Exhibit 13.1      2000 Annual Report to security holders




                                TABLE OF CONTENTS


MESSAGE OF THE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER........... 3

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA........................... 4

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS......................... 7

INDEX TO FINANCIAL STATEMENTS............................................27

QUARTERLY RESULTS OF OPERATIONS (Unaudited)..............................61

MANAGEMENT OF THE HOLDING COMPANY AND THE BANK...........................62

SHAREHOLDER INFORMATION..................................................63




         This Annual Report to  Shareholders  contains  certain  forward looking
statements  consisting  of estimates  with respect to the  financial  condition,
results  of  operations  (including  noninterest  expense  and  availability  of
potential  tax  credits)  and  business  of Company  that are subject to various
factors  which  could  cause  actual  results  to differ  materially  from these
estimates.  These  factors  include  changes  in  general,  economic  and market
conditions,  the  development  of an  adverse  interest  rate  environment  that
adversely affects the interest rate spread or other income  anticipated from the
Company's operations and investments,  and changes in depositor  preferences for
financial products.


<PAGE>
                     MESSAGE OF THE CHAIRMAN, PRESIDENT AND
                             CHIEF EXECUTIVE OFFICER

Dear Shareholders:

         We are pleased to report to you the operating  results of North Central
Bancshares,  Inc.  ("North  Central  Bancshares"  or the "Company") for the year
ended  December 31, 2000.  North Central  Bancshares is the holding  company for
First Federal Savings Bank of Iowa (the "Bank).

         For the year ended  December 31, 2000,  North Central  Bancshares'  net
income was $4.0 million or $2.00 diluted earnings per share, as compared to $4.2
million,  or $1.60 diluted  earnings per share,  for the year ended December 31,
1999. Some of our achievements during the past year include:

                                 2000 HIGHLIGHTS

     * Total assets, loans and diluted earnings per share  reached  new  Company
       highs.

           *      Total assets reached a high of $389.0 million
           *      Total net loans increased by 10.9% or $31.3 million
           *      Diluted earnings per share for the year 2000  reached a record
                  $2.00, a 25% increase

     *      Increased quarterly  dividends in April, 2000 to $0.125 per share, a
            25% increase

     *      Repurchased a total of 349,862 shares or 15.5% of outstanding  stock
            during the year ended December 31, 2000

     *      Established a Dividend Reinvestment and Stock Purchase Plan for  the
            Company

     *      Established our presence on the Internet at www.firstfederaliowa.com

     *      Relocated Ames, Iowa office to a new larger building

         Howard A. Hecht will retire from the Board of  Directors at this year's
annual meeting of the Company.  During his twelve year tenure on the Board,  the
Company  and the Bank have  benefitted  tremendously  from his wise  counsel and
input. We all wish him well in his retirement.

         I want to thank our  outstanding  staff who  helped  make 2000  another
successful  year for the  Company.  The  directors,  officers and staff of North
Central Bancshares, Inc. and its subsidiary, First Federal Savings Bank of Iowa,
wish to thank you for your continued  interest and support.  We remain committed
to increasing shareholder value.

                                            Sincerely,



                                            /s/ David M. Bradley
                                            --------------------
                                            David M. Bradley
                                            Chairman, President and
                                            Chief Executive Officer


<PAGE>
                 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

         The selected  consolidated  financial  and other data of North  Central
Bancshares,  Inc. set forth below is derived in part from, and should be read in
conjunction  with,  the  Consolidated  Financial  Statements  and Notes  thereto
presented elsewhere in this Annual Report.
<TABLE>
<CAPTION>
                                                                         At December 31,
                                         -------------------------------------------------------------------------
                                                2000            1999            1998            1997            1996
                                                ----            ----            ----            ----            ----
                                                                         (In thousands)
<S>                                        <C>             <C>             <C>             <C>             <C>
Selected Consolidated Financial
  Condition Data:
 Total assets............................   $  388,998      $  367,433      $  336,690      $  221,954      $  203,093
Cash (noninterest bearing)..............        2,519           8,542           2,435             982             963
Loans receivable, net:(1)
  First mortgage loans secured
    by one-to-four family
    residences..........................      174,413         161,547         145,967         114,286         106,053
  First mortgage loans secured
    by multifamily properties...........       74,644          71,503          63,285          49,895          33,015
  First mortgage loans secured
    by commercial properties............       23,825          17,470          11,168           3,724           5,068
  Consumer loans........................       45,144          36,239          33,612          23,344          21,695
                                           ----------    ------------      ----------      ----------      ----------
    Total loans receivable, net.........      318,026         286,759         254,032         191,249         165,831
Investment securities(2)................       49,682          53,820          63,084          22,279          29,577
Deposits................................      261,167         271,031         246,690         141,124         129,722
Borrowed funds..........................       88,592          55,715          38,832          28,550          22,335
Total shareholders' equity..............       36,398          38,127          48,207          50,417          49,235
</TABLE>
<TABLE>
<CAPTION>
                                                                For the Year Ended December 31,
                                               2000            1999            1998           1997            1996
                                               ----            ----            ----           ----            ----
                                                                        (In thousands)
<S>                                       <C>             <C>             <C>            <C>                <C>
Selected Operating Data:
Interest income.........................  $   27,284      $   24,556      $   23,602     $   16,205         $15,090
Interest expense........................      16,707          13,604          12,869          7,900           6,929
                                          ----------      ----------      ----------     ----------      ----------
   Net interest income before
     provision for loan losses..........      10,577          10,952          10,733          8,305           8,161
Provision for loan losses...............         120             120             210            240             240
                                          ----------      ----------      ----------     ----------      ----------
   Net interest income after
     provision for loan losses..........      10,457          10,832          10,523          8,065           7,921
                                          ----------      ----------      ----------     ----------      ----------
Noninterest income:
     Fees and service charges...........       1,592           1,485           1,243            657             580
     Abstract fees......................       1,233           1,421           1,584          1,222             931
     Other income.......................       1,189           1,157           1,088            658             382
                                          ----------      ----------      ----------     ----------      ----------
       Total noninterest income.........       4,014           4,063           3,915          2,537           1,893
                                          ----------      ----------      ----------     ----------      ----------
Noninterest expense:
     Salaries and employee benefits.....       4,103           4,026           3,482          2,209           2,004
     Premises and equipment.............       1,092             931             812            444             421
     Data processing....................         455             522             553            258             244
     One-time SAIF special assessment...          --              --              --             --             817
     SAIF deposit insurance
       premiums.........                          55             147             143             85             279
     Goodwill                                    472             472             436             28              29
     Other expenses.....................       2,410           2,356           2,146          1,553           1,144
                                          ----------      ----------      ----------     ----------      ----------
       Total noninterest expense........       8,587           8,454           7,572          4,577           4,938
                                          ----------      ----------      ----------     ----------      ----------
Income before income taxes..............       5,884           6,441           6,866          6,025           4,876
Income tax expense......................       1,873           2,241           2,481          2,108           1,744
                                          ----------      ----------      ----------     ----------      ----------
   Net income...........................  $    4,011      $    4,200      $    4,385     $    3,917      $    3,132
                                          ==========      ==========      ==========     ==========      ==========
</TABLE>
                                       -4-
<PAGE>
<TABLE>
<CAPTION>
                                                               At or for the Year Ended December 31,
                                             ------------------------------------------------------------------------
                                                            2000        1999          1998         1997         1996
                                                            ----        ----          ----         ----         ----
<S>                                                      <C>         <C>             <C>        <C>          <C>
Key Financial Ratios and Other Data:
Performance Ratios: (%)
Net interest rate spread (difference between
  average yield on interest-earning
  assets and average cost of interest-
  bearing liabilities)......................               2.57%        2.86%          2.81%       2.87%        3.01%
Net interest margin (net interest income
  as a percentage of average interest-
  earning assets)...........................               2.95         3.35           3.50        4.06         4.33
Return on average assets (net income
  divided by average total assets)..........               1.06         1.21           1.35        1.86         1.62
Return on average equity (net income
  divided by average equity)................              11.08         9.51           8.73        7.94         6.30
Noninterest income to average assets........               1.07         1.21           1.21        1.20         0.98
Efficiency ratio(3).........................              58.85        56.30          51.69       42.21        49.11
Noninterest expense to average assets.......               2.28         2.45           2.34        2.17         2.56
Net interest income after provision for
  loan losses to noninterest expenses.......             121.78       128.13         138.97      176.22       160.40
Financial Condition Ratios: (%) (4)
Equity to assets at period end..............               9.36        10.38          14.32       22.72        24.24
Tangible equity to tangible assets
  at period end (5) (6).....................               7.84         8.68          12.42       22.32        23.80
Average shareholders' equity divided by
  average total assets......................               9.61        12.77          15.52       23.38        25.73
Average tangible shareholders equity divided
  by average tangible total assets (5) (6)..               8.00        10.94          13.71       22.96        25.29
Average interest-earning assets to average
  interest-bearing liabilities..............             108.31       112.05         116.28      130.97       136.02
Asset Quality Ratios: (%) (4)
Nonaccrual loans to total net loans.........               0.33         0.07           0.38        0.08         0.11
Nonperforming assets to total assets(7).....               0.28         0.20           0.34        0.10         0.15
Allowance for loan losses as a percent of
  total loans receivable at end of period...               0.88         0.95           1.03        1.10         1.16
Allowance for loan losses to nonaccrual
   loans.....................................             274.08     1,301.13         279.72    1,468.33     1,059.35
Per Share Data:
Book value per share........................             $19.04       $16.86         $16.26      $15.43       $14.36
Tangible book value per share(5)............              15.71        13.83          13.79       15.09        14.01
Basic earnings per share (8)................               2.04         1.64           1.44        1.23         0.82
Diluted earnings per share (9)..............               2.00         1.60           1.40        1.21         0.82
Dividends declared per share................               0.50         0.40           0.32        0.25         0.28
Dividend payout ratio.......................               0.25         0.24           0.22        0.20         0.34

Key Financial Ratios Excluding
SAIF Assessment: (%) (10)
Return on average assets (net income divided
  by average total assets)..................               1.06%        1.21%          1.35%       1.86%        1.89%
Return on average equity (net income
  divided by average equity)................              11.08         9.51           8.73        7.94         7.34
Efficiency ratio (3)........................              58.85        56.30          51.69       42.21        40.99
Noninterest expense to average assets ......               2.28         2.45           2.34        2.17         2.13
Net interest income after provision for
  loan losses to noninterest expenses.......             121.78       128.13         138.97      176.22       192.21
</TABLE>
                            (Notes on following page)

                                       -5-
<PAGE>
[FN]
(1)      Loans receivable,  net represents total loans less discounts,  loans in
         process,  net deferred  loan fees and  allowance  for loan losses.  The
         allowance for loan losses at December 31, 2000,  1999,  1998,  1997 and
         1996 was $2.8  million,  $2.8 million,  $2.7 million,  $2.2 million and
         $2.0 million, respectively.

(2)      Includes  interest-bearing  deposits with the Federal Home Loan Bank of
         Des Moines (the "FHLB").

(3)      Efficiency ratio represents  noninterest  expense divided by the sum of
         net interest income before  provision for loan losses plus  noninterest
         income.

(4)      Asset Quality  Ratios are end of period  ratios.  With the exception of
         end of period ratios,  all ratios are based on average monthly balances
         during the indicated periods and are annualized where appropriate.

(5)      Tangible  equity  consists of  stockholders'  equity less  goodwill and
         title plant. Goodwill and title plant at December 31, 2000, 1999, 1998,
         1997 and 1996  was $6.4  million,  $6.8  million,  $7.3  million,  $1.1
         million and $1.2 million, respectively.

(6)      Tangible assets consists of total assets less goodwill and title plant.
         Goodwill  and title plant at December 31, 2000,  1999,  1998,  1997 and
         1996 was $6.4  million,  $6.8 million,  $7.3 million,  $1.1 million and
         $1.2 million, respectively.

(7)      Nonperforming assets  consists  of  nonaccrual  loans, foreclosed  real
         estate and other nonperforming assets.

(8)      Basic  earnings per share  information  is  calculated  by dividing net
         income  by the  weighted  average  number of  shares  outstanding.  The
         weighted  average number of shares  outstanding  for basic earnings per
         share  computation for 2000,  1999, 1998, 1997 and 1996 were 1,963,686,
         2,562,940, 3,048,148, 3,184,269 and 3,818,273, respectively.

(9)      Diluted  earnings per share  information  is calculated by dividing net
         income by the weighted average number of shares  outstanding,  adjusted
         for the effect of dilutive  potential common shares  outstanding  which
         consists of stock  options  granted.  The  weighted  average  number of
         shares outstanding for diluted earnings per share computation for 2000,
         1999,  1998,  1997  and  1996  were  2,006,340,  2,621,542,  3,132,833,
         3,241,069 and 3,818,273, respectively.

(10)     For 1996,  excludes the one-time $817,000  (pre-tax) special assessment
         for the  recapitalization  of the Savings  Association  Insurance  Fund
         ("SAIF").

(11)     As of the close of business on January 30, 1998, the Company  completed
         the  Acquisition of Valley  Financial  Corp.  Subsequent to January 30,
         1998, the information  contained in the Financial  Selected Data tables
         reflect the effect of the Acquisition.  Financial data prior to January
         30, 1998, does not reflect the Acquisition and is based upon historical
         figures.
</FN>
                                       -6-
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

         North  Central  Bancshares,  Inc.  (the  "Holding  Company"),  an  Iowa
corporation,  is the holding company for First Federal Savings Bank of Iowa (the
"Bank"), a federally chartered savings bank.  Collectively,  the Holding Company
and the Bank are referred to herein as the  "Company."  The Holding  Company was
organized on December 5, 1995 at the  direction of the Board of Directors of the
Bank for the purpose of acquiring  all of the capital  stock to be issued by the
Bank in connection with the conversion and  reorganization of the Bank and North
Central  Bancshares,  M.H.C.  (the "MHC")  from the mutual to the stock  holding
company  structure  (these  transactions  are  collectively  referred  to as the
"Conversion"). On March 20, 1996, upon completion of the Conversion, the Holding
Company issued an aggregate of 4,011,057  shares of its common stock,  par value
$0.01 per share  ("Common  Stock"),  of which  1,385,590  shares  were issued in
exchange for all of the Bank's issued and outstanding shares,  except for shares
owned by the MHC which were cancelled,  and 2,625,467  shares of which were sold
in  Subscription  and Community  Offerings at a price of $10.00 per share,  with
gross  proceeds  amounting to  $26,254,670.  At this time,  the Holding  Company
conducts  business  as a  unitary  savings  and  loan  holding  company  and the
principal  business of the Holding  Company  consists  of the  operation  of its
wholly-owned subsidiary, the Bank.

         The  profitability of the Company depends primarily on its level of net
interest  income,  which  is  the  difference  between  interest  earned  on the
Company's  interest-earning assets, consisting primarily of loans and investment
securities,  and  the  interest  paid  on  interest-bearing  liabilities,  which
primarily consist of deposits and advances from the FHLB. Net interest income is
a function  of the  Company's  interest  rate  spread,  which is the  difference
between the average yield on  interest-earning  assets and the average rate paid
on interest-bearing liabilities, as well as a function of the average balance of
interest-earning  assets  as  compared  to  interest-bearing   liabilities.  The
Company's  net  income is  affected  by its level of  noninterest  income  which
primarily   consists  of  service  fees  and  charges  and  abstract  fees,  and
noninterest  expense,  which  primarily  consists of  compensation  and employee
benefit expenses, premises and equipment and data processing. Net income also is
affected   significantly  by  general   economic  and  competitive   conditions,
particularly  changes in market interest rates,  government policies and actions
of regulatory authorities, which events are beyond the control of the Company.

Acquisition of Valley Financial Corp.

         As of the close of business on January 30, 1998 (the "Effective Time"),
the Company  completed the acquisition ( the  "Acquisition") of Valley Financial
Corp., ("Valley Financial"),  pursuant to an Agreement and Plan of Merger, dated
as of September 18, 1997, (the "Merger Agreement").  The Acquisition resulted in
the merger of Valley Financial's  wholly owned subsidiary,  Valley Savings Bank,
("Valley  Savings")  with  and  into the  Bank,  with the Bank as the  resulting
financial institution.  Valley Savings, headquartered in Burlington, Iowa, was a
federally-chartered  stock  savings  bank with three branch  offices  located in
southeastern Iowa.

         In connection with the  Acquisition,  each share of Valley  Financial's
common  stock,  par value $1.00 per share,  issued and  outstanding  (other than
shares held as treasury  stock of Valley  Financial) was cancelled and converted
automatically  into the right to receive  $525.00 per share in cash  pursuant to
the  terms  and  conditions  of  the  Merger  Agreement.  As  a  result  of  the
Acquisition, shareholders of Valley Financial were paid $14,726,250 in cash.

SAIF Recapitalization

         In response to the disparity in deposit insurance assessment rates that
existed  between  banks insured by the Bank  Insurance  Fund ("BIF") and thrifts
insured by the SAIF, the Deposits Funds  Insurance Act of 1996 (the "Funds Act")
was enacted on September 30, 1996. The Funds Act authorized the Federal  Deposit
Insurance   Corporation   ("FDIC")  to  impose  a  special   assessment  on  all
institutions   with   SAIF-assessable   deposits  in  the  amount  necessary  to
recapitalize the SAIF. The Company's  special SAIF assessment of $817,000 before
taxes  (and  $512,000  net of taxes)  was  charged  against  income in the third
quarter of 1996 and
                                       -7-
<PAGE>
paid in November 1996 (the "SAIF Assessment").  In view of the  recapitalization
of the SAIF, the FDIC reduced the assessment rates for SAIF-assessable deposits.
For the fiscal years ended  December 31, 2000,  1999 and 1998, the Bank incurred
$55,000, $147,000 and $143,000,  respectively, in deposit insurance premiums and
for the interest payments on the FICO bonds issued by the Financing  Corporation
to recapitalize the now defunct Federal Savings and Loan Insurance Corporation.

Business Strategy

         The  Company's  current  business  strategy is to operate the Bank as a
well-capitalized,  profitable and  independent  community-oriented  savings bank
dedicated to providing  quality  customer  service.  Generally,  the Company has
sought to implement this strategy  primarily by using deposits and advances from
the FHLB as its source of funds and maintaining a substantial part of its assets
in loans secured by one- to four-family  residential  real estate,  multi-family
loans and  commercial  real estate located both inside and outside the Company's
market area, consumer and other loans and in other liquid investment securities.
Specifically,   the  Company's  business  strategy  incorporates  the  following
elements:   (1)  operating  as  a  community-oriented   financial   institution,
maintaining  a strong  core  customer  base by  providing  quality  service  and
offering  customers  the  access  to  senior  management  and  services  that  a
locally-headquartered  institution can offer; (2) maintaining high asset quality
by emphasizing  investment in residential mortgage loans (including the purchase
of qualifying  multifamily  and  commercial  real estate  loans) and  securities
issued or  guaranteed by the United  States  Government or agencies  thereof and
mortgage-backed  securities;  (3)  maintaining  capital in excess of  regulatory
requirements  and growing only to the extent that adequate capital levels can be
maintained;  (4) controlling  noninterest  expenses;  (5) managing interest rate
risk  exposure  while  achieving  desirable  levels  of  profitability;  and (6)
increasing  noninterest  income  through  other  increases  in fees and  service
charges.

         Highlights of the Company's business strategy are as follows:

         Community-Oriented Institution. The Company is committed to meeting the
financial  needs of the  communities in which it operates.  Based in part on its
participation in several different  programs designed to facilitate  residential
lending  to low-  and  moderate-income  households,  the Bank  has  received  an
"Outstanding"  Community  Reinvestment  Act rating.  The Company  believes it is
large enough to provide a full range of personal and business financial services
and yet is small  enough to be able to provide such  services on a  personalized
and efficient basis.  Management believes that the Company can be more effective
in  servicing  its  customers  than  many  of  its  competitors  which  are  not
headquartered  locally.  Such proximity allows senior  management of the Bank to
quickly and personally respond to customer needs and inquiries.

         Strong  Retail  Deposit  Base.  In 2000,  the Company had a  relatively
strong and stable  retail  deposit  base drawn from its offices  located in Fort
Dodge, Ames, Nevada, Perry, Burlington and Mount Pleasant, Iowa. At December 31,
2000,  31.6% of the deposit base, or $82.5 million,  consisted of core deposits,
which  included  money market  accounts,  savings  accounts,  NOW accounts,  and
noninterest-bearing  demand accounts.  Core deposits are considered to be a more
stable and lower cost  source of funds than  certificates  of deposit or outside
borrowings.  The Company will continue to emphasize retail deposits by providing
quality customer service,  offering  competitive rates on deposit accounts,  and
providing depositors with a full range of accounts.

         Asset Quality and Emphasis on Residential Mortgage Lending. The Company
has  historically  emphasized  residential real estate  financing,  and has been
primarily a portfolio lender.  The Company expects to continue its commitment to
financing the purchase or improvement  of residential  real estate in its market
area.  At December 31, 2000,  44.8% of the Company's  total assets  consisted of
one-to-four  family  residential  first  mortgage  loans.  To  supplement  local
mortgage  loan  originations  and  to  diversify  its  mortgage  loan  portfolio
geographically,  the  Company  has  purchased  loans in the  secondary  mortgage
market, with an emphasis on multifamily and commercial real estate loans secured
by  properties  outside  the State of Iowa (the "out of state  properties").  At
December 31, 2000, the Company's portfolio of loans which were either originated
or purchased by the Company and secured by out of state properties  consisted of
$9.5 million of one-to-four  family  residential  mortgage loans, or 2.9% of the
Company's total loan portfolio,  and $92.2 million of multifamily and commercial
loans, or 28.6% of the Company's total loan portfolio. At December 31, 2000, the
Company's ratio of  nonperforming  assets to total assets was 0.28%. The Company
also invests in United
                                       -8-
<PAGE>
States  Government  agencies,  State  and  Local  Obligations,   mortgage-backed
securities, interest-earning deposits, equity securities and FHLB stock.

         Generally,  the yield on mortgage loans originated and purchased by the
Company is greater than that of  securities  purchased  by the  Company.  Future
economic  conditions and continued  strong banking  competition  could result in
diminished  lending  opportunities.  If new loan originations are reduced in the
future,  the Company may increase its  investment in securities and in purchased
mortgage loans outside its market area.

         Capital Strength and Controlled Internal Growth. Total equity decreased
from $49.2 million at December 31, 1996 to $36.4 million at December 31, 2000, a
decrease of 26.1%.  Total  assets have  increased by $185.9  million,  or 91.5%,
since December 31, 1996. As a result,  the ratio of total equity to total assets
has decreased  from 24.2% at December 31, 1996 to 9.4% at December 31, 2000. The
Company's growth can be attributed to the Acquisition and the Company's emphasis
on the origination and purchase of residential  mortgage loans,  the purchase of
multifamily and commercial mortgage loans and the origination of consumer loans.
The  Company's  growth  has been  funded  through  a  combination  of the use of
proceeds  from the stock  offerings  held in 1994 and 1996,  FHLB  advances  and
deposit  growth.  The Company  intends to maintain strong levels of total equity
and capital  ratios by  controlling  growth to the extent that adequate  capital
levels can be maintained.

         Acquisition Strategy. With the consummation of the Acquisition in 1998,
the Company has grown through the purchase of another financial institution. The
Acquisition  resulted  in an increase in total  assets of  approximately  42.0%,
making  effective use of the Company's  excess  capital.  The Company intends to
continue  evaluating  the  possibility  of  acquiring  branch  offices and other
financial institutions,  which involves executing confidentiality agreements and
conducting due diligence.  Such evaluations by the Company provide no indication
of the likelihood that the Company will enter into any agreement to engage in an
acquisition transaction as, in many instances,  such transactions are subject to
competitive  bidding  and, in every  instance,  are subject to  extensive  arm's
length negotiations once the Company's evaluation is complete.

         Increasing  Noninterest  Income.  The Company has attempted to increase
its level of noninterest  income from both new and traditional lines of business
to supplement net interest income. The Company currently owns abstract companies
in  Webster,  Boone and  Jasper  counties  in Iowa,  through  First  Iowa  Title
Services, Inc. ("First Iowa"), the Bank's wholly owned subsidiary.  The abstract
business  performed by First Iowa  replaces  the  function of a title  insurance
company.  The Company  believes  that First Iowa can continue to be an excellent
source of fee income.  Noninterest  income from such business for the year ended
December 31, 2000 was $1.2 million,  offset by noninterest expense  attributable
to First Iowa. The Company also owns a mortgage  banking company in Ames,  Iowa,
First Iowa  Mortgage,  Inc.  ("First Iowa  Mortgage"),  the Bank's  wholly owned
subsidiary.  On January 30, 1998, the Company  acquired First Iowa Mortgage as a
part of the  Acquisition  of  Valley  Financial.  Non-interest  income  for such
business  for  the  year  ended  December  31,  2000  was  $231,000,  offset  by
non-interest expense attributable to First Iowa Mortgage.

         Liquidity and Interest Rate Risk Management. Management seeks to manage
the Company's  interest rate risk exposure by monitoring  the levels of interest
rate sensitive assets and liabilities while  maintaining an acceptable  interest
rate spread. At December 31, 2000, total  interest-bearing  liabilities maturing
or repricing within one year exceeded total interest-earning  assets maturing or
repricing in the same period by $29.9  million,  representing  a one-year gap to
total assets ratio of negative 7.7% as compared to a negative  14.7% at December
31, 1999.  To reduce the potential  volatility  of the  Company's  earnings in a
changing interest rate  environment,  the Company has emphasized the origination
of 5 and 7-year fixed rate mortgage  loans that convert to  adjustable  rates at
the  conclusion of their  initial terms and have overall  maturities of up to 30
years,  adjustable-rate  loans,  investment  in  short  to  medium  term  U.  S.
Government agencies,  mortgage-backed  securities and has sought to lengthen the
terms of its deposits through its pricing strategies with respect to longer term
certificates  of deposit.  See "--  Discussion  of Market Risk -- Interest  Rate
Sensitivity Analysis".

                                       -9-
<PAGE>
Liquidity and Capital Resources

        OTS  regulations  require  that  thrift  institutions  such as the  Bank
maintain an average daily balance of liquid assets (cash, certain time deposits,
banker's  acceptances and specified United States  Government,  state or federal
agency  obligations)  equal to a monthly  average of not less than 4% of its net
withdrawable  deposits plus  short-term  borrowings.  At December 31, 2000,  the
amount of the Bank's liquid assets were $26.0 million,  resulting in a liquidity
ratio of 8.3%.

        The Company's  primary sources of funds are deposits,  amortization  and
prepayment  of  loans,  maturities  of  securities  and other  investments,  and
earnings  and  funds  provided  from  operations.   While  scheduled   principal
repayments on loans are a relatively  predictable source of funds, deposit flows
and loan prepayments are greatly influenced by general interest rates,  economic
conditions, and competition.  The Company manages the pricing of its deposits to
maintain  a desired  deposit  balance.  In  addition,  the  Company  invests  in
short-to- medium term  interest-earning  assets, which provide liquidity to meet
lending requirements.  At December 31, 2000, $362,000, or 1.2%, of the Company's
investment  portfolio,  excluding  equity and mortgage  backed  securities,  was
scheduled  to  mature  in one year or less and  $17.0  million,  or  56.9%,  was
scheduled  to mature  in one to five  years and  $12.5  million,  or 41.9%,  was
scheduled to mature in more than five years.  Certificates of deposit  scheduled
to mature in less than one year, at December 31, 2000,  totaled  $93.0  million.
Based on prior  experience,  management  believes that a significant  portion of
such deposits will remain with the Company. If the Company requires funds beyond
its ability to generate them  internally,  borrowing  agreements  exist with the
FHLB  which  provide  an  additional  source of funds.  The  amount of  eligible
collateral  for  blanket  lien  pledges  from the FHLB was $165.8  million as of
December  31,  2000.  For  additional  information  about  cash  flows  from the
Company's operating,  financing and investing activities,  see the Statements of
Cash Flows included in the Consolidated Financial Statements.

        At December 31, 2000, the Company had  outstanding  loan  commitments of
$3.2 million. This amount does not include undisbursed overdraft loan privileges
and the undisbursed home equity lines of credit.

        The main sources of liquidity  for the Holding  Company are net proceeds
from the sale of stock and payments  from the Bank in the form of dividends  and
loan   repayments.   The  main  cash  outflows  are  payments  of  dividends  to
shareholders  and funds used to repurchase  the Common Stock.  During 2000,  the
Holding  Company  repurchased  349,862  shares of its Common Stock.  The Holding
Company's  ability to pay dividends to  shareholders  depends  substantially  on
dividends and loan payments  received from the Bank. The Bank may not declare or
pay cash  dividends  on or  repurchase  any of its shares of common stock if the
effect  thereof  would cause equity to be reduced  below  applicable  regulatory
capital requirements or the amount required to be maintained for the liquidation
account.  For a description of the liquidation  account,  see Notes 16 and 17 to
the Consolidated  Financial Statements.  Unlike the Bank, the Holding Company is
not subject to OTS  regulatory  restrictions  on the payment of dividends to its
shareholders,  however,  it is subject to the requirements of Iowa law. Iowa law
generally  prohibits the Holding Company from paying a dividend if, after giving
it effect,  either of the following would result:  (a) the Holding Company would
not be able to pay its debts as they become due in the usual course of business;
or (b) the  Holding  Company's  total  assets  would be less than the sum of its
total liabilities,  plus the amount that would be needed, if the Holding Company
were to be dissolved at the time of  distribution,  to satisfy the  preferential
rights upon dissolution of shareholders whose  preferential  rights are superior
to those receiving the distribution.

        The primary investing  activities of the Company are the origination and
purchase of mortgage and other loans and the purchase of securities.  During the
years ended December 31, 2000,  1999 and 1998, the Company's  disbursements  for
loan originations and purchases  totaled $86.3 million,  $91.7 million and $85.2
million,  respectively.  These  activities were funded  primarily by net deposit
inflows,  principal repayments on loans,  proceeds from the maturity and sale of
securities  and FHLB  advances.  Net cash  flows  used in  investing  activities
amounted to $25.4  million,  $37.2  million and $2.2 million for the years ended
December  31,  2000,  1999 and 1998,  respectively.  Net cash flows  provided by
financing  activities amounted to $16.4 million,  $28.0 million and $9.4 million
for the years ended December 31, 2000, 1999 and 1998, respectively.

        The OTS regulations require savings  associations,  such as the Bank, to
meet three minimum capital  standards:  a tangible capital ratio  requirement of
1.5% of total assets as adjusted under the OTS regulations; a

                                      -10-
<PAGE>
leverage ratio  requirement of 3% of core capital to such adjusted total assets;
and a  risk-based  capital  ratio  requirement  of 8% of core and  supplementary
capital to total  risk-based  assets.  The Bank satisfied  these minimum capital
standards at December 31, 2000 with tangible and leverage capital ratios of 7.4%
and a total  risk-based  capital ratio of 14.0%.  In  determining  the amount of
risk-weighted  assets for  purposes of the risk- based  capital  requirement,  a
savings association must compute its risk-based assets by multiplying its assets
and certain  off-balance  sheet items by  risk-weights,  which range from 0% for
cash and obligations  issued by the United States  Government or its agencies to
100%  for  consumer  and  commercial  loans,  as  assigned  by the  OTS  capital
regulations. These capital requirements,  which are applicable to the Bank only,
do not  consider  additional  capital  held at the Holding  Company  level,  and
require  certain  adjustments to  shareholder's  equity to arrive at the various
regulatory capital amounts.

        The table  below  presents  the  Bank's  regulatory  capital  amounts as
compared to the OTS regulatory capital requirements at December 31, 2000:

<TABLE>
<CAPTION>

                                                 Capital              Excess
                               Amount          Requirements           Capital
                               ------          ------------           -------
                                              (In thousands)

<S>                          <C>                <C>                 <C>
Tangible capital...........  $ 28,456           $  5,732            $ 22,724
Core capital...............    28,456             11,464              16,992
Risk-based capital.........    31,241             17,830              13,411
</TABLE>

                                      -11-
<PAGE>
Discussion of Market Risk--Interest Rate Sensitivity Analysis

     As a financial institution,  the Company's primary component of market risk
is interest rate  volatility.  Fluctuations  in interest  rates will  ultimately
impact both the level of income and expense  recorded on a large  portion of the
Bank's  assets and  liabilities,  and the market  value of all  interest-earning
assets,  other than those which  possess a short term to maturity.  Since all of
the Company's  interest-bearing  liabilities  and virtually all of the Company's
interest-earning  assets are located at the Bank, virtually all of the Company's
interest rate risk management  procedures are performed at the Bank level. Based
upon the  Bank's  nature  of  operations,  the Bank is not  subject  to  foreign
currency  exchange  or  commodity  price  risk.  The  Bank's  real  estate  loan
portfolio,  within Iowa, is subject to risks  associated with the local economy.
The Company has sought to  diversify  its loan  portfolio  by  purchasing  loans
secured by  properties  outside of Iowa.  At  December  31,  2000,  31.5% of the
Company's  loan  portfolio was secured by properties  outside the State of Iowa,
located in twenty- six states.  See "Asset  Quality."  The Bank does not own any
trading assets.  At December 31, 2000,  neither the Company nor the Bank had any
hedging transactions in place, such as interest rate swaps and caps.

     The Company seeks to manage its interest risk by monitoring and controlling
the variation in repricing  intervals  between its assets and liabilities.  To a
lesser  extent,  the Company  also  monitors its interest  rate  sensitivity  by
analyzing  the estimated  changes in market value of its assets and  liabilities
assuming various interest rate scenarios.  As discussed more fully below,  there
are a variety of factors which  influence the repricing  characteristics  of any
given asset or liability.

     The matching of assets and  liabilities  may be analyzed by  examining  the
extent to which such assets and liabilities are "interest rate sensitive" and by
monitoring  an  institution's  interest  rate  sensitivity  "gap."  An  asset or
liability is said to be interest rate sensitive within a specific time period if
it  will  mature  or  reprice  within  that  time  period.  The  "interest  rate
sensitivity   gap"  is  defined  as  the   difference   between  the  amount  of
interest-earning  assets maturing or repricing within a specific time period and
the amount of  interest-bearing  liabilities  maturing or repricing  within that
time  period.  A gap is  considered  positive  when the amount of interest  rate
sensitive  assets exceeds the amount of interest rate sensitive  liabilities.  A
gap  is  considered   negative  when  the  amount  of  interest  rate  sensitive
liabilities  exceeds  the amount of interest  rate  sensitive  assets.  During a
period of rising interest  rates, a negative gap would tend to adversely  affect
net interest  income while a positive  gap would tend to  positively  affect net
interest  income.  Similarly,  during a period  of  falling  interest  rates,  a
negative  gap would  tend to  positively  affect  net  interest  income  while a
positive gap would tend to adversely affect net interest income.

     The  Company's  policy in recent  years has been to manage its  exposure to
interest rate risk  generally by focusing on the maturities of its interest rate
sensitive  assets  and  by  emphasizing   adjustable-rate  mortgage  loans,  and
maintaining  a level of  liquidity  by  investing  in short to medium  term U.S.
government agencies,  mortgage-backed securities and short-term interest-earning
deposits. The Company generally offers competitive rates on deposit accounts and
prices  certificates  of deposit to provide  customers with incentives to choose
certificates of deposit with longer terms.

     At  December  31,  2000,  total  interest-bearing  liabilities  maturing or
repricing  within one year exceeded total  interest-earning  assets  maturing or
repricing in the same period by $29.9 million, representing a one-year gap ratio
of negative 7.7%, compared to a one-year gap ratio of negative 14.7% at December
31, 1999.  To manage the potential  volatility  of the  Company's  earnings in a
changing interest rate  environment,  the Company has emphasized the origination
of 5 and 7-year fixed rate mortgage  loans that convert to  adjustable  rates at
the  conclusion of their  initial terms and have overall  maturities of up to 30
years and has sought to lengthen the terms of its  deposits  through its pricing
strategies  with  respect to longer  term  certificates  of  deposit.  The Chief
Executive Officer  regularly meets with the Bank's senior executive  officers to
review  trends in deposits as well as mortgage and consumer  lending.  The Chief
Executive  Officer also regularly meets with the investment  committee to review
the investment  portfolio.  The Chief Executive Officer reports quarterly to the
Board of Directors on interest  rate risks and trends,  as well as liquidity and
capital ratios and requirements.

     Gap Table.  The following table sets forth the amounts of  interest-earning
assets and interest-bearing  liabilities  outstanding at December 31, 2000 which
are expected to reprice or mature, based upon certain

                                      -12-
<PAGE>
assumptions,  in each of the future time periods shown.  Except as stated below,
the  amounts of assets and  liabilities  shown that  reprice or mature  during a
particular  period were  determined  in  accordance  with the earlier of term of
repricing  or  the  contractual  terms  of  the  asset  or  liability.   Certain
assumptions  used in preparing the table are set forth in the  following  table.
Management  believes that these  assumptions  approximate  actual experience and
considers them appropriate and reasonable.
<TABLE>
<CAPTION>
                                                                           At December 31, 2000 (1)
                                        -------------------------------------------------------------------------------------------
                                          Within          1-3          3-5          5-10         10-20        Over 20
                                          1 Year         Years        Years         Years        Years         Years        Total
                                          ------         -----        -----         -----        -----         -----        -----
                                                                           (Dollars in thousands)
<S>                                     <C>           <C>           <C>           <C>          <C>           <C>           <C>
Interest-earning assets:
    First mortgage loans
      Adjustable (2).................   $ 87,648      $ 71,313      $ 43,450      $     --     $     --     $     --       $202,411
      Fixed (2)......................     18,041        26,103        16,008        20,541        1,658            21        82,372
   Consumer and other loans..........     18,516        18,667         8,074           525           25             1        45,808
   Investment securities(3)(4).......     17,159         6,219        14,835         3,121           --            --        41,334
                                        --------      --------      --------      --------     --------      --------      --------
      Total interest-earning assets..   $141,364      $122,302      $ 82,367      $ 24,187     $  1,683      $     22      $371,925
                                        ========      ========      ========      ========     ========      ========      ========

Rate sensitive liabilities:
   Savings accounts..................   $  3,693      $  5,609      $  3,864      $  5,186     $  2,848      $    523      $ 21,723
   NOW accounts......................     11,183        11,484         4,558         2,702          295             3        30,225
   Money market accounts.............     19,370         5,149            --            --           --            --        24,519
   Certificate accounts..............     93,149        61,996        23,274           209           --            --       178,628
   Noninterest bearing deposits......      6,071            --            --            --           --            --         6,071
   FHLB advances and other liabilities    37,803        44,769           983         5,038           --            --        88,593
                                        --------      --------      --------      --------     --------      --------      --------
     Total interest-bearing liabilities $171,269      $129,007      $ 32,679      $ 13,135     $  3,143      $    526      $349,759
                                        ========      ========      ========      ========     ========      ========      ========

Interest sensitivity gap.............   $(29,905)     $ (6,705)     $ 49,688      $ 11,052     $ (1,460)     $   (504)
Cumulative interest-sensitivity gap..   $(29,905)     $(36,610)     $ 13,078      $ 24,130     $ 22,670      $ 22,166

Interest sensitivity gap to total assets   (7.70)%       (1.73)%       12.79%         2.85%       (0.38)%       (0.13)%
Cumulative interest-sensitivity gap to
   total assets......................      (7.70)        (9.42)         3.37          6.21         5.84          5.71
Ratio of interest-earning assets to
   interest-bearing liabilities......      82.54         94.80        252.05        184.14        53.55          4.18        106.34
Cumulative ratio of interest-earning
   assets to interest-bearing liabilities  82.54%        87.81%       103.93%       106.97%      106.49%       106.34%       106.34%

Total assets.........................   $388,456      $388,456      $388,456      $388,456     $388,456      $388,456      $388,456
Cumulative interest bearing assets...   $141,364      $263,666      $346,033      $370,220     $371,903      $371,925      $371,925
Cumulative interest sensitive           $171,269      $300,276      $332,955      $346,090     $349,233      $349,759      $349,759
   liabilities
</TABLE>
[FN]
(1)        The following assumptions were used in regard to prepayment speed for
           loans:  (i)  multifamily  adjustable  rate  loans  will  prepay at 10
           percent per year,  (ii)  multifamily  fixed rate loans and commercial
           real estate loans (both fixed and adjustable  rate) will prepay at 12
           percent,  (iii) one-to-four family fixed rate loans will prepay at 15
           percent,   (iv)  one-to-four  family   adjustable,   mortgage  backed
           securities,  consumer  and all other loans will prepay at 20 percent.
           Besides prepayment assumptions,  the chart above also includes normal
           principal  payments  based  upon  the  loan  contractual  agreements.
           Savings  accounts are assumed to be withdrawn at an annual rate of 17
           percent.  NOW  accounts are assumed to be withdrawn at an annual rate
           of 37 percent.  Money Market  accounts are assumed to be withdrawn at
           79 percent  during the first year with the  balance  being  withdrawn
           within the one-to-three  year category.  These assumptions are annual
           percentages based on remaining balances and should not be regarded as
           indicative  of the actual  prepayments  and  withdrawals  that may be
           experienced by the Company. Certain short comings are inherent in the
           analysis presented by the foregoing table.

(2)        Includes $417,000 and $7.8  million in mortgage-backed  securities in
           adjustable and fixed first mortgage loans, respectively.

(3)        Includes other equity securities,  interest-bearing deposits and FHLB
           stock,  all of  which  are  shown  in the  within-one-year  category.
           Components  include  interest-bearing  deposits  of $6.3  million and
           securities available for sale of $28.9 million.

(4)        Includes FHLMC preferred stock and  FNMA preferred stock,  which  are
           included in the appropriate repricing  category based upon their call
           dates.
</FN>
           Certain shortcomings are inherent in the method of analysis presented
in the Gap Table. For example,  although certain assets and liabilities may have
similar maturities or periods to repricing,  they may react in different degrees
to changes in market interest  rates.  Also, the interest rates on certain types
of assets and liabilities may fluctuate in advance of changes in market interest
rates,  while  interest rates on other types of assets and  liabilities  may lag
behind  changes  in  market  rates.   Additionally,   certain  assets,  such  as
adjustable-rate  loans,  have features which restrict  changes in interest rates
both on a short-term basis and over the life of the asset. Further, in the event
of changes in interest  rates,  prepayment  and early  withdrawal  levels  would
likely  deviate  significantly  from  those  assumed in  calculating  the table.
Finally,  the ability of many borrowers to service their  adjustable-rate  loans
may decrease in the event of an interest rate increase.

                                      -13-
<PAGE>
         NPV  Analysis.  As part of its efforts to maximize net interest  income
and manage the risks  associated with changing  interest rates,  management uses
the "market value of portfolio  equity"  ("NPV")  methodology  which the OTS has
adopted as part of its capital regulations.

         Under this  methodology,  interest  rate risk  exposure  is assessed by
reviewing the  estimated  changes in Net Interest  Income  ("NII") and NPV which
would  hypothetically  occur if interest  rates  rapidly  rise or fall along the
yield curve. Projected values of NII and NPV at both higher and lower regulatory
defined rate  scenarios are compared to base case values (no change in rates) to
determine the sensitivity to changing interest rates.

         Presented  below,  as of  December  31,  2000,  is an  analysis  of the
Company's  interest  rate risk ("IRR") as measured by changes in NPV and NII for
instantaneous  and  sustained  parallel  shifts  of 100  basis  points in market
interest rates.  Such limits have been  established  with  consideration  of the
impact of various rate changes and the Company's current capital position.

<TABLE>
<CAPTION>
                             Interest Rate Sensitivity of Net Portfolio Value (NPV)(1)
                                    Net Portfolio Value                  NPV as % of PV of Assets
                        ---------------------------------------       ---------------------------

   Change in Rates      $ Amount       $ Change        % Change       NPV Ratio         Change
   ---------------      --------       --------        --------       ---------         ------
                                            (Dollars in thousands)

<S>                      <C>            <C>                <C>           <C>             <C>
    +300 bp              30,835         -2,693              -8           8.31             -35bp
    +200 bp              32,364         -1,165              -3           8.59              -7bp
    +100 bp              33,348           -180              -1           8.72               6bp
       0 bp              33,529             --              --           8.66                --
    -100 bp              32,383         -1,146              -3           8.28             -38bp
    -200 bp              30,835         -2,694              -8           7.81             -84bp
    -300 bp              29,791         -3,738             -11           7.47            -119bp
</TABLE>
[FN]
(1) Denotes rate shock used to compute interest rate risk capital component.
</FN>
         As is the case with the Gap Table, certain shortcomings are inherent in
the  methodology  used in the above  interest rate risk  measurements.  Modeling
changes in NPV  require the making of certain  assumptions  which may or may not
reflect the manner in which actual yields and costs respond to changes in market
interest  rates.  In this  regard,  the NPV  Table  presented  assumes  that the
composition of the Company's interest sensitive assets and liabilities  existing
at the beginning of a period remains constant over the period being measured and
also assumes 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 Table provides an
indication of the Company's interest rate risk exposure at a particular point in
time,  such  measurements  are not  intended  to and do not  provide  a  precise
forecast of the effect of changes in market  interest rates on the Company's net
interest income and will differ from actual results.

Asset Quality

         Delinquencies.  The Company's collection procedures provide that when a
loan is 15 days past due, a computer-generated late charge notice is sent to the
borrower  requesting  payment,  plus  a  late  charge  for  mortgage  loans.  If
delinquency continues, on the 20th day past due, a telephone call is made to the
borrower seeking payment.  If the loan is 30 days past due, a delinquent  notice
is mailed along with a letter  advising that the  mortgagors are in violation of
the terms of their  mortgage  contract.  If a loan becomes 60 days past due, the
loan becomes  subject to possible legal action.  After 90 days, if  satisfactory
payment terms are not reached with the  borrower,  foreclosure  proceedings  are
initiated.  To the  extent  required  by the  Department  of  Housing  and Urban
Development  ("HUD")  regulations,  generally  within 45 days of delinquency,  a
Section  160 HUD  notice  is given to the  borrower  which  provides  access  to
consumer counseling services.

         It is sometimes  necessary and desirable to arrange  special  repayment
schedules with mortgagors to prevent  foreclosure or filing for bankruptcy.  The
mortgagors are required to submit a written repayment  schedule which is closely
monitored  for  compliance.  Under these terms,  the account is brought to date,
usually within a few months.

                                      -14-
<PAGE>
         Nonperforming  Assets.  Loans are  reviewed on a regular  basis and are
placed on nonaccrual  status when, in the opinion of management,  the collection
of additional interest is doubtful. Mortgage loans and consumer loans are placed
on nonaccrual status generally when either principal or interest is more than 90
days  past  due.  Interest  accrued  and  unpaid at the time a loan is placed on
nonaccrual status is charged against interest income.

         Real estate  acquired by the Company as a result of  foreclosure  or by
deed in lieu of foreclosure is deemed  foreclosed real estate until such time as
it is sold. In general,  the Company  considers  collateral  for a loan to be in
substance  foreclosed  if:  (i) the  borrower  has  little  or no  equity in the
collateral; (ii) proceeds for repayment of the loan can be expected to come only
from the operation or sale of the collateral;  and (iii) the borrower has either
formally or effectively  abandoned control of the collateral to the Company,  or
retained  control of the collateral but is unlikely to be able to rebuild equity
in the collateral or otherwise repay the loan in the foreseeable future.

         When foreclosed real estate is acquired or otherwise deemed  foreclosed
real estate,  it is recorded at the lower of the unpaid principal balance of the
related loan or its  estimated  fair value,  less  estimated  selling  expenses.
Valuations are periodically performed by management,  and any subsequent decline
in fair value is charged to  operations.  At December  31, 2000,  the  Company's
foreclosed  real estate  consisted of two properties  with an aggregate value of
$64,000.

         Delinquent  Loans,  Nonaccrual  Loans  and  Nonperforming  Assets.  The
following table sets forth information  regarding loans on nonaccrual status and
foreclosed  real  estate of the  Company  at the dates  indicated.  At the dates
indicated,  the Company did not have any material  restructured loans within the
meaning of SFAS No. 15,  Accounting  by Debtors and  Creditors for Troubled Debt
Restructurings,  and did not have any loans that were  ninety  days past due and
still accruing interest.
<TABLE>
<CAPTION>
                                                                            At December 31,
                                            -----------------------------------------------------------------------------
                                                2000              1999              1998             1997            1996
                                                ----              ----              ----             ----            ----
                                                                         (Dollars in thousands)
<S>                                         <C>                <C>              <C>              <C>              <C>
Nonaccrual loans and
nonperforming assets:
First mortgage loans:
   One-to-four family residential.......    $    237           $    111         $    403         $    122         $    149
   Multifamily and commercial
     properties ........................       556(2)                --            423(3)              --               --
Consumer loans:.........................         244                102              130               25               35
                                            --------           --------         --------         --------         --------
   Total nonaccrual loans...............       1,037                213              956              147              184
Total foreclosed real estate(1).........          64                503              187               67              128
Other nonperforming assets..............          --                 --                1               --                2
                                            --------           --------         --------         --------         --------
   Total nonperforming assets...........    $  1,101           $    716         $  1,144         $    214         $    314
                                            ========           ========         ========         ========         ========
Total nonaccrual loans to net loans
   receivable...........................        0.33%              0.07%            0.38%            0.08%            0.11%
Total nonaccrual loans to total assets..        0.27               0.06             0.28             0.07             0.09
Total nonperforming assets to total
    assets..............................        0.28               0.19             0.34             0.10             0.15
</TABLE>
[FN]
(1)     Represents  the  net book value of  property  acquired  by  the  Company
        through foreclosure  or deed in lieu of foreclosure.  Upon  acquisition,
        this  property  is  recorded  at  the  lower of cost or fair  value less
        estimated selling expenses.

(2)     Includes a purchase  loan which was secured  by a  commercial  property
        that was 90 days  past due in the amount of $488,822 (in actual dollars)

(3)     Includes a  purchase loan which was secured  by  a  commercial  property
        that was 90 days past due in the amount of $364,636 (in actual dollars).
        This loan was repaid in March, 1999.
</FN>
                                      -15-
<PAGE>
         The  following  table  sets  forth  information  with  respect to loans
delinquent 60-89 days in the Company's portfolio at the dates indicated.
<TABLE>
<CAPTION>
                                                                             At December 31,
                                                    ---------------------------------------------------------------
                                                      2000           1999          1998           1997         1996
                                                      ----           ----          ----           ----         ----
                                                                              (In thousands)
<S>                                                 <C>            <C>            <C>           <C>          <C>
Loans past due 60-89 days:
First mortgage loans:
   One-to-four family residential................   $   590        $   521        $ 1,070       $   275      $   323
   Multifamily and commercial properties.........        --            491             22           --            --
Consumer loans...................................        96            198            270           135           51
                                                    -------        -------        -------       -------      -------
     Total past due 60-89 days...................   $   686        $ 1,210        $ 1,362       $   410      $   374
                                                    =======        =======        =======       =======      =======
</TABLE>
         The  following  table  sets  forth  information  with  respect  to  the
Company's delinquent loans and other problem assets at December 31, 2000.
<TABLE>
<CAPTION>
                                                       At December 31, 2000
                                                       --------------------
                                                       Balance        Number
                                                       -------        ------
                                                       (Dollars in thousands)
<S>                                                   <C>               <C>
One-to-four family first mortgage loans:
  Loans 60 to 89 days delinquent...................   $ 590             16
  Loans 90 days or more delinquent.................     237              6
Multifamily and commercial first mortgage loans:

  Loans 60 to 89 days delinquent...................       -              -
  Loans 90 days or more delinquent.................     556              2
Consumer Loans:

  Loans 60 to 89 days delinquent...................      96             15
  Loans 90 days or more delinquent.................     244             22
Foreclosed real estate.............................      64              2
Other nonperforming assets.........................     - -            - -
Loans to facilitate sale of foreclosed real estate.     116              1
Special mention loans..............................     924             33
</TABLE>
         Classification  of  Assets.   Federal   regulations   provide  for  the
classification  of loans and other  assets  such as debt and  equity  securities
considered by the OTS to be of lesser quality as  "substandard,"  "doubtful," or
"loss"  assets.  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 savings 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
that do not  expose  the  savings  institution  to risk  sufficient  to  warrant
classification in one of the aforementioned  categories,  but which possess some
weaknesses, are required to be designated "special mention" by management. Loans
designated  as special  mention  are  generally  loans  that,  while  current in
required  payments,  have  exhibited  some  potential  weaknesses  that,  if not
corrected, could increase the level of risk in the future. At December 31, 2000,
the Company had $924,000 of special mention loans,  consisting of eighteen loans
secured by one-to-four  family residences,  one commercial  property and fifteen
consumer loans.

         The following  table sets forth the  aggregate  amount of the Company's
classified assets at the dates indicated.

<TABLE>
<CAPTION>
                                                               At December 31,
                               --------------------------------------------------------------------------
                                    2000             1999            1998            1997            1996
                                    ----             ----            ----            ----            ----
                                                                (In thousands)

<S>                              <C>             <C>              <C>             <C>             <C>
Substandard assets............   $ 1,087(3)      $   689(2)       $   745(1)      $     208       $     311
Doubtful assets...............          --              --               --              --              --
Loss assets...................          53              60               35              18               9
                                 ---------       ---------        ---------       ---------       ---------
  Total classified assets.....   $   1,140       $     749        $     780       $     226       $     320
                                 =========       =========        =========       =========       =========

                            (Notes on following page)
</TABLE>
                                      -16-
<PAGE>
[FN]
(1)  Includes one purchase loan which was secured by a commercial  property that
     was 90 days past due in the amount of $364,636  (in actual  dollars).  This
     loans  was  repaid in March,  1999.
(2)  Includes one loan secured by a commercial  property that was not delinquent
     at December 31, 1999
(3)  Includes one purchase loan which was secured by a commercial  property that
     was 10 months past due in the amount of $489,000 (in actual dollars).
</FN>

         Allowance  for Loan  Losses.  It is  management's  policy to provide an
allowance  for  estimated  losses  on the  Company's  loan  portfolio  based  on
management's evaluation of the prior loss experience,  industry standards,  past
due loans,  economic  conditions,  the volume and type of loans in the Company's
portfolio,   which  includes  a  significant   amount  of   multifamily   loans,
substantially  all of which are purchased and are  collateralized  by properties
located  outside of the Company's  market area, and other factors related to the
collectibility  of the Company's loan portfolio.  The Company  regularly reviews
its loan  portfolio,  including  problem loans,  to determine  whether any loans
require   classification  or  the  establishment  of  appropriate   reserves  or
allowances for losses. Such evaluation,  which includes a review of all loans of
which full  collectibility  of  interest  and  principal  may not be  reasonably
assured,  considers,  among  other  matters,  the  estimated  fair  value of the
underlying  collateral.  During the years ended December 31, 2000, 1999 and 1998
the Company's  provision for loan losses were  $120,000,  $120,000 and $210,000,
respectively. The Company's allowance for loan losses totaled $2.8 million, $2.8
million and $2.7 million at December 31, 2000, 1999 and 1998, respectively.

         Management  believes  that the  allowances  for  losses  on  loans  and
foreclosed real estate are adequate. While management uses available information
to recognize losses on loans and foreclosed real estate, future additions to the
allowances  may be  necessary  based  on  changes  in  economic  conditions.  In
addition,  various regulatory agencies, as an integral part of their examination
process,  periodically  review  the  Bank's  allowances  for loan  losses.  Such
agencies may require the Bank to recognize  additions to the allowances based on
their  judgments  about  information  available  to  them at the  time of  their
examination.

         Analysis of the  Allowance for Loan Losses.  The  following  table sets
forth the analysis of the allowance for loan losses for the periods indicated.

<TABLE>
<CAPTION>
                                                                  For the Year Ended December 31,
                                         ----------------------------------------------------------------------------
                                               2000             1999            1998            1997            1996
                                               ----             ----            ----            ----            ----
                                                                      (Dollars in thousands)
<S>                                        <C>              <C>              <C>            <C>              <C>
Total loans outstanding.................   $ 322,408        $ 291,760        $ 259,360      $ 194,626        $ 168,921
Average net loans outstanding...........     307,104          265,553          246,510        175,284          156,708
Allowance balances (at beginning of
  period...............................        2,776            2,676            2,151          1,953            1,736
                                           ---------        ---------        ---------      ---------        ---------
Provisions for losses...................         120              120              210            240              240
  Effect of-

    Valley Financial Corporation........          --               --              343             --               --
Charge-Offs:
  First mortgage loans..................          15                5                6             21                5
  Consumer loans........................          41               23               23             31               19
Recoveries:

  First mortgage loans..................          --               --               --            --                --
  Consumer loans........................           3                8                1             10                1
                                           ---------        ---------        ---------      ---------        ---------
  Net charge-offs.......................          53               20               28             42               23
                                           ---------        ---------        ---------      ---------        ---------
Allowance balance (at end of period)....   $   2,843        $   2,776        $   2,676      $   2,151        $   1,953
                                           =========        =========        =========       ========         ========

Allowance for loan losses as a percent
  of total loans receivable at end of
  period................................        0.88%            0.95%            1.03%          1.10%            1.16%
Net loans charged off as a percent of
  average net loans outstanding.........        0.02             0.01             0.01           0.02             0.01
Ratio of allowance for loan losses to
  total nonaccrual loans at end of
  period................................      274.08         1,301.13           279.72       1,468.33         1,059.35
Ratio of allowance for loan losses to
  total nonaccrual loans and foreclosed
  real estate at end of period..........      258.18           387.78           233.95       1,006.96           621.31
</TABLE>

                                      -17-
<PAGE>
         Allocation of Allowance for Loan Losses. The following table sets forth
the allocation for loan losses by loan category for the periods indicated:

<TABLE>
<CAPTION>
                                                              At December 31,
                                           ----------------------------------------------------
                                                     2000                       1999
                                                     ----                       ----
                                                          % of Loans                % of Loans
                                                           In Each                   In Each
                                                         Category to               Category to
                                             Amount      Total Loans    Amount     Total Loans
                                             ------      -----------    ------     -----------

                                                          (Dollars in thousands)

<S>                                         <C>           <C>           <C>         <C>
Balance at end of period applicable to:
 One-to-four family residential
   mortgage loans .......................   $  731         54.78%       $  726       56.23%
 Multifamily residential mortgage loans .    1,145         23.45         1,332       25.16
 Commercial mortgage loans ..............      303          7.56           252        6.07
 Consumer loans .........................      664         14.21           466       12.53
                                            ------        ------        ------      ------
   Total allowance for loan losses ......   $2,843        100.00%       $2,776      100.00%
                                            ======        ======        ======      ======
</TABLE>

<TABLE>
<CAPTION>
                                                                       At December 31,
                                                    ------------------------------------------------------
                                                    1998                     1997                     1996
                                                    ----                     ----                     ----
                                                         % of Loans                % of Loans              % of Loans
                                                           In Each                   In Each               In Each
                                                         Category to               Category to             Category to
                                             Amount      Total Loans    Amount     Total Loans    Amount   Total Loans
                                             ------      -----------    ------     -----------    -----    -----------

                                                                        (Dollars in thousands)
<S>                                         <C>           <C>           <C>         <C>         <C>         <C>
Balance at end of period applicable to:
 One-to-four family residential
   mortgage loans .......................   $  684         57.45%       $  675       59.48%     $  503       63.44%
 Multifamily residential mortgage loans .    1,298         25.02         1,026       26.38         948       20.42
 Commercial mortgage loans ..............      228          4.39            76        1.95         157        3.09
 Consumer loans .........................      466         13.14           374       12.19         345       13.05
                                            ------        ------        ------       ------     ------      ------
   Total allowance for loan losses ......   $2,676        100.00%       $2,151      100.00%     $1,953      100.00%
                                            ======        ======        ======      ======      ======      ======
</TABLE>

Average Balance Sheet

           The following  table sets forth certain  information  relating to the
Company's  average  balance  sheet and reflects the average  yield on assets and
average cost of  liabilities  for the periods  indicated and the average  yields
earned and rates paid.  Such yields and costs are derived by dividing  income or
expense by the average balance of assets or liabilities,  respectively,  for the
periods presented. For purposes of this table, average balances were computed on
a monthly basis.

                                      -18-
<PAGE>
<TABLE>
<CAPTION>
                                                                  For the Year Ended December 31,
                                                                  -------------------------------
                                                                           At December 31,
                                  2000                   2000                            1999                       1998
                              ---------------  -------------------------   ----------------------------  ---------------------------
                                                                 Average                        Average                      Average
                                        Yield/ Average            Yield/   Average               Yield/  Average              Yield/
                              Balance    Cost  Balance   Interest  Cost    Balance     Interest   Cost   Balance    Interest   Cost
                              --------  -----  -------   --------  -----   --------    --------   ----   --------   --------
                                                                   (Dollars in thousands)
<S>                          <C>       <C>    <C>         <C>        <C>   <C>         <C>        <C>   <C>         <C>       <C>
Assets:
 Interest-earning assets:
  First mortgage loans(1)....$275,061   7.92% $265,557    $20,586(8) 7.75% $233,457    $18,104(8) 7.75%  $216,914   $17,318(8) 7.98%
  Consumer loans(1)..........  45,808   8.93    41,547      3,677    8.85    34,831      3,111    8.93    32,173      3,014    9.37
  Investment securities...... 50,081(4) 5.99    51,097(5)   3,020    5.91    58,666(6)   3,341    5.69    57,826(7)   3,270    5.65
                             --------   ----   -------    -------   ------  -------    -------    -----  -------    -------    ----
Total interest-earning assets 370,950   7.78% $358,201    $27,283    7.62%  326,954     24,556    7.51%  306,913     23,602    7.69%
 Noninterest-earning assets..  18,048           18,470                       18,750                       16,847
                             --------         --------                      -------                       -------
   Total assets..............$388,998         $376,671                     $345,704                     $323,760
                             ========         ========                     ========                      ========
Liabilities and Equity:
Interest-bearing liabilities:
   NOW and money market
     savings..............   $ 54,744   2.85% $ 48,262    $ 1,185    2.46%  47,551     $ 1,088    2.29% $ 44,622    $ 1,351    3.03%
   Passbook savings.......     21,724   1.83    24,571        485    1.97   27,189         562    2.07    25,591        594    2.32
   Certificates of Deposit    178,628   6.01   186,292     10,599    5.69  173,329       9,463    5.46   159,701      8,948    5.60
    Borrowed funds........     88,592   6.11    71,602      4,438    6.20   43,711       2,491    5.62    34,020      1,976    5.81
                             --------  -----  --------    -------    ----  -------      ------   -----   -------    -------    ----
    Total interest-bearing
     liabilities........     $343,688   5.27% $330,727    $16,707    5.05% $291,780    $13,604    4.65% $263,934    $12,869    4.88%

 Noninterest-bearing            8,912            9,739                        9,776                        9,587
     liabilities              -------         --------                      -------                     --------
     Total liabilities....   $352,600         $340,466                     $301,556                     $273,522
Equity....................     36,398           36,205                       44,148                       50,239
                             ---------        ---------                    --------                     --------
   Total liabilities and     $388,998         $376,671                     $345,704                     $323,760
      equity                 =========        ========                     ========                     =========

 Net interest income.......                                $10,576                     $10,952                      $10,733
                                                           =======                     =======                      =======
Net interest rate spread(2)             2.51%                         2.57%                        2.86%                       2.81%
                                         ====                          ====                         ====                        ====
Net interest margin (3)....              2.90                          2.95                         3.35                        3.50
                                         ====                          ====                         ====                        ====
Ratio of average                       107.93                        108.31                       112.05                      116.28
 interest-earning assets               ======                        ======                       ======                      ======
 to average interest-
 bearing liabilities........
</TABLE>
[FN]
(1)  Balance is net of deferred loan fees, loan discounts and loans in process.
     Nonaccrual loans are included in the balances.
(2)  Net interest rate spread represents  the difference  between  the  yield on
     average interest-earning assets and the  cost of  average  interest-bearing
     liabilities.
(3)  Net interest margin represents net interest income divided by average total
     interest-earning assets.
(4)  Includes interest-bearing deposits of $6,331,000 and  securities  available
     for sale of $43,750,000.
(5)  Includes interest-bearing deposits of $4,392,000 and  securities  available
     for sale of $46,705,000.
(6)  Includes interest-bearing deposits of $7,309,000 and  securities  available
     for sale of $51,357,000.
(7)  Includes interest-bearing deposits of $8,235,000 and  securities  available
     for sale of $49,590,000.
(8)  Includes loan fee amortization of $(60,000), $(9,000) and $(29,000) for the
     years ended December 31, 2000, 1999 and 1998.
</FN>
                                      -19-
<PAGE>
Rate/Volume Analysis

         The table below sets forth  certain  information  regarding  changes in
interest income and interest  expense of the Company for the periods  indicated.
For each category of interest-earning  assets and interest-bearing  liabilities,
information is provided on changes attributable to (i) changes in average volume
(changes  in  average  volume  multiplied  by old rate);  (ii)  changes in rates
(changes in rate multiplied by old average volume); (iii) changes in rate-volume
(changes in rate multiplied by the changes in average volume);  and (iv) the net
change.

<TABLE>
<CAPTION>
                                                         Year Ended                                  Year Ended
                                                      December 31, 2000                           December 31, 1999
                                                         Compared to                                 Compared to
                                                         Year Ended                                  Year Ended
                                                      December 31, 1999                           December 31, 1998
                                            ----------------------------------------    ---------------------------------------
                                                  Increase/(Decrease)                        Increase/(Decrease)
                                                        Due to                                    Due to
                                            -----------------------------               ----------------------------

                                                                              Total                                    Total
                                                                    Rate/   Increase                         Rate/    Increase
                                            Volume       Rate      Volume  (Decrease)    Volume     Rate     Volume   (Decrease)
                                            -------    -------    --------  --------    --------  --------   -------   --------
                                                                           (In thousands)
<S>                                         <C>        <C>        <C>        <C>        <C>       <C>        <C>        <C>
Interest income:
    First mortgage loans ................   $ 2,490    $    (7)   $    (1)   $ 2,482    $ 1,321   $  (496)   $   (38)   $   787
    Consumer loans ......................       601        (29)        (6)       566        249      (140)       (12)        97
    Investment securities ...............      (408)       126        (39)      (321)        77         6        (12)        71
                                            -------    -------    -------    -------    -------   -------    -------    -------
       Total interest-earning assets ....   $ 2,683    $    90    $   (46)   $ 2,727    $ 1,647   $  (630)   $   (62)   $   955
                                            =======    =======    =======    =======    =======   =======    =======    =======
Interest expense:
    NOW and money market savings ........   $    16    $    80    $     1    $    97    $    89   $  (330)   $   (22)   $  (263)
    Passbook savings ....................       (53)       (26)         2        (77)        37       (65)        (4)       (32)
    Certificate of deposits .............       708        398         30      1,136        763      (228)       (19)       516
    Borrowed funds ......................     1,588        219        140      1,947        563       (38)       (11)       514
                                            -------    -------    -------    -------    -------   -------    -------    -------
       Total interest-bearing liabilities   $ 2,259    $   671    $   173    $ 3,103    $ 1,452   $  (661)   $   (56)   $   735
                                            =======    =======    =======    =======    =======   =======    =======    =======
Net change in net interest income .......   $   424    $  (581)   $  (219)   $  (376)   $   195   $    31    $    (6)   $   220
                                            =======    =======    =======    =======    =======   =======    =======    =======
</TABLE>

                                      -20-
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME (Unaudited)

         The  unaudited pro forma  consolidated  statement of income is based on
the historical  financial  statements of the Company and Valley  Financial.  The
unaudited pro forma consolidated statement of income for the year ended December
31, 1998 was prepared as if the  Acquisition had occurred as of the beginning of
the period for purposes of the combined  consolidated  statements of income. The
income  statement for the year ended December 31, 1998 would  therefore  include
the month January 31, 1998 for Valley Financial.

         These pro forma financial statements are not necessarily  indicative of
the results of  operations  that might have occurred had the  Acquisition  taken
place at the  beginning of the period,  or to project the  Company's  results of
operations at any future date or for any future period.

NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

ACTUAL AND PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)

<TABLE>
<CAPTION>
                                                                                    Years Ended
                                                                                    December 31,
                                                          --------------------------------------------------------------
                                                               Actual                   Actual                 Pro forma
                                                                2000                     1999                    1998
                                                          --------------           --------------          --------------

<S>                                                       <C>                      <C>                     <C>
Interest income...............................            $   27,283,447           $   24,556,267          $   24,223,861
Interest expense..............................                16,706,620               13,603,841              13,319,040
                                                          --------------           --------------          --------------

    Net interest income.......................                10,576,827               10,952,426              10,904,821
Provision for loan losses.....................                   120,000                  120,000                 210,000
                                                          --------------           --------------          --------------
    Net interest income after provision for
       loan losses............................                10,456,827               10,932,426              10,694,821
                                                          --------------           --------------          --------------

Noninterest income:
    Fees and service charges..................                 1,591,780                1,484,962               1,279,153
    Abstract fees.............................                 1,233,091                1,420,955               1,583,773
    Gain on sale of securities
       available for sale, net................                        42                   61,564                  51,362
    Mortgage banking income...................                   231,170                  367,696                 454,992
    Other income..............................                   957,935                  727,869                 599,159
                                                          --------------           --------------          --------------
       Total noninterest income...............                 4,014,018                4,063,046               3,968,439
                                                          --------------           --------------          --------------

Noninterest expense:
    Salaries and employee benefits............                 4,103,419                4,025,744               3,650,905
    Premises and equipment....................                 1,091,653                  930,988                 846,223
    Data processing...........................                   455,389                  522,122                 583,111
    SAIF deposit insurance premiums...........                    55,332                  147,243                 148,226
    Goodwill amortization.....................                   472,290                  472,290                 472,290
    Other expenses............................                 2,408,276                2,356,024               2,277,600
                                                          --------------           --------------          --------------
       Total noninterest expense..............                 8,586,359                8,454,411               7,978,355
                                                          --------------           --------------          --------------

Income before income taxes....................                 5,884,486                6,441,061               6,684,905

Provision for income taxes....................                 1,873,369                2,240,886               2,439,432
                                                          --------------           --------------          --------------

Net Income....................................            $    4,011,117           $    4,200,175          $    4,245,473
                                                          ==============           ==============          ==============
</TABLE>

                                      -21-
<PAGE>
Comparison of Financial Condition as of December 31, 2000, December 31, 1999 and
December 31, 1998

         Total assets  increased $21.6 million,  or 5.9%, from $367.4 million at
December 31, 1999 to $389.0 million at December 31, 2000.  Interest bearing cash
increased $2.2 million, or 53.4%, from $4.1 million at December 31, 1999 to $6.3
million at December 31, 2000.  Noninterest  bearing cash decreased $6.0 million,
or 70.5%, from $8.5 million at December 31, 1999 to $2.5 million at December 31,
2000. Securities available for sale decreased $6.3 million, or 12.8%,  primarily
due to the sales,  calls,  payments and maturities on U.S.  Treasury notes, U.S.
Government  agencies and  mortgage-backed  securities,  partially  offset by the
purchase of FHLB stock. Total loans receivable, net, increased by $31.3 million,
or 10.9%, from $286.8 million at December 31, 1999 to $318.0 million at December
31, 2000,  primarily due to the  origination  of $35.5 million of first mortgage
loans secured by one-to-four  family  residences,  purchases and originations of
first  mortgage  loans  primarily  secured  by  one-to-four  family  residences,
multifamily  residences and commercial real estate loans located out of state of
$19.6 million, and originations of $21.5 million of second mortgage loans. These
originations  and  purchases  were offset in part by payments,  prepayments  and
sales of loans during the year ended December 31, 2000.  Deposits decreased $9.9
million,  or 3.6%, from $271.0 million at December 31, 1999 to $261.2 million at
December 31, 2000,  primarily  reflecting  decreases in  certificates of deposit
accounts,  due in part to  decreases  in  deposits of certain  public  funds and
decreases  in savings  accounts,  offset in part by an increase in money  market
accounts.  Other borrowings,  primarily FHLB advances,  increased $32.9 million,
from $55.7  million at December 31, 1999 to $88.6  million at December 31, 2000.
Total shareholders' equity decreased $1.7 million from $38.1 million at December
31, 1999 to $36.4 million at December 31, 2000,  primarily due to dividends paid
to shareholders  and funds used for repurchases of Common Stock less, net income
and decreased unrealized losses.

         Total assets  increased $30.7 million,  or 9.1%, from $336.7 million at
December 31, 1998 to $367.4 million at December 31, 1999.  Interest bearing cash
decreased  $9.1  million,  or 68.7%,  from $13.2 million at December 31, 1998 to
$4.1 million at December  31, 1999.  Noninterest  bearing  cash  increased  $6.1
million,  or 250.7%,  from $2.4  million at December 31, 1998 to $8.5 million at
December 31, 1999.  Securities  available for sale decreased $190,000,  or 0.4%,
primarily due to the sales,  calls,  payments and  maturities  on U.S.  Treasury
notes, U.S. Government agencies and mortgage-backed securities, partially offset
by the  purchase of U.S.  Government  agencies and  mortgage-backed  securities.
Total loans receivable,  net, increased by $32.7 million,  or 12.9%, from $254.0
million at December 31, 1998 to $286.8  million at December 31, 1999,  primarily
due to the  origination  of $31.6  million of first  mortgage  loans  secured by
one-to-four  family  residences,  purchases and  originations  of first mortgage
loans primarily secured by one-to-four family residences, multifamily residences
and  commercial  real estate loans  located out of state of $40.3  million,  and
originations of $12.3 million of second mortgage loans.  These  originations and
purchases were offset in part by payments, prepayments and sales of loans during
the year ended December 31, 1999.  Deposits  increased  $24.3 million,  or 9.9%,
from $246.7 million at December 31, 1998 to $271.0 million at December 31, 1999,
primarily  reflecting  increases in certificates of deposit accounts,  primarily
due to  deposits of certain  public  funds.  Other  borrowings,  primarily  FHLB
advances,  increased  $16.9 million,  from $38.8 million at December 31, 1998 to
$55.7 million at December 31, 1999. Total  shareholders'  equity decreased $10.1
million from $48.2 million at December 31, 1998 to $38.1 million at December 31,
1999,  primarily  due to  dividends  paid to  shareholders  and  funds  used for
repurchases of Common Stock less, net income and decreased unrealized losses.

Comparison  of  Results  of  Operations  for  the  Years Ended December 31, 2000
and 1999

         Interest  Income.  Interest  income  increased by $2.7 million to $27.3
million for the year ended  December 31, 2000  compared to $24.6 million for the
year ended December 31, 1999. The increase in interest  income was primarily due
to a $31.2 million increase in average interest earning assets to $358.2 million
for the year ended December 31, 2000, from $327.0 million for 1999. The increase
in the average balances of interest earning assets primarily  reflects increases
in the average balances of first and second mortgage loans,  partially offset by
decreases in  securities  available for sale.  These  increases  were  primarily
derived from  originations  of $35.5 million of first  mortgage loans secured by
one-to-four  family  residences,  purchases and  originations  of first mortgage
loans secured by  one-to-four  family  residences,  multifamily  residences  and
commercial real estate located outside of the State of Iowa of $19.6 million and
originations of $21.5 million of second mortgage loans,  which  originations and
purchases were offset in part by payments, prepayments and sales of loans during
the year ended  December  31,  2000.  The  increase in average  interest-earning
assets reflects the Company's  continued  emphasis on residential  lending.  See
"-Business Strategy." The decreases in available for sale

                                      -22-
<PAGE>
securities  were primarily due to the sales,  calls,  payments and maturities on
U.S. Treasury Notes, U.S. Government  agencies and  mortgage-backed  securities,
partially  offset by the purchase of FHLB stock.  The average  yield on interest
earning  assets  increased  to 7.62% for the year ended  December  31, 2000 from
7.51% for the year ended December 31, 1999,  primarily due to a general increase
in market interest rates.

         Interest  Expense.  Interest expense increased by $3.1 million to $16.7
million for the year ended  December 31, 2000  compared to $13.6 million for the
year ended December 31, 1999. The increase in interest expense was primarily due
to  a  $38.9  million  increase  in  the  average  balance  of  interest-bearing
liabilities to $330.7 million for the year ended December 31, 2000,  from $291.8
million  for 1999.  The  increase  in the  average  balance of  interest-bearing
liabilities  primarily  reflects an increase in the certificates of deposits and
borrowed funds. The increases in certificates of deposits is primarily due to an
increase  in the  average  balance of  deposits  of certain  public  funds.  The
increase in borrowed funds was due to the borrowing of funds in part to fund the
corresponding  asset growth.  The average cost of interest  bearing  liabilities
increased to 5.05% for the year ended  December 31, 2000 from 4.65% for the year
ended  December 31, 1999.  The increase in the average cost of interest  bearing
liabilities is primarily due to an increase in the average cost of  certificates
of deposits and borrowed funds. The increase in the average cost of funds is due
to the general increase in market interest rates.

         Net Interest  Income.  Net interest  income  before  provision for loan
losses  decreased by $376,000 to $10.6  million for the year ended  December 31,
2000 from $11.0  million for the year ended  December 31, 1999.  The decrease is
primarily   due  to  the   increases  in  the  average   yield  on  the  average
interest-bearing  assets being less than the increase in the cost of the average
interest-bearing  liabilities. The interest rate spread (i.e., the difference in
the average yield on assets and average cost of liabilities)  decreased to 2.57%
for the year ended  December 31, 2000 from 2.86% for the year ended December 31,
1999.  The decrease in the spread  reflects the general  increase in the overall
costs on interest bearing liabilities in excess of the increase in yields on the
interest-earning  assets offset by the increase in the average  interest bearing
liabilities in excess of the increase in the interest earning assets.

         Provision for Loan Losses. The Company's  provision for loan losses was
$120,000  for each of the years ended  December  31, 2000 and December 31, 1999,
respectively.  The Company  establishes  provisions  for loan losses,  which are
charged to  operations,  in order to maintain the allowance for loan losses at a
level which is deemed to be  appropriate  based upon an assessment of prior loss
experience,  industry standards, past due loans, economic conditions, the volume
and type of loans in the  Company's  portfolio,  which  includes  a  significant
amount of multifamily  and commercial  real estate loans,  substantially  all of
which are  purchased  and are secured by  properties  located out of state,  and
other factors related to the collectibility of the Company's loan portfolio. The
net charge offs were $53,000 for the year ended December 31, 2000 as compared to
$20,000 for the year ended December 31, 1999.  The resulting  allowance for loan
loss was $2.8 million at December 31, 2000 and December 31, 1999.

         The allowance for loan losses as a percentage of total loans receivable
decreased to 0.88% at December  31, 2000 from 0.95% at December  31,  1999.  The
level of nonperforming  loans has increased to $1.0 million at December 31, 2000
from $213,000 at December 31, 1999. See "Asset Quality".

         Management  believes  that the  allowance  for loan losses is adequate.
While  management  estimates loan losses using the best  available  information,
such  as  independent  appraisals  for  significant  collateral  properties,  no
assurance  can be made that  future  adjustments  to the  allowance  will not be
necessary  based on changes  in  economic  and real  estate  market  conditions,
further  information  obtained  regarding no problem  loans,  identification  of
additional  problem  loans,  and other  factors,  both  within  and  outside  of
management's control.

         Noninterest  income.  Total noninterest income decreased by $49,000, or
1.2%, to $4.0 million for the year ended December 31, 2000 from $4.1 million for
the year ended  December 31, 1999.  The decrease is due to decreases in abstract
fees and  mortgage  banking  fees,  partially  offset by an increase in fees and
service  charges and other  income.  Abstract  fees  decreased  $188,000  due to
decreased sales volume.  Sales volume decreased in part due to a general decline
in real estate activity.  Mortgage banking fees decreased $137,000 due to higher
interest rates during the year ended December 31, 2000. Fees and service charges
increased  $107,000 due to increases in overdraft fees on NOW accounts,  service
charges on NOW accounts  and service  charges on  ATM/debit  cards,  offset by a
decrease  in loan  prepayment  fees.  Other  income  increased  $230,000  due to
increases in annuity and mutual fund sales, insurance sales, gain on the sale of
foreclosed real estate and interest

                                      -23-
<PAGE>
income on a  disputed  income  tax item.  Noninterest  income for the year ended
December 31, 1999 also reflects  gains on the sales of securities  available for
sale of $62,000. See "-Business Strategy-Increased Noninterest Income".

         Noninterest  Expense.  Total non-interest expense increased by $132,000
to $8.6  million for the year ended  December 31, 2000 from $8.5 million for the
year ended  December 31, 1999.  The increase is primarily  due to an increase in
the premises and equipment,  offset in part by a decrease in data processing and
SAIF deposit  insurance  premiums.  The increase in premises and  equipment  was
primarily due to an increase in depreciation expense relating to the purchase of
computer  equipment and software,  the opening of a branch  located in Perry and
Ames,  Iowa and normal  cost  increases.  The  decrease  in data  processing  is
primarily due to the signing of a multi year data  processing  contract in 1999.
The  decrease in SAIF  deposit  insurance  premiums is due to lower SAIF deposit
premium rates.  The Company's  efficiency  ratio for the year ended December 31,
2000 and 1999 were  58.85% and  56.30%,  respectively.  The  Company's  ratio of
noninterest  expense to average  assets for the year ended December 31, 1999 and
1998 were 2.28% and 2.45%, respectively.

         Income  Taxes.  Income taxes  decreased by $368,000 to $1.9 million for
the year ended  December 31, 2000 as compared to $2.2 million for the year ended
December 31, 1999.  The  decrease was  principally  due to a decrease in pre-tax
earnings during the 2000 period as compared to the 1999 period and an income tax
benefit of $100,000  received due to a state  franchise tax refund related to an
issue that had been under dispute for several years.

         Net Income. Net income totaled $4.0 million for the year ended December
31, 2000 compared to $4.2 million for the same period in 1999.

Comparison  of Results of Operations  for the Years Ended  December 31, 1999 and
1998.
         The actual statement of income for the year ended December 31, 1999 was
compared to the pro forma  statement of income for the years ended  December 31,
1998 for comparison purposes in order to more clearly present the changes in the
results of operations.

         Interest Income. Interest income increased by $332,000 to $24.6 million
for the year ended  December  31, 1999  compared  to $24.2  million for the year
ended December 31, 1998. The increase in interest  income was primarily due to a
$11.9 million  increase in average interest earning assets to $327.0 million for
the year ended December 31, 1999,  from $315.1 million for 1998. The increase in
the average balances of interest earning assets primarily  reflects increases in
the average  balances of first and second  mortgage loans,  partially  offset by
decreases in  securities  available for sale.  These  increases  were  primarily
derived from  originations  of $31.6 million of first  mortgage loans secured by
one-to-four  family  residences,  purchases and  originations  of first mortgage
loans secured by  one-to-four  family  residences,  multifamily  residences  and
commercial real estate located outside of the State of Iowa of $40.3 million and
originations of $12.3 million of second mortgage loans,  which  originations and
purchases were offset in part by payments, prepayments and sales of loans during
the year ended  December  31,  1999.  The  increase in average  interest-earning
assets reflects the Company's  continued  emphasis on residential  lending.  See
"-Business  Strategy."  The  decreases in  available  for sale  securities  were
primarily due to the sales,  calls,  payments and  maturities  on U.S.  Treasury
Notes, U.S. Government agencies and mortgage-backed securities, partially offset
by the purchase of U.S.  Government  agencies,  mortgage-backed  securities  and
certain equities. The impact of the increase in average  interest-earning assets
was offset in part by a decrease in the  average  yields.  The average  yield on
interest  earning assets decreased to 7.51% for the year ended December 31, 1999
from 7.69% for the year ended  December  31,  1998,  primarily  due to a general
decrease in market interest rates.

         Interest  Expense.  Interest  expense  increased  by  $285,000 to $13.6
million for the year ended  December 31, 1999  compared to $13.3 million for the
year ended December 31, 1998. The increase in interest expense was primarily due
to  a  $18.5  million  increase  in  the  average  balance  of  interest-bearing
liabilities to $291.8 million for the year ended December 31, 1999,  from $273.3
million  for 1998.  The  increase  in the  average  balance of  interest-bearing
liabilities  primarily  reflects an increase in the certificates of deposits and
borrowed funds. The increases in certificates of deposits is primarily due to an
increase in deposits of certain public funds. The increase in borrowed funds was
due to the borrowing of funds in part to fund the corresponding asset growth.

                                      -24-
<PAGE>
The  impact  of  the  increase  in  the  average  balances  of  interest-bearing
liabilities   was  offset  in  part  by  a  decrease  in  the  average  cost  of
interest-bearing  liabilities.  The average cost of interest bearing liabilities
decreased to 4.65% for the year ended  December 31, 1999 from 4.87% for the year
ended December 31, 1998. The decrease in the average cost of funds is due to the
general decrease in market interest rates.

         Net Interest  Income.  Net interest  income  before  provision for loan
losses  increased  by $47,000 to $11.0  million for the year ended  December 31,
1999 from $10.9  million for the year ended  December 31, 1998.  The increase is
primarily   due  to  the   decreases  in  the  average   yield  on  the  average
interest-bearing  assets being less than the decrease in the cost of the average
interest-bearing  liabilities.  This was  offset  in part by a  decrease  in the
excess  of  average  interest  earning  assets  over  the  average  balances  of
interest-bearing  liabilities. The interest rate spread (i.e., the difference in
the average yield on assets and average cost of liabilities)  increased to 2.86%
for the year ended  December 31, 1999 from 2.82% for the year ended December 31,
1998.  The increase in the spread  reflects  the general  decline in the overall
costs on interest bearing  liabilities in excess of the decline in yields on the
interest-earning  assets offset by the increase in the average  interest bearing
liabilities in excess of the increase in the interest earning assets.

         The  following  table sets forth  certain  information  relating to the
Company's  actual and pro forma average  balance  sheets and reflects the actual
and pro forma  average yield on assets and the actual and pro forma average cost
of liabilities for the years ended December 31, 1999 and 1998, respectively.
<TABLE>
<CAPTION>
                                                                           For Years Ended December 31,
                                                                           ----------------------------
                                                                 1999                                         1998
                                             --------------------------------------------------------------------------------------
                                                 Average                      Average        Average                       Average
                                                 Balance      Interest       Yield/Cost      Balance      Interest       Yield/Cost
                                                 -------      --------       ----------      -------      --------       ----------
                                                                              (Dollars in thousands)
<S>                                           <C>            <C>           <C>            <C>            <C>           <C>
Assets:
 Interest-earning assets:
   Loans....................................  $ 268,288      $  21,215             7.91%   $ 253,863     $  20,737             8.17%
   Securities available for sale............     51,357          2,998             5.84       53,138         3,106             5.85
   Interest bearing cash....................      7,309            343             4.69        8,103           381             4.70
                                              ---------      ---------     ------------    ---------     ---------     ------------
     Total interest-earning assets..........    326,954         24,556             7.51%     315,104     $  24,224             7.69%
                                                             ---------     ------------                  ---------     ------------
 Noninterest-earning assets.................     18,750                                       18,299
                                              ---------                                    ---------
     Total assets...........................  $ 345,704                                    $ 333,403
                                              =========                                    =========

Liabilities and Equity:
 Interest-bearing liabilities:
   NOW and money market savings.............  $  47,551      $   1,088             2.29%   $  46,457     $   1,416             3.05%
   Savings..................................     27,189            562             2.07       26,329           616             2.34
   Certificates of deposit..................    173,329          9,463             5.46      165,207         9,236             5.59
   Borrowed funds...........................     43,711          2,491             5.62       35,275         2,051             5.81
                                              ---------      ---------     ------------    ---------     ---------     ------------
 Total interest-bearing liabilities.........  $ 291,780      $  13,604             4.65%   $ 273,268     $  13,319             4.87%
                                                             ---------     ------------                  ---------     ------------

 Noninterest-bearing liabilities............      9,776                                        9,896
                                              ---------                                    ---------
     Total liabilities......................    301,556                                      283,164
 Equity.....................................     44,148                                       50,239
                                              ---------                                    ---------
     Total liabilities and equity ..........  $ 345,704                                    $ 333,403
                                              =========                                    =========

Net interest income.........................                 $  10,952                                   $  10,905
                                                             =========                                   =========
Net interest rate spread....................                                       2.86%                                       2.82%
                                                                           ============                                ============
Net interest margin.........................                                       3.35%                                       3.46%
                                                                           ============                                ============
Ratio of average interest-earning assets to
 average interest-bearing liabilities.......                                     112.05%                                     115.31%
                                                                           ============                                ============
</TABLE>
         Provision for Loan Losses. The Company's  provision for loan losses was
$120,000 and  $210,000 for years ended  December 31, 1999 and December 31, 1998,
respectively.  The Company  establishes  provisions  for loan losses,  which are
charged to  operations,  in order to maintain the allowance for loan losses at a
level which is deemed to be  appropriate  based upon an assessment of prior loss
experience,  industry standards, past due loans, economic conditions, the volume
and type of loans in the  Company's  portfolio,  which  includes  a  significant
amount of multifamily  loans,  substantially  all of which are purchased and are
secured by properties  located out of state,  and other  factors  related to the
collectibility of the Company's loan portfolio. The net charge offs were $20,000
for the year ended  December  31, 1999 as compared to $28,000 for the year ended
December 31, 1998.  The  resulting  allowance  for loan loss was $2.8 million at
December 31, 1999 as compared to $2.7 million at December 31, 1998.

                                      -25-
<PAGE>
         The increase in the allowance is primarily due to the increase in total
loans from $259.4 million at December 31, 1998 to $291.8 million at December 31,
1999.  The allowance  for loan losses as a percentage of total loans  receivable
decreased to 0.95% at December  31, 1999 from 1.03% at December  31,  1998.  The
level of nonperforming loans has decreased to $716,000 at December 31, 1999 from
$956,000 at December 31, 1998. See "Asset Quality".

         Noninterest  income.  Total noninterest income increased by $95,000, or
2.4%, to $4.1 million for the year ended December 31, 1999 from $4.0 million for
the year ended  December 31, 1998.  The increase is due to increases in fees and
service  charges,  partially  offset by a decrease  in abstract  fees.  Fees and
service  charges  increased  $206,000 due to increases in overdraft  fees on NOW
accounts,  service  charges  on NOW and  savings  accounts,  service  charges on
ATM/debit cards and loan prepayment fees.  Abstract fees decreased  $163,000 due
to  decreased  sales  volume.  Sales  volume  decreased in part due to a general
decline in real estate activity. Non interest income for the year ended December
31, 1999 also reflects  gains on the sales of  securities  available for sale of
$62,000,  as compared to gains on the sale of such securities of $51,000 for the
1998 comparable period. See "-Business Strategy-Increased Noninterest Income".

         Noninterest  Expense.  Total non-interest expense increased by $476,000
to $8.5  million for the year ended  December 31, 1999 from $8.0 million for the
year ended  December 31, 1998.  The increase is primarily  due to an increase in
the employee salaries and benefits and premises and equipment, offset in part by
a decrease  in data  processing.  The  increase  in salaries  and  benefits  was
primarily a result of normal salary  increases,  the opening of a branch located
in Perry,  Iowa,  additional  employees and related  insurance costs and payroll
taxes.  The increase in premises and  equipment was primarily due to an increase
in  depreciation  expense  relating to the  purchase of computer  equipment  and
software,  ATM's, the opening of a branch located in Perry, Iowa and normal cost
increases.  The decrease in data processing is primarily due to the signing of a
multi year data processing  contract in 1999,  offset in part by additional data
processing  services utilized by the Bank due to the Acquisition,  upgrading the
Bank's operating systems and Year 2000 costs. The Company's efficiency ratio for
the year ended December 31, 1999 and 1998 were 56.30% and 53.64%,  respectively.
The Company's ratio of noninterest  expense to average assets for the year ended
December 31, 1999 and 1998 were 2.45% and 2.39%, respectively.

         Income  Taxes.  Income taxes  decreased by $199,000 to $2.2 million for
the year ended  December 31, 1999 as compared to $2.4 million for the year ended
December 31, 1998.  The decrease was  principally  due to a decrease in pre- tax
earnings during the 1999 period as compared to the 1998 period.

         Net Income. Net income totaled $4.2 million for the year ended December
31, 1999 compared to $4.2 million for the same period in 1998.

Impact of Inflation and Changing Prices

         The consolidated financial statements of the Company and notes thereto,
presented  elsewhere  herein,  have been prepared in accordance  with  generally
accepted  accounting  principles,  which  require the  measurement  of financial
position  and  operating   results  in  terms  of  historical   dollars  without
considering the change in the relative  purchasing  power of money over time and
due to inflation.  The impact of inflation is reflected in the increased cost of
the  Company's  operations.  Unlike most  industrial  companies,  nearly all the
assets and liabilities are monetary. As a result,  interest rates have a greater
impact on the  Company's  performance  than do the effects of general  levels of
inflation.  Interest rates do not  necessarily  move in the same direction or to
the same extent as the price of goods and services.

Impact of New Accounting Standards

         SFAS No. 133, Accounting for Derivatives  Instruments and Hedging will,
beginning with the quarter ended March 31, 2001,  require an entity to recognize
all derivatives as either assets or liabilities,  and measure those  instruments
at fair value. It also sets forth the proper accounting for hedging  activities,
which is  determined by the intended use of the  derivative  and how that use is
designated  by the  entity.  Since the  Company  is not  currently  holding  any
derivative  instruments  (as defined) and is not engaged in hedging  activities,
the  adoption  of SFAS No. 133 is  expected  to have no effect on the  Company's
financial condition or results of operations.

         SFAS No. 140 Accounting for Transfers and Servicing of Financial Assets
and  Extinguishments  of Liabilities  was issued in September 2000, and replaces
SFAS  No.  125 of the same  title.  SFAS  No.  140  revises  the  standards  for
accounting  for  securitizations  and other  transfers of  financial  assets and
collateral and requires  certain  disclosures,  but it carries over most of SFAS
No. 125's provisions  without  reconsideration.  The adoption of SFAS No. 140 is
not expected to have a material impact on the results of operations or financial
condition of the Company.

                                      -26-
<PAGE>
                         NORTH CENTRAL BANCSHARES, INC.
                                AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS



    INDEPENDENT AUDITOR'S REPORT...........................................28


    FINANCIAL STATEMENTS
     Consolidated statements of financial condition........................29
     Consolidated statements of income.....................................30
     Consolidated statements of shareholders' equity.......................31
     Consolidated statements of cash flows.................................32
     Notes to consolidated financial statements............................34



                                      -27-
<PAGE>
                          Independent Auditor's Report

To the Board of Directors
North Central Bancshares, Inc.
Fort Dodge, Iowa

We have audited the accompanying  consolidated statements of financial condition
of North Central  Bancshares,  Inc. and subsidiaries as of December 31, 2000 and
1999, and the related  consolidated  statements of income,  stockholders' equity
and cash flows for the three years ended December 31, 2000, 1999 and 1998. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of North  Central
Bancshares,  Inc. and  subsidiaries  as of December  31, 2000 and 1999,  and the
results  of their  operations  and their cash  flows for the three  years  ended
December  31,  2000,  1999 and  1998,  in  conformity  with  generally  accepted
accounting principles.

                                                 /s/ McGladrey & Pullen, LLP
Des Moines, Iowa
February 2, 2001


                                      -28-

<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 2000 and 1999

<TABLE>
<CAPTION>

ASSETS                                                                2000             1999
------                                                                ----             ----
<S>                                                             <C>              <C>
Cash and due from banks:
Interest-bearing                                                $   6,330,525    $   4,127,153
Noninterest-bearing                                                 2,519,201        8,541,525
Securities available-for-sale (Notes 3 and 9)                      43,351,850       49,692,857
Loans receivable, net (Notes 4, 5, 9 and 15)                      318,025,782      286,759,101
Loans held for sale                                                   498,387          335,564
Accrued interest receivable (Note 6)                                2,257,153        2,082,598
Foreclosed real estate                                                 63,866          503,150
Premises and equipment, net (Note 7)                                6,660,783        5,356,097
Rental real estate                                                  1,757,014        1,846,134
Title plant                                                           925,256          925,256
Goodwill                                                            5,443,091        5,915,381
Deferred taxes (Note 10)                                              556,913          921,057
Income taxes receivable                                               209,995               --
Prepaid expenses and other assets                                     397,970          426,772
                                                                -------------    -------------

Total assets                                                    $ 388,997,786    $ 367,432,645
                                                                =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Deposits (Note 8)                                               $ 261,166,646    $ 271,030,791
Borrowed funds (Note 9)                                            88,592,226       55,715,289
Advances from borrowers for taxes and insurance (Note 5)            1,318,069        1,204,025
Dividend payable                                                      240,235          226,174
Income taxes payable                                                       --           74,214
Accrued expenses and other liabilities                              1,282,495        1,055,228
                                                                -------------    -------------
Total liabilities                                                 352,599,671      329,305,721
                                                                -------------    -------------

COMMITMENTS AND CONTINGENCIES (Notes 14 and 17)

STOCKHOLDERS' EQUITY (Notes 12 and 18)
Common stock, $.01 par value, authorized 15,500,000 shares;
issued and outstanding 2000 and 1999 4,011,057 shares                  40,111           40,111
Preferred stock, $.01 par value, authorized 3,000,000 shares;
issued and outstanding 2000 and 1999 none                                  --               --
Additional paid-in capital                                         38,378,315       38,278,872
Retained earnings, substantially restricted (Note 10)              33,345,852       30,290,488
Unearned shares, employee stock ownership plan (Note 11)             (646,912)        (825,484)
Accumulated other comprehensive income (loss)                        (247,340)        (921,138)
Less cost of treasury stock, 2000 2,099,177 shares;
1999 1,749,315 shares                                             (34,471,911)     (28,735,925)
                                                                -------------    -------------
Total stockholders' equity                                         36,398,115       38,126,924
                                                                -------------    -------------

Total liabilities and stockholders' equity                      $ 388,997,786    $ 367,432,645
                                                                =============    =============
</TABLE>

See Notes to Financial Statements


                                      -29-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                              2000          1999        1998
                                                              ----          ----        ----
<S>                                                       <C>           <C>           <C>
Interest income:
Loans receivable:
First mortgage loans                                      $20,585,997   $18,104,426   $17,317,988
Consumer loans                                              3,676,669     3,111,402     3,013,947
Securities and cash deposits                                3,020,781     3,340,439     3,269,617
                                                            ---------     ---------     ---------
                                                           27,283,447    24,556,267    23,601,552
                                                           ----------    ----------    ----------
Interest expense:
Deposits (Note 8)                                          12,268,726    11,113,533    10,893,081
Other borrowed funds                                        4,437,894     2,490,308     1,975,879
                                                            ---------     ---------     ---------
                                                           16,706,620    13,603,841    12,868,960
                                                           ----------    ----------    ----------

Net interest income                                        10,576,827    10,952,426    10,732,592

Provision for loan losses (Note 4)                            120,000       120,000       210,000
                                -                             -------       -------       -------
Net interest income after provision
   for loan losses                                         10,456,827    10,832,426    10,522,592
                                                           ----------    ----------    ----------
 oninterest income:
Fees and service charges                                    1,591,780     1,484,962     1,243,248
Abstract fees                                               1,233,091     1,420,955     1,583,773
Mortgage banking fees                                         231,170       367,696       339,397
Gain on sale of securities available-for-sale, net                 42        61,564        51,362
Other income                                                  957,935       727,869       696,919
                                                              -------       -------       -------
Total noninterest income                                    4,014,018     4,063,046     3,914,699
                                                            ---------     ---------     ---------

Noninterest expense:
Salaries and employee benefits (Note 11)                    4,103,419     4,025,744     3,482,210
Premises and equipment                                      1,091,653       930,988       811,725
Data processing                                               455,389       522,122       553,288
SAIF deposit insurance premiums                                55,332       147,243       142,932
Goodwill amortization                                         472,290       472,290       435,817
Other expenses (Note 13)                                    2,408,276     2,356,024     2,145,854
                                                            ---------     ---------     ---------
Total noninterest expense                                   8,586,359     8,454,411     7,571,826
                                                            ---------     ---------     ---------

Income before income taxes                                  5,884,486     6,441,061     6,865,465

Provision for income taxes (Note 10)                        1,873,369     2,240,886     2,480,620
                                                            ---------     ---------     ---------

Net income                                                $ 4,011,117   $ 4,200,175   $ 4,384,845
                                                          ===========   ===========   ===========

Basic earnings per common share (Note 19)                 $      2.04   $      1.64   $      1.44

Earnings per common share - assuming dilution (Note 19)          2.00          1.60          1.40

Dividends declared per common share (Note 12)                    0.50          0.40          0.32
</TABLE>

See Notes to Financial Statements.

                                      -30-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 2000, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                     Employee   Accumulated
                                                            Additional                Stock       Other                  Total
                                   Comprehensive   Common    Paid-in     Retained    Ownership Compehensive  Treasury Stockholders'
                                      Income       Stock     Capital     Earnings      Plan    Income (Loss)   Stock      Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>          <C>       <C>          <C>         <C>          <C>       <C>          <C>
Balance, December 31, 1997                       $ 40,111  $37,949,598  $23,660,964 $(1,210,441) $354,781  $(10,377,937)$50,417,076
Comprehensive income:
Net income                          $ 4,384,845         -            -    4,384,845           -         -            -    4,384,845
Other comprehensive income,
   unrealized gains on securities,
net of reclassification adjustment,
    net of tax (Note 3)                   3,885                                               -     3,885            -        3,885
                                    -----------
Total comprehensive income          $ 4,388,730
                                    ===========
Purchase of treasury stock                              -            -            -           -         -   (6,164,419)  (6,164,419)
Dividends on common stock                               -            -     (960,902)                                 -     (960,902)
Effect of contribution to employee
    stock ownership plan                  -                    206,636            -     197,157         -            -      403,793
Effect of stock options exercised                       -      (20,417)           -           -         -      142,953      122,536
                                                ------------------------------------------------------------------------------------
Balance, December 31, 1998                          40,111  38,135,817   27,084,907  (1,013,284)   358,666 (16,399,403)  48,206,814
Comprehensive income:
Net income                          $ 4,200,175         -            -    4,200,175           -          -           -    4,200,175
Other comprehensive (loss),
 unrealized (losses) on securities,
net of reclassification adjustment,
    net of tax (Note 3)              (1,279,804)        -            -           -            -  (1,279,804)         -   (1,279,804)
                                    -----------

Total comprehensive income          $ 2,920,371
                                    ===========
Purchase of treasury stock                              -            -            -           -          - (12,336,522) (12,336,522)
Dividends on common stock                               -            -     (994,594)          -          -           -     (994,594)
Effect of contribution to employee
     stock ownership plan                               -      143,055            -     187,800          -           -      330,855
                                                ------------------------------------------------------------------------------------
Balance, December 31, 1999                         40,111   38,278,872   30,290,488    (825,484)  (921,138)(28,735,925)  38,126,924
Comprehensive income:
Net income                          $ 4,011,117         -            -    4,011,117           -          -           -    4,011,117
Other comprehensive income,
    unrealized gains on securities,
net of reclassification adjustment,
     net of tax (Note 3)               673,798          -            -            -           -     673,798           -     673,798
                                     ----------
Total comprehensive income          $ 4,684,915
                                    ===========
Purchase of treasury stock                              -            -            -           -          -   (5,799,736) (5,799,736)
Dividends on common stock                               -            -     (955,753)          -          -            -    (955,753)
Effect of contribution to employee
    stock ownership plan                                -      108,723            -     178,572          -            -     287,295
Issuance of treasury stock                              -       (9,280)           -           -          -       63,750      54,470
                                                 -----------------------------------------------------------------------------------
Balance, December 31, 2000                       $ 40,111  $38,378,315  $33,345,852  $ (646,912) $(247,340)$(34,471,911)$36,398,115
                                                 ===================================================================================
</TABLE>
See Notes to Financial Statements
                                      -31-

<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2000, 1999 and 1998
<TABLE>
<CAPTION>

                                                            2000            1999           1998
                                                            ----            ----           ----
<S>                                                   <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                            $  4,011,117    $  4,200,175    $  4,384,845
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses                                  120,000         120,000         210,000
Depreciation                                               668,945         596,815         488,989
Amortization and accretion                                 488,021         483,546         539,878
Deferred taxes                                             (38,062)       (141,678)       (164,846)
Effect of contribution to employee stock
ownership plan                                             287,295         330,855         403,793
(Gain) on sale of foreclosed real estate and
loans, net                                                 (66,744)        (28,827)         (4,726)
(Gain) on sale of securities available-for-sale                (42)        (61,564)        (51,362)
Loss on disposal of equipment                               28,297          19,270           9,191
Proceeds from sales of loans held for sale              13,261,815      20,146,594      26,334,791
Originations of loans held for sale                    (13,424,638)    (18,801,141)    (28,015,808)
Change in assets and liabilities:
Accrued interest receivable                               (174,555)       (149,361)        386,631
Income taxes receivable                                   (209,995)             --              --
Prepaid expenses and other assets                           28,802          21,559         453,985
Income taxes payable                                       (74,214)       (125,010)         25,036
Accrued expenses and other liabilities                     227,267        (403,163)        (41,121)
                                                           -------        --------         -------
Net cash provided by operating activities                5,133,309       6,208,070       4,959,276
                                                         ---------       ---------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in loans                       (11,278,698)      7,376,603      20,168,334
Purchase of loans                                      (19,625,170)    (40,343,689)    (24,644,011)
Proceeds from sale of securities available-for-sale        224,792         438,915       4,445,868
Purchase of securities available-for-sale               (1,594,100)    (18,922,917)    (18,371,558)
Proceeds from maturities of securities
available-for-sale                                       8,712,985      16,512,369      25,460,742
Purchase of premises, equipment and rental real
estate                                                  (2,171,097)     (2,259,834)       (776,473)
Proceeds from sale of equipment                            258,289           3,807              58
Cash paid in connection with acquisition of Valley
Financial Corporation net of cash received                      --              --      (8,568,743)
Other                                                       80,860            (975)         69,974
                                                            ------            ----          ------
Net cash (used in) investing activities                (25,392,139)    (37,195,721)     (2,215,809)
                                                       -----------     -----------      ----------
</TABLE>

(Continued)
                                      -32-

<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31, 2000, 1999 and 1998
<TABLE>
<CAPTION>
                                                         2000           1999             1998
                                                         ----           ----             ----

<S>                                                <C>             <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits                $ (9,864,145)   $ 24,340,478    $  6,297,514
Net increase (decrease) in advances from
borrowers for taxes and insurance                       114,044         138,000        (154,127)
Net increase (decrease) in short-term borrowings     (9,000,000)     14,000,000              --
Proceeds from other borrowed funds                   64,000,000       8,000,000      16,542,000
Payments of other borrowed funds                    (22,123,063)     (5,116,950)     (6,259,761)
Purchase of treasury stock                           (5,799,736)    (12,336,522)     (6,164,419)
Proceeds from issuance of treasury stock                 54,470              --         114,963
Dividends paid                                         (941,692)     (1,005,553)       (927,924)
                                                     ----------      ----------       ---------
Net cash provided by financing activities            16,439,878      28,019,453       9,448,246
                                                     ----------      ----------       ---------

Net increase (decrease) in cash                      (3,818,952)     (2,968,198)     12,191,713

CASH

Beginning                                            12,668,678      15,636,876       3,445,163
                                                     ----------      ----------       ---------
Ending                                             $  8,849,726    $ 12,668,678    $ 15,636,876
                                                   ============    ============    ============

SUPPLEMENTAL SCHEDULE OF CASH FLOW
INFORMATION
Cash payments for:

Interest paid to depositors                        $ 12,075,178    $ 11,181,280    $ 10,989,646
Interest paid on borrowings                           4,461,883       2,414,957       1,975,691
Income taxes                                          2,195,640       2,507,574       2,628,003
</TABLE>

See Notes to Financial Statements.


                                      -33-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Note 1. Significant Accounting Policies

Organization,  nature of  business  and  basis of  presentation:  North  Central
Bancshares,  Inc., (the Company), an Iowa corporation,  is a unitary savings and
loan holding  company that owns 100% of the  outstanding  stock of First Federal
Savings Bank of Iowa (the Bank),  which is a federally  chartered  stock savings
bank that conducts its  operations  from its main office  located in Fort Dodge,
Iowa,  and seven branch  offices  located in Fort Dodge,  Nevada,  Ames,  Perry,
Burlington and Mt. Pleasant, Iowa.

Principles of consolidation: The consolidated financial statements, as described
above, include the accounts of the Company and its wholly-owned subsidiary,  the
Bank  and  the  Bank's  wholly-owned  subsidiaries,   First  Federal  Investment
Services,  Inc.,  formerly  First  Financial  Service  Corporation  (which sells
insurance,  annuity  products,  mutual funds and originates  equipment  leases),
First  Iowa  Title  Services,  Inc.  (which  provides  real  estate  abstracting
services),  Northridge  Apartments Limited Partnership (which owns a multifamily
apartment  building) and First Iowa Mortgage,  Inc. (which  originates and sells
mortgage loans in the secondary market). All significant  intercompany  balances
and transactions have been eliminated in consolidation.

Accounting estimates and assumptions: The preparation of financial statements in
conformity with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities, disclosures of contingent assets and liabilities at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the  reporting  period.  Actual  results  could differ from those  estimates.  A
material estimate that is particularly  susceptible to significant change in the
near term relates to the determination of the allowance for loan losses.

Securities  available-for-sale:  Securities classified as available-for-sale are
those debt and equity  securities the Company  intends to hold for an indefinite
period of time, but not necessarily to maturity. Any decision to sell a security
classified as  available-for-sale  would be based on various factors,  including
significant  movements  in interest  rates,  changes in the  maturity mix of the
Company's  assets  and  liabilities,   liquidity   needs,   regulatory   capital
considerations and other similar factors.

Securities  available-for-sale  are reported at fair value with unrealized gains
or losses reported as a separate component of other comprehensive income/(loss),
net of the  related  deferred  tax effect.  The  amortization  of  premiums  and
accretion of discounts is computed by the interest method over their contractual
lives.

Realized  gains or  losses,  determined  on the  basis  of the cost of  specific
securities sold, are included in earnings.

Loans held for sale: Loans held for sale are those loans held with the intent to
sell in the foreseeable  future. They are carried at the lower of aggregate cost
or  market  value.  Sales  are  made  without  recourse  and any gain or loss is
recognized at the settlement date.

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

Discounts  on first  mortgage  loans are  amortized to income using the interest
method  over  the  remaining  period  to  contractual  maturity,   adjusted  for
anticipated prepayments.
                                      -34-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

The allowance  for loan losses is increased by provisions  charged to income and
reduced by charge-offs,  net of recoveries.  Management's periodic evaluation of
the adequacy of the allowance is based on 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.  While  management uses the best  information
available to make its  evaluation,  future  adjustments  to the allowance may be
necessary if there are significant changes in economic conditions.

Uncollectible  interest on loans that are contractually  past due is charged-off
or an  allowance  is  established  based on  management's  periodic  evaluation,
generally  when loans become 90 days past due. The allowance is established by a
charge to interest income equal to all interest previously  accrued,  and income
is  subsequently  recognized  only to the extent that cash payments are received
until,  in  management's  judgment,  the  borrower's  ability  to make  periodic
interest and principal payments is no longer in doubt, in which case the loan is
returned to accrual status.

A loan is considered  impaired when, based on current information and events, it
is probable that a creditor will be unable to collect the scheduled  payments of
principal or interest  when due according to the  contractual  terms of the loan
agreement.  Factors  considered by management in determining  impairment include
payment status,  collateral  value, and the probability of collecting  scheduled
principal and interest  payments when due.  Impairment is measured by either the
present value of expected future cash flows  discounted at the loan's  effective
interest  rate,  the loan's  obtainable  market price,  or the fair value of the
collateral if the loan is collateral dependent.

Loan  origination  fees and related  costs:  Loan fees and  certain  direct loan
origination  costs are  deferred,  and the net fee or cost is  recognized  as an
adjustment  to interest  income using the interest  method over the  contractual
life of the  loans,  adjusted  for  estimated  prepayments  based on the  Bank's
historical prepayment experience.

Foreclosed real estate: Real estate properties acquired through loan foreclosure
are initially  recorded at the lower of cost or fair value less selling costs at
the date of  foreclosure.  Costs  relating to  development  and  improvement  of
property are capitalized,  whereas costs relating to the holding of property are
expensed.

Valuations are periodically performed by management, and an allowance for losses
is established by a charge to income if the carrying value of a property exceeds
its fair value less estimated selling costs.

Premises  and  equipment:  Premises  and  equipment  are stated at cost,  net of
accumulated  depreciation.  Depreciation is computed  primarily by straight-line
and  double-declining  balance  methods over the  estimated  useful lives of the
assets.

Rental real estate:  Rental real estate is  comprised  of a low-income  housing,
multifamily  apartment  building and equipment  which is stated at cost,  net of
accumulated   depreciation.   Depreciation   is   computed   primarily   by  the
straight-line  and  double-declining  balance methods over the estimated  useful
lives of the assets.

Title  plant:  Title  plant is  carried  at cost and,  in  accordance  with FASB
Statement No. 61, is not depreciated.  Costs incurred to maintain and update the
title plant are expensed as incurred.

Goodwill:  Goodwill is stated at cost,  net of accumulated  amortization  and is
being amortized over 10 - 15 years using the straight-line method.

                                      -35-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Income taxes:
Deferred taxes are provided on a liability  method  whereby  deferred tax assets
are recognized for deductible  temporary  differences and operating loss and tax
credit  carryforwards  and deferred tax  liabilities  are recognized for taxable
temporary  differences.  Temporary  differences  are the difference  between the
reported  amounts of assets and liabilities  and their income tax bases.  Income
taxes are allocated to the Company and its  subsidiaries  based on each entity's
income tax liability as if it filed a separate return.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion, or all of the deferred
tax  assets,  will not be  realized.  Deferred  tax assets and  liabilities  are
adjusted  for the  effects  of  changes  in tax  laws  and  rates on the date of
enactment.

Comprehensive  income:  Accounting  principles generally require that recognized
revenue,  expenses, gains and losses be included in net income. Although certain
changes  in assets  and  liabilities,  such as  unrealized  gains and  losses on
available-for-sale  securities,  are  reported  as a separate  component  of the
equity  section of the balance  sheet,  such items,  along with net income,  are
components of comprehensive income.

Earnings per share:  Basic earnings per common share represents income available
to common  stockholders  divided by the weighted average number of common shares
outstanding during the periods presented.  The earnings per common share amounts
- assuming  dilution were computed  using the weighted  average number of shares
outstanding  during the periods  presented,  adjusted for the effect of dilutive
potential common shares outstanding, which consists of stock options granted. In
accordance  with Statement of Position 93-6,  shares owned by the ESOP that have
not been committed to be released are not  considered to be outstanding  for the
purpose of computing earnings per share.

Stock-option  plan:  SFAS No.  123,  Accounting  for  Stock-Based  Compensation,
establishes a fair value based method for financial accounting and reporting for
stock-based employee  compensation plans and for transactions in which an entity
issues its equity  instruments to acquire goods and services from  nonemployees.
However,  the standard  allows  compensation to continue to be measured by using
the  intrinsic  value  based  method of  accounting  prescribed  by APB No.  25,
Accounting for Stock Issued to Employees, but requires expanded disclosures. The
Company has elected to apply the intrinsic  value based method of accounting for
stock options  issued to  employees.  Accordingly,  compensation  cost for stock
options is  measured as the excess,  if any, of the quoted  market  price of the
Company's  stock at the date of grant  over the amount an  employee  must pay to
acquire the stock.

Fair value of financial instruments: The fair value of a financial instrument is
the current amount that would be exchanged  between willing parties,  other than
in a fixed  liquidation.  Fair value is best determined based upon quoted market
prices.  In cases where quoted market prices are not available,  fair values are
based on estimates  using present  value or other  valuation  techniques.  Those
techniques are  significantly  affected by the assumptions  used,  including the
discount  rate and estimates of future cash flows.  In that regard,  the derived
fair value  estimates  cannot be  substantiated  by  comparison  to  independent
markets and, in many cases, could not be realized in immediate settlement of the
instruments.  Statement No. 107 excludes certain  financial  instruments and all
nonfinancial  instruments  from its disclosure  requirements.  Accordingly,  the
aggregate fair value amounts  presented do not represent the underlying value of
the Company.

                                      -36-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

The following methods and assumptions were used by the Company in estimating the
fair value of its financial instruments:

   Cash:  The carrying amount of cash represents the fair value.
   ----

   Securities: Fair values for all securities are based on quoted market prices,
   where available.  If quoted market prices are not available,  fair values are
   based on quoted market prices of comparable instruments.

   Loans: For variable-rate  loans that reprice  frequently and have experienced
   no  significant  change in credit  risk,  fair  values are based on  carrying
   values.  Fair values for all other loans are  estimated  based on  discounted
   cash flows,  using  interest  rates  currently  being  offered for loans with
   similar terms to borrowers with similar credit quality.

   Deposits:  Fair values  disclosed for demand,  NOW,  savings and money market
   savings  deposits equal their carrying  amounts,  which  represent the amount
   payable on demand.  Fair values for  certificates  of deposit  are  estimated
   using  a  discounted  cash  flow  calculation  that  applies  interest  rates
   currently being offered on  certificates to a schedule of aggregate  expected
   monthly maturities on time deposits.

   Borrowed  funds:  The fair  value of  borrowed  funds is  estimated  based on
   discounted cash flows using currently available borrowing rates.

   Accrued  interest  receivable  and  payable:  The fair values of both accrued
   interest receivable and payable are their carrying amounts.

   Commitments to extend credit: The fair values of commitments to extend credit
   are based on fees currently charged to enter into similar agreements,  taking
   into account the remaining  terms of the agreements and  creditworthiness  of
   the  counterparties.  At December 31, 2000 and 1999, the carrying  amount and
   fair value of the commitments were not significant.

Note 2.  Business Combination

As of the  close of  business  on  January  30,  1998,  the Bank  completed  the
acquisition  of Valley  Financial  Corp.  ("Valley  Financial")  pursuant  to an
Agreement and Plan of Merger,  dated as of September 19, 1997.  The  acquisition
resulted in the merger of Valley  Financial's  wholly-owned  subsidiary,  Valley
Savings Bank, FSB ("Valley  Savings")  with and into the Bank,  with the Bank as
the  resulting   financial   institution.   Valley  Savings,   headquartered  in
Burlington,  Iowa, was a federally-charted  stock savings bank with three branch
offices located in  southeastern  Iowa. The former offices of Valley Savings are
being operated as branches of the Bank.

                                      -37-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

In connection  with the  acquisition,  each share of Valley  Financial's  common
stock, par value $1.00 per share, issued and outstanding (other than shares held
as treasury stock of Valley Financial) was canceled and converted  automatically
into the  right to  receive  $525 per  share in cash  pursuant  to the terms and
conditions of the Merger Agreement. As a result of the acquisition, shareholders
of Valley  Financial were paid a total of $14,726,250 in cash. The excess of the
total  acquisition  cost  over the  fair  value of the net  assets  acquired  of
$6,627,859 is being  amortized over 15 years by the  straight-line  method.  The
acquisition  was  accounted for as a purchase  transaction  and  therefore,  the
operating  results of the former  offices of Valley Savings Bank are included in
the operating results of the Company from the date of acquisition.

The  following is a summary of the assets  acquired and  liabilities  assumed in
connection with the acquisition of Valley Financial Corporation:

<TABLE>
<CAPTION>

<S>                                               <C>
Cash                                              $  6,157,507
Securities                                          41,818,057
Loans                                               58,567,364
Accrued interest receivable                          1,019,373
Premises and equipment                               1,081,890
Goodwill                                             6,627,859
Prepaid expenses and other assets                      228,785
Deposits                                           (99,269,092)
Advances from borrowers for taxes and insurance       (301,783)
Deferred income taxes                                 (262,738)
Accrued taxes payable                                   12,565
Accrued expenses and other liabilities                (953,537)
                                                  ------------
Cash paid                                           14,726,250

Less: cash received                                 (6,157,507)
                                                  ------------
Cash paid, net of cash received                   $  8,568,743
                                                  ============
</TABLE>

Unaudited  pro forma  consolidated  results  of  operations  for the year  ended
December 31, 1998, as though Valley Savings Bank had been acquired as of January
1, 1998, follow:

<TABLE>
<CAPTION>
                                                      1998
                                                      ----

<S>                                             <C>
Net interest income                             $   10,904,821
Net income                                           4,245,473
Basic earnings per common share                           1.39
Earnings per common share - assuming dilution             1.36
</TABLE>

                                      -38-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Note 3.  Securities
Securities available-for-sale as of December 31, 2000, were as follows:

<TABLE>
<CAPTION>
                                                      Gross           Gross
                                    Amortized       Unrealized      Unrealized
                                      Cost            Gains          (Losses)     Fair Value
                                 -----------------------------------------------------------

<S>                              <C>            <C>             <C>             <C>
Equity securities:
Federal Home Loan Bank
stock                            $  4,428,700   $         --    $         --    $  4,428,700
FHLMC preferred stock               3,499,375             --        (104,375)      3,395,000
FNMA preferred stock                5,134,375          5,625          (9,625)      5,130,375
Other                                 474,533         14,400         (24,884)        464,049
                                      -------         ------         -------         -------
                                    13,536,983         20,025        (138,884)     13,418,124
                                    ----------         ------        --------      ----------
Debt securities:
U.S. Government agencies           17,501,722             --        (223,647)     17,278,075
State and political
subdivisions                        4,472,262            597            (387)      4,472,472
Mortgage-backed securities          8,239,745          9,311         (65,877)      8,183,179
                                    ---------          -----         -------       ---------
                                   30,213,729          9,908        (289,911)     29,933,726
                                   ----------          -----        --------      ----------

                                 $ 43,750,712   $     29,933    $   (428,795)   $ 43,351,850
                                 ============   ============    ============    ============
</TABLE>

Securities available-for sale as of December 31, 1999, were as follows:
<TABLE>
<CAPTION>
                                                      Gross           Gross
                                    Amortized       Unrealized      Unrealized
                                      Cost            Gains          (Losses)     Fair Value
                                 -----------------------------------------------------------

<S>                             <C>            <C>             <C>             <C>
Equity securities:
Federal Home Loan Bank
stock                           $  3,034,600   $         --    $         --    $  3,034,600
FHLMC preferred stock              3,499,375             --        (241,875)      3,257,500
FNMA preferred stock               5,134,375         37,625         (15,000)      5,157,000
Other                                499,283         16,300         (58,478)        457,105
                                     -------         ------         -------         -------
                                   12,167,633         53,925        (315,353)     11,906,205
                                   ----------         ------        --------      ----------
Debt securities:
U.S. Treasury notes                4,270,840             --         (10,410)      4,260,430
U.S. Government agencies          19,582,382             --        (782,856)     18,799,526
State and political
subdivisions                       4,866,505          5,657        (100,165)      4,771,997
Mortgage-backed securities        10,280,363             --        (325,664)      9,954,699
                                  ----------         ------        --------       ---------
                                  39,000,090         43,282        (115,165)     37,786,652
                                  ----------         ------        --------      ----------

                                $ 51,167,723   $     59,582    $ (1,534,448)   $ 49,692,857
                                ============   ============    ============    ============
</TABLE>
                                       39
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

The amortized cost and fair value of debt securities as of December 31, 2000, by
contractual  maturity are shown below.  Certain  securities  have call features,
which allow the issuer to call the security  prior to maturity.  Maturities  may
differ from contractual  maturities in  mortgage-backed  securities  because the
mortgages  underlying  the  securities  may be  called  or  repaid  without  any
penalties.  Therefore,  these  securities  are  not  included  in  the  maturity
categories in the following maturity summary:

<TABLE>
<CAPTION>

                                              Securities Available-for-Sale
                                             -------------------------------
                                              Amortized
                                                Cost             Fair Value
                                             -------------------------------
<S>                                          <C>                 <C>
Due in one year or less                        $ 362,615           $ 361,729
Due from one to five years                    17,244,047          17,027,614
Due from five to ten years                     3,801,682           3,796,276
Due after ten years                              565,640             564,928
Mortgage-backed securities                     8,239,745           8,183,179
                                               ---------           ---------
                                             $30,213,729         $29,933,726
                                             ===========         ===========
</TABLE>
Gross  gains  of  $42,  $61,564  and  $71,923  were  realized  on  the  sale  of
available-for-sale  securities in 2000, 1999 and 1998, respectively.  There were
no gross losses on the sale of  available-for-sale  securities  in 2000 and 1999
and $20,561 in 1998.

The  components  of other  comprehensive  income (loss) - net  unrealized  gains
(losses) on  securities  for the years ended  December 31, 2000,  1999 and 1998,
were as follows:

<TABLE>
<CAPTION>
                                                     2000           1999            1998
                                                 -----------------------------------------

<S>                                              <C>            <C>            <C>
Unrealized holding gains (losses) arising
during the period                                $ 1,076,046    $(1,984,129)   $    57,558
Less reclassification adjustment for net gains
realized in net income                                    42         61,564         51,362
                                                 -----------------------------------------
Net unrealized gains (losses)
   before tax (expense) benefit                    1,076,004     (2,045,693)         6,196
Tax (expense) benefit                               (402,206)       765,889         (2,311)
                                                 -----------------------------------------
Other comprehensive income

(loss) - net unrealized gains
(losses) on securities                           $   673,798    $(1,279,804)   $     3,885
                                                 =========================================
</TABLE>

                                      -40-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Note 4.  Loans Receivable

Loans receivable at December 31, 2000 and 1999, are summarized as follows:
<TABLE>
<CAPTION>

                                                       2000              1999
                                                  ------------------------------

<S>                                               <C>              <C>
First mortgage loans (principally conventional)
Principal balances:
Secured by one-to-four family residences          $ 171,772,639    $ 159,970,037
Secured by:
Multifamily properties                               75,857,571       73,416,278
Commercial properties                                24,127,064       17,723,455
Construction loans                                    4,842,706        4,087,495
                                                      ---------        ---------
Total first mortgage loans                          276,599,980      255,197,265
                                                    -----------      -----------

Consumer loans
Principal balances:

Automobile                                            8,803,211        8,003,907
Second mortgage                                      31,910,144       23,603,060
Other                                                 5,094,295        4,955,638
                                                      ---------        ---------
Total consumer loans                                 45,807,650       36,562,605
                                                     ----------       ----------

Total loans                                         322,407,630      291,759,870

Less:
Undisbursed portion of construction loans            (1,493,322)      (1,981,962)
Unearned discounts                                      (68,693)        (135,953)
Net deferred loan origination fees                       23,316         (106,315)
Allowance for loan losses                            (2,843,149)      (2,776,539)
                                                     ----------       ----------
                                                  $ 318,025,782    $ 286,759,101
                                                  =============    =============
</TABLE>

Activity in the allowance for loan losses us summarized as follows for the years
 ended December 31:
<TABLE>

                                                 2000          1999           1998
                                            -----------------------------------------

<S>                                         <C>            <C>            <C>
Balance, beginning                          $ 2,776,539    $ 2,676,438    $ 2,150,587
Provision charged to income                     120,000        120,000        210,000
Effect of acquisition of Valley Financial
Corporation                                          --             --        343,418
Loans charged-off                               (55,923)       (28,032)       (28,422)
Recoveries                                        2,533          8,133            855
                                                  -----          -----      ----- ---
Balance, ending                             $ 2,843,149    $ 2,776,539    $ 2,676,438
                                            ===========    ===========    ===========
</TABLE>


                                      -41-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

The following is a summary of information pertaining to impaired loans:

<TABLE>
<CAPTION>
                                                      December 31,
                                                -----------------------
                                                   2000         1999
                                                -----------------------

<S>                                             <C>          <C>
Impaired loans without a valuation allowance    $       --   $       --
Impaired loans with a valuation allowance        1,089,639      213,394
                                                -----------------------
Total impaired loans                            $1,089,639   $  213,394
                                                =======================
Valuation allowance related to impaired loans   $  204,731   $   32,009
                                                =======================
</TABLE>

Interest income recognized on impaired loans is insignificant.

The  Bank  has  had,  and  may  be  expected  to  have  in the  future,  banking
transactions  in the  ordinary  course of  business  with  directors,  executive
officers and their immediate families (commonly referred to as related parties),
all of which  have  been,  in the  opinion  of  management,  on the same  terms,
including  interest rates and  collateral,  as those  prevailing at the time for
comparable transactions with others.

Activity in loans  receivable from certain  executive  officers and directors of
the Bank consisted of the following for the years ended December 31, 2000,  1999
and 1998:
<TABLE>
<CAPTION>

                         2000          1999            1998
                    -----------------------------------------

<S>                 <C>            <C>            <C>
Beginning balance   $ 1,685,101    $ 1,075,964    $ 1,045,188
New loans               283,688        825,200        166,701
Repayments              (54,116)      (216,063)      (135,925)
                        -------       --------       --------
Ending balance      $ 1,914,673    $ 1,685,101    $ 1,075,964
                    ===========    ===========    ===========
</TABLE>



Note 5.    Servicing

Mortgage  loans  serviced  for  FHLMC and other  banks are not  included  in the
accompanying   consolidated  statements  of  financial  condition.   The  unpaid
principal  balances of these loans at December 31, 2000 and 1999, are $6,803,472
and $6,673,921, respectively. Custodial escrow balances maintained in connection
with the foregoing  loan servicing were $49,441 and $53,236 at December 31, 2000
and 1999, respectively.

                                      -42-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Note 6.  Accrued Interest Receivable

Accrued interest receivable at December 31, is summarized as follows:
<TABLE>
<CAPTION>
                                                2000         1999
                                            -----------------------

<S>                                         <C>          <C>
Securities                                  $  375,335   $  467,804
Loans receivable                             1,943,946    1,642,479
                                             ---------    ---------
                                             2,319,281    2,110,283
Less allowance for uncollectible interest       62,128       27,685
                                             ---------    ---------
                                            $2,257,153   $2,082,598
                                            =======================
</TABLE>


Note 7.  Premises and Equipment

Premises and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>

                                       2000        1999
                                    -----------------------

<S>                                 <C>          <C>
Land                                $1,641,371   $1,696,695
Buildings and improvements           5,532,342    4,236,326
Leasehold improvements                  32,061       15,546
Furniture, fixtures and equipment    2,276,566    2,020,593
Vehicles                                88,279       87,968
                                     ---------    ---------
                                     9,570,619    8,057,128
Less accumulated depreciation        2,909,836    2,701,031
                                     ---------    ---------
                                    $6,660,783   $5,356,097
                                    ==========   ==========
</TABLE>


                                      -43-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Note 8.  Deposits

Deposits at December 31, were as follows:
<TABLE>
<CAPTION>
                                Weighted-                                      Weighted-
                                Average                                         Average
                                Rate at                                        Rate at
                                December               2000                    December                1999
Nature of Deposit              31, 2000         Amount         Percentage      31, 1999      Amount       Percentage
------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                  <C>                      <C>                  <C>
Demand and NOW accounts:
Noninterest bearing                  -%      $ 6,071,103          2.3%             -%      $ 6,411,709          2.4%
Interest-bearing                   1.25       30,224,808          11.6           1.25       30,096,432          11.1
Savings accounts                   1.83       21,723,847           8.3           2.00       25,829,919           9.5
Money market savings               4.92       24,518,731           9.4           3.61       17,463,869           6.4
                                             -------------------------                      ------------------------
                                              82,538,489          31.6                      79,801,929          29.4
                                             -------------------------                      ------------------------
Certificates of deposit:
Less than 4.0%                     3.20           23,836           0.0           3.65          687,639           0.3
4.0% - 4.9%                        4.72       15,550,125           6.0           4.65       30,875,083          11.4
5.0% - 5.9%                        5.55       62,587,480          24.0           5.44      123,356,192          45.5
6.0% - 6.9%                        6.47       91,429,871          35.0           6.24       30,506,154          11.3
7.0% - 7.9%                        7.14        9,025,628           3.4           7.09        5,793,434           2.1
More than 8.0%                     8.02           11,217           0.0           8.00           10,360           0.0
                                             -------------------------                      ------------------------
                                             178,628,157          68.4                     191,228,862          70.6
                                             -------------------------                      ------------------------
                                  4.88%     $261,166,646        100.0%          4.42%     $271,030,791        100.0%
                                  ==================================================================================
</TABLE>

At December 31, 2000, scheduled maturities of certificates of deposit were as
 follows:

<TABLE>
<CAPTION>
                             One year          One to          Two to        Three to         Four to
                              or less        two years      three years     four years       five years      Thereafter
                       -------------------------------------------------------------------------------------------------

<S>                       <C>              <C>            <C>             <C>              <C>                <C>
Less than 4.0%            $     23,836     $          -   $          -    $          -     $          -       $       -
4.0 - 4.9%                  13,987,797        1,540,226         22,102               -                -               -
5.0 - 5.9%                  32,237,534       10,012,828      9,248,088       8,226,981        2,860,585           1,464
6.0 - 6.9%                  40,892,381       31,598,757      7,309,055       2,072,181        9,546,980          10,517
7.0 - 7.9%                   6,030,834          347,606      1,883,346         117,490          449,403         196,949
More than 8.0%                       -           11,217              -               -                -               -
                       -------------------------------------------------------------------------------------------------
                          $ 93,172,382     $ 43,510,634   $ 18,462,591    $ 10,416,652     $ 12,856,968       $ 208,930
                       =================================================================================================
</TABLE>


                                      -44-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Interest expense on deposits consisted of the following:

<TABLE>
<CAPTION>
                                   Years ended December 31,
                          ---------------------------------------
                               2000          1999          1998
                          ---------------------------------------
<S>                       <C>           <C>           <C>
NOW accounts              $   345,100   $   419,878   $   554,031
Savings                       484,774       562,178       594,276
Money market savings          839,957       668,340       797,372
Certificates of deposit    10,598,895     9,463,137     8,947,402
                           ----------     ---------     ---------
                          $12,268,726   $11,113,533   $10,893,081
                          ===========   ===========   ===========
</TABLE>

The  aggregate  amount  of  certificates  of  deposit  of  $100,000  or more was
$30,330,601 and $32,215,908 as of of December 31, 2000 and 1999, respectively.

Note 9.   Borrowed Funds

Borrowed funds at December 31, 2000 included miscellaneous borrowings of $29,605
and borrowings from Federal Home Loan Bank of Des Moines (FHLB) as follows:

<TABLE>
<CAPTION>
                 Weighted-
  Stated          Average
 Maturity       Interest Rate       Amount                 Features
-------------------------------------------------------------------------------------------

   <S>             <C>           <C>              <C>
   2001            6.49%         $ 28,300,000     $5 million variable rate, renewable daily
   2002             6.31           25,500,000
   2003             5.72            5,000,000
   2004             5.51            1,000,000
   2008             5.31            9,000,000     All callable, various dates 2001 to 2003
   2010             5.88           17,500,000     All callable, various dates 2001 to 2003
   2013             5.25            2,262,621     5 - year amortizing, repayable 2003
           ----------------------------------------
                    6.11%        $ 88,562,621
           ========================================
</TABLE>

                                      -45-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Borrowed  funds at December  31,  1999,  included  miscellaneous  borrowings  of
$33,703 and borrowings from the FHLB of $55,681,586.  Such borrowings  carried a
weighted-average  interest  rate of 5.59%  with  maturities  ranging  from  2000
through 2013.

The  borrowings  are  collateralized  by the FHLB  stock  and  qualifying  first
mortgage loans representing 125% of the total borrowings outstanding.

Note 10.  Income Taxes and Retained Earnings

Under previous law, the  provisions of the IRS and similar  sections of Iowa Law
Code permitted the Bank to deduct from taxable income an allowance for bad debts
based on 8% of taxable income before such  deduction or actual loss  experience.
Legislation passed in 1996 eliminated the percentage of taxable income method as
an option for computing bad debt deductions for 1996, and in all future years.

The Bank is recapturing its tax bad debt reserves which have  accumulated  since
1987,  amounting  to  approximately  $1,659,000.  The tax  associated  with  the
recaptured  reserves  is  approximately  $615,000  and is  being  paid in  years
beginning  in  1996  and  ending  in  2003.  Deferred  income  taxes  have  been
established for the taxes associated with the recaptured reserves.

Deferred  taxes  have been  provided  for the  difference  between  tax bad debt
reserves  and the loan loss  allowances  recorded  in the  financial  statements
subsequent  to December  31,  1987.  However,  at December  31,  2000,  retained
earnings  contain certain  historical  additions to bad debt reserves for income
tax purposes of  approximately  $2,445,000 as of December 31, 1987, for which no
deferred taxes have been provided  because the Bank does not intend to use these
reserves  for  purposes  other than to absorb  losses.  If these  amounts  which
qualified as bad debt  deductions are used for purposes other than to absorb bad
debt losses or adjustments  arising from the carryback of net operating  losses,
income taxes may be imposed at the then existing rates.  The approximate  amount
of  unrecognized  tax liability  associated with these  historical  additions is
$929,000.

Income tax expense is summarized as follows:

<TABLE>
<CAPTION>

                     Years ended December 31,
           -----------------------------------------
               2000           1999           1998
           -----------------------------------------
<S>        <C>            <C>            <C>
Current    $ 1,911,431    $ 2,382,564    $ 2,645,466
Deferred       (38,062)      (141,678)      (164,846)
               -------       --------       --------
           $ 1,873,369    $ 2,240,886    $ 2,480,620
           ===========    ===========    ===========
</TABLE>


                                      -46-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Deferred tax assets and liabilities  consisted of the following components as of
December 31, 2000 and 1999:
<TABLE>
<CAPTION>
                                                          2000         1999
                                                     -----------------------
<S>                                                  <C>          <C>
Deferred tax assets:
Unearned shares, employee stock ownership plan       $   40,000   $   40,000
Allowance for loan losses                               796,000      668,000
Deferred directors fees and compensation                 46,000       52,000
Unrealized losses on securities available-for-sale      149,000      551,000
Other                                                    19,258      133,894
                                                         ------      -------
Total gross deferred tax assets                       1,050,258    1,444,894
                                                      ---------    ---------

Deferred tax liabilities:
Federal Home Loan Bank stock dividend                    45,000       47,000
Loan costs                                               44,000       43,000
Premises and equipment                                   74,000       75,000
Title plant                                             119,000       99,000
Loans acquired                                           89,000      129,000
Investments acquired                                     42,000       63,000
Deferred directors' fees and compensation                72,000       60,000
Other                                                     8,345        7,837
                                                          -----        -----
Total gross deferred tax liabilities                    493,345      523,837
                                                        -------      -------

Net deferred tax assets                              $  556,913   $  921,057
                                                     ==========   ==========
</TABLE>

                                      -47-

<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Total income tax expense differed from the amounts computed by applying the U.S.
Federal income tax rates of 34% to income before income taxes as a result of the
following:
<TABLE>
<CAPTION>
                                                            Years Ended December 31,
                                                            ------------------------
                                              2000                     1999                   1998
                                  ------------------------------------------------------------------------
                                                   Percent                 Percent                  Percent
                                                  of Pretax               of Pretax                of Pretax
                                      Amount       Income      Amount      Income       Amount      Income
                                  -------------------------------------------------------------------------

<S>                               <C>               <C>    <C>               <C>    <C>               <C>
Income before income taxes        $ 2,000,725       34.0%  $ 2,189,961       34.0%  $ 2,334,258       34.0%
Nontaxable dividends                 (132,386)      (2.2)     (109,022)      (1.7)     (105,296)      (1.5)
State income tax, net of
federal income tax benefit            165,680        2.7       233,647        3.6       226,613        3.1
State income tax refund, net of
federal income tax benefit            (66,233)      (1.1)           --       --              --       --
Municipal interest income             (64,182)      (1.1)      (62,762)      (1.0)      (54,286)      (0.8)
Low income housing tax
credit                               (153,680)      (2.6)     (153,680)      (2.4)     (148,867)      (2.1)
Goodwill amortization                 145,547        2.5       145,546        2.3       137,536        2.1
Other                                 (22,102)      (0.4)       (2,804)       0.0        90,662        1.3
                                      -------       ----        ------        ---        ------        ---
                                  $ 1,873,369       31.8%  $ 2,240,886       34.8%  $ 2,480,620       36.1%
                                  ===========       ====   ===========       ====   ===========       ====
</TABLE>

Note 11.  Employee Benefit Plans

Retirement  plans:  The Bank  participates  in a  multiemployer  defined benefit
pension plan covering substantially all employees.  This is a multiemployer plan
and information as to actuarial valuations and net assets available for benefits
by participating institutions is not available. There was no pension expense for
the years ended December 31, 2000, 1999 and 1998.

The Bank has a defined  contribution plan covering  substantially all employees.
The Bank does not contribute to this plan.

Employee Stock Ownership Plan (ESOP):  In conjunction with the Bank's conversion
to stock  ownership,  the Bank established an ESOP for eligible  employees.  All
employees  of the Bank as of January  1,  1994,  were  eligible  to  participate
immediately  and employees of the Bank hired after January 1, 1994, are eligible
to participate  after they attain age 21 and complete one year of service during
which they work at least 1,000 hours.  The ESOP borrowed  funds in the amount of
$960,000 to purchase  104,075 shares of common stock issued in the conversion in
1994 and  $840,000  to  purchase  84,000  shares of common  stock  issued in the
reorganization  and  conversion  in 1996.  These  funds  are  borrowed  from the
Company.

                                      -48-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

The Bank makes  contributions  to the ESOP equal to the ESOP's debt service less
dividends received by the ESOP. Dividends on unallocated ESOP shares are used to
pay  debt  service.  Contributions  to the  ESOP and  shares  released  from the
suspense account in an amount proportional to the repayment of the ESOP loan are
allocated  among ESOP  participants  on the basis of compensation in the year of
allocation.  Benefits  generally become 100% vested after five years of credited
service.   Forfeitures  will  be  reallocated   among  remaining   participating
employees,  in the same proportion as contributions.  Benefits may be payable in
the form of stock or cash upon termination of employment. If the Bank's stock is
not  traded  on an  established  market  at the  time of an  ESOP  participant's
termination,  the terminated ESOP  participant has the right to require the Bank
to purchase the stock at its current fair market value. Bank management believes
there is an  established  market for the  Bank's  stock and  therefore  the Bank
believes  there is no potential  repurchase  obligation at December 31, 2000 and
1999.

As shares are  released,  the Bank  reports  compensation  expense  equal to the
current  market  price of the shares.  Dividends  on  allocated  ESOP shares are
recorded as a reduction  of retained  earnings.  Dividends on  unallocated  ESOP
shares  are  recorded  as  a  reduction  of  debt  and  accrued  interest.  ESOP
compensation  expense was  $287,295,  $330,855  and $403,793 for the years ended
December 31, 2000, 1999 and 1998, respectively.

Shares of the Company's  common stock held by the ESOP, at December 31, 2000 and
1999, are as follows:

<TABLE>
<CAPTION>
                                                         2000        1999
                                                    -----------------------

<S>                                                 <C>          <C>
Allocated shares                                       117,943       98,626
Unreleased (unearned) shares                            66,881       85,507
                                                        ------       ------
                                                       184,824      184,133
                                                       =======      =======

Fair market value of unreleased (unearned) shares   $1,162,057   $1,282,605
                                                    ==========   ==========
</TABLE>
Stock option plan: In 1996, the  stockholders  of the Company  ratified the 1996
Incentive  Option Plan (the Plan). The Plan provides for the grant of options at
an exercise price equal to the fair market value on the date of grant.  The Plan
is intended to promote stock  ownership by directors  and selected  officers and
employees of the Company to increase their  proprietary  interest in the success
of the Company and to encourage  them to remain in the employment of the Company
or its  subsidiaries.  Awards granted under the Plan may include incentive stock
options,  nonqualified  stock options and limited  rights which are  exercisable
only upon a change in control of the Bank or the Company. All awards to date are
nonqualified stock options.

The Plan  authorizes the granting of stock options for a total of 401,105 shares
of common stock or 10% of the shares issued in the 1996 conversion.  All options
are granted at an exercise  price which was the market price of the common stock
on the grant date.

                                      -49-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Options  granted to officers  and  directors  become  exercisable  in five equal
annual  installments  commencing on the first  anniversary of the grant date and
continuing on each anniversary date thereafter.  The options granted to officers
expire ten years from the date of grant  unless an  earlier  expiration  date is
triggered by death, disability,  retirement or termination,  as described in the
Plan. A person who becomes a director  after  September  21,  1996,  receives an
annual  grant of options  to  purchase  2,000  shares of common  stock.  Options
granted to directors are  exercisable  immediately and expire ten years from the
date of grant,  unless an earlier  expiration  date is  triggered by removal for
cause.

The table below reflects option activity for the period indicated:

<TABLE>
<CAPTION>
                                                    Weighted-
                                                     Average
                                                     Exercise
                                         Number     Price per
                                       of Shares      Share
                                       ---------------------
<S>                                     <C>        <C>
Outstanding, December 31, 1997          231,000    $   12.42
Granted                                  62,000        19.32
Forfeited                                    --        --
Exercised                               (10,290)       12.38
                                        -------        -----
Outstanding, December 31, 1998          282,710        13.93
Granted                                  12,000        15.76
Forfeited                                    --           --
Exercised                                    --           --
                                        -------        -----
Outstanding, December 31, 1999          294,710        14.01
Granted                                  13,000        15.44
Forfeited                                (4,400)       14.84
Exercised                                (4,600)       12.82
                                         ------        -----
Outstanding, December 31, 2000          298,710    $   14.08
                                        =======    =========

Options exercisable                     201,610    $   13.45
                                        =======    =========

Remaining shares available for grant     73,605
                                         ======
</TABLE>

                                      -50-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

As of December 31, 2000,  the 298,710  options  outstanding  under the Plan have
exercise prices between $12.375 and $20.00.  The weighted average fair value per
option of options  granted  during the years ended  December 31, 2000,  1999 and
1998, were $3.88, $4.68 and $5.96, respectively.

Had compensation  cost for the Plan been determined based on the grant date fair
values  of  awards  (the  method  described  in FASB  Statement  No.  123),  the
approximate  2000,  1999 and 1998,  reported  net income and earnings per common
share would have been decreased to the pro forma amounts shown below:
<TABLE>
<CAPTION>
                                                       2000            1999            1998
                                                 ---------------------------------------------

<S>                                              <C>             <C>             <C>
Net income:
As reported                                      $   4,011,117   $   4,200,175   $   4,384,845
Pro forma                                            3,811,161       4,011,266       4,202,056

Earnings per common share:
As reported                                               2.04            1.64            1.44
Pro forma                                                 1.94            1.57            1.38

Earnings per common share - assuming dilution:

As reported                                               2.00            1.60            1.40
Pro forma                                                 1.90            1.53            1.34
</TABLE>



The fair  values  of the  grants  are  estimated  at the  grant  date  using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions  for grants in 2000, 1999 and 1998,  respectively:  dividend rate of
3.2%, 2.4% and 1.3%,  price volatility of 21%, 25% and 17%,  risk-free  interest
rates of 6.49%, 4.64% and 5.65% and expected lives of eight years for all years.

Employment  agreements:  The Company and the Bank have entered  into  employment
agreements with a key officer. Under the terms of the agreements, the officer is
entitled  to  additional  compensation  in the event of  certain  conditions  of
involuntary termination. The agreements extend for up to 36 months.

The Bank has entered  into  certain  employment  retention  agreements  with key
officers.  Under the terms of the  agreements,  the  employees  are  entitled to
additional  compensation  in the event of a change of control of the Bank or the
Company and the  employees  are  involuntarily  terminated  within the remaining
unexpired  employment  period, up to 36 months. A change in control is generally
triggered by the acquisition or control of 20% or more of the common stock.

                                      -51-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Note 12.  Stockholders' Equity

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below)  of  total  and  Tier  I  capital  (as  defined  in the  regulations)  to
risk-weighted  assets (as  defined),  of Tier I capital (as  defined) to average
assets  (as  defined)  and  tangible  capital  to  adjusted  assets.  Management
believes,  as of  December  31,  2000,  the  Bank  meets  all  capital  adequacy
requirements to which it is subject.

The Bank's actual capital amounts and ratios are also presented in the following
table:
<TABLE>
<CAPTION>
                                                                                               To Be Well
                                                                                             Capitalized Under
                                                                   For Capital              Prompt Corrective
                                          Actual                Adequacy Purposes           Action Provisions
                                 ----------------------------------------------------------------------------
                                   Amount        Ratio         Amount       Ratio          Amount       Ratio
                                 ----------------------------------------------------------------------------
                                   (000's)                     (000's)                     (000's)
<S>                              <C>            <C>           <C>            <C>          <C>           <C>
As of December 31, 2000:
Total Capital (to risk
weighted assets)                 $ 31,241       14.0%         $ 17,830       8.0%         $ 22,287      10.0%
Tier 1 Capital (to risk
weighted assets)                   28,456        12.8            8,915        4.0           13,372        6.0
Tier I  (Core) Capital
(to adjusted assets)               28,456         7.4           11,464        3.0           19,107        5.0
Tangible Capital (to
adjusted assets)                   28,456         7.4            5,732        1.5                -          -
As of December 31, 1999:
Total Capital (to risk
weighted assets)                 $ 33,168       16.7%         $ 15,870       8.0%         $ 19,837      10.0%
Tier 1 Capital (to risk
weighted assets)                   30,685        15.4            7,935        4.0           11,902        6.0
Tier I (Core) Capital
(to adjusted assets)               30,685         8.5           10,833        3.0           18,054        5.0
Tangible Capital (to
adjusted assets)                   30,685         8.5            5,416        1.5                -          -
</TABLE>
                                      -52-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Limitations on Dividends and Other Capital Distributions: OTS regulations impose
limitations   on  dividends   and  other   capital   distributions   by  savings
institutions.   Capital  distributions  include  cash  dividends,   payments  to
repurchase or otherwise acquire the savings  association's  shares,  payments to
stockholders of another institution in a cash out merger and other distributions
charged against capital.  The rule establishes  three tiers of institutions.  An
institution  such  as  the  Bank  that  exceeds  all  fully  phased-in   capital
requirements  before  and  after  a  proposed  capital   distribution  ("Tier  1
Association")  may, after prior notice but without the approval of the OTS, make
capital distributions during a calendar year up to the higher of (i) 100% of its
net income to date during the calendar year plus the amount that would reduce by
one-half its surplus  capital at the  beginning of the calendar year or (ii) 75%
of its net income over the most recent four-quarter  period,  subject to certain
limitations  and  restrictions as described in the  regulations.  Any additional
capital  distributions  would  require  prior  regulatory  approval.  A  savings
institution that does not meet its current regulatory capital requirement before
or after  payment of a proposed  capital  distribution  may not make any capital
distributions  without the prior  approval of the OTS. At December 31, 2000, the
Bank was considered a Tier 1 Association.

Note 13.     Other Noninterest Expense

Other noninterest  expense amounts are summarized as follows for the years ended
December 31:
<TABLE>
<CAPTION>
                                                     2000              1999                1998
                                               ---------------------------------------------------

<S>                                              <C>                <C>                 <C>
Advertising and promotion                        $ 237,482          $ 191,828           $ 168,105
Professional fees                                  152,648            207,211             171,761
Printing, postage, stationery and supplies         364,308            441,243             369,877
Checking account charges                           329,821            328,380             299,530
Insurance                                           84,058             80,400              85,987
OTS general assessment                              77,831             73,168              80,337
Telephone                                          120,302            108,292              91,900
ATM costs                                          106,821            111,982              82,285
Other                                              935,005            813,520             796,072
                                               ---------------------------------------------------
                                                $2,408,276        $ 2,356,024         $ 2,145,854
                                               ===================================================
</TABLE>

Note 14.  Financial Instruments With Off-Statement of Financial Condition Risk

The Bank is a party to financial  instruments  with  off-statement  of financial
condition  risk in the normal course of business to meet the financing  needs of
its customers.  These financial  instruments consist primarily of commitments to
extend credit. Those instruments involve, to varying degrees, elements of credit
and interest  rate risk in excess of the amount  recognized  in the statement of
financial  condition.  The  contract  or notional  amounts of those  instruments
reflect  the  extent  of  involvement  the Bank  has in  particular  classes  of
financial instruments.

The Bank uses the same credit  policies in making  commitments  and  conditional
obligations as they do for on-statement of financial condition instruments.

                                      -53-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

The Bank does  require  collateral,  or other  security,  to  support  financial
instruments with credit risk.

A summary of the  contract  amount of the Bank's  exposure to  off-statement  of
financial condition risk for commitments to extend credit is as follows:

<TABLE>
<CAPTION>
                                                                   Contract or Notional Amount
                                                                   ---------------------------
                                                                            December 31,
                                                                       2000            1999
                                                                       ----            ----
<S>                                                                <C>             <C>
Mortgage loans (including one-to-four family and multifamily
loans)                                                             $ 3,156,421     $ 5,440,249
Undisbursed overdraft loan privileges and undisbursed home
equity lines of credit                                               1,761,048         952,000
</TABLE>

At December 31, 2000,  the mortgage  loan  commitments  above were  comprised of
variable-rate commitments carrying a weighted-average interest rate of 8.18% and
fixed-rate commitments carrying a weighted-average interest rate of 8.76%.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since some of the  commitments are expected to expire
without being drawn upon, the total commitment  amounts above do not necessarily
represent future cash  requirements.  The Bank evaluates each customer's  credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank, upon extension of credit, is based on management's credit
evaluation of the  counterparty.  Collateral  held varies but normally  includes
real estate and personal property.

Note 15.   Lending Activities and Concentrations of Credit Risk

Most of the Bank's lending  activity is with customers  located within the state
of Iowa. The Bank generally  originates  single family  residential loans within
its primary lending area of Webster,  Story, Des Moines and Henry counties.  The
Bank's  underwriting  policies  require such loans to be 80% loan to value based
upon   appraised   values  unless  private   mortgage   insurance  is  obtained.
Approximately  37% of the Bank's first  mortgage loan  portfolio at December 31,
2000,  consisted  of loans  purchased or  originated  outside the state of Iowa.
These are generally multifamily residential and commercial real estate loans for
properties located primarily in Wisconsin,  Colorado and California. These loans
are secured by the underlying  properties.  The properties  securing these loans
are  physically  inspected.  The  loans  are  subject  to the same  underwriting
guidelines as loans originated  locally.  The Bank is also active in originating
secured  consumer  loans  to its  customers,  primarily  automobile  and  second
mortgage  loans.  Collateral for  substantially  all consumer loans are security
agreements and/or Uniform Commercial Code filings on the purchased asset.

                                      -54-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Note 16. Fair Values of Financial Instruments

The carrying amount and fair value of the Company's financial  instruments as of
December 31, 2000 and 1999, were as follows:

<TABLE>
<CAPTION>
                                             2000                                    1999
                               -----------------------------------------------------------------------
                                 Carrying             Fair               Carrying             Fair
                                  Amount              Value                Amount             Value
                               -----------------------------------------------------------------------
                                                  (nearest 000)                           (nearest 000)
<S>                            <C>                <C>                  <C>                <C>
Financial assets:
Cash                           $  8,849,726       $  8,850,000         $ 12,668,678       $ 12,669,000
Securities                       43,351,850         43,352,000           49,692,857         49,693,000
Loans, net                      318,025,782        320,667,000          286,759,101        285,004,000
Accrued interest receivable       2,257,153          2,257,000            2,082,598          2,083,000
Financial liabilities:
Deposits                        261,166,646        261,231,000          271,030,791        270,849,000
Borrowed funds                   88,592,226         88,334,000           55,715,289         54,860,000
Accrued interest payable            601,309            601,000              431,750            432,000
</TABLE>

Note 17.     1994 Reorganization and Conversion to Stock Ownership

Effective  August 31, 1994, First Federal Savings Bank of Iowa (a mutual savings
bank)  reorganized  such that its assets and liabilities  were  transferred to a
newly formed stock savings bank and a federal mutual holding  company was formed
under the name of North Central  Bancshares,  Inc. The stock savings bank issued
approximately  65% of its shares of stock to the mutual holding  company and the
remainder were sold in a public offering.

Persons who had  membership  or  liquidation  rights with  respect to the mutual
savings  bank as of the date of  reorganization  shall,  as long as they  remain
depositors of the Bank,  continue to have such rights solely with respect to the
mutual holding company after the reorganization (see Note 18).

Note 18.     The 1996 Reorganization and Conversion

Effective  March 20, 1996,  the mutual  holding  company and the Bank executed a
Plan of  Conversion  and Agreement and Plan of  Reorganization  (the Plan).  The
Company  became  an Iowa  corporation  owning  100% of the stock of the Bank and
offered shares to the public. The mutual holding company ceased to exist.

                                      -55-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

The Plan  provided  that  when the  conversion  was  completed,  a  "Liquidation
Account"  would be established in an amount equal to the amount of any dividends
waived by the mutual holding company (totaling approximately  $1,897,000),  plus
65.5% of the Bank's  total  stockholders'  equity,  as  reflected  in its latest
statement  of  financial  condition  in the  final  prospectus  utilized  in the
conversion. The Liquidation Account is established to provide a limited priority
claim to the assets of the Bank to qualifying  depositors as of specified  dates
(Eligible  Account  Holders  and  Supplemental  Eligible  Account  Holders)  who
continue to maintain deposits in the Bank after the conversion.  In the unlikely
event of a complete liquidation of the Bank, and only in such an event, Eligible
Account Holders and Supplemental Eligible Account Holders would receive from the
Liquidation  Account a  liquidation  distribution  based on their  proportionate
share of the then total remaining qualifying deposits.

Note 19.  Earnings Per Common Share

Presented below is the  reconciliation of the numerators and denominators of the
computations  for  earnings  per common  share and  earnings  per common share -
diluted, for the years ended December 31:
<TABLE>
<CAPTION>
                                                  2000         1999        1998
                                              ------------------------------------
<S>                                           <C>          <C>          <C>
Numerator, income available to common
stockholders                                  $4,011,117   $4,200,175   $4,384,845
                                              ==========   ==========   ==========
Denominator:
Weighted-average shares outstanding            2,042,140    2,660,629    3,166,041
Less unallocated ESOP                             78,454       97,689      117,894
                                                  ------       ------      -------
Weighted-average shares outstanding-basic      1,963,686    2,562,940    3,048,147
Dilutive effect of stock options                  42,654       58,602       84,684
                                                  ------       ------       ------
Weighted-average shares outstanding-diluted    2,006,340    2,621,542    3,132,831
                                               =========    =========    =========

Basic earnings per common share                     2.04         1.64         1.44
Earnings per common share-assuming dilution         2.00         1.60         1.40
</TABLE>

Note 20.  Pending Accounting Pronouncements

SFAS No. 133, Accounting for Derivatives Instruments and Hedging will, beginning
with the  quarter  ended  March 31,  2001,  require an entity to  recognize  all
derivatives as either assets or  liabilities,  and measure those  instruments at
fair value.  It also sets forth the proper  accounting  for hedging  activities,
which is  determined by the intended use of the  derivative  and how that use is
designated  by the  entity.  Since the  Company  is not  currently  holding  any
derivative  instruments  (as defined) and is not engaged in hedging  activities,
the  adoption  of SFAS No. 133 is  expected  to have no effect on the  Company's
financial condition or results of operations.

SFAS No. 140  Accounting  for Transfers  and  Servicing of Financial  Assets and
Extinguishments  of Liabilities  was issued in September 2000, and replaces SFAS
No. 125 of the same title. SFAS No. 140 revises the standards for accounting for
securitizations  and other  transfers of  financial  assets and  collateral  and
requires  certain  disclosures,  but it  carries  over  most of SFAS  No.  125's
provisions without reconsideration. The adoption of SFAS No. 140 is not expected
to have a material impact on the results of operations or financial condition of
the Company.
                                      -56-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Note 21.  North Central Bancshares, INC. (Parent Company Only) Financial
<TABLE>
<CAPTION>
                    STATEMENTS OF FINANCIAL CONDITION
                       December 31, 2000 and 1999

                                                         2000            1999
                                                   ----------------------------
<S>                                                <C>             <C>
ASSETS
Cash                                               $    346,592    $    190,106
Securities available-for-sale                           464,049         457,105
Loan receivables, net                                 1,101,000         951,000
Investment in First Federal Savings Bank of Iowa     34,648,865      36,765,460
Income taxes receivable                                  71,629          30,809
Deferred taxes                                            6,215              --
Prepaid expenses and other assets                            --          11,549
                                                          -----          ------
Total assets                                       $ 36,638,350    $ 38,406,029
                                                   ============    ============
LIABILITIES AND EQUITY

LIABILITIES

Dividend payable                                   $    240,235    $    226,174
Accrued expenses and other liabilities                       --          32,639
Deferred taxes                                               --          20,292
                                                        -------          ------
Total liabilities                                       240,235         279,105
                                                        -------         -------

EQUITY
Common stock                                             40,111          40,111
Additional paid-in capital                           38,378,315      38,278,872
Retained earnings                                    33,345,852      30,290,488
Unearned shares, employee stock ownership plan         (646,912)       (825,484)
Accumulated other comprehensive (loss)                 (247,340)       (921,138)
Treasury stock, at cost                             (34,471,911)    (28,735,925)
                                                    -----------     -----------

Total equity                                         36,398,115      38,126,924
                                                     ----------      ----------

Total liabilities and equity                       $ 36,638,350    $ 38,406,029
                                                   ============    ============
</TABLE>
                                      -57-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

<TABLE>
<CAPTION>
                              STATEMENTS OF INCOME
                  Years Ended December 31, 2000, 1999 and 1998

                                                          2000           1999         1998
                                                     ----------------------------------------
<S>                                                  <C>            <C>           <C>
Operating income:
Equity in net income of subsidiary                   $ 4,050,607    $ 4,173,425   $ 4,393,955
Interest income                                          118,392        286,915       200,055
Gain on sale of securities available-for-sale, net            42         61,564        71,923
                                                         -------         ------        ------
                                                       4,169,041      4,521,904     4,665,933
                                                       ---------      ---------     ---------

Operating expenses:
Salaries and employee benefits                            47,400         45,750        45,000
Other                                                    145,921        267,979       265,088
                                                         -------        -------       -------
                                                         193,321        313,729       310,088
                                                         -------        -------       -------

Income before income taxes                             3,975,720      4,208,175     4,355,845

Provision for income taxes                               (35,397)         8,000       (29,000)
                                                         -------          -----       -------

Net income                                           $ 4,011,117    $ 4,200,175   $ 4,384,845
                                                     ===========    ===========   ===========
</TABLE>

                                      -58-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
<TABLE>
<CAPTION>
                                                                        STATEMENTS OF EQUITY
                                                               Years Ended December 31, 2000, 1999 and 1998
                                                                                 Employee   Accumulated
                                                        Additional                  Stock        Other                     Total
                                 Comprehensive  Common    Paid-in    Retained     Ownership   Compehensive  Treasury   Stockholer's
                                   Income       Stock     Capital    Earnings       Plan      Income (Loss)  Stock        Equity
                                   -------------------------------------------------------------------------------------------------
<S>                                <C>        <C>       <C>         <C>          <C>          <C>         <C>           <C>
Balance, December 31, 1997                     $40,111  $37,949,598 $23,660,964  $(1,210,441)   $354,781  $(10,377,937) $50,417,076
Comprehensive income:
Net income                         $4,384,845       --           --   4,384,845           --          --           --     4,384,845
Other comprehensive income,
 unrealized gains on securities,
 net of reclassification
 adjustment,net of tax (Note 3)         3,885       --           --         --            --       3,885           --         3,885
                                    ---------
Total comprehensive income         $4,388,730
                                   ==========
Purchase of treasury stock                          --           --         --            --          --   (6,164,419)   (6,164,419)
Dividends on common stock                           --           --    (960,902)          --          --            --     (960,902)
Effect of contribution to
 employee stock ownership plan                      --      206,636          --      197,157          --            --      403,793
Effect of stock options exercised                   --      (20,417)         --           --          --       142,953      122,536
                                                ------------------------------------------------------------------------------------
Balance, December 31, 1998                      40,111   38,135,817  27,084,907   (1,013,284)    358,666   (16,399,403)  48,206,814

Comprehensive income:
Net income                         $4,200,175       --           --   4,200,175           --          --           --     4,200,175
Other comprehensive (loss),
 unrealized (losses) on securities,
 net of reclassification adjustment,
     net of tax (Note 3)           (1,279,804)      --           --          --           --  (1,279,804)         --     (1,279,804)
                                   -----------
Total comprehensive income         $2,920,371
                                   ==========

Purchase of treasury stock                          --           --          --           --        --    (12,336,522)  (12,336,522)
Dividends on common stock                           --           --    (994,594)          --        --             --      (994,594)
Effect of contribution to employee
     stock ownership plan                           --      143,055          --      187,800        --             --       330,855
                                                ------------------------------------------------------------------------------------
Balance, December 31, 1999                      40,111   38,278,872  30,290,488     (825,484)   (921,138) (28,735,925)   38,126,924
Comprehensive income:
Net income                         $4,011,117       --           --   4,011,117           --          --           --     4,011,117
Other comprehensive (loss),
 unrealized (losses)on securities,
 net of reclassification adjustment,
    net of tax (Note 3)               673,798       --           --          --           --     673,798           --       673,798
                                   ----------
Total comprehensive income         $4,684,915
                                   ==========

Purchase of treasury stock                          --           --          --           --         --    (5,799,736)   (5,799,736)
Dividends on common stock                           --           --    (955,753)          --         --            --      (955,753)
Effect  of contribution to
 employee stock ownership plan                      --      108,723          --      178,572         --            --       287,295
Issuance of treasury stock                          --       (9,280)         --           --         --         63,750       54,470
                                               -------------------------------------------------------------------------------------
Balance, December 31, 2000                     $40,111  $38,378,315 $33,345,852   $ (646,912)  $(247,340) $(34,471,911) $36,398,115
                                               =====================================================================================
</TABLE>
                                      -59-
<PAGE>
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
<TABLE>
<CAPTION>
                            STATEMENTS OF CASH FLOWS
                  Years Ended December 31, 2000, 1999 and 1998

                                                           2000            1999            1998
                                                      --------------------------------------------
<S>                                                   <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                            $  4,011,117    $  4,200,175    $  4,384,845
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in net income of First Federal Savings
Bank of Iowa                                            (4,050,607)     (4,173,425)     (4,393,955)
Dividends received from First Federal Savings
Bank of Iowa                                             7,100,000      12,398,262       3,295,694
(Gain) on sale of securities available-for-sale                (42)        (61,564)        (71,923)
Change in deferred income taxes                            (29,906)         43,318            (485)
Change in assets and liabilities:
Income taxes receivable                                    (40,820)         (2,319)        (20,917)
Prepaid expenses and other assets                           11,549            (963)          2,191
Income taxes payable                                            --              --          (2,723)
Accrued expenses and other liabilities                     (32,639)        (14,490)          5,836
                                                           -------         -------           -----
Net cash provided by operating activities                6,968,652      12,388,994       3,198,563
                                                         ---------      ----------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in loans                          (150,000)        310,000       8,680,000
Proceeds from sale of securities available-for-sale         24,792         438,915         128,550
Purchase of securities available-for-sale                       --         (15,125)       (361,058)
Capital contributions to First Federal Savings Bank             --              --      (5,000,000)
                                                          --------         -------       ---------
Net cash provided by (used in) investing
activities                                                (125,208)        733,790       3,447,492
                                                          --------         -------       ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock                              (5,799,736)    (12,336,522)     (6,164,419)
Proceeds from issuance of treasury stock                    54,470              --         114,963
Dividends paid                                            (941,692)     (1,005,553)       (927,924)
                                                          --------      ----------        --------
Net cash (used in) financing activities                 (6,686,958)    (13,342,075)     (6,977,380)
                                                        ----------     -----------      ----------

Net increase (decrease) in cash                            156,486        (219,291)       (331,325)

CASH
Beginning                                                  190,106         409,397         740,722
                                                           -------         -------         -------
Ending                                                $    346,592    $    190,106    $    409,397
                                                      ============    ============    ============

SUPPLEMENTAL SCHEDULE OF CASH
FLOW INFORMATION
Cash payment (receipts) for income taxes              $     44,608    $    (32,998)   $     82,158
</TABLE>


                                      -60-

<PAGE>
                   QUARTERLY RESULTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
                                                                Year Ended December 31, 2000
                                      ----------------------------------------------------------------------------
                                              First               Second                Third              Fourth
                                             Quarter              Quarter              Quarter             Quarter
                                      ----------------------------------------- -------------------- -------------
                                                          (In thousands, except per share amounts)
<S>                                       <C>                  <C>                  <C>                  <C>
Interest income.......................    $     6,530          $     6,731          $     6,951          $     7,071
Interest expense......................          3,786                4,030                4,356                4,535
                                          -----------          -----------          -----------          -----------
Net interest income...................          2,744                2,701                2,595                2,536
Provision for loan losses.............             30                   30                   30                   30
                                          -----------          -----------          -----------          -----------
Net interest income after provision for
    loan losses.......................          2,714                2,671                2,565                2,506
                                          -----------          -----------          -----------          -----------
Noninterest income:
    Fees and service charges..........            354                  380                  424                  434
    Abstract fees.....................            304                  354                  305                  270
    Other income......................            297                  218                  260                  414
                                          -----------          -----------          -----------          -----------
      Total noninterest income........            955                  952                  989                1,118
Noninterest expense:
    Salaries and employee benefits....          1,043                  992                1,005                1,063
    Premises and equipment............            237                  245                  283                  327
    Data Processing...................            113                  116                  112                  114
    SAIF deposit insurance premiums ..             13                   14                   14                   14
    Goodwill..........................            118                  118                  118                  118
    Other.............................            588                  625                  546                  650
                                          -----------          -----------          -----------          -----------
      Total noninterest expense.......          2,112                2,110                2,078                2,286
                                          -----------          -----------          -----------          -----------
Income before income taxes............          1,557                1,513                1,476                1,338
Provision for income tax expense......            550                  508                  505                  310
                                          -----------          -----------          -----------          -----------
Net Income............................    $     1,007          $     1,005          $       971          $     1,028
                                          ===========          ===========          ===========          ===========
Basic earnings per share..............    $      0.48          $      0.51          $      0.50          $      0.55
                                          ===========          ===========          ===========          ===========
Diluted earnings per share............    $      0.47          $      0.50          $      0.49          $      0.53
                                          ===========          ===========          ===========          ===========
</TABLE>
<TABLE>
<CAPTION>
                                                               Year Ended December 31, 1999
                                     -------------------------------------------------------------------------------
                                              First               Second                Third               Fourth
                                             Quarter              Quarter              Quarter              Quarter
                                     ------------------------------------------ --------------------- -------------
                                                          (In thousands, except per share amounts)
<S>                                      <C>                   <C>                  <C>                   <C>
Interest income......................    $  5,967              $  6,005             $  6,129              $  6,455
Interest expense.....................       3,200                 3,235                3,390                 3,779
                                         --------              --------             --------              --------
Net interest income..................       2,767                 2,770                2,739                 2,676
Provision for loan losses............          30                    30                   30                    30
                                         --------              --------             --------              --------

Net interest income after provision for
    loan losses......................       2,737                 2,740                2,709                 2,646
                                         --------              --------             --------              --------
Noninterest income:
    Fees and service charges.........         361                   334                  378                   412
    Abstract fees....................         343                   383                  372                   323
    Other income.....................         216                   338                  379                   224
                                         --------              --------             --------              --------
      Total noninterest income.......         920                 1,055                1,129                   959
Noninterest expense:
    Salaries and employee benefits...         973                 1,007                1,033                 1,013
    Premises and equipment...........         207                   216                  236                   272
    Data Processing..................         148                   149                  111                   114
    SAIF deposit insurance premiums .          37                    36                   36                    38
    Goodwill.........................         118                   118                  118                   118
    Other............................         571                   631                  594                   560
                                         --------              --------             --------              --------
      Total noninterest expense......       2,054                 2,157                2,128                 2,115
                                         --------              --------             --------              --------
Income before income taxes...........       1,603                 1,638                1,710                 1,490
Provision for income tax expense.....         545                   564                  622                   510
                                         --------              --------             --------              --------
Net income...........................    $  1,058              $  1,074             $  1,088              $    980
                                         ========              ========             ========              ========
Basic earnings per share.............    $   0.37              $   0.39             $   0.44              $   0.44
                                         =========             =========            =========             =========
Diluted earnings per share...........    $   0.36              $   0.38             $   0.43              $   0.43
                                         =========             =========            =========             =========
</TABLE>
                                      -61-
<PAGE>
                 MANAGEMENT OF THE HOLDING COMPANY AND THE BANK

     The Board of  Directors  of the  Holding  Company  is  divided  into  three
classes, each of which contains approximately one-third of the Board. The Bylaws
of the Holding Company  currently  authorize  seven  directors.  Currently,  all
directors of the Holding Company are also directors of the Bank.

Directors

     David M.  Bradley,  CPA is  Chairman  of the  Board,  President  and  Chief
Executive Officer.

     Howard A. Hecht is a retired insurance executive,  who was a Vice President
with Principal Mutual Life Insurance Company in Des Moines, Iowa. Mr. Hecht will
be retiring from the board of directors effective April 27, 2001.

     Melvin R.  Schroeder  is Vice  President  of  Instruction  at Iowa  Central
Community College in Fort Dodge, Iowa.

     KaRene Egemo is the owner of Egemo Realty, Inc. in Fort Dodge, Iowa.

     Robert H. Singer, Jr. is the co-owner of Calvert, Singer & Kelley Insurance
Services, Inc., an insurance agency, in Fort Dodge, Iowa.

     Mark  Thompson is the owner of Mark  Thompson,  CPA,  P.C. , in Fort Dodge,
Iowa and has been a certified public accountant since 1978.

     Craig R.  Barnes  is  Executive  Director  of  International  Products  for
Principal Capital Management,  a member of the Principal Financial Group. He has
been employed with Principal in Des Moines, Iowa, since 1979.

Executive Officers Who are Not Directors

     C. Thomas  Chalstrom is Chief  Operating  Officer of the Bank and Executive
Vice President of the Holding Company and the Bank.

     Jean L. Lake is Secretary of the Holding Company and the Bank.

     John L.  Pierschbacher,  CPA is  Treasurer  of the Holding  Company and the
Bank.

     Kirk A. Yung is Senior Vice President of the Holding Company and the Bank.

                                      -62-
<PAGE>
                             SHAREHOLDER INFORMATION

Price Range of the Company's Common Stock

         The Company's  Common Stock trades on The Nasdaq National Market System
under the symbol  "FFFD." The  following  table shows the high and low per share
sales  prices of the  Company's  Common  Stock as  reported  by  Nasdaq  and the
dividends  declared  per share  during the periods  indicated.  Such  quotations
reflect inter-dealer prices,  without retail markup,  markdown or commission and
may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
                                             Price Range ($)
                                             ---------------
                                                                    Dividends Declared
        Quarter Ended                  High               Low            Per Share
        -------------                  ----               ---            ---------
1999
----
<S>                              <C>                <C>               <C>
First Quarter................    $    17.250        $    16.250       $     0.10
Second Quarter...............         18.750             16.000             0.10
Third Quarter................         17.625             16.188             0.10
Fourth Quarter...............         17.000             15.000             0.10

2000
----
First Quarter................         16.688             12.750             0.125
Second Quarter...............         14.750             13.750             0.125
Third Quarter................         16.938             13.750             0.125
Fourth Quarter ..............         17.750             16.625             0.125
</TABLE>

The Company's Common Stock was traded at $20.00 as of March 12, 2001.

Information Relating to the Company's Common Stock

         As of March 12,  2001,  the Company had 1,437  shareholders  of record,
which does include the number of persons or entities who hold their Common Stock
in nominee or "street" name through  various  brokerage  firms.  As of such date
1,897,380 shares of the Common Stock were outstanding.

         The Company's current quarterly  dividend is $0.15 per share. The Board
of Directors of the Company  plans to maintain a regular  quarterly  dividend in
the future and will continue to review the dividend  payment  amount in relation
to the Company's earnings,  financial condition and other relevant factors (such
as regulatory requirements).

         The Bank will not be permitted to pay dividends to the Holding  Company
on its capital  stock if its  shareholders'  equity  would be reduced  below the
amount required for the liquidation account. For information  concerning federal
regulations  which apply to the Bank in determining the amount of proceeds which
may be retained by the Company and regarding a savings  institution's ability to
make  capital  distributions  including  payment  of  dividends  to its  holding
company, see Note 11 to the Consolidated Financial Statements.

         Unlike the Bank,  the Holding  Company is not subject to OTS regulatory
restrictions  on the payment of  dividends  to its  shareholders,  although  the
source of such dividends  will be dependent on the net proceeds  retained by the
Holding  Company  and  earnings  thereon  and may be  dependent,  in part,  upon
dividends from the Bank. The Holding  Company is subject to the  requirements of
Iowa law,  which  prohibit the Holding  Company from paying a dividend if, after
giving it effect,  either of the following would result: (a) the Holding Company
would not be able to pay its  debts as they  become  due in the usual  course of
business;  or (b) the Holding  Company's total assets would be less than the sum
of its total  liabilities  plus the amount that would be needed,  if the Holding
Company  were to be dissolved  at the time of the  distribution,  to satisfy the
preferential  rights upon dissolution of shareholders whose preferential  rights
are superior to those receiving the distribution.

                                      -63-
<PAGE>
Annual Meeting

         The Annual Meeting of Shareholders of the Company will be held at 10:00
a.m.,  Friday,  April 27, 2001 at the Trolley Center,  900 Central Avenue,  Fort
Dodge, Iowa.

Stockholders and General Inquiries

David M. Bradley
North Central Bancshares, Inc.
c/o First Federal Savings Bank of Iowa
825 Central Avenue
Fort Dodge, Iowa 50501
(515) 576-7531
www.firstfederaliowa.com

General Counsel                               Independent Auditor
Johnson, Erb, Bice,                           McGladrey & Pullen, LLP
Kramer, Good & Mulholland, P.C.               400 Locust Street   Suite  640
809 Central Avenue                            Des Moines, Iowa 50309
Fort Dodge, Iowa 50501


Special Counsel                               Transfer Agent
Thacher Proffitt & Wood                       Computershare Investor Services
1700 Pennsylvania Avenue, N.W., Suite 800     12039 West Alameda Parkway Suite Z
Washington, D.C.  20006                       Lakewood, Colorado  80228
                                              (303) 986-5400
                                              www.asttrust.com
Annual Report on Form 10-K

         A copy of the  Company's  Form 10-K  (without  exhibits) for the fiscal
year ended December 31, 2000 will be furnished without charge to shareholders as
of March 12, 2001 upon  written  request to Jean L. Lake,  Corporate  Secretary,
North Central  Bancshares,  Inc.,  c/o First Federal  Savings Bank of Iowa,  825
Central Avenue, Fort Dodge, Iowa 50501.

                                      -64-