SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
[X] Annual report pursuant to section 13 or 15 (d) of the Securities Exchange 
    Act of 1934 

    For the fiscal year ended   September 30, 1997
                               ---------------------

[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
    Act of 1934 
    For the transition period from              to                .
                                     ------------    ------------

Commission File No. 0-27620

                           GREEN STREET FINANCIAL CORP
         -------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

              North Carolina                                    56-1951478
--------------------------------------------------         ---------------------
        (State or Other Jurisdiction                          (I.R.S. Employer
      of Incorporation or Organization)                      Identification No.)

241 Green Street, Fayetteville, North Carolina                   28301-5051
--------------------------------------------------         ---------------------
   (Address of Principal Executive Offices)                      (Zip Code)

Registrant's Telephone Number, Including Area Code:          (910) 483-3681
                                                            ---------------

Securities registered under Section 12(b) of the Securities Exchange Act:  None
                                                                           ----

Securities registered under Section 12(g) of the Securities Exchange Act:

                           Common Stock, no par value
                           --------------------------
                                (Title of Class)

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

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

      The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant, based on the average bid and asked price of
the  registrant's  Common  Stock on December 4, 1997,  was  approximately  $71.0
million.

      As of December 4, 1997, there were issued and outstanding 4,298,125 shares
of the registrant's Common Stock.


                       DOCUMENTS INCORPORATED BY REFERENCE

      1. Portions of the Annual Report to Stockholders for the Fiscal Year ended
September 30, 1997. (Parts II, III and IV)
      2. Portions of the Proxy  Statement for the Annual Meeting of Stockholders
for the Fiscal Year ended September 30, 1997. (Part III)



<PAGE>

                                     PART I

Item 1.  Business
-----------------

General

      Green  Street   Financial  Corp  (the   "Company")  is  a  North  Carolina
corporation  organized in December 1995 at the direction of Home Federal Savings
and Loan  Association  (the  "Association")  to acquire all of the capital stock
that the  Association  issued in its conversion from the mutual to stock form of
ownership (the  "Conversion").  On April 3, 1996, the Association  completed the
Conversion and became a wholly owned subsidiary of the Company. The Company is a
unitary savings and loan holding company which,  under existing laws,  generally
is not  restricted  in the types of business  activities  in which it may engage
provided  that the  Association  retains a  specified  amount  of its  assets in
housing-related  investments.  The Company  conducts no significant  business or
operations  of its own other than  holding all of the  outstanding  stock of the
Association, investing the Company's portion of the net proceeds obtained in the
conversion,  and lending funds to an employee stock ownership plan formed by the
Association.

      The  Association,   a  federally   chartered  stock  savings   association
headquartered in Fayetteville,  North Carolina,  was chartered in 1916 under the
name  Home  Building  and  Loan  Association.  The  Association  is  subject  to
examination  and  comprehensive  regulation by the Office of Thrift  Supervision
("OTS") and its deposits have been federally insured by the Savings  Association
Insurance  Fund  ("SAIF")  and its  predecessor,  the  Federal  Savings and Loan
Insurance  Corporation,  since  1935.  The  Association  is a member of and owns
capital stock in the FHLB of Atlanta,  which is one of the 12 regional  banks in
the FHLB System.

Competition

      The  Association's  primary market area consists of Cumberland and Robeson
Counties,   North  Carolina  and  the  Association  is  one  of  many  financial
institutions serving its market area. The competition for deposit products comes
from other  insured  financial  institutions  such as commercial  banks,  thrift
institutions  and  credit  unions  in the  Association's  market  area.  Deposit
competition  also  includes a number of insurance  products sold by local agents
and investment  products such as mutual funds and other securities sold by local
and regional brokers.  Loan competition  varies depending upon market conditions
and comes from other insured  financial  institutions  such as commercial banks,
thrift institutions and credit unions.






                                        2

<PAGE>



Lending Activities

      Analysis of Loan  Portfolio.  Set forth below is selected data relating to
the composition of the Association's loan portfolio by the type of loan.

<TABLE>
<CAPTION>
 
                                                            At September 30,
                                ---------------------------------------------------------------------------
                                         1997                     1996                       1995
                                ---------------------     ---------------------    ------------------------
                                 Amount       Percent     Amount        Percent      Amount         Percent
                                --------      -------     ------        -------    ---------        -------
                                                         (Dollars in thousands)
<S>                             <C>           <C>       <C>              <C>       <C>              <C>   
Type of Loans:
  Residential 1- to 4-family    $106,084       80.57%   $102,011          80.82%   $ 94,668          79.32%
  Residential multi-family ..      7,527        5.72       5,579           4.42       5,577           4.67
  Non-residential real estate     14,172       10.76      15,544          12.31      16,663          13.96
  Construction ..............      3,445        2.62       2,948           2.34       2,218           1.85
  Installment account loans .        434         .33         142           0.11         229           0.20
                                --------      ------    --------         ------    --------         ------ 
                                 131,662      100.00%    126,224         100.00%    119,355         100.00%
                                ========      ======    ========         ======    ========         ====== 
 
Less:
  Unearned fees and discounts        965                     931                        900
  Loans in process ..........      1,496                   1,910                      1,029
  Allowance for losses ......        255                     235                        225
                                --------                --------                   --------
                                   2,176                   3,076                      2,154
                                --------                --------                   --------

Total loans receivable, net .   $128,946                $123,148                   $117,201
                                ========                ========                   ========

</TABLE>

Loan Maturity Tables

      The following table sets forth the estimated maturity of the Association's
loan portfolio at September 30, 1997. The table does not include  prepayments or
scheduled principal  repayments.  Prepayments and scheduled principal repayments
on  loans  totalled  $17.5  million  for the  year  ended  September  30,  1997.
Adjustable-rate  mortgage  loans  are  shown as  maturing  based on  contractual
maturities.

                                            Due after
                               Due within   1 through    Due after
                                1 year       5 years      5 years      Total
                                ------       -------      -------      -----
                                               (In thousands)

  Residential 1- to 4-family.     $116        $2,932     $103,036    $106,084
  Residential multi-family...       --            23        7,504       7,527
  Non-residential real estate        8         1,513       12,651      14,172
  Construction...............       --            --        3,445       3,445
  Installment account loans..      434            --           --         434
                                  ----        ------     --------    --------
                                  $558        $4,468     $126,636    $131,662
                                  ====        ======     ========    ========




                                        3

<PAGE>



      The  following  table sets forth the dollar  amount of all loans due after
September  30, 1998,  which have  pre-determined  interest  rates and which have
floating or adjustable interest rates.

                                              Floating or
                               Fixed Rates  Adjustable Rates   Total
                               -----------  ----------------   -----
                                             (In thousands)
Residential 1- to 4-family...      $68,931       $37,036      $105,967
Residential multi-family.....        1,031         6,496         7,527
Non-residential real estate..        5,446         8,719        14,165
Construction.................        3,445            --         3,445
                                   -------       -------      --------
  Total......................      $78,853       $52,251      $131,104
                                   =======       =======      ========




      One- to Four-Family  Residential Loans. The Association's  primary lending
activity consists of the origination of one- to four-family residential mortgage
loans secured by property located in the Association's  primary market area. The
Association generally originates one- to four-family  residential mortgage loans
in amounts up to 80% of the lesser of the  appraised  value or selling  price of
the  mortgaged  property.  With  private  mortgage  insurance  obtained  for the
borrower,  the maximum loan to value ratio is increased  to 90%.  However,  when
lending amounts of over $240,000,  the maximum loan to value ratio is reduced to
70%.  The maximum loan amount for such loans is handled on a case by case basis.
The Association  does not originate loans with initial  interest rates which are
deeply discounted  ("teaser  rates").  Mortgage loans originated and held by the
Association in its portfolio generally include due-on-sale clauses which provide
the Association with the contractual  right to deem the loan immediately due and
payable in the event  that the  borrower  transfers  ownership  of the  property
without the Association's  consent. The Association  originates and retains both
fixed and adjustable-rate mortgage loans.

      The Association  requires for all adjustable-rate  mortgage loans that the
borrower  qualify  at 2%  above  the  interest  rate  at loan  origination.  The
Association's  adjustable-rate  loans provide for limitations on annual interest
rate adjustments of up to 2% with a maximum adjustment over the term of the loan
of 6%. Adjustable-rate loans typically reprice every year, and provide for terms
of up to 30 years with most loans having  terms of between 15 and 30 years.  The
Association sets the maximum loan term based on a dollar amount.

      Adjustable-rate  mortgage loans decrease the risks associated with changes
in interest rates by more closely  reflecting  these changes,  but involve other
risks  because as  interest  rates  increase,  the  underlying  payments  by the
borrower increase,  thus increasing the potential for default. At the same time,
the  marketability  of the underlying  collateral  may be adversely  affected by
higher interest  rates.  Upward  adjustment of the contractual  interest rate is
also limited by the adjustable-rate mortgage loan documents, thereby potentially
limiting their  effectiveness  during periods of rising  interest  rates.  These
risks have not had an adverse effect on the Association.

      Non-Residential  Loans.  The  non-residential  real estate loan  portfolio
consists  primarily  of loans  secured  by  commercial  real  estate  and church
property.  Loans secured by church real estate, loans secured by rental property
and loans secured by commercial property may be made in amounts up to 70% of the
appraised value.  Non-residential  lending entails significant  additional risks
when  compared  with  one- to  four-family  residential  lending.  For  example,
non-residential loans typically involve larger loan balances to single borrowers
or groups of related  borrowers,  the payment experience on such loans typically
is dependent on the  successful  operation of the project and these risks can be
significantly  impacted by the cash flow of the  borrowers and supply and demand
conditions in the market for commercial office, retail and warehouse space.

                                        4

<PAGE>




      Multi-Family  Residential Loans. The Association makes multi-family loans,
including loans on apartment complexes. These loans have a maximum loan to value
ratio of 70%.  Multi-family  loans generally  provide higher interest rates than
can be obtained from single-family mortgage loans. Multifamily lending, however,
entails  significant  additional  risks when compared  with one- to  four-family
residential  lending.  For example,  multi-family loans typically involve larger
loan balances to single  borrowers or groups of related  borrowers,  the payment
experience on such loans  typically is dependent on the successful  operation of
the real estate project, and these risks can be significantly impacted by supply
and demand conditions in the market for multi-family residential units.

      Construction  Loans.  Construction loans are made on a long term basis and
are  classified  as  construction/permanent  loans.  Approximately  90%  of  the
Association's   construction   loan  portfolio  are  for  the   construction  of
single-family  residential  property and are made to the individuals who will be
the owners and occupants upon  completion of  construction.  These  construction
loans usually require no principal payments during the first 6-12 months,  after
which the payments are set at an amount that will  amortize over the term of the
permanent loan. The terms, including interest rate, of single family residential
construction  loans are the same as those for a loan to purchase or  refinance a
previously constructed single family residence.  The maximum loan to value ratio
for other  construction  loans is dependent on the type of property that will be
constructed.  The  Association  also makes  construction  loans to builders  and
construction loans on non-residential properties.

      Construction lending is generally considered to involve a higher degree of
credit  risk  than   long-term   financing  of   residential   properties.   The
Association's  risk of loss on a construction loan is dependent largely upon the
accuracy  of the initial  estimate  of the  property's  value at  completion  of
construction  or  development  and the estimated  cost of  construction.  If the
estimate  of  construction  cost  and the  marketability  of the  property  upon
completion  of the  project  prove  to be  inaccurate,  the  Association  may be
compelled to advance additional funds to complete construction.  Furthermore, if
the estimate of value proves to be inaccurate, the Association may be confronted
at or prior to the  maturity of the loan,  with a property  with a value that is
insufficient to assure full repayment.

     Installment  Account Loans.  The  Association's  installment  account loans
consist of home equity loans secured by second  mortgages on single family loans
in the  Association's  market area and savings account loans.  Home equity loans
generally are limited to 80% of the appraised value of the residence.

      Savings  account loans are only made when secured by a savings  account in
the Association (share loans) and generally have rates that adjust with the rate
on the  underlying  account and are typically  between two and six percent above
the rate on the underlying savings account. Share loans are offered subject to a
90% loan to collateral value limit.

      Loan Approval  Authority and Underwriting.  All loans of up to $125,000 in
amount must be approved by one or more loan  committees.  Loans for amounts over
$125,000 must be approved by the Board of Directors of the Association.

      Upon receipt of a completed loan application from a prospective  borrower,
a credit report is generally  ordered,  income and certain other  information is
verified and, if necessary,  additional financial  information is requested.  An
appraisal  of the real estate  intended to be used as security  for the proposed
loan is obtained.  Appraisals are obtained from independent fee appraisers.  For
real estate loans the  Association  requires  either title  insurance or a title
opinion.  Borrowers  must also obtain fire and casualty  insurance (for loans on
property  located in a flood zone,  flood  insurance is  required)  prior to the
closing of the loan. For loans where private  mortgage  insurance is required by
the  Association,  the borrower must also provide an escrow amount for taxes and
fire insurance.

                                        5

<PAGE>




      Loan   Commitments.   The  Association   issues  written   commitments  to
prospective  borrowers  on  all  approved  real  estate  loans.  Generally,  the
commitment  requires  acceptance  within  30 days of the  date of  issuance.  At
September 30, 1997,  the  Association  had $2.1 million of  commitments to cover
originations  and $1.5  million  in  undisbursed  funds  for  loans in  process.
Management believes that virtually all of the Association's  commitments will be
funded.

      Loans to One  Borrower.  Regulations  limit  loans to one  borrower  in an
amount  equal  to  15% of  unimpaired  capital  and  unimpaired  surplus  of the
Association.  The  Association  is authorized to lend up to an additional 10% of
unimpaired  capital  and  unimpaired  surplus  if the loan is fully  secured  by
readily marketable collateral. Savings associations are authorized to make loans
to one borrower, for any purpose, in an amount up to $500,000. The Association's
maximum loan to one borrower limit was  approximately  $6.8 million at September
30, 1997.

      At September 30, 1997,  the  Association's  largest amount of loans to one
borrower  was seven loans  aggregating  $2.4  million.  All of the loans to this
borrower are current.

Non-Performing and Problem Assets

      Loan Delinquencies.  The Association's  collection procedures provide that
when a mortgage  loan is 30 days past due, a notice of  nonpayment  is sent.  If
payment is still  delinquent  after 45 days,  the customer will receive a letter
and/or  telephone  call and may  receive a visit  from a  representative  of the
Association.  If the delinquency continues,  similar subsequent efforts are made
to eliminate the delinquency.  If the loan continues in a delinquent  status for
60 days past due and no repayment  plan is in effect,  a notice of right to cure
default is mailed to the customer giving 30 additional days to bring the account
current before foreclosure is commenced.

      Loans are  reviewed  on a  monthly  basis  and are  generally  placed on a
non-accrual   status  when  the  loan  becomes  more  than  90  days  delinquent
("non-performing  loans") or when, in the opinion of management,  the collection
of additional  interest is doubtful.  Interest  accrued and unpaid at the time a
loan is placed on non-accrual  status is charged against  interest income by the
establishment  of a  reserve  for  uncollected  interest.  Such  interest,  when
ultimately collected, is credited to income in the period received.

      Non-Performing   Assets.   The  following  table  sets  forth  information
regarding non-performing loans and real estate owned. As of the dates indicated,
the Association had no loans categorized as troubled debt  restructuring  within
the meaning of SFAS 15.

                                             At September 30,
                                    --------------------------------
                                    1997   1996   1995   1994   1993
                                    ----   ----   ----   ----   ----
                                         (Dollars in thousands)
Non-performing loans:
  One- to four-family residential   $173   $310   $242   $292   $246
  Multi-family residential ......     --     --     77     --     --
  Non-residential real estate ...     --     --     --    113    134
  Construction ..................     --     --     --     --     --
  Installment account loans......     --     --     --     --     --
                                    ----   ----   ----   ----   ----
Total non-performing loans ......    173    310    319    405    380
  Real estate owned .............     --     34     --     38     94
                                    ----   ----   ----   ----   ----
Total non-performing assets .....   $173   $344   $319   $443   $474
                                    ====   ====   ====   ====   ====





                                        6

<PAGE>

      Interest  income  foregone on loans  accounted for on a non-accrual  basis
under  the  original  terms of such  loans  was  immaterial  for the year  ended
September 30, 1997.  Amounts  actually  included in the  Association's  interest
income  for  non-accrual  loans for the year  ended  September  30,  1997,  were
likewise immaterial.

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

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

      In accordance with its  classification  of assets policy,  the Association
regularly  reviews the problem assets in its portfolio to determine  whether any
assets require classification in accordance with applicable regulations.  On the
basis  of  management's  review  of its  assets,  at  September  30,  1997,  the
Association had $173,000 of assets classified as substandard loans.

     Foreclosed Real Estate. Real estate acquired by the Association as a result
of  foreclosure  or by deed in lieu of  foreclosure is classified as real estate
owned until it is sold. Real estate acquired in settlement of loans is initially
recorded at fair value at the date of foreclosure establishing a new cost basis.
After foreclosure,  valuations are periodically  performed by management and the
real estate is carried at the lower of cost or fair value,  minus estimated cost
to sell. No foreclosed  real estate was held by the Association at September 30,
1997.

      Allowances  for Loan  Losses.  It is  management's  policy to provide  for
losses on unidentified loans in its loan portfolio.  A provision for loan losses
is charged to  operations  based on  management's  evaluation  of the  potential
losses  that  may  be  incurred  in  the  Association's  loan  portfolio.   Such
evaluation, which includes a review of all loans of which full collectibility of
interest  and   principal  may  not  be   reasonably   assured,   considers  the
Association'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.


                                        7

<PAGE>



      The  following  table  sets  forth  the  allocation  of the  allowance  by
category,  which  management  believes can be allocated  only on an  approximate
basis.  The  allocation  of the  allowance to each  category is not  necessarily
indicative  of future loss and does not  restrict  the use of the  allowance  to
absorb losses in any category.

<TABLE>
<CAPTION>

                                                             At September 30,
                                ----------------------------------------------------------------------------------
                                        1997                       1996                         1995
                                -------------------------  --------------------------   --------------------------
                                           % of Loans in               % of Loans in                % of Loans in
                                Amount of  Each Category   Amount of   Each Category    Amount of   Each Category
                                Allowance  to Total Loans  Allowance   to Total Loans   Allowance   to Total Loans
                                ---------  --------------  ---------   --------------   ---------   --------------
                                                             (Dollars in thousands)
<S>                                <C>        <C>            <C>          <C>             <C>          <C>   
Residential one- to four-family.   $ 93        80.57%        $ 85          80.82%         $ 89          79.53%
Residential multi-family .......     47         5.72           29           4.42            32           4.67
Non-residential real estate ....     91        10.76          102          12.31            93          13.96
Construction ...................     24         2.62           19           2.34            11           1.65
Installment loans ..............     --          .33           --            .11            --            .19
                                   ----       ------         ----         ------          ----         ------ 
Total allowance for loan losses.   $255       100.00%        $235         100.00%         $225         100.00%
                                   ====       ======         ====         ======          ====         ====== 
</TABLE>

      The  following   table  sets  forth   information   with  respect  to  the
Association's  allowance  for  loan  losses  at the  dates  and for the  periods
indicated:

<TABLE>
<CAPTION>
                                                     Year ended September 30,
                                                     ------------------------
                                                     1997      1996      1995
                                                     ----      ----      ----
                                                      (Dollars in thousands)

<S>                                                 <C>       <C>       <C>  
Allowance balances (at beginning of period)......   $ 235     $ 225     $ 225
Provision (credit) for loan losses:
  One- to four-family residential ...............       8        (4)        2
  Multi-family residential ......................      18        (3)      (12)
  Non-residential real estate ...................     (11)        9         9
  Construction ..................................       5         8         1
  Installment loans .............................      --        --        --
Net (charge-offs) recoveries:
  One- to four-family ...........................      --        --        --
  Multi-family ..................................      --        --        --
  Non-residential real estate ...................      --        --        --
  Construction ..................................      --        --        --
  Installment loans .............................      --        --        --
                                                    -----     -----     -----
Allowance balance (at end of period) ............   $ 255     $ 235     $ 225
                                                    =====     =====     =====
Allowance for loan losses as a percent
  of total loans outstanding ....................    0.19%     0.19%     0.19%

</TABLE>



                                        8

<PAGE>



Investment Activities

      General. The Association is required under federal regulations to maintain
a minimum amount of liquid assets which may be invested in specified  short-term
securities  and  certain  other  investments  and  has  generally  maintained  a
liquidity portfolio well in excess of regulatory requirements.  Liquidity levels
may  be  increased  or  decreased   depending  upon  the  yields  on  investment
alternatives  and upon  management's  judgment as to the  attractiveness  of the
yields then available in relation to other  opportunities and its expectation of
future yield levels,  as well as  management's  projections as to the short-term
demand  for funds to be used in the  Association's  loan  origination  and other
activities.

      Investment Portfolio. The following table sets forth the carrying value of
the  Company's and the  Association's  investment  securities,  interest-earning
deposits,  federal funds sold and nonmarketable  equity investments at the dates
indicated.  At September 30, 1997, the market value of the investment securities
that are held-to-maturity was $13.6 million.


                                            At September 30,
                                ------------------------------------
                                      1997       1996      1995
                                      ----       ----      ----
                                             (In thousands)
Investment securities:
 U.S. Treasury securities ........   $13,500   $ 2,999   $ 2,993
 U.S. Agency securities ..........        --    12,000        --
                                     -------   -------   -------
   Total investment securities ...    13,500    14,999     2,993
 Interest earning deposits .......    29,414    33,108    27,472
 Federal Funds sold ..............     3,118     2,125       538
 Federal Home Loan Bank stock ....     1,127     1,127     1,127
 Central Service Corporation stock        44        44        44
                                     -------   -------   -------
  Total ..........................   $47,203   $51,403   $32,174
                                     =======   =======   =======





                                        9

<PAGE>



      The  following  table  sets  forth  information  regarding  the  scheduled
maturities,  carrying value and weighted  average  yields for the  Association's
investment securities at September 30, 1997.

<TABLE>
<CAPTION>

                                                                    As of September 30, 1997
                         -----------------------------------------------------------------------------------------------------------
                                                After One Through    After Five Through
                            One Year or Less       Five Years             Ten Years          After Ten Years            Total
                          ------------------- -------------------   -------------------   -------------------   --------------------
                                     Weighted            Weighted              Weighted              Weighted               Weighted
                          Carrying    Average Carrying    Average   Carrying    Average   Carrying    Average   Carrying    Average
                            Value      Yield    Value      Yield      Value      Yield      Value      Yield      Value      Yield
                           --------  -------- --------   ---------   -------   --------   ---------  --------   --------    --------
                                                                   (Dollars in thousands)

<S>                        <C>         <C>     <C>         <C>       <C>         <C>      <C>          <C>        <C>         <C>
U.S. Treasury securities...$     --      --%   $10,500     6.89%     $3,000      7.07%    $   --         --%      $13,500     6.93%
U.S. Agency securities.....      --      --         --       --          --        --         --         --            --       --
Interest earning deposits    29,414    5.45%        --       --          --        --         --         --        29,414     5.45%
Federal Funds sold.........   3,118    5.32%        --       --          --        --         --         --         3,118     5.32%
Federal Home Loan Bank 
 stock (1).................      --      --         --       --          --        --      1,127       7.29%        1,127     7.29%
Central Service Corporation
  stock(1).................      --      --         --       --          --        --         44                       44       --
                            -------    ----    -------     ----      ------      ----     ------       ----       -------     ---- 
  Total.................... $32,532    5.44%   $10,500     6.89%     $3,000      7.07%    $1,171       7.29%      $47,203     5.91%
                            =======    ====    =======     ====      ======      ====     ======       ====       =======     ==== 
</TABLE>


-------------
(1)   Nonmarketable equity security; substantially all required to be maintained
      and assumed to mature in periods greater than 10 years.

                                       10

<PAGE>



Sources of Funds

      General. Deposits are the major external source of the Association's funds
for lending and other investment  purposes.  The Association  derives funds from
amortization and prepayment of loans and, to a much lesser extent, maturities of
investment securities,  borrowings,  mortgage-backed  securities and operations.
Scheduled  loan principal  repayments  are a relatively  stable source of funds,
while  deposit  inflows and  outflows  and loan  prepayments  are  significantly
influenced by general interest rates and market conditions.

      Deposits.  Consumer and commercial deposits are attracted principally from
within the Association's primary market area through the offering of a selection
of  deposit  instruments  including  regular  savings  accounts,   money  market
accounts,  and term  certificate  accounts.  The  Association  also  offers  IRA
accounts.  Deposit account terms vary according to the minimum balance required,
the time period the funds must remain on deposit,  and the interest rate,  among
other factors. At September 30, 1997, the Association had no brokered accounts.

      Certificates  of Deposit.  The following table indicates the amount of the
Association's  certificates  of deposit of  $100,000  or more by time  remaining
until maturity as of September 30, 1997.

                                                  Certificates
                                                  of Deposits
                                                  ------------
Maturity Period                                  (In thousands)
---------------

Within three months............................      $2,350
Three through six months.......................       2,692
Six through twelve months......................       2,798
Over twelve months.............................       2,117
                                                     ------
                                                     $9,957
                                                     ======



Borrowings

      The Association may obtain advances from the FHLB of Atlanta to supplement
its supply of lendable  funds.  Advances  from the FHLB of Atlanta are typically
secured  by a pledge of the  Association's  stock in the FHLB of  Atlanta  and a
portion of the Association's first mortgage loans and certain other assets. Each
FHLB credit program has its own interest  rate,  which may be fixed or variable,
and range of maturities.  The Association,  if the need arises,  may also access
the  discount  window of the Board of Governors  of the Federal  Reserve  System
("Federal Reserve Board") to supplement its supply of lendable funds and to meet
deposit withdrawal  requirements.  At September 30, 1997, the Association had no
borrowings from the FHLB of Atlanta.

Employees

      At September 30, 1997,  the  Association  had 28 full-time and 4 part-time
employees.  None of the Association's  employees are represented by a collective
bargaining  group.  The  Association  believes  that its  relationship  with its
employees is good.


                                       11

<PAGE>



Regulation

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

Company Regulation

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

      Qualified  Thrift  Lender  Test.  As a unitary  savings  and loan  holding
company, the Company generally is not subject to activity restrictions, provided
the  Association  satisfies  the Qualified  Thrift  Lender  ("QTL") test. If the
Company  acquires   control  of  another  savings   association  as  a  separate
subsidiary, it would become a multiple savings and loan holding company, and the
activities  of  the  Company  and  any  of  its  subsidiaries  (other  than  the
Association or any other SAIF-insured  savings association) would become subject
to  restrictions   applicable  to  bank  holding  companies  unless  such  other
associations  each also  qualify  as a QTL and were  acquired  in a  supervisory
acquisition.  See "-  Regulation of the  Association  - Qualified  Thrift Lender
Test."

Regulation of the Association

      General. As a federally chartered,  SAIF-insured savings association,  the
Association is subject to extensive  regulation by the OTS and the FDIC. Lending
activities and other  investments must comply with various federal statutory and
regulatory  requirements.  The  Association  is also subject to certain  reserve
requirements promulgated by the Federal Reserve Board.

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

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

      Under  separate   proposed   legislation,   Congress  is  considering  the
elimination of the federal thrift charter and the separate federal regulation of
thrifts.  As a result,  the  Association  might have to  convert to a  different
financial  institution  charter and be  regulated  under  federal law as a bank,
including being

                                       12

<PAGE>



subject to the more restrictive  activity limitations imposed on national banks.
The  Association  cannot  predict the impact of its conversion to, or regulation
as, a bank until the legislation requiring such change is enacted.

      Insurance of Deposit  Accounts.  The  Association's  deposit  accounts are
insured by the SAIF to a maximum of $100,000 for each insured member (as defined
by law and regulation). Insurance of deposits may be terminated by the FDIC upon
a finding that the institution has engaged in unsafe or unsound practices, is in
an unsafe or unsound  condition  to continue  operations,  or has  violated  any
applicable law, regulation,  rule, order or condition imposed by the FDIC or the
institution's  primary  regulator.   The  FDIC  may  also  prohibit  an  insured
depository institution from engaging in any activity the FDIC determines poses a
serious threat to the SAIF.

      The FDIC charges an annual  assessment for the insurance of deposits based
on the risk a  particular  institution  poses  to its  deposit  insurance  fund,
depending upon the institution's risk  classification.  This risk classification
is based on an institution's  capital group and supervisory subgroup assignment.
In addition,  the FDIC is authorized to increase  deposit  insurance  rates on a
semi-annual  basis if it  determines  that such action is necessary to cause the
balance  in the  SAIF  to  reach  the  designated  reserve  ratio  of  1.25%  of
SAIF-insured  deposits  within a reasonable  period of time. The FDIC may impose
special  assessments  on SAIF members to repay  amounts  borrowed  from the U.S.
Treasury  or for any  other  reason  deemed  necessary  by the  FDIC.  Prior  to
September 30, 1996, savings  associations paid within a range of .23% to .31% of
domestic deposits and the SAIF was substantially underfunded.  By comparison, at
September 30, 1996,  members of the Bank Insurance  Fund ("BIF"),  predominantly
commercial  banks,  were required to pay  substantially  lower, or virtually no,
federal deposit insurance premiums.

      Effective  September  30,  1996,  federal  law was  revised  to  mandate a
one-time  special  assessment  on  SAIF  members  such  as  the  Association  of
approximately .657% of deposits held on March 31, 1995. The Association recorded
a $792,868 pre-tax expense for this assessment at September 30, 1996.  Beginning
January 1, 1997, deposit insurance  assessments for SAIF members were reduced to
approximately  .064% of  deposits  on an annual  basis;  this rate may  continue
through the end of 1999. During this same period, BIF members are expected to be
annually assessed approximately .013% of deposits.  Thereafter,  assessments for
BIF and SAIF members  should be the same and the SAIF and BIF may be merged.  It
is expected that these continuing assessments for both SAIF and BIF members will
be used to repay outstanding Financing Corporation bond obligations. As a result
of these  changes,  beginning  January  1, 1997,  the rate of deposit  insurance
assessed the Association substantially declined.

      Regulatory Capital  Requirements.  OTS capital regulations require savings
institutions to meet three capital standards: (1) tangible capital equal to 1.5%
of total adjusted assets,  (2) a leverage ratio (core capital) equal to at least
3% of total adjusted assets, and (3) a risk-based  capital  requirement equal to
8.0% of total risk-weighted assets.  The Association met these capital standards
at September 30, 1997.

      Dividend  and Other  Capital  Distribution  Limitations.  OTS  regulations
require the  Association  to give the OTS 30 days advance notice of any proposed
declaration of dividends to the Company, and the OTS has the authority under its
supervisory powers to prohibit the payment of dividends to the Company.


                                       13

<PAGE>



      OTS  regulations  impose  limitations  upon all capital  distributions  by
savings  institutions,  such  as  cash  dividends,  payments  to  repurchase  or
otherwise acquire its shares, payments to shareholders of another institution in
a cash-out  merger and other  distributions  charged against  capital.  The rule
establishes  three tiers of  institutions,  based primarily on an  institution's
capital  level.  An  institution  that  exceeds  all  fully  phased-in   capital
requirements  before  and  after  a  proposed  capital   distribution  ("Tier  1
institution")  and has not  been  advised  by the OTS that it is in need of more
than the normal  supervision can, after prior notice but without the approval of
the OTS, make capital  distributions during a calendar year equal to the greater
of (i) 100% of its net income to date during the  calendar  year plus the amount
that would reduce by one-half its "surplus  capital  ratio" (the excess  capital
over its fully phased-in capital  requirements) at the beginning of the calendar
year,  or (ii) 75% of its net income over the most recent four  quarter  period.
Any additional capital  distributions  require prior regulatory approval.  As of
September 30, 1997, the Association  was a Tier 1 institution.  In the event the
Association's  capital  fell below its fully  phased-in  requirement  or the OTS
notified  it  that  it  was  in  need  of  more  than  normal  supervision,  the
Association's  ability to make capital  distributions  could be  restricted.  In
addition,  the  OTS  could  prohibit  a  proposed  capital  distribution  by any
institution,  which would otherwise be permitted by the  regulation,  if the OTS
determines  that  such  distribution  would  constitute  an  unsafe  or  unsound
practice.

      Qualified Thrift Lender Test.  Savings  institutions must meet a QTL test.
If  the  Association   maintains  an  appropriate   level  of  Qualified  Thrift
Investments (primarily residential mortgages and related investments,  including
certain mortgage-related  securities) ("QTIs") and otherwise qualifies as a QTL,
it will continue to enjoy full  borrowing  privileges  from the FHLB of Atlanta.
The  required  percentage  of QTIs is 65% of  portfolio  assets  (defined as all
assets minus intangible  assets,  property used by the institution in conducting
its business and liquid assets equal to 20% of total assets). Certain assets are
subject to a  percentage  limitation  of 20% of portfolio  assets.  In addition,
savings associations may include shares of stock of the FHLBs, FNMA and FHLMC as
qualifying  QTIs. As of September 30, 1997,  the  Association  was in compliance
with its QTL requirement with 88% of its assets invested in QTIs.

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

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

      Federal Reserve System.  The Federal Reserve Board requires all depository
institutions  to maintain  non-interest  bearing  reserves at  specified  levels
against  their  transaction  accounts  (primarily  checking,  NOW, and Super NOW
checking  accounts) and non-personal time deposits.  The balances  maintained to
meet the reserve  requirements  imposed by the Federal Reserve Board may be used
to satisfy the liquidity  requirements that are imposed by the OTS. At September
30, 1997, the  Association  was in compliance  with these Federal  Reserve Board
requirements.


                                       14

<PAGE>



Executive Officers of the Company Who Are Not Directors


                  Name and Title                Age as of September 30, 1997
                  --------------                ----------------------------

                  Allen Lloyd                                44
                  Secretary

                  Jerry L. Robertson                         55
                  Vice President and Treasurer

                  Anthony Strickland                         51
                  Vice President


Allen Lloyd has been the  Secretary of the  Association  since 1983 and has held
the same position with the Company since December 1995.

Jerry L.  Robertson has been Vice  President  and  Treasurer of the  Association
since 1983 and has held the same position with the Company since December 1995.

Anthony Strickland has been Vice President of the Association since 1982 and has
held the same position  with the Company since  December  1995.  Mr.  Strickland
became an executive officer on April 3, 1997.

Item 2. Properties
------------------

      The  Association  operates from its main office,  two full service  branch
offices and one loan office.

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

      There  are  various  claims  and  lawsuits  in which  the  Company  or the
Association  are  periodically  involved,  such  as  claims  to  enforce  liens,
condemnation  proceedings on properties in which the Association  holds security
interests, claims involving the making and servicing of real property loans, and
other  issues  incident  to  the  Association's  business.  In  the  opinion  of
management,  no material  loss is expected  from any of such  pending  claims or
lawsuits.

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

      No matter was  submitted to a vote of security  holders  during the fourth
quarter of the fiscal year.


                                    PART II

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

      The  information  contained  under the  section  captioned  "Common  Stock
Information" in the Company's  Annual Report to Stockholders for the fiscal year
ended  September  30, 1997 (the  "Annual  Report"),  is  incorporated  herein by
reference.  In addition, there are 4,298,125 shares of Common Stock  outstanding
which were held by approximately 2,450 holders on September 30, 1997.


                                       15

<PAGE>



Item 6.  Selected Financial Data
--------------------------------

      The information contained in the section captioned "Green Street Financial
Corp Selected  Financial  Data" in the Annual Report is  incorporated  herein by
reference.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------

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

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
--------------------------------------------------------------------

      See pages 11 and 12 of  Management's  Discussion and Analysis of Financial
Condition and Results of Operations in the Annual Report.

Item  8.  Financial Statements and Supplementary Data
-----------------------------------------------------

      The   Registrant's   financial   statements   listed  under  Item  14  are
incorporated herein by reference.

Item  9.  Changes  in and  Disagreements  with  Accountants  On  Accounting  and
--------------------------------------------------------------------------------
Financial Disclosure.
--------------------

      Not applicable.

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant
------------------------------------------------------------

      The  information  contained  under the sections  captioned  "Section 16(a)
Beneficial Ownership Reporting  Compliance" and "I - Information with Respect to
Nominees for Director,  Directors Continuing in Office, and Executive Officers -
Election  of  Directors"  and " -  Biographical  Information"  in the 1997 Proxy
Statement are incorporated herein by reference.

Item 11.  Executive Compensation
--------------------------------

      The information contained in the section captioned "Director and Executive
Officer  Compensation"  in the 1997 Proxy  Statement is  incorporated  herein by
reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

      (a)   Security Ownership of Certain Beneficial Owners

            Information   required  by  this  item  is  incorporated  herein  by
            reference  to  the  first  chart  in  the  section  captioned  "I  -
            Information  with  Respect  to  Nominees  for  Director,   Directors
            Continuing  in Office,  and  Executive  Officers"  in the 1997 Proxy
            Statement.





                                       16

<PAGE>



      (b)   Security Ownership of Management

            Information   required  by  this  item  is  incorporated  herein  by
            reference  to  the  first  chart  in  the  section  captioned  "I  -
            Information  with  Respect  to  Nominees  for  Director,   Directors
            Continuing  in Office,  and  Executive  Officers"  in the 1997 Proxy
            Statement.

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

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

      The information  required by this item is incorporated herein by reference
to the section captioned "Certain Relationships and Related Transactions" in the
1997 Proxy Statement.

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
-------------------------------------------------------------------------

      (a) Listed below are all financial  statements  and exhibits filed as part
of this report.

            1.    The consolidated balance sheets of Green Street Financial Corp
                  and  subsidiary  as of  September  30, 1997 and 1996,  and the
                  related   consolidated   statements  of  income,   changes  in
                  stockholders'  equity  and cash flows for each of the years in
                  the three year period ended September 30, 1997,  together with
                  the  related  notes and the  independent  auditors'  report of
                  McGladrey  &  Pullen,   LLP,   independent   certified  public
                  accountants.

            2.    Schedules omitted as they are not applicable.

            3.    Exhibits

      The following Exhibits are filed as part of this report:

             3(i)  Articles of Incorporation of Green Street Financial Corp *
             3(ii) Bylaws of Green Street Financial Corp *
             10.1  Form of Employment  Agreement  with H.D.  Reaves,  Jr., Jerry
                   Robertson and Allen Lloyd *
             10.6  1996 Stock Option Plan **
             10.7  Restricted Stock Plan and Trust Agreement **
             13    Annual  Report to  Stockholders  for the  fiscal  year  ended
                   September 30, 1997
             21    Subsidiaries  of the  Registrant  (See  Item 1 -  Business  -
                   General)
             27    Financial Data Schedule ***

---------------------
*     Incorporated by reference to the registration  statement on Form S-1 (File
      No. 33-80485) declared effective by the SEC on February 12, 1996.
**    Incorporated  by reference to the proxy  statement for the special meeting
      of stockholders on October 17, 1996 and filed with the SEC on September 6,
      1996.
***   Only included in electronic filing.

     (b) No  reports  were  filed  under  cover of Form 8-K  during  the  fourth
         quarter.


                                       17

<PAGE>



                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the  undersigned,  thereunto  duly  authorized  as of
December 18, 1997.


                                    GREEN STREET FINANCIAL CORP


                                    By:   /s/ H.D. Reaves, Jr.
                                          --------------------------------------
                                          H. D. Reaves, Jr.
                                          President, Chief Executive Officer and
                                             Director
                                          (Duly Authorized Representative)

      Pursuant to the  requirements  of the Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated as of December 18, 1997.
                                                  


/s/ H.D. Reaves, Jr.                       /s/ John C. Pate
------------------------------------       -----------------------------------
H. D. Reaves, Jr.                          John C. Pate
President, Chief Executive Officer         Senior Vice President and Director
and Director                               (Principal Financial Officer)
(Principal Executive Officer)


/s/ Robert O. McCoy, Jr.                   /s/ Jerry Robertson
------------------------------------       ------------------------------------
Robert O. McCoy, Jr.                       Jerry Robertson
Chairman of the Board and Director         Vice President and Treasurer
                                           (Principal Accounting Officer)


                                           /s/ Henry G. Hutaff, Sr.
------------------------------------       ------------------------------------
Norwood E. Bryan, Jr.                      Henry G. Hutaff, Sr.
Director                                   Vice Chairman of the Board and 
                                            Director


/s/ Joseph H. Hollinshed                   /s/ John M. Grantham
------------------------------------       ------------------------------------
Joseph H. Hollinshed                       John M. Grantham
Director                                   Senior Vice President and Director


/s/ Robert G. Ray                          /s/ Henry W. Holt
------------------------------------       ------------------------------------
Robert G. Ray                              Henry W. Holt
Director                                   Director