held
     to maturity .............................      --       3,938
                                                 -------   -------
Investment securities available for  sale: (1)
 U.S. Agency securities ......................    15,749    16,287
 Municipal securities ........................     2,033     1,085
 Mortgage-backed securities:
   GNMA ......................................     4,002     2,745
   FHLMC .....................................     3,949       872
   FNMA ......................................     2,472      --
   REMIC's ...................................       718     2,300
Investment in mutual funds(2) ................     1,073     1,032
                                                 -------   -------
   Total securities available for sale .......    29,996    24,321
                                                 -------   -------
Interest-bearing deposits ....................      --          99
FHLB stock ...................................       988       917
                                                 -------   -------
   Total .....................................   $30,984   $29,275
                                                 =======   =======

----------------
(1)  Amounts shown at amortized cost, but carried at fair value.
(2)  Includes three mutual funds held as available for sale.

                                       15
<PAGE>

         The  following  table sets forth  information  regarding  the scheduled
maturities,  carrying  value,  market value and weighted  average yields for the
Bank's investment securities at September 30, 1999:

<TABLE>
<CAPTION>
                                                                      As of September 30, 1999
                                  --------------------------------------------------------------------------------------------------
                                                                                                                    Total
                                  One Year or Less  One to Five Years Five to Ten Years More than Ten Years  Investment Securities
                                  ----------------  ----------------- ----------------- -------------------  ---------------------
                                  Amortized Average Amortized Average Amortized Average Amortized Average Amortized Average   Market
                                    Cost    Yield     Cost    Yield     Cost    Yield     Cost    Yield     Cost    Yield    Value
                                    ----    -----     -----   ------    -----   ------    -----   ------    -----   ------   -----
                                                                       (Dollars in Thousands)
<S>                                <C>       <C>   <C>         <C>   <C>        <C>     <C>       <C>    <C>         <C>   <C>
Investment securities
available for sale: (1)
U. S. Agency securities.......      $ 500     7.07% $ 5,200     6.39% $10,049    6.35%   $   --       --% $15,749     6.39% $15,146
Municipal securities (2)......         75     7.27      281     7.54      295     7.69    1,382     6.89    2,033     7.11    1,945
Mortgage-backed securities
and other pass-throughs.....
    GNMA                               --       --    1,878     6.54    2,124     6.75       --       --    4,002     6.65    3,939
    FHLMC                              --       --    1,668     6.52    2,281     6.77       --       --    3,949     6.66    3,891
    FNMA                               --       --      907     6.56    1,089     6.33      476     6.11    2,472     6.37    2,457
    REMIC's...................         --       --      303     6.80      415     6.50       --       --      718     6.63      692
                                    -----           -------           -------            ------           -------           -------
  Total.......................      $ 575     7.10% $10,237     6.50% $16,253     6.49%  $1,858     6.69% $28,923     6.52% $28,070
                                    =====           =======            ======            ======           =======           =======
</TABLE>


(1)  Includes U.S. Agency securities and mortgage-backed securities but does not
     include   investment  in  mutual  funds  (See  -   "Investment   Securities
     Portfolio").
(2)  Calculated using tax equivalent yield


                                       16
<PAGE>

Sources of Funds

         General. Deposits are the major external source of the Bank's funds for
lending  and other  investment  purposes.  Buffalo  Federal  derives  funds from
amortization  and  prepayment  of loans and, to a lesser  extent,  maturities of
investment securities,  borrowings, maturities of mortgage-backed securities and
operations.  Scheduled loan principal  repayments are a relatively stable source
of  funds,   while  deposit  inflows  and  outflows  and  loan  prepayments  are
significantly  influenced  by  general  interest  rates and  market  conditions.
Buffalo  Federal also  utilizes  FHLB  advances to meet  liquidity and investing
needs.

         Deposits.  Deposits are  attracted  principally  from within the Bank's
primary  market area through the offering of a selection of deposit  instruments
including regular savings  accounts,  money market accounts,  NOW accounts,  and
term certificate  accounts.  The Bank also offers IRA accounts.  Deposit account
terms vary according to the minimum balance required,  the time period the funds
must remain on deposit, and the interest rate, among other factors.

         The  interest  rates paid by the Bank on deposits are set weekly at the
direction of senior  management.  The Bank determines the interest rate to offer
the public on new and maturing  accounts by reviewing the market  interest rates
offered by competitors and the national market.  The Bank reviews,  weekly,  the
interest rates being offered by other financial  institutions within its primary
market area.

         Passbook  savings,  business  checking,  money  market and NOW accounts
constituted  $12.79  million,  or 37.33%,  of the Bank's  deposit  portfolio  at
September  30,  1999.  Certificates  of deposit (or time  deposits)  constituted
$21.47 million,  or 62.67% of the deposit  portfolio of which $7.67 million,  or
22.39% of the deposit  portfolio were  certificates  of deposit with balances of
$100,000 or more. As of September 30, 1999, the Bank had no brokered deposits.

         Time Deposits by Rate. The following table sets forth the time deposits
in the Bank classified by interest rate as of the dates indicated.

                                                    At September 30,
                                                 -----------------------
                                                   1999          1998
                                                   ----          ----
                                                    (In Thousands)

Interest Rate
4.01 - 5.00%..............................         6,223         1,301
5.01 - 6.00%..............................        13,554        15,067
6.01 - 7.00%..............................         1,691         4,031
7.01 - 8.00%..............................            --            29
                                                 -------       -------
                           Total..........       $21,468       $20,428
                                                 =======       =======

                                       17
<PAGE>



         Time Deposits  Maturity  Schedule.  The following  table sets forth the
amount and maturities of time deposits at September 30, 1999.


                                            Amount Due
               -----------------------------------------------------------------
                                                             After
               September 30, September 30,  September 30, September 30,
               ------------- -------------  ------------- -------------
Interest Rate       2000          2001          2002          2003         Total
-------------       ----          ----          ----          ----         -----
                                      (In Thousands)
4.01-5.00% ...   $ 5,895       $   328       $  --         $  --         $ 6,223
5.01-6.00% ...     9,262         2,468         1,125           699        13,554
6.01-7.00% ...       911           397           383          --           1,691
                 -------       -------       -------       -------       -------

         Total   $16,068       $ 3,193       $ 1,508       $   699       $21,468
                 =======       =======       =======       =======       =======

         Jumbo Certificates of Deposit. The following table indicates the amount
of the Bank's  certificates  of deposit of  $100,000  or more by time  remaining
until maturity as of September 30, 1999.

                                                      Certificates
Maturity Period                                        of Deposit
---------------                                        ----------
                                                      (In Thousands)
Within three months........................              $ 1,896
More than three through six months.........                2,312
More than six through twelve months........                2,232
Over twelve months.........................                1,225
                                                         -------
   Total...................................              $ 7,665
                                                         =======

         Savings  Deposit  Activity.  The following table sets forth the savings
activities of the Bank for the periods indicated:

                                              Year Ended
                                             September 30,
                                       ------------------------
                                          1999           1998
                                          ----           ----
                                             (In Thousands)
Net increase (decrease)
  before interest credited ........     $  (205)        $ 1,868
Interest credited .................       1,549           1,539
                                        -------         -------
Net increase in savings deposits...     $ 1,344         $ 3,407
                                        =======         =======

         Borrowings.  The Bank may obtain  advances  from the FHLB of Seattle to
supplement its supply of lendable  funds.  Advances from the FHLB of Seattle are
typically  secured by a pledge of the Bank's  stock in the FHLB of Seattle and a
portion of the Bank's first  mortgage  loans and certain other assets.  The Bank
utilizes  short-term FHLB advances  primarily to fund loan originations and as a
hedge  against  interest  rates  whereby  funds from  advances  are  invested in
callable  government agencies with terms to maturity of three to ten years. Each
FHLB credit program has its own interest  rate,  which may be fixed or variable,
and a range of  maturities.  The Bank,  if the need arises,  may also access the
Federal  Reserve Bank discount window to supplement its supply of lendable funds
and to meet deposit withdrawal requirements. At September 30, 1999, the Bank had
$15.60  million of borrowings  from the FHLB of Seattle that  consisted of $4.40
million in fixed-rate  advances with rates of 4.98% to 6.38%, and $11.20 million
in  putable  advances  with  rates of 4.53% to 5.45%.  FHLB  advances  have

                                       18
<PAGE>

been  utilized  by the  Bank to fund  loan  demand  and to  purchase  investment
securities.  The Bank has used FHLB  advances to fund the purchase of investment
and  mortgage-backed  securities with the goal of earning income on the interest
rate differential  between the rate earned on the investment  securities and the
rate paid on the FHLB advances.

         The following table sets forth  information  concerning only short-term
borrowings  (those  maturing  within  one year or less) the Bank had  during the
periods indicated.
<TABLE>
<CAPTION>
                                                          Year ended September 30,
                                                    -----------------------------------
                                                         1999                 1998
                                                    -------------         -------------
<S>                                                  <C>                  <C>
Short-term FHLB advances:
  Average balance outstanding                        $ 10,926,000         $ 15,413,000
  Maximum amount outstanding at any month-end
    during the period                                $ 12,000,000         $ 14,550,000
  Weighted average interest rate during the period           5.10%                5.61%
Total short-term borrowings at end of period         $ 11,000,000         $ 12,050,000
</TABLE>

Personnel

         At September 30, 1999 the Bank had ten  full-time  and three  part-time
employees.  None  of  the  Bank's  employees  are  represented  by a  collective
bargaining  group. The Bank believes that its relationship with its employees is
good.

Regulation

         Set forth below is a brief  description of certain laws which relate to
the regulation of the Bank and the Company.  The description does not purport to
be complete and is qualified in its entirety by reference to applicable laws and
regulations.

Bank Regulation

         General. As a federally  chartered Savings  Association  Insurance Fund
(SAIF) insured savings association,  the Bank is subject to extensive regulation
by the  OTS  and the  Federal  Deposit  Insurance  Corporation  (FDIC).  Lending
activities and other  investments must comply with various federal statutory and
regulatory   requirements.   The  Bank  is  also  subject  to  certain   reserve
requirements promulgated by the Board of Governors of the Federal Reserve System
("Federal Reserve System").

         The OTS, in conjunction with the FDIC,  regularly examines the Bank and
prepares  reports for the  consideration of the Bank's Board of Directors on any
deficiencies that they find in the Bank's  operations.  The Bank's  relationship
with its depositors and borrowers is also regulated to a great extent by federal
law,  especially  in such matters as the  ownership of savings  accounts and the
form and content of the Bank's mortgage documents.

         The Bank must file  reports  with the OTS and the FDIC  concerning  its
activities  and  financial  condition,   in  addition  to  obtaining  regulatory
approvals  prior to entering into certain  transactions  such as mergers with or
acquisitions  of other savings  institutions.  This  regulation and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended  primarily for the protection of the SAIF and depositors.
The  regulatory  structure  also  gives  the  regulatory  authorities  extensive
discretion in connection with their  supervisory and enforcement

                                       19
<PAGE>

activities  and  examination  policies,  including  policies with respect to the
classification  of assets and the  establishment  of adequate loan loss reserves
for regulatory purposes. Any change in such regulations, whether by the OTS, the
FDIC or the United States  Congress could have a material  adverse impact on the
Company or the Bank and their operations.

         Insurance of Deposit  Accounts.  The deposit  accounts held by the Bank
are insured by the Savings  Association  Insurance Fund ("SAIF") to a maximum of
$100,000 for each insured member (as defined by law and  regulation).  Insurance
of deposits may be  terminated  by the FDIC upon a finding that the  institution
has engaged in unsafe or unsound practices, is in an unsafe of unsound condition
to continue  operations or has violated any applicable  law,  regulation,  rule,
order or condition imposed by the FDIC or the Institutions primary regulator.

         As a member of the SAIF, the Bank paid an insurance premium to the FDIC
equal to a minimum of 0.23% of its total  deposits  during 1996 and prior years.
The FDIC also maintains another insurance fund, the Bank Insurance Fund ("BIF"),
which primarily insures commercial bank deposits.  In 1996, the annual insurance
premium for most BIF members lowered to $2,000. The lower insurance premiums for
BIF members placed SAIF members at a competitive disadvantage to BIF members.

Effective,  December  31,  1996,  federal  law was revised to mandate a one-time
special  assessment on SAIF members such as the Bank of approximately  0.657% of
deposits  held on march  31,  1995.  Beginning  January  1,  1997,  the  deposit
insurance  assessment for most SAIF members was reduced to 0.064% of deposits on
an annual basis  through the end of 1999.  During this same period,  BIF members
will be assessed  approximately 0.013% of deposits.  After 1999, assessments for
BIF and SAIF members  should be the same. It is expected  that these  continuing
assessments  for both  SAIF and BIF  members  will be used to repay  outstanding
Financing Corporation bond obligations.

         Regulatory  Capital  Requirements.   OTS  capital  regulations  require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total adjusted assets, (2) core capital equal to at least 3% of total
adjusted  assets and (3) risk-based  capital equal to 8% of total  risk-weighted
assets.

         Tangible capital is defined as core capital less all intangible  assets
(including  supervisory  goodwill),  plus purchased  mortgage  servicing  rights
valued  at the lower of the  maximum  percentage  established  by the OTS or the
amount   includable  in  core  capital.   Core  capital  is  defined  as  common
stockholders'  equity (including  retained  earnings),  noncumulative  perpetual
preferred  stock and minority  interests in the equity  accounts of consolidated
subsidiaries, and qualifying supervisory goodwill, less nonqualifying intangible
assets.

         The OTS requires a core capital  ratio of at least 3% for those savings
associations  in the strongest  financial and  managerial  condition.  All other
savings  associations  are required to maintain minimum core capital of at least
4% of total adjusted  assets,  with a maximum core capital ratio  requirement of
5%. In determining the required minimum core capital ratio, the OTS assesses the
quality of risk management and the level of risk in each savings  association on
a case-by-case basis.

         The risk-based capital standard for savings  institutions  requires the
maintenance of total  risk-based  capital (which is defined as core capital plus
supplementary  capital)  of  8%  of  risk-weighted  assets.  The  components  of
supplementary capital include, among other items, cumulative perpetual preferred
stock,  perpetual  subordinated debt, mandatory  convertible  subordinated debt,


                                       20
<PAGE>

intermediate-term  preferred  stock and the  portion of the  allowance  for loan
losses not designated for specific loan losses. The portion of the allowance for
loan and lease  losses  includable  in  supplementary  capital  is  limited to a
maximum of 1.25% of  risk-weighted  assets.  Overall,  supplementary  capital is
limited  to 100% of core  capital.  A savings  association  must  calculate  its
risk-weighted  assets by multiplying  each asset and  off-balance  sheet item by
various risk factors as determined  by the OTS,  which range from 0% for cash to
100% for delinquent  loans,  property acquired through  foreclosure,  commercial
loans and other assets.

         Set forth below is information  regarding the Bank's regulatory capital
at September 30, 1999.

                                                         Percent of
                                         Amount        Adjusted Assets
                                         ------        ---------------
                                               (In Thousands)
GAAP Capital                            $11,589
Tangible Capital:
Regulatory requirement                      948                1.50%
Actual capital                           12,151               19.22%
                                         ------               -----
  Excess                                 11,203               17.72%

Core Capital:
Regulatory requirement                    1,897                3.00%
Actual capital                           12,151               19.22%
                                         ------               -----
  Excess                                 10,254               16.22%

Risk-Based Capital:
Regulatory Requirement                    1,983                8.00%
Actual capital                           12,400               50.01%
                                         ------               -----
  Excess                                 10,417               42.01%

         Net Portfolio Value. In order to encourage associations to reduce their
interest rate risk, the OTS adopted a rule  incorporating  an interest rate risk
("IRR") component into the risk-based  capital rules. Using data from the Bank's
quarterly reports to the OTS, the Bank receives a report which measures interest
rate risk by  modeling  the change in the Net  Portfolio  Value  ("NPV")  over a
variety of interest  rate  scenarios.  NPV is the present value of expected cash
flows from assets,  liabilities and off-balance sheet contracts. The calculation
is intended to  illustrate  the change in NPV that will occur in the event of an
immediate  change in interest  rates of at least 200 basis points with no effect
given to any steps  which  management  might take to counter  the effect of that
interest rate movement. Under the OTS regulations, an institution with a greater
than "normal"  level of interest  rate risk will be subject to a deduction  from
total capital for purposes of calculating its risk-based  capital.  Institutions
with assets of less than $300  million and a  risk-based  capital  ratio of more
than 12.0% are exempt.  The Bank meets these  qualifications  and  therefore  is
exempt.  Assuming this proposed rule was in effect at September 30, 1999 and the
Bank was not exempt from the rule,  the Bank's level of interest rate risk would
have  caused it to be treated  as an  institution  with  greater  than  "normal"
interest rate risk.  This would have  resulted in a reduction in the  risk-based
capital ratio from the September 30, 1999 calculation of 50.01% to 49.01%, which
is in excess of the required  minimum of 8.00%.  Utilizing  the NPV  measurement
concept,  at September 30, 1999, this would have resulted in a $3.68 million, or
14.46%  decrease  in the Bank's  NPV,  assuming a 200 basis  point  increase  in
interest rates with no effect given to steps  management may take to counter the
effect of that interest rate movement.

                                       21
<PAGE>



         The following  table is provided by the OTS and  illustrates the change
in NPV at September 30, 1999, based on OTS  assumptions,  that will occur in the
event of an immediate change in interest rates with no effect given to any steps
which  management  might  take to  counter  the  effect  of that  interest  rate
movement.
<TABLE>
<CAPTION>
                                                                            Net Portfolio as % of
                                     Net Portfolio Value                  Portfolio Value of Assets
                       ---------------------------------------------   --------------------------------
    Basis Point ("bp")
    Change in Rates      $ Amount        $ Change(1)      % Change        NPV Ratio (2)       Change(3)
---------------------  ------------   ---------------  -------------   ------------------  ------------
                                           (Dollars in Thousands)
<S>     <C>              <C>               <C>                <C>             <C>             <C>
           300 bp          6,723           (5,429)            (45)             11.88%         (748)bp
           200 bp          8,476           (3,676)            (30)             14.46%         (489)bp
           100 bp         10,297           (1,855)            (15)             16.97%         (238)bp
             0 bp         12,152                                               19.36%
         (100) bp         13,901            1,748              14              21.45%          210 bp
         (200) bp         14,675            2,523              21              22.29%          293 bp
         (300) bp         15,488            3,336              27              23.14%          378 bp
</TABLE>

-----------------
(1)  Represents  the increase  (decrease)  of the estimated NPV at the indicated
     change in interest rates compared to the NPV assuming no change in interest
     rates.
(2)  Calculated as the  estimated  NPV divided by the  portfolio  value of total
     assets  ("PV").  The  Bank's  PV is the  estimated  present  value of total
     assets. The PV of the Bank as of September 30, 1999, assuming no changes in
     interest rates, was $62.79 million.
(3)  Calculated  as the  increase  (decrease)  of the  NPV  ratio  assuming  the
     indicated change in interest rates over the estimated NPV ratio assuming no
     change in interest rates.

         Under the OTS interest rate risk capital rule, those  institutions with
greater  than  "normal"  levels of  interest  rate risk  will be  subject  to an
interest rate risk component in calculating  their risk-based  capital ratio. An
institution  with a "normal" level of interest rate risk is defined as one whose
"Measured Interest Rate Risk" is less than 2.0%.

         The  following  table  is  provided  by the  OTS  and is  based  on the
calculations  in the above table.  It sets forth the IRR capital  component that
will be deducted from risk-based  capital in determining the level of risk-based
capital.  At September 30, 1999,  the change in NPV as a percentage of portfolio
value of total assets is negative  5.85%,  which is greater than negative  2.0%,
indicating  that the Bank has a greater  than  "normal"  level of interest  rate
risk.  As  mentioned  earlier,  the Bank is exempt from any  additional  capital
requirements;  however,  had the Bank been subject to the IRR capital component,
its IRR capital component at September 30, 1999 would be approximately $954,000.

                                       22
<PAGE>
<TABLE>
<CAPTION>
                                                                 September 30, 1999          September 30, 1998
                                                              --------------------------  --------------------------

<S>                                                                   <C>                         <C>
RISK MEASURES: 200 BP RATE SHOCK:
Pre-Shock NPV Ratio: NPV as % of PV of Assets.................          19.36%                      22.55%
Exposure Measure: Post-Shock NPV Ratio........................          14.46%                      18.53%
Sensitivity Measure: Change in NPV Ratio......................           (489)bp                     (402)bp

CALCULATION OF CAPITAL COMPONENT:
Change in NPV as % of PV of Assets............................         (5.85)%                     (5.10)%
Interest Rate Risk Capital Component ($000) (1)...............             --                          --
</TABLE>

--------------
(1)  No amounts  are shown on the  interest  rate risk  capital  component  line
     because the Bank is exempt from the IRR capital component.

         Certain  shortcomings are inherent in the methodology used in the above
table.  Modeling changes in NPV requires the making of certain  assumptions that
may tend to oversimplify  the manner in which actual yields and costs respond to
changes in market interest rates.  First, the models assume that the composition
of  the  Bank's  interest  sensitive  assets  and  liabilities  existing  at the
beginning of a period remains  constant over the period being measured.  Second,
the models  assume  that a  particular  change in  interest  rates is  reflected
uniformly  across the yield  curve  regardless  of the  duration  to maturity or
repricing  of specific  assets and  liabilities.  Accordingly,  although the NPV
measurements  do provide an indication of the Bank's interest rate risk exposure
at a particular  point in time, such  measurements are not intended to provide a
precise forecast of the effect of changes in market interest rates on the Bank's
net interest  income.  Furthermore,  in times of decreasing  interest rates, the
value of fixed-rate  assets could  increase in value and the lag in repricing of
interest rate  sensitive  assets could be expected to have a positive  effect on
the Bank.

         Management  believes  that  the NPV  method  of  assessing  the  Bank's
exposure to interest rate risk and potential  reductions in net interest  income
is a useful tool for measuring  risk.  Management  also believes that strategies
employed  to  respond  to  changing   interest  rate  environments  can  have  a
significant  impact  upon  the net  value  of  assets  and  extent  of  earnings
fluctuations.  Also,  management  believes that a strong equity capital position
and  existence  of the  corporate  authority  to  raise  additional  capital  as
necessary act as valuable tools to absorb interest rate risk.

         Limitations  on  Dividends  and Other  Capital  Distributions.  The OTS
imposes  various   restrictions  or  requirements  on  the  ability  of  savings
institutions to make capital distributions, including cash dividends.

         A  savings  association  that is a  subsidiary  of a  savings  and loan
holding company, such as the Bank after the conversion, must file an application
or a notice with the OTS at least 30 days before making a capital  distribution.
Savings  associations  are not required to file an application for permission to
make a  capital  distribution  an  need  only  file a  notice  if the  following
condition  are met:  (1) they are  eligible for  expedited  treatment  under OTS
regulations,   (2)  they  would   remain   adequately   capitalized   after  the
distribution,  (3) the annual amount of capital distribution does not exceed net
income for that year to date added to retained net income for the two  preceding
years, and (4) the capital  distribution does not violate any agreements between
the OTS and the savings association or any OTS regulations.  Any other situation
would require an application to the OTS.

                                       23
<PAGE>

         In addition,  the OTS could prohibit a proposed capital distribution by
any  institution,  which would otherwise be permitted by the regulation,  if the
OTS  determines  that the  distribution  would  constitute  an unsafe or unsound
practice.

         A federal  savings  institution  is  prohibited  from  making a capital
distribution if, after making the distribution, the savings institution would be
unable to meet any one of its minimum regulatory capital requirements.  Further,
a federal  savings  institution  cannot  distribute  regulatory  capital that is
needed for its liquidation account.

         Qualified  Thrift  Lender  Test.  Savings   institutions  must  meet  a
Qualified Thrift Lender ("QTL") test. If the Bank maintains an appropriate level
of Qualified Thrift Investments  ("QTIs") (primarily  residential  mortgages and
related  investments,   including  certain   mortgage-related   securities)  and
otherwise  qualifies  as a  QTL,  it  will  continue  to  enjoy  full  borrowing
privileges from the FHLB of Seattle.  The required  percentage of QTIs is 65% of
portfolio assets (defined as all assets minus intangible  assets,  property used
by the  institution in conducting its business and liquid assets equal to 10% of
total assets).  Certain assets are subject to a percentage  limitation of 20% of
portfolio assets. In addition,  savings associations may include shares of stock
of the Federal Home Loan Banks  ("FHLBs"),  FNMA and FHLMC as  qualifying  QTIs.
Compliance  with the QTL test is  determined  on a monthly  basis in nine out of
every 12 months.  As of September 30, 1999, the Bank was in compliance  with its
QTL requirement with 84.30% of its assets invested in QTIs.

         Transactions With Affiliates.  Generally,  restrictions on transactions
with affiliates require that transactions  between a savings  association or its
subsidiaries  and  its  affiliates  be on  terms  as  favorable  to the  Bank as
comparable  transactions  with  non-affiliates.  In  addition,  certain of these
transactions are restricted to an aggregate percentage of the Bank's capital and
collateral  in  specified  amounts  must  usually be provided by  affiliates  to
receive loans from the Bank.  Affiliates of the Bank include the Company and any
company  which would be under  common  control  with the Bank.  In  addition,  a
savings  association  may not lend to any affiliate  engaged in  activities  not
permissible  for a  bank  holding  company  or  acquire  the  securities  of any
affiliate  that  is not a  subsidiary.  The  OTS has  the  discretion  to  treat
subsidiaries  of savings  associations  as affiliates on a  case-by-case  basis.
There  were no  transactions  with  affiliates  out of the  ordinary  course  of
business.

         Liquidity  Requirements.  All  savings  associations  are  required  to
maintain an average daily balance of liquid assets equal to a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity  requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings  associations.  At September 30, 1999, the Bank's liquidity
ratio was  63.93%.  Monetary  penalties  may be imposed  upon  associations  for
violations of liquidity requirements.

         Federal  Home  Loan  Bank  System.  The Bank is a member of the FHLB of
Seattle,  which is one of 12 regional  FHLBs that  administer the home financing
credit function of savings associations and other financial  institutions.  Each
FHLB  serves as a reserve or central  bank for its members  within its  assigned
region.  It  is  funded  primarily  from  proceeds  derived  from  the  sale  of
consolidated  obligations  of the FHLB System.  It makes loans to members (i.e.,
advances) in accordance with policies and procedures established by the Board of
Directors of the FHLB.

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of  Seattle  in an  amount  equal to at least  1% of its  aggregate  unpaid
residential  mortgage loans, home purchase  contracts or similar  obligations at
the beginning of each year. At September 30, 1999, the Bank had

                                       24
<PAGE>

$987,700 in FHLB stock, which was in compliance with this requirement.  The FHLB
imposes  various  limitations on advances such as limiting the amount of certain
types of real estate  related  collateral to 35% of a member's  total assets and
limiting  total  advances to a member.  At September  30,  1999,  this limit was
approximately $24.27 million for the Bank.

         The  FHLB's'  are  required  to  provide  funds for the  resolution  of
troubled savings  associations and to contribute to affordable  housing programs
through  direct loans or interest  subsidies on advances  targeted for community
investment and low- and  moderate-income  housing projects.  These contributions
have  adversely  affected the level of FHLB dividends paid and could continue to
do so in the future.  For the year ended  September 30, 1999,  dividends paid by
the FHLB of Seattle to the Bank totaled $71,000.

         Federal  Reserve  System.  The  Federal  Reserve  System  requires  all
depository  institutions to maintain  non-interest bearing reserves at specified
levels against their transaction accounts (primarily checking, NOW and Super NOW
checking  accounts) and non-personal time deposits.  The balances  maintained to
meet the reserve  requirements imposed by the Federal Reserve System may be used
to satisfy the liquidity  requirements that are imposed by the OTS. At September
30, 1999, the Bank's total transaction accounts were below the minimum level for
which the Federal Reserve System requires a reserve.

         Savings  associations have authority to borrow from the Federal Reserve
System "discount  window," but Federal Reserve System policy generally  requires
savings  associations  to exhaust all other sources  before  borrowing  from the
Federal  Reserve  System.  The Bank had no borrowings  from the Federal  Reserve
System at September 30, 1999.

         Community  Reinvestment.  Under the Community Reinvestment Act ("CRA"),
as implemented by OTS  regulations,  a savings  association has a continuing and
affirmative obligation consistent with its safe and sound operation to help meet
the credit  needs of its entire  community,  including  low-and  moderate-income
neighborhoods.  The CRA does not  establish  specific  lending  requirements  or
programs  for  financial   institutions  nor  does  it  limit  an  institution's
discretion  to develop the types of products and  services  that it believes are
best  suited  to its  particular  community,  consistent  with the CRA.  The CRA
requires the OTS, in connection with its  examination of a savings  institution,
to assess the institution's  record of meeting the credit needs of its community
and to take such record into account in its  evaluation of certain  applications
by such institution.  Current law requires public disclosure of an institution's
CRA  rating  and  requires  the  OTS  to  provide  a  written  evaluation  of an
institution's CRA performance utilizing a four-tiered  descriptive rating system
in lieu of the existing  five-tiered  numerical rating system.  The OTS reported
that Buffalo  Federal had a  "satisfactory  record of meeting  community  credit
needs," in its examination dated June 21, 1999.

Financial Services Modernization Bill

         On  November  12,  1999,   President   Clinton   signed  into  law  the
Gramm-Leach-Bliley  Act (the "Act") which will, effective March 11, 2000, permit
qualifying  bank holding  companies to become  financial  holding  companies and
thereby  affiliate with securities  firms and insurance  companies and engage in
other  activities  that are financial in nature.  The Act defines  "financial in
nature"  to  include  securities   underwriting,   dealing  and  market  making;
sponsoring  mutual funds and investment  companies;  insurance  underwriting and
agency;  merchant  banking  activities;   and  activities  that  the  Board  has
determined to be closely related to banking. A qualifying national bank also may
engage,  subject to limitations on investment,  in activities that are financial
in nature,  other  than  insurance

                                       25
<PAGE>

underwriting,  insurance company portfolio investment,  real estate development,
and real estate investment, through a financial subsidiary of the bank.

         The act also  prohibits  new  unitary  thrift  holding  companies  from
engaging in  nonfinancial  activities or from  affiliating  with an nonfinancial
entity.  As a  grandfathered  unitary thrift holding  company,  the Company will
retain its authority to engage in nonfinancial activities.

Company Regulation

         General.  The  Company is a unitary  savings and loan  holding  company
subject to regulatory  oversight by the OTS. As such, the Company is required to
register  and  file  reports  with  the OTS and is  subject  to  regulation  and
examination by the OTS. In addition,  the OTS has enforcement authority over the
Company and its non-savings association  subsidiaries,  should such subsidiaries
be formed,  which also permits the OTS to restrict or prohibit  activities  that
are determined to be a serious risk to the subsidiary savings association.  This
regulation  and  oversight  is  intended  primarily  for the  protection  of the
depositors of the Bank and not for the benefit of  stockholders  of the Company.
The Company is required to file certain reports with, and otherwise comply with,
the rules and regulations of the OTS and the Securities and Exchange  Commission
("SEC").

         QTL Test. As a unitary  savings and loan holding  company,  the Company
generally  will not be  subject  to  activity  restrictions,  provided  the Bank
satisfies  the QTL test.  If the  Company  acquires  control of another  savings
association  as a separate  subsidiary,  it would become a multiple  savings and
loan holding company.  The activities of the Company and any of its subsidiaries
(other than the Bank or any other SAIF-insured savings association) would become
subject  to  restrictions   applicable  to  bank  holding  companies  and  those
activities  specified by the OTS as permissible for a multiple  savings and loan
holding  company  unless such other  associations  each also qualify as a QTL or
were acquired in a supervised acquisition.

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

         Federal law  generally  provides that no "person,"  acting  directly or
indirectly or through or in concert with one or more other persons,  may acquire
"control," as that term is defined in OTS  regulations,  of a federally  insured
savings  institution  without  giving at least 60 days written notice to the OTS
and providing the OTS an opportunity to disapprove the proposed acquisition.  In
addition,  no company may acquire  control of such an institution  without prior
OTS approval.

         Restriction on  Repurchases of Stock.  The Company has the authority to
repurchase stock, subject to statutory and regulatory requirements.  The Company
must tender an offer to all  stockholders,  the  repurchase  would not cause the
Bank  to  become  "undercapitalized"  within  the  meaning  of  the  OTS  prompt
correction  action  regulation and the Company provides to the Regional Director
of the OTS no later  than ten days  prior to the  commencement  of a  repurchase
program  written  notice  containing  a full  description  of the  program to be
undertaken and such program is not disapproved by the Regional Director.


                                       26
<PAGE>

         Federal  Securities Law. The Company's  common stock is registered with
the SEC under the Exchange Act. The Company is subject to the information, proxy
solicitation,  insider trading  restrictions,  and other  requirements under the
Exchange Act.

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

         (a) Properties.

         The Company owns no real  property but utilizes the office owned by the
Bank.  The Bank owns and  operates  from its office  located at 106 Fort Street,
Buffalo,  Wyoming 82834.  The Bank has a total investment in office property and
equipment of $1,014,000 with a net book value of $544,000 at September 30, 1999.

         (b) Investment Policies.

         See "Item 1.  Business"  above for a general  description of the Bank's
investment  policies and any  regulatory  or Board of  Directors'  percentage of
assets limitations  regarding certain investments.  All of the Bank's investment
policies are  reviewed  and approved by the Board of Directors of the Bank,  and
such  policies,  subject to  regulatory  restrictions  (if any),  can be changed
without a vote of stockholders. The Bank's investments are primarily acquired to
produce income, and to a lesser extent, possible capital gain.

         (1)  Investments in Real Estate or Interests in Real Estate.  See "Item
1.  Business -- Lending  Activities,"  "Item 1.  Business --  Regulation  of the
Bank," and "Item 2. Description of Property. (a) Properties" above.

         (2)  Investments  in Real Estate  Mortgages.  See "Item 1.  Business --
Lending Activities" and "Item 1. Business -- Regulation of the Bank."

         (3)  Investments  in  Securities  of or Interests in Persons  Primarily
Engaged in Real Estate Activities. See "Item 1. Business -- Lending Activities,"
"Item  1.  Business  --  Regulation  of the  Bank,"  and  "Item 1.  Business  --
Subsidiary Activity."

         (c)  Description of Real Estate and Operating Data.

         Not Applicable.

Item  3.  Legal Proceedings
---------------------------

         The  Company,  from  time to  time,  is a  party  to  ordinary  routine
litigation,  which arises in the normal  course of  business,  such as claims to
enforce  liens,  condemnation  proceedings on properties in which the Bank holds
security  interests,  claims involving the making and servicing of real property
loans, and other issues incident to the business of the Company.  In the opinion
of management,  currently there are no such claims or lawsuits that would have a
material  adverse  effect on the  Company's  results of  operations or financial
condition.

Item  4.  Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------

         Not applicable.


                                       27
<PAGE>

                                     PART II

Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
--------------------------------------------------------------------------------
         Matters
         -------

         The  information  contained under the section  captioned  "Stock Market
Information" in the Company's  Annual Report to Stockholders for the fiscal year
ended  September  30, 1999 (the  "Annual  Report"),  is  incorporated  herein by
reference.

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

         The  required   information  is  contained  in  the  section  captioned
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" in the Annual Report and is incorporated herein by reference.

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

         The Company's  consolidated  financial  statements  required herein are
contained in the Annual Report and are incorporated herein by reference.

Item 8.  Changes  in  and  Disagreements  With  Accountants  on  Accounting  and
--------------------------------------------------------------------------------
         Financial Disclosure
         --------------------

         Not Applicable.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
--------------------------------------------------------------------------------
        with Section 16(b) of the Exchange Act
        --------------------------------------

         The  information  contained  under the  sections  captioned  "Filing of
Beneficial  Ownership  Reports"  and  "Information  with Respect to Nominees for
Director,  Directors  Continuing  in  Office,  and  Executive  Officers"  in the
Company's  definitive  proxy  statement  for the  Company's  Annual  Meeting  of
Stockholders (the "Proxy Statement") is incorporated herein by reference.

Item 10.  Executive Compensation
--------------------------------

         The  information  contained under the section  captioned  "Director and
Executive Officer Compensation" in the Proxy Statement is incorporated herein by
reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

         (a)      Security Ownership of Certain Beneficial Owners

                  Information  required by this item is  incorporated  herein by
                  reference  to the section  captioned  "Voting  Securities  and
                  Principal Holders Thereof" in the Proxy Statement.

         (b)      Security Ownership of Management

                  Information  required by this item is  incorporated  herein by
                  reference to the section  captioned  "Information with Respect
                  to Nominees for Director,  Directors Continuing in Office, and
                  Executive Officers" in the Proxy Statement.

                                       28
<PAGE>

         (c)      Management of the Company knows of no arrangements,  including
                  any pledge by any person of  securities  of the  Company,  the
                  operation of which may at a subsequent date result in a change
                  in control of the Registrant.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

         The  information  required  by this  item  is  incorporated  herein  by
reference  to  the  section   captioned   "Certain   Relationships  and  Related
Transactions" and "Voting Securities and Principal Holders Thereof" in the Proxy
Statement.

Item 13.  Exhibits, List and Reports on Form 8-K
------------------------------------------------

(a)  Exhibits are either attached as part of this Report or incorporated  herein
     by reference.

<TABLE>
<CAPTION>
               <S>       <C>
                  3.1      Articles of Incorporation of Crazy Woman Creek Bancorp Incorporated*

                  3.2      Bylaws of Crazy Woman Creek Bancorp Incorporated*

                  10.1     Form of Employment Contract with Crazy Woman Creek Bancorp Incorporated*

                  10.2     Stock Option Plan**

                  10.3     Management Stock Bonus Plan**

                  11       Statement  regarding  computation  of  earnings  per share (see Notes 1 and 12 to the
                           Notes to  Consolidated Financial Statements in the Annual Report)

                  13       Annual  Report to  Stockholders  for the fiscal  year ended September 30, 1999.

                  21       Subsidiaries of the Registrant  (See "Item 1.  Business of the Company" and "--Business of the Bank".)

                  23       Consent of Independent Auditors.

                  27       Financial Data Schedule (in electronic filing only)

(b)               Reports on Form 8-K.

                  None.

</TABLE>
------------------
*    Incorporated  by reference to the  Registrant's  Registration  Statement on
     Form SB-2 (33-80557)  declared  effective by the Commission on February 12,
     1996.
**   Incorporated  by reference to the  Registrant's  Proxy Statement filed with
     the Commission on December 27, 1996.

                                       29
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.


                                    CRAZY WOMAN CREEK BANCORP INCORPORATED



                                    By: /s/ Deane D. Bjerke
                                        ----------------------------------------
                                        Deane D. Bjerke
                                        President and Chief Executive Officer
                                        (Duly Authorized Representative)


         In accordance  with the  requirement of the Securities  Exchange Act of
1934,  this Report has been signed below by the  following  persons on behalf of
the Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

<S>                                                <C>
/s/Deane D. Bjerke                                   /s/John B. Snyder
-------------------------------------------          --------------------------------------------
Deane D. Bjerke                                      John B. Snyder
President and Chief Executive Officer                Vice President and Chief Financial Officer
(Principal Executive Officer)                        (Principal Financial and Accounting Officer)
Dated:  December 27, 1999                            Dated:  December 27, 1999


/s/Richard Reimann                                   /s/Douglas D. Osborn
-------------------------------------------          --------------------------------------------
Richard Reimann                                      Douglas D. Osborn
Chairman of the Board                                Director
Dated:  December 27, 1999                            Dated:  December 27, 1999


                                                     /s/Thomas J. Berry
-------------------------------------------          --------------------------------------------
Greg L. Goddard                                      Thomas J. Berry
Director                                             Director
Dated:  December 27, 1999                            Dated:  December 27, 1999


/s/Sandra K. Todd
-------------------------------------------
Sandra K. Todd
Director
Dated:  December 27, 1999
</TABLE>