SECURITIES & EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

Annual report pursuant to Section 13 or 15(d) of the Securities  Exchange Act of
1934

For the fiscal year ended June 30, 1996

                                       or

Transition report pursuant to Section 13 or 15(d) or the Securities Exchange Act
of 1934

For the transition period from ___________ to _____________

Commission file number:                0-18847

                              HOME FEDERAL BANCORP
             (Exact name of registrant as specified in its charter)

            United States                               35-1807839
    (State or other jurisdiction                     (I.R.S. Employer
  of incorporation or organization)                 Identification No.)

 222 West Second Street, Seymour, Indiana                   47274
 (Address of Principal Executive Offices)                (Zip Code)

Registrants telephone number including area code: (812) 522-1592

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

                                      None

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

                           Common Stock, no par value
                                       and
                          Common Share Purchase Rights
                                (Title of Class)

Indicate by check mark whether the Registrant (l) 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 ______ NO ______

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) 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.

The aggregate market value of the issuer's voting stock held by  non-affiliates,
as of September 20, 1996, was $56,981,839.

The number of shares of the Registrants Common Stock, no par value,  outstanding
as of September 20, 1996, was 2,226,282 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Shareholders  for the year ended June 30, 1996,
are  incorporated  into Part II.  Portions of the Proxy  Statement  for the 1996
annual meeting of shareholders are incorporated into Part I and Part III.


                            Exhibit Index on Page 37
                               Page l of 41 Pages
<PAGE>
                              HOME FEDERAL BANCORP

                                    FORM 10-K

                                      INDEX


Item 1.      Business..................................................     1
Item 2.      Properties................................................    29
Item 3.      Legal Proceedings.........................................    30
Item 4.      Submission of Matters to a Vote 
               of Security Holders.....................................    30
Item 4.5     Executive Officers of Home Federal Bancorp................    30
Item 5.      Market for Registrant's Common Equity and 
               Related Stockholder Matters.............................    30
Item 6.      Selected Financial Data...................................    32
Item 7.      Management's Discussion and Analysis of 
               Financial Condition and Results of
             Operations................................................    32
Item 8.      Financial Statements and Supplementary Data...............    32
Item 9.      Changes in and Disagreements with Accountants
               on Accounting and Financial
             Disclosure................................................    32
Item 10.     Directors and Executive Officers of the Registrant........    32
Item 11.     Executive Compensation....................................    32
Item 12.     Security Ownership of Certain Beneficial 
               Owners and Management...................................    32
Item 13.     Certain Relationships and Related Transactions............    32
Item 14.     Exhibits, Financial Statement Schedules, 
               and Reports on Form 8-K.................................    33
SIGNATURES   ..........................................................    34

<PAGE>

                                     PART I

Item 1.           Business

General

         Home Federal Bancorp (the "Company" or "HFB") is an Indiana corporation
organized in August,  1990 to become a unitary savings and loan holding company.
The  principal  asset  of  the  Company  consists  of  100%  of the  issued  and
outstanding  capital stock of Home Federal  Savings Bank ("Home  Federal" or the
"Bank").  The Company was a shell corporation until Home Federal  reorganized in
March, 1993.

         Home Federal began  operations  in Seymour,  Indiana under the name New
Building and Loan  Association  in 1908,  and  received its federal  charter and
changed  its name to Home  Federal  Savings  and Loan  Association  in 1950.  On
November 9, 1983,  Home Federal  Savings and Loan  Association  became a federal
savings bank and its name was changed to Home Federal  Savings  Bank. On January
14,  1988,  Home  Federal  converted  to stock form and on March 1,  1993,  Home
Federal  reorganized by converting  each  outstanding  share of its common stock
into one share of common stock of the Company, thereby causing the Company to be
the holding company of Home Federal.  Home Federal  currently  provides services
through its main office at 222 West Second Street in Seymour,  Indiana,  fifteen
full service branches  located in south central  Indiana,  and the Magic Line(R)
network of automated  teller machines at seven  locations in Seymour,  Columbus,
North  Vernon  and  Batesville.  In August,  1994,  Home  Federal  opened a loan
production  office in  Greensburg,  Indiana.  As a result,  Home Federal  serves
primarily Bartholomew,  Jackson, Jefferson, Jennings, Scott, Ripley, Decatur and
Washington Counties in Indiana. Home Federal also participates in the nationwide
electronic funds transfer  networks known as Plus System,  Inc.(R) and Cirrus(R)
System.

         Home Federal directly and, through its service corporation  subsidiary,
indirectly  offers a wide range of consumer and commercial  financial  services.
These services  include:  (i) residential and commercial real estate loans; (ii)
NOW accounts;  (iii) regular and term savings accounts and savings certificates;
(iv)  Linsco  Private  Ledger  Financial   Services,   Inc.  ("Private  Ledger")
full-service securities brokerage services; (v) consumer loans; (vi) annuity and
life insurance products;  (vii) Individual  Retirement Accounts and Keogh plans;
(viii) commercial loans; (ix) real estate development; and (x) commercial demand
deposit accounts.

         Home  Federal's  primary  source of revenue is  interest  from  lending
activities.  Its principal  lending  activity is the origination of conventional
mortgage loans to enable  borrowers to purchase or refinance one- to four-family
residential real property.  These loans are generally secured by first mortgages
on the  property.  Virtually  all of the real estate  loans  originated  by Home
Federal are secured by properties located in Indiana,  although Home Federal has
authority to make or purchase real estate loans throughout the United States. In
addition,  Home Federal  makes  secured and  unsecured  consumer  related  loans
(including consumer auto loans, second mortgage,  home equity,  mobile home, and
savings  account  loans)  and  commercial  loans  secured  by  mortgages  on the
underlying  property.  At June 30, 1996,  approximately  19.6% of its loans were
consumer-related  loans and 13.6% of its loans were  commercial  mortgage loans.
Home Federal  also makes  construction  loans,  which  constituted  7.4% of Home
Federal's loans at June 30, 1996. Finally,  Home Federal makes commercial loans,
which constituted 7.5% of its loans at June 30, 1996.

<PAGE>

Lending Activities

         Loan Portfolio Data

         The following two tables set forth the  composition  of Home  Federal's
loan  portfolio by loan type and security  type as of the dates  indicated.  The
third  table  represents  a  reconciliation  of  gross  loans  receivable  after
consideration of undisbursed  portions of loans in process,  deferred loan fees,
the  allowance  for  loan  losses,  unearned  discounts  on loans  and  purchase
discounts.

<TABLE>
<CAPTION>

                                                                                         At June 30,
                                                              ---------------------------------------------------------------
                                                                      1996                  1995                    1994         
                                                               Amount     Percent      Amount   Percent      Amount   Percent    
                                                               ------     -------      ------   -------      ------   -------    
                                                                                                           (Dollars In Thousands)
TYPE OF LOAN
First mortgage loans:
<S>                                                           <C>          <C>       <C>          <C>      <C>          <C>      
   One-to four-family residential loans...................    $275,975     50.9%     $266,909     55.1%    $276,648     59.7%    
   Commercial and multi-family............................      73,853     13.6%       63,215     13.0%      59,830     12.9%    
   Loans on property under construction...................      40,407      7.4%       23,982      4.9%      25,547      5.5%    
   Loans on unimproved acreage............................       3,252      0.6%        2,554      0.5%       2,053      0.4%    
   FHA and VA loans.......................................       2,143      0.4%        1,600      0.3%       1,735      0.4%    
Second mortgage, home equity..............................      50,372      9.3%       40,536      8.4%      29,376      6.3%    
Commercial loans..........................................      40,609      7.5%       28,881      6.0%      21,660      4.7%    
Consumer loans............................................      11,952      2.2%       11,392      2.3%       4,381      1.0%    
Auto loans................................................      20,883      3.8%       21,506      4.4%      19,164      4.1%    
Mobile home loans.........................................      18,833      3.5%       20,258      4.2%      19,287      4.2%    
Savings account loans.....................................       4,199      0.8%        4,407      0.9%       3,684      0.8%    
                                                              --------    -----      --------    -----     --------    -----     
   Gross loans receivable.................................    $542,478    100.0%     $485,240    100.0%    $463,365    100.0%    
                                                              ========    =====      ========    =====     ========    =====     

TYPE OF SECURITY
Residential:
   One- to four-family....................................    $358,003     66.0%     $326,296     67.3%    $326,055     70.4%    
   Multi-dwelling units...................................      23,807      4.4%       20,488      4.2%      22,004      4.7%    
Commercial real estate....................................      60,940     11.2%       49,458     10.2%      45,077      9.7%    
Commercial................................................      40,609      7.5%       28,881      6.0%      21,660      4.7%    
Mobile home...............................................      18,833      3.5%       20,258      4.2%      19,287      4.2%    
Savings account...........................................       4,199      0.8%        4,407      0.9%       3,684      0.8%    
Auto .....................................................      20,883      3.8%       21,506      4.4%      19,164      4.1%    
Other consumer............................................      11,952      2.2%       11,392      2.3%       4,381      1.0%    
Land acquisition..........................................       3,252      0.6%        2,554      0.5%       2,053      0.4%    
                                                              --------    -----      --------    -----     --------    -----     
     Gross loans receivable...............................    $542,478    100.0%     $485,240    100.0%    $463,365    100.0%    
                                                              ========    =====      ========    =====     ========    =====     

LOANS RECEIVABLE-NET
Gross loans receivable....................................    $542,478    104.3%     $485,240    103.2%    $463,365    103.9%    
Deduct:
Unidisbursed portion of loans in process..................     (18,249)    (3.5)     (11,291)   (2.4)      (13,377)    (3.0)%    
Deferred net loan fees....................................        (963)    (0.2)      (1,069)   (0.2)       (1,204)    (0.3)%    
Allowance for loan losses.................................      (3,061)    (0.6)      (2,806)   (0.6)       (2,580)    (0.6)%    
Unearned discounts........................................         (19)     0.0          (53)     ---         (114)      ---%    
Purchase discount.........................................         (89)     0.0         (138)     ---         (187)      ---%    
                                                              --------    -----      --------    -----     --------    -----     
   Net loans receivable...................................    $520,097    100.0%     $469,883  100.0%      $445,903    100.0%  
                                                              ========    =====      ========    =====     ========    =====     
</TABLE>
  


<PAGE>

<TABLE>
<CAPTION>
                                                                            At June 30,
                                                            -----------------------------------------
                                                                     1993                1992     
                                                            -------------------   -------------------     
                                                             Amount    Percent      Amount   Percent    
                                                             ------    -------      ------   -------    
                                                                                                        
TYPE OF LOAN                                                                                            
First mortgage loans:                                                                                   
<S>                                                        <C>           <C>      <C>          <C>      
   One-to four-family residential loans................... $255,074      61.4%    $226,612     61.0%    
   Commercial and multi-family............................   51,393      12.4%      46,466     12.5%      
   Loans on property under construction...................   21,760       5.2%       8,143      2.2%    
   Loans on unimproved acreage............................    1,988       0.5%       1,502      0.4%    
   FHA and VA loans.......................................    2,531       0.6%       3,212      0.9%    
Second mortgage, home equity..............................   27,157       6.5%      27,694      7.4%    
Commercial loans..........................................   17,234       4.2%      17,697      4.8%    
Consumer loans............................................    5,796       1.4%       6,278      1.7%    
Auto loans................................................   11,719       2.8%      14,597      3.9%    
Mobile home loans.........................................   16,416       4.0%      15,230      4.1%    
Savings account loans.....................................    4,295       1.0%       4,225      1.1%    
                                                           --------     -----     --------    -----     
   Gross loans receivable................................. $415,363     100.0%    $371,656    100.0%    
                                                           ========     =====     ========    =====     
                                                                                                        
TYPE OF SECURITY                                                                                        
Residential:                                                                                            
   One- to four-family.................................... $298,478      71.8%    $265,385     71.4%    
   Multi-dwelling units...................................   16,664       4.0%       8,678      2.3%    
Commercial real estate....................................   42,773      10.3%      38,064     10.3%    
Commercial................................................   17,234       4.2%      17,697      4.8%    
Mobile home...............................................   16,416       4.0%      15,230      4.1%    
Savings account...........................................    4,295       1.0%       4,225      1.1%    
Auto .....................................................   11,719       2.8%      14,597      3.9%    
Other consumer............................................    5,796       1.4%       6,278      1.7%    
Land acquisition..........................................    1,988        .5%       1,502       .4%    
                                                           --------     -----     --------    -----     
     Gross loans receivable............................... $415,363     100.0%    $371,656    100.0%    
                                                           ========     =====     ========    =====     
                                                                                                        
LOANS RECEIVABLE-NET                                                                                    
Gross loans receivable.................................... $415,363     103.8%    $371,656    102.1%    
Deduct:                                                                                                 
Unidisbursed portion of loans in process..................  (11,603)     (2.9)      (4,104)    (1.1)%    
Deferred net loan fees....................................   (1,082)      (.3)        (820)     (.2)%    
Allowance for loan losses.................................   (2,257)      (.5)      (2,123)     (.6)%    
Unearned discounts........................................     (220)     ----         (408)     (.1)%    
Purchase discount.........................................     (221)      (.1)        (242)     (.1)%    
                                                           --------     -----     --------    -----     
   Net loans receivable................................... $399,980    100.0%     $363,959   100.0%     
                                                           ========     =====     ========    =====  
</TABLE>
  
                                              

The following  tables  summarize the  contractual  maturities for Home Federal's
loan portfolio (including  participations and mortgage-backed  certificates) for
the fiscal  periods  indicated  and the interest rate  sensitivity  of loans due
after one year:

<TABLE>
<CAPTION>
                                                              Maturities in Fiscal
                               Balance     ------------------------------------------------------------------------
                             Outstanding                                   2000       2002      2007        2012          
                              At June 30,                                   to         to        to         and  
                                 1996       1997       1998     1999      2001        2006      2011     thereafter
                                 ----       ----       ----     ----      ----        ----      ----     ----------
                                                           (In Thousands)
<S>                           <C>          <C>       <C>       <C>       <C>       <C>       <C>          <C>     
Real estate...............    $405,800     $7,174    $2,603    $5,027    $17,795   $90,628   $119,548     $163,025
Mortgage-backed
   certificates,
   collateralized mortgage
   obligations............      27,975        215     1,303     2,734      6,744     5,558      5,977        5,444
Construction loans........      40,252      6,091     3,478       ---        ---     2,582      1,115       26,986
Commercial loans..........      40,618     12,098     7,675     4,110      5,427     8,048      2,972          288
Other  loans..............      55,808     11,591     4,124     6,952     15,827     5,893     11,311          110
                              --------    -------   -------   -------    -------  --------   --------     --------
   Total..................    $570,453    $37,169   $19,183   $18,823    $45,793  $112,709   $140,923     $195,853
                              ========    =======   =======   =======    =======  ========   ========     ========
</TABLE>



Interest Rate Sensitivity:

<TABLE>
<CAPTION>
                                                                     Due After June 30, 1997
                                                              -------------------------------------------
                                                               Fixed                       Variable Rate
                                                                Rate                        and Balloon
                                                              ---------                    --------------
                                                                         (In Thousands)

<S>                                                            <C>                           <C>     
Real estate..............................................      $122,930                      $275,696
Mortgage-backed certificates,
   collateralized mortgage obligations...................        23,399                         4,361
Construction loans.......................................         4,335                        29,826
Commercial loans ........................................         6,588                        21,932
Other loans..............................................        44,193                            24
                                                               --------                      --------
   Total.................................................      $201,445                      $331,839
                                                               ========                      ========
</TABLE>


         Residential Mortgage Loans

         Approximately  96%  of  Home  Federal's  residential  mortgage  lending
activity  involves  the  origination  of loans  secured  by  one-to  four-family
residential  properties.  Home Federal is authorized to make one-to  four-family
residential loans without any limitation as to interest rate,  amount, or number
of interest rate adjustments.  Pursuant to federal regulations,  such loans must
require  at least  semi-annual  payments  and be for a term of not more  than 40
years,  and, if the interest  rate is  adjustable,  it must be  correlated  with
changes in a readily  verifiable  index.  Home  Federal  also makes  residential
mortgage  loans secured by mid-size  multi-family  dwelling  units and apartment
complexes.  The residential  mortgage loans included in Home Federal's portfolio
are primarily  conventional  loans. As of June 30, 1996, $392 million, or 72.3%,
of Home Federal's total loan portfolio  consisted of residential  first mortgage
loans,  $278  million,  or 51.3%,  of which were secured by one- to  four-family
homes.

<PAGE>

Many of the residential  mortgage loans  currently  offered by Home Federal have
adjustable rates.  These loans generally have interest rates which adjust (up or
down)  semi-annually  or annually,  with maximum rates which vary depending upon
when the loans are written.  The  adjustment is currently  based upon the weekly
average of the one-year Treasury constant maturity rate.

         The rates  offered on Home  Federal's  adjustable-rate  and  fixed-rate
residential  mortgage loans are generally  competitive with the rates offered by
other financial institutions in its south central Indiana market area.

         Although  Home  Federal's  residential  mortgage  loans are written for
amortization  terms up to 30 years,  due to prepayments  and  refinancings,  its
residential mortgage loans in the past have generally remained outstanding for a
substantially  shorter  period  of time  than  the  maturity  terms  of the loan
contracts.

         All of the  residential  mortgages  Home Federal  currently  originates
include  "due on sale"  clauses,  which give Home Federal the right to declare a
loan  immediately  due and payable in the event that,  among other  things,  the
borrower  sells or  otherwise  disposes  of the  real  property  subject  to the
mortgage and the loan is not repaid.  Qualified  borrowers  are not permitted to
assume  mortgages at rates below the current market rate,  unless the instrument
does not include a due on sale provision.  Home Federal utilizes the due on sale
clause  as a means of  increasing  the rate of  interest  on  existing  loans by
negotiating with the buyer new interest rates at the time of sale.

         The Office of Thrift  Supervision (the "OTS") requires  institutions it
regulates to establish  loan-to-value  ratios  consistent with their supervisory
loan-to-value  limits. The supervisory limits adopted by the OTS are 65% for raw
land  loans,  75%  for  land  development  loans,  80%  for  construction  loans
consisting of commercial,  multi-family and other non-residential  construction,
and 85% for improved property.  Multi-family  construction includes condominiums
and cooperatives.  A loan-to-value  limit has not been established for permanent
mortgage or home equity loans on owner-occupied  one-to four-family  residential
property.  However,  for any such loan with a loan-to-value ratio that equals or
exceeds 90 percent at  origination,  an institution  should require  appropriate
credit  enhancement  in  the  form  of  either  mortgage  insurance  or  readily
marketable  collateral.  The Board of  Directors  of Home  Federal  Savings Bank
approved a set of loan-to-value ratios consistent with these supervisory limits.
In some  instances,  Home Federal's  limits are more stringent than those set by
the OTS.

         It may be  appropriate  in  individual  cases to  originate  loans with
loan-to-value  ratios in excess of the OTS limits based on the support  provided
by other credit  factors.  The aggregate  amount of all loans in excess of these
limits should not exceed 100 percent of total capital.  Moreover,  loans for all
commercial,   agricultural,   multi-family  or  other   non-one-to   four-family
residential properties should not exceed 30 percent of total capital.

         Commercial Mortgage Loans

         At  June  30,  1996,  13.6%  of Home  Federal's  total  loan  portfolio
consisted of mortgage loans secured by commercial real estate.  These properties
consisted  primarily  of shopping  centers,  office  buildings,  nursing  homes,
manufacturing  plants,  warehouses,  motels,  apartment  buildings  and churches
located in central or south central Indiana.  The commercial  mortgage loans are
generally  adjustable-rate  loans, are written for terms not exceeding 30 years,
and require an 80% loan-to-value ratio. Commitments for these loans in excess of
$1 million must be approved in advance by Home Federal's Board of Directors. The
largest such loan as of June 30, 1996,  had a balance of $3.8  million.  At that
date, approximately 99% of Home Federal's commercial real estate loans consisted
of loans secured by real estate located in Indiana.

         Under the Financial Institutions Reform,  Recovery, and Enforcement Act
of 1989  ("FIRREA"),  a thrift's  portfolio of  commercial  real estate loans is
limited to 400% of its capital.  Also,  FIRREA's  Qualified  Thrift  Lender test
limits  the  amount  of  commercial  real  estate  loans  made by  thrifts.  See
"Regulation --Qualified Thrift Lender." However, Home Federal currently complies
with the commercial real estate loan

<PAGE>

limitation,  and neither that  limitation  nor the Qualified  Thrift Lender test
significantly  limits the ability of Home Federal to make commercial real estate
loans in its market area.

         Generally,  commercial  mortgage  loans  involve  greater  risk to Home
Federal than do residential loans.  Commercial  mortgage loans typically involve
large loan  balances  to single  borrowers  or groups of related  borrowers.  In
addition, the payment experience on loans secured by income-producing properties
is typically  dependent on the successful  operation of the related  project and
thus may be subject to adverse  conditions  in the real estate  market or in the
general economy.

         Construction Loans

         Home Federal offers conventional short-term construction loans. At June
30, 1996, 7.4% of Home Federal's total loan portfolio  consisted of construction
loans.   Normally,   a  95%  or  less  loan-to-value   ratio  is  required  from
owner-occupants of residential  property, an 80% loan-to-value ratio is required
from persons building residential property for sale or investment purposes,  and
an 80%  loan-to-value  ratio is required for commercial  property.  Construction
loans  are  also  made  to  builders  and  developers  for the  construction  of
residential or commercial  properties on a to-be-occupied or speculative  basis.
Construction normally must be completed in six months for residential loans. The
largest such loan on June 30, 1996, was $3.3 million.

         Consumer Loans

         Federal  laws  and  regulations  permit  federally   chartered  savings
institutions to make secured and unsecured consumer loans in an aggregate amount
of up to 35%  of the  institution's  total  assets.  In  addition,  a  federally
chartered  savings  institution  has lending  authority  above the 35% limit for
certain consumer loans, such as property  improvement loans and loans secured by
savings  accounts.  However,  the Qualified  Thrift Lender test  restricts  some
thrifts from making consumer loans. See "Regulation -- Qualified Thrift Lender."

         Consumer-related  loans,  consisting of second mortgage and home equity
loans,  mobile home loans,  automobile loans,  loans secured by savings accounts
and consumer loans were $106 million on June 30, 1996, or approximately 19.6% of
Home Federal's total loan portfolio.

         Second  mortgage  loans  are made for  terms of 5 - 15  years,  and are
fixed-rate  loans.  Home  Federal's  minimum for such loans is $5,000,  and Home
Federal will loan up to 90% of the  appraised  value of the  property,  less the
existing mortgage amount(s). As of June 30, 1996, Home Federal had $22.3 million
of second mortgage loans,  which equaled 4.1% of its total loan portfolio.  Home
Federal aggressively markets home equity loans, which are adjustable-rate loans.
As of June 30,  1996,  Home Federal had $28.0  million  drawn on its home equity
loans,  or 5.2% of its total loan  portfolio,  with $34.9  million of additional
credit available to its borrowers under existing home equity loans.

         Automobile  loans are generally made for terms of up to five years. The
vehicles  are  required to be for  personal  or family use only.  As of June 30,
1996, $20.9 million,  or 3.8%, of Home Federal's total loan portfolio  consisted
of automobile loans.

         As of June 30, 1996,  $18.8 million,  or 3.5%, of Home Federal's  total
loan portfolio consisted of mobile home loans.  Generally,  these loans are made
for terms of one year for each $1,000 of the sales price, with a maximum term of
15 years. On new mobile home loans, Home Federal requires a loan-to-value  ratio
of 125% of the manufacturer's  invoice price plus sales tax or 90% of the actual
sales price,  whichever is lower.  Also, Home Federal makes loans for previously
occupied  mobile  homes up to a 90%  loan-to-value  ratio  based upon the actual
sales price or value as appraised, whichever is lower.

         Loans secured by savings account  deposits may be made up to 95% of the
pledged  savings  collateral at a rate 2% above the rate of the pledged  savings
account or a rate equal to Home  Federal's  highest  seven-year  certificate  of
deposit  rate,  whichever is higher.  The loan rate will be adjusted as the rate
for the pledged savings account changes.  As of June 30, 1996, $4.2 million,  or
 .8%, of Home Federal's total loan portfolio consisted of savings account loans.


<PAGE>

         Although  consumer-related  loans  generally  involve a higher level of
risk than one-to four-family residential mortgage loans, their relatively higher
yields  and  shorter  terms to  maturity  are  believed  to be  helpful  in Home
Federal's asset/liability management.

         Commercial Loans

         Collateral for Home Federal's  commercial loans includes  manufacturing
equipment,  securities, real estate, inventory and accounts receivable. Terms of
these loans are normally for up to ten years and have  adjustable  rates tied to
reported  prime rates and  treasury  indexes.  Generally,  commercial  loans are
considered  to  involve a higher  degree of risk than  residential  real  estate
loans. However, commercial loans generally carry a higher yield and are made for
a shorter term than real estate loans.  As of June 30, 1996,  $40.6 million,  or
7.5%, of Home Federal's total loan portfolio consisted of commercial loans.

         Origination, Purchase and Sale of Loans

         Home Federal  originates  residential loans in conformity with standard
underwriting  criteria of the Federal Home Loan Mortgage  Corporation  ("FHLMC")
and the  Federal  National  Mortgage  Association  ("FNMA")  to  assure  maximum
eligibility for possible resale in the secondary  market.  Although Home Federal
currently has authority to lend anywhere in the United  States,  it has confined
its loan  origination  activities  primarily  to the central  and south  central
Indiana area.  Home Federal's  loan  originations  are generated  primarily from
referrals from real estate brokers, builders, developers and existing customers,
newspaper,   radio  and  periodical  advertising  and  walk-in  customers.  Home
Federal's loan approval process is intended to assess the borrower's  ability to
repay the loan,  the  viability of the loan and the adequacy of the value of the
property that will secure the loan.

         Home Federal studies the employment, credit history, and information on
the historical and projected income and expenses of its individual and corporate
mortgagors  to assess  their  ability to repay its mortgage  loans.  It uses its
staff appraisers or independent appraisers to appraise the property securing its
loans.  It requires  title  insurance or abstracts  accompanied by an attorney's
opinion  evidencing Home Federal's valid lien on its mortgaged real estate and a
mortgage  survey or survey  coverage  on all first  mortgage  loans and on other
loans  when  appropriate.  Home  Federal  requires  fire and  extended  coverage
insurance in amounts at least equal to the principal  amount of the loan. It may
also require flood insurance to protect the property securing its interest. When
private mortgage insurance is required,  borrowers must make monthly payments to
an escrow  account from which Home  Federal  makes  disbursements  for taxes and
insurance. Otherwise, such escrow arrangements are optional.

         The procedure for approval of loans on property under  construction  is
the same as for residential  mortgage loans,  except that the appraisal obtained
evaluates  the building  plans,  construction  specifications  and  estimates of
construction   costs.  Home  Federal  also  evaluates  the  feasibility  of  the
construction  project  and the  experience  and track  record of the  builder or
developer.

         Consumer loans are  underwritten on the basis of the borrower's  credit
history and an analysis of the borrower's income and expenses,  ability to repay
the loan and the value of the collateral, if any.

         In order to generate  loan fee and  servicing  income and recycle funds
for  additional  lending  activities,  Home  Federal  seeks to sell loans in the
secondary  market.  Loan sales can enable Home Federal to recognize  significant
fee income and to reduce  interest rate risk while meeting local market  demand.
Home Federal sold $107 million of fixed-rate loans in the fiscal year ended June
30,  1996.  Home  Federal's   current  lending  policy  is  to  sell  fixed-rate
residential  mortgage loans exceeding 15 year maturities.  In addition,  when in
the  opinion  of  management  cash flow  demands  and  asset/liability  concerns
warrant,  Home  Federal  will  consider  selling  fixed-rate  loans with 15 year
maturities as well as  adjustable-rate  loans. Home Federal sells  participating
interests in commercial  real estate loans in order to share the risk with other
lenders.  Mortgage  loans  held for sale are  carried at lower of cost or market
value,  determined on an aggregate basis. The servicing is retained on most loan
sales except Veteran's  Administration  ("VA"),  Federal Housing  Administration
("FHA") and Indiana Housing Finance Authority ("IHFA") loans.

<PAGE>


         When loans are sold, Home Federal typically retains the  responsibility
for collecting and remitting loan payments,  inspecting the properties  securing
the loans,  making certain that monthly principal and interest payments and real
estate tax payments are made on behalf of borrowers, and otherwise servicing the
loans. Home Federal receives a servicing fee for performing these services.  The
amount of fees received by Home Federal varies,  but is generally  calculated as
an amount equal to 25 basis points per annum on the outstanding principal amount
of the loans  serviced.  The servicing fee is recognized as income over the life
of the loans. At June 30, 1996, Home Federal serviced $267 million of loans sold
to other parties.  Gains and losses on sales of loans, loan  participations  and
mortgage-backed securities are recognized at the time of sale.

         Management believes that purchases of loans and loan participations may
be desirable and evaluates  potential  purchases as  opportunities  arise.  Such
purchases can enable Home Federal to take advantage of favorable lending markets
in other  parts of the state,  diversify  its  portfolio  and limit  origination
expenses. Any participations it acquires in commercial real estate loans require
a review of financial  information on the borrower, a review of the appraisal on
the property by a local designated appraiser, an inspection of the property by a
senior loan officer, and a complete financial analysis of the loan. Servicing of
loans purchased is generally done by the seller. At June 30, 1996, approximately
1.1%, or $6.1 million,  of Home  Federal's  gross loan portfolio was serviced by
others.

<PAGE>

The  following  table shows loan  activity for Home  Federal  during the periods
indicated:

<TABLE>
<CAPTION>

                                                                                 Year Ended June 30,
                                                                     -------------------------------------------
                                                                       1996             1995              1994
                                                                     -------          --------         --------
                                                                               (Dollars in Thousands)

<S>                                                                  <C>               <C>              <C>     
Gross loans receivable at beginning of periods....................   $469,883          $463,365         $415,363
   Loans originated:
   Mortgage loans and contracts:
     Construction:
       Residential................................................     45,336            24,465           29,649
       Commercial.................................................     12,058             6,361            9,814
     Purchases:
       Residential................................................    112,549            88,692           57,937
       Commercial.................................................      7,214             3,809            7,222
     Refinancing..................................................     88,861            26,723          111,938
     Other........................................................      1,302             1,054              867
                                                                      -------          --------         --------
       Total......................................................    267,320           151,104          217,427

   Commercial.....................................................     51,537            28,556           14,909
   Consumer.......................................................     35,800            42,037           52,211
                                                                      -------          --------         --------
     Total loans originated.......................................    354,657           221,697          284,547
Loans purchased:
   Residential....................................................      2,140               ---              ---
   Other .........................................................      1,477               ---              894
                                                                      -------          --------         --------
     Total loans originated and purchased.........................    358,274           221,697          285,441
                                                                      -------          --------         --------
Real estate loans sold............................................    107,500            52,686          109,584
Loan repayments and other deductions..............................    178,179           147,136          127,855
                                                                      -------          --------         --------
   Total loans sold, loan repayments and other deductions.........    285,679           199,822          237,439
                                                                      -------          --------         --------
Net loan activity.................................................     72,595            21,875           48,002
                                                                      -------          --------         --------
Gross loans receivable at end of period...........................    542,478           485,240          463,365
Adjustments.......................................................    (22,381)          (15,357)         (17,462)
                                                                      -------          --------         --------
Net loans receivable at end of period.............................    520,097          $469,883         $445,903
                                                                      =======          ========         ========
</TABLE>


         FIRREA  contains  a  generally  more  stringent   loans-to-one-borrower
limitation  than  that  applicable  to  savings   associations  before  FIRREA's
enactment.  Under FIRREA, a savings association  generally may not make any loan
to a  borrower  or its  related  entities  if the total of all such loans by the
savings  association exceeds 15% of its capital (plus up to an additional 10% of
capital  in the  case  of  loans  fully  collateralized  by  readily  marketable
collateral);  provided,  however,  that loans up to $500,000 irrespective of the
percentage  limitations may be made and certain housing  development loans of up
to $30 million or 30% of capital,  whichever is less, are permitted.  Loans made
prior to FIRREA,  however,  are not  subject to these  limitations.  The maximum
amount which Home Federal  could have loaned to one borrower and the  borrower's
related  entities at June 30, 1996 under the 15% of capital  limitation was $8.2
million.  At that date, the highest outstanding balance of loans by Home Federal
to one borrower and related entities was approximately  $7.0 million,  an amount
within such loans-to-one borrower limitations.

         Origination and Other Fees

         Home Federal  realizes  income from fees for  originating  loans,  late
charges,  NOW  account  fees and fees for  other  miscellaneous  services.  Home
Federal charges origination fees which range from 0% to 3.5% of the loan amount.
Late charges are assessed  fifteen days after  payment is due. Home Federal also
receives commissions on Linsco Private Ledger full-service  securities brokerage
transactions  which its  subsidiary,  Home  Savings  Corporation,  offers to its
customers.

<PAGE>

         Non-performing Assets

         Late  charges  on  mortgage  loans are  assessed  by Home  Federal if a
payment is not  received by the 16th day  following  its due date.  Any borrower
whose payment was not received by this time is mailed a past due notice.  At the
same time the notice is  mailed,  the  delinquent  account  is  downloaded  to a
PC-based   collection   system  and   assigned  to  a  specific   loan   service
representative.  The loan  service  representative  will attempt to make contact
with the customer via a phone call to efficiently  and  effectively  resolve any
problem that might exist. If contact by phone is not possible, mail, in the form
of  preapproved  form  letters,  will be used  during the 16th and the 30th days
following a specific due date.  After the 30th day following any due date, or at
the time a second  payment  has come due,  if no contact  has been made with the
customer,  a  personal  visit will be  conducted  by a Loan  Service  Department
employee to interview  the  customer  and inspect the property to determine  the
borrower's  ability  to repay the loan.  Prompt  follow up is a goal of the Loan
Service Department with any and all delinquencies.

         When an advanced stage of  delinquency  appears  (generally  around the
90th day of delinquency) and if repayment cannot be expected within a reasonable
amount of time,  Home  Federal  will make a  determination  of how to proceed to
protect the interests of both the customer and Home Federal. It may be necessary
for the borrower to attempt to sell the property at Home Federal's request. If a
resolution  cannot be arranged,  Home Federal will consider avenues necessary to
obtain  title to the  property  which  include  foreclosure  and/or  accepting a
deed-in-lieu of foreclosure,  whichever may be most appropriate.  However,  Home
Federal attempts to avoid taking title to the property if at all possible.

         Home Federal has acquired certain real estate in lieu of foreclosure by
acquiring title to the real estate and then reselling it. Home Federal  performs
an updated  title check of the  property  and, if needed,  an  appraisal  on the
property before accepting such deeds.

         On June 30,  1996,  Home  Federal held $48,000 of real estate and other
repossessed  collateral acquired as a result of foreclosure,  voluntary deed, or
other means.  Such assets are is  classified  as "real estate owned" until sold.
When property is so acquired, it is recorded at the lower of cost or fair market
value less estimated cost to sell at the date of acquisition  and any subsequent
writedown  resulting  therefrom is charged to the  allowance  for losses on real
estate owned.  Interest  accrual ceases on the date of acquisition and all costs
incurred from that date in maintaining the property are expensed.

         Consumer  loan  borrowers  who  fail to  make  payments  are  contacted
promptly  by the  Loan  Service  Department  in an  effort  to  effectively  and
efficiently cure any delinquency.  A notice of delinquency is sent 10 days after
any specific due date when no payment has been received.  The delinquent account
is  downloaded to a PC-based  collection  system and assigned to a specific loan
service  representative.  The loan service  representative  will then attempt to
contact the borrower via a phone call.

         Continued follow-up in the form of phone calls,  letters,  and personal
visits (when necessary) will be conducted to resolve delinquency.  If a consumer
loan  delinquency  continues  and advances to the 60-90 days past due status,  a
determination  will be made by Home Federal on how to proceed.  Home Federal may
initiate  action to obtain  collateral  (if any) or collect the debt through the
legal remedies available.

         Collateral  obtained  as a result of loan  default is  retained by Home
Federal as an asset until sold or otherwise disposed.

         The table below sets forth the amounts and categories of Home Federal's
non-performing  assets  (non-accrual loans, loans past due 90 days or more, real
estate owned, and other  repossessed  assets) for the last five years. It is the
policy of Home Federal that all earned but uncollected  interest on conventional
loans be  reviewed  monthly  to  determine  if any  portion  thereof  should  be
classified as  uncollectible  for any portion that is due but  uncollected for a
period in excess of 90 days. The determination is based upon factors such as the
amount  outstanding  of the loan as a percentage of the  appraised  value of the
property and the delinquency record of the borrower.

<PAGE>

<TABLE>
<CAPTION>
                                                                               At June 30,
                                                     ------------------------------------------------------------
                                                      1996          1995         1994         1993         1992
                                                     ------        ------       ------       ------       ------
                                                                         (Dollars in Thousands)
Non-performing Assets:
   Loans:
<S>                                                  <C>           <C>          <C>          <C>          <C>   
     Non-Accrual...............................      $2,871        $2,431       $1,887       $1,428       $2,637
     Past due 90 days or more..................          89            81          115        1,292          755
   Restructured loans..........................           1           102          283          597        1,006
                                                     ======        ======       ======       ======       ======
   Total non-performing loans..................       2,961         2,614        2,285        3,317        4,398
   Real estate owned, net (1)..................         ---           ---          370        1,025        1,598
   Other repossessed assets, net...............          48            41           71           25           35
   Total non-performing assets (2).............       3,009        $2,655       $2,726       $4,367       $6,031
                                                     ------        ------       ------       ------       ------
   Non-performing assets to total assets.......         .48%          .45%         .50%         .82%         1.19%
                                                     ======        ======       ======       ======       ======
   Loans with allowance for
     uncollected interest......................      $2,872        $2,531       $2,167       $2,018       $2,989
</TABLE>


(1)  Refers  to real  estate  acquired  by  Home  Federal  through  foreclosure,
     voluntary deed, or in-substance foreclosure, net of reserve.

(2)  At June 30, 1996, 54.2% of Home Federal's  non-performing  assets consisted
     of residential  mortgage  loans,  20.3% consisted of commercial real estate
     loans,   10.2%   consisted  of  commercial   loans,   13.7%   consisted  of
     consumer-related  loans,  and 1.6% consisted of real estate owned and other
     repossessed assets.

         For the year  ended  June 30,  1996,  the  income  that would have been
recorded under original terms on the above  non-accrual and  restructured  loans
was $274,000  compared to actual income recorded of $155,000.  At June 30, 1996,
Home Federal had  approximately  $5.5 million in loans that were 30-89 days past
due.

         The allowance for loan losses  represents  amounts  available to absorb
future loan losses.  Loans or portions thereof are charged to the allowance when
losses are considered probable. Recoveries of amounts previously charged off are
added to the allowance and provisions for loan losses are charged or credited to
earnings to bring the allowance to a level considered necessary by management.

         For the year  ended  June 30,  1996,  Home  Federal  charged  off loans
totaling $453,000 and realized  recoveries of $70,000 on previously  charged-off
loans. Based on management's continuing review of the loan portfolio, historical
charge-offs and current economic  conditions,  Home Federal recorded a charge to
earnings  of  $638,000 to adjust the  allowance  to $3.1  million as of June 30,
1996.

Investments

         Home   Federal's    investment    portfolio   consists   primarily   of
mortgage-backed securities, collateralized mortgage obligations, overnight funds
with the FHLB of Indianapolis,  U.S.  Treasury  obligations and U.S.  Government
agency  obligations.  At June  30,  1996,  1995,  and  1994,  Home  Federal  had
approximately  $57.9  million,  $59.3 million and $60.4 million in  investments,
respectively.

         Home  Federal's  investment  portfolio  is managed by its  officers  in
accordance  with an investment  policy  approved by the Board of Directors.  The
Board reviews all transactions  and activities in the investment  portfolio on a
monthly basis.  Home Federal does not purchase  corporate debt securities  which
are not  rated  in one of the top four  investment  grade  categories  by one of
several  generally  recognized  independent  rating  agencies.   Home  Federal's
investment  strategy  has enabled it to (i) shorten the average term to maturity
of its

<PAGE>

assets, (ii) improve the yield on its investments,  (iii) meet federal liquidity
requirements   and  (iv)  maintain   liquidity  at  a  level  that  assures  the
availability of adequate funds.

         The OTS  requires  savings  associations  to maintain an average  daily
balance of liquid assets (cash, certain time deposits, bankers' acceptances, and
specified  United  States  government,  state  or  federal  agency  obligations,
corporate debt  securities,  commercial  paper,  certain  mutual funds,  certain
mortgage related securities,  and certain first lien residential mortgage loans)
equal to a monthly  average of not less than a specified  percentage  of its net
withdrawable  savings  deposits  plus  short-term  borrowings.   This  liquidity
requirement may be changed from time to time by the OTS to any amount within the
range of 4% to 10%, and is currently 5%.  Monetary  penalties may be imposed for
failure to meet the liquidity  requirement.  At June 30, 1996,  Home Federal had
liquid assets of $48.7 million,  and a liquidity ratio of 10.1%,  which exceeded
its liquidity requirement.

Source Of Funds

         General

         Deposits have  traditionally  been the primary  source of funds of Home
Federal for use in lending and investment  activities.  In addition to deposits,
Home Federal derives funds from loan amortization,  prepayments, borrowings from
the FHLB of Indianapolis and income on earning assets.  While loan  amortization
and income on earning  assets are relatively  stable  sources of funds,  deposit
inflows and outflows can vary widely and are  influenced by prevailing  interest
rates, money market conditions and levels of competition. Borrowings may be used
to  compensate  for  reductions  in  deposits  or  deposit  inflows at less than
projected  levels and may be used on a  longer-term  basis to  support  expanded
activities. See "-- Borrowings."

         Deposits

         Consumer and commercial deposits are attracted  principally from within
Home Federal's  primary market area through the offering of a broad selection of
deposit  instruments  including  checking accounts,  fixed-rate  certificates of
deposit, NOW accounts,  individual  retirement  accounts,  passbook accounts and
commercial  demand deposit  accounts.  Home Federal does not actively solicit or
advertise  for  deposits  outside  of the  counties  in which its  branches  are
located.  Deposit account terms vary, with the principal  differences  being the
minimum balance required, the amount of time the funds remain on deposit and the
interest  rate.  To attract  funds,  Home  Federal  pays higher  rates on larger
balances within the same maturity class.

         Under  regulations  adopted  by  the  FDIC,   well-capitalized  insured
depository  institutions  (those with a ratio of total capital to  risk-weighted
assets of not less  than  10%,  with a ratio of core  capital  to  risk-weighted
assets of not less than 6%, with a ratio of core  capital to total assets of not
less  than 5% and  which  have  not been  notified  that  they  are in  troubled
condition) may accept brokered  deposits without  limitations.  Undercapitalized
institutions  (those that fail to meet minimum regulatory capital  requirements)
are  prohibited  from  accepting  brokered  deposits.   Adequately   capitalized
institutions (those that are neither  well-capitalized nor undercapitalized) are
prohibited  from accepting  brokered  deposits unless they first obtain a waiver
from  the  FDIC.  Under  these  standards,   Home  Federal  would  be  deemed  a
well-capitalized institution.

         An  undercapitalized  institution may not solicit  deposits by offering
rates of interest that are  significantly  higher than the  prevailing  rates of
interest on insured  deposits (i) in such  institution's  normal market areas or
(2) in the market area in which such deposits would otherwise be accepted.

         Adequately  capitalized  institutions,   whether  or  not  they  accept
brokered deposits pursuant to a waiver from the FDIC, are prohibited from paying
a rate of interest  on such funds  which,  at the time such funds are  accepted,
significantly  exceeds (1) the rate paid on deposits of similar maturity in such
institution's  normal  market area for  deposits  accepted in the  institution's
normal  market area or (2) the  "national  rate" paid on deposits of  comparable
maturity for deposits accepted outside the institution's normal market area. The
national rate is (1) 120 percent of the current  yield on similar  maturity U.S.
Treasury obligations or (2) in the

<PAGE>

case of any  deposit  at  least  half of which is  uninsured  (institutional  or
wholesale  deposits),  130 percent of such applicable yield. A rate is deemed to
be  "significantly"  higher or  excessive  if it  exceeds  by more than 75 basis
points the applicable benchmark (i.e., the local rate or national rate).

         Interest  rates  paid,  maturity  terms,  service  fees and  withdrawal
penalties are established by Home Federal on a periodic basis.  Determination of
rates and terms are predicated on funds acquisition and liquidity  requirements,
rates paid by competitors, growth goals, federal regulations, and market area of
solicitation.

         Deposit accounts at Home Federal at June 30, 1996, were as follows:

<TABLE>
<CAPTION>


                                                       Minimum                                            Weighted
                                                       Opening        Balance at          % of             Average
Type of Account                                        Balance       June 30, 1996       Deposits           Rate
---------------                                        -------       -------------       --------         --------
                                                                         (Dollars in Thousands)
Withdrawable:
<S>                                                <C>                 <C>                 <C>              <C>  
Passbook.........................................  $       1           $58,988             12.05%           3.00%
Money market savings.............................      1,000            25,188              5.14%           3.05%
NOW..............................................          1            70,856             14.48%           1.44%
   Total withdrawable............................                      155,032             31.67%           2.30%
                                                                      --------             -----     
Certificates (original terms):
Less than 1 year.................................        500            83,830             17.12%           5.32%
12 to 23 months..................................        500            94,482             19.30%           5.81%
24 to 35 months..................................        500            71,232             14.55%           5.99%
36 to 59 months..................................        500            26,908              5.50%           5.54%
60 to 120 months.................................        500            58,089             11.86%           6.24%
   Total certificates............................                      334,541             68.33%           5.78%
                                                                      --------             -----     
Total deposits...................................                     $489,573             100.0%           4.68%
                                                                      ========             =====     
</TABLE>
  


         The following table sets forth by nominal  interest rate categories the
composition of deposits of Home Federal at the dates indicated:

<TABLE>
<CAPTION>

                                                                           At June 30,
                                                          -------------------------------------------
                                                            1996              1995             1994
                                                         ---------          --------         --------
                                                                     (Dollars in Thousands)
<S>                                                       <C>               <C>              <C>     
Non-interest bearing and below 3%.......................  $130,424          $124,334         $152,556
3.01% - 5.00%...........................................    62,219            78,023          191,395
5.01% - 7.00%...........................................   289,019           242,125           66,129
7.01% - 9.00%...........................................     7,911            22,238           34,891
9.01%  or greater.......................................       ---               366            1,016
                                                       -----------          --------         --------
Total..................................................$   489,573          $467,086         $445,987
                                                       ===========          ========         ========
</TABLE>


<PAGE>

         The following table  represents,  by various  interest rate categories,
the amounts of deposits  maturing  during each of the three years following June
30, 1996,  and the  percentage  of such  maturities to total  deposits.  Matured
certificates  which  have  not  been  renewed  as of June 30,  1996,  have  been
allocated based upon certain rollover assumptions.


<PAGE>

                               DEPOSIT MATURITIES
                             (Dollars in Thousands)
<TABLE>
<CAPTION>


                                    2.00       3.01       4.01       5.01       6.01       7.01       8.01
                                     to         to         to         to         to         to         to                Percent of
                                    3.00%      4.00%      5.00%      6.00%      7.00%      8.00%      9.00%     Total      Total
                                    ----     ------    -------   --------    -------     ------     ------    --------   ---------- 
Certificate accounts maturing in 
the twelve-month period ending:

<S>                                <C>      <C>       <C>       <C>         <C>         <C>          <C>     <C>             <C>  
June 30, 1997.....................  $580     $1,165    $35,612   $119,897    $61,600     $3,316       $477    $222,647        66.6%
June 30, 1998.....................   ---          5        247     48,821      7,584        605      1,676      58,938        17.6
June 30, 1999.....................   ---        ---          2     11,911      2,976      1,199         86      16,174         4.8
Thereafter........................   ---        ---        ---     12,534     23,696        493         59      36,782        11.0
                                    ----     ------    -------   --------    -------     ------     ------    --------       ----- 
                                    $580     $1,170    $35,861   $193,163    $95,856     $5,613     $2,298    $334,541       100.0%
                                    ====     ======    =======   ========    =======     ======     ======    ========       ===== 
</TABLE>



         Included  in  the  deposit  totals  in  the  above  table  are  savings
certificates  of deposit with balances of over  $100,000.  The majority of these
deposits are from regular customers of Home Federal. None of these were brokered
deposits.  The  following  table  provides  a  breakdown  at  June  30,  1996 of
certificates of greater than $100,000 by maturity.


                         ACCOUNTS GREATER THAN $100,000
                             (Dollars in Thousands)

<TABLE>
<CAPTION>


                                        2.00       3.01       4.01       5.01       6.01       7.01
                                         to         to         to         to         to         to                Percent of
                                        3.00%      4.00%      5.00%      6.00%      7.00%      8.00%    Total      Total
                                        ----       ----     ------    -------    -------     ------    -------    ---------- 
Certificate accounts maturing 
in the twelve-month period ending:

<S>                                    <C>        <C>      <C>       <C>        <C>         <C>        <C>           <C>  
June 30, 1997.......................    $301       $317     $4,534    $32,773    $10,822     $1,655     50,402        87.2%
June 30, 1998.......................     ---        ---        ---      1,746        861        133      2,740         4.7
June 30, 1999.......................     ---        ---        ---        380        132        272        784         1.4
Thereafter..........................     ---        ---        ---        586      2,798        463      3,847         6.7
                                        ----       ----     ------    -------    -------     ------    -------       ----- 
 ....................................    $301       $317     $4,534    $35,485    $14,613     $2,523    $57,773       100.0%
                                        ====       ====     ======    =======    =======     ======    =======       ===== 
</TABLE>
<PAGE>

         The following  table sets forth the change in dollar amount of deposits
in the various accounts offered by Home Federal for the periods indicated.


<TABLE>
<CAPTION>
                                                                                DEPOSIT ACTIVITY
                                                                             (Dollars in Thousands)
                                  Balance                           Balance                          Balance
                                    at                                at                               at
                                 June 30,     % of      Increase   June 30,     % of     Increase    June 30,    % of      Increase
                                   1996     Deposits   (Decrease)    1995     Deposits  (Decrease)    1994    Deposits   (Decrease)
                                ----------  --------   ----------    ----     --------  ----------    ----    --------   ----------

Withdrawable:
<S>                                <C>        <C>         <C>       <C>         <C>       <C>         <C>       <C>      <C>      
Passbook ........................  $58,988    12.1%       $2,991    $55,997     12.0%     $(2,323)    $58,320   13.1%    $   3,595
Money Market Savings.............   25,188     5.1         2,322     22,866      4.9       (3,517)     26,383    5.9        (1,080)
NOW        ......................   70,856    14.5         3,646     67,210     14.4        2,707      64,503   14.5         8,648
   Total withdrawable............  155,032    31.7         8,959    146,073     31.3       (3,133)    149,206   33.5        11,163
                                  --------   -----       -------   --------    -----      -------    --------  -----     ---------
Certificates:
Less than one year...............   83,830    17.1        24,290     59,540     12.7      (23,486)     83,026   18.6        11,377
12 to 23 months..................   94,482    19.3       (13,303)   107,785     23.1       50,164      57,621   12.9       (26,003)
24 to 35 months..................   71,232    14.5         6,602     64,630     13.8        9,509      55,121   12.3        (7,223)
36 to 59 months..................   26,908     5.5          (712)    27,620      5.9       (5,667)     33,287    7.5         7,662
60 to 120 months.................   58,089    11.9        (3,349)    61,438     13.2       (6,288)     67,726   15.2         3,533
                                  --------   -----       -------   --------    -----      -------    --------  -----     ---------

   Total certificate accounts....  334,541    68.3        13,528    321,013     68.7       24,232     296,781   66.5       (10,654)
                                  --------   -----       -------   --------    -----      -------    --------  -----     ---------
         Total deposits.......... $489,573   100.0%      $22,487   $467,086    100.0%     $21,099    $445,987  100.0%    $     509
                                  ========   =====       =======   ========    =====      =======    ========  =====     =========
</TABLE>

<PAGE>

Borrowings

         Home  Federal  relies  upon  advances  (borrowings)  from  the  FHLB of
Indianapolis to supplement its supply of lendable funds, meet deposit withdrawal
requirements  and to  extend  the term of its  liabilities.  This  facility  has
historically  been Home Federal's major source of borrowings.  Advances from the
FHLB of Indianapolis  are typically  secured by Home Federal's stock in the FHLB
of  Indianapolis  and a  portion  of Home  Federal's  first  mortgage  loans and
mortgage-backed securities.

         Each FHLB credit program has its own interest rate,  which may be fixed
or variable,  and range of maturities.  Subject to the express limits in FIRREA,
the FHLB of  Indianapolis  may  prescribe  the  acceptable  uses to which  these
advances  may be put, as well as  limitations  on the size of the  advances  and
repayment provisions. At June 30, 1996, Home Federal had advances totaling $70.7
million outstanding from the FHLB of Indianapolis.

         On June 30,  1993,  the Company  borrowed  $13.0  million  from LaSalle
National  Bank of Chicago,  with the stock of Home Federal and its  subsidiaries
pledged as collateral (the "Senior  Debt").  The Senior Debt bears interest at a
variable  rate of prime plus .75%,  which was 9.00% at June 30, 1996. Of the net
proceeds,  the Company  injected $10.0 million to Home Federal's Tier l capital.
Home Federal used the proceeds to prepay $9.0 million of subordinated  debt plus
a prepayment penalty of $1.8 million. See Note 10 to the Consolidated  Financial
Statements included in the 1996 Shareholder Annual Report incorporated into Item
8 hereof for a description of the terms of the Senior Debt.

         Other than the FHLB advances and the Senior Debt,  Home  Federal's only
borrowings in recent years have been short-term borrowings.  The following table
sets  forth  the  maximum  amount  of each  category  of  short-term  borrowings
(borrowings  with remaining  maturities of one year or less)  outstanding at any
month-end  during  the  periods  shown and the  average  aggregate  balances  of
short-term borrowings for such periods.

<TABLE>
<CAPTION>
                                                                   For the year ended June 30,
                                                            ---------------------------------------
                                                            1996              1995             1994
                                                            ----              ----             ----
                                                                     (Dollars in Thousands)
<S>                                                        <C>               <C>              <C>    
FHLB advances....................................          $16,000           $29,000          $22,000
Official check overnight remittance..............         $  4,280         $   3,086          $ 3,416
FHLB overnight remittance........................         $     57         $      38          $    60
Average amount of total
   short-term borrowings outstanding.............         $  6,822         $  24,225          $13,570
</TABLE>


     The  following  table  sets  forth the  maximum  amount of short  term FHLB
advances  outstanding  at any month end durig the period  shown and the weighted
average rate of such FHLB advances.

                                          For the year ended June 30,
                                  ------------------------------------------
                                  1996               1995               1994
                                  ----               ----               ----
                                            (Dollars in Thousands)
     FHLB advances:
         Amount                   26,000            $15,500            $22,000
         Weighted average rate       6.2%               6.8%               6.4%


See Note 9 in the Notes to  Consolidated  Financial  Statements  included in the
1996 Shareholder Annual Report incorporated into Item 8 hereof for a description
of the terms of these borrowings.

<PAGE>

Service Corporation Subsidiaries

         Federal  savings banks generally may invest up to 2% of their assets in
service  corporations and make loans to such  subsidiaries and joint ventures in
which such subsidiaries are participants in an aggregate amount not exceeding 2%
of an association's  assets,  plus an additional 1% of assets if the amount over
2% is used for  specified  community  or  inner-city  development  purposes.  In
addition,  federal  regulations  permit  associations to make specified types of
loans to such subsidiaries (other than special-purpose finance subsidiaries), in
which the association  owns more than 10% of the stock,  in an aggregate  amount
not exceeding 50% of the association's  regulatory  capital if the association's
regulatory capital is in compliance with applicable regulations.

         One of Home Federal's  subsidiaries,  Home Savings Corporation ("HSC"),
an Indiana corporation,  is currently engaged in three types of activities:  (i)
real estate  development;  (ii) sales of life insurance  products and annuities;
and (iii) full-service  securities brokerage services. With the exception of its
securities  brokerage  services,  all of HSC's activities are conducted  through
joint  ventures  in which it is an equity  investor.  HSC has  undertaken  these
activities as a part of Home Federal's  business  strategy of  diversifying  its
operations into areas which, although related to traditional activities in which
Home  Federal has  expertise  and often  involving a similar  pool of  potential
customers,  provide  opportunities  to earn income that are not as  sensitive to
changes in interest rates as is net interest income,  and also to meet the needs
of its customers by becoming a  full-service  financial  center.  Although these
activities create a potential for a higher rate of return than mortgage lending,
either directly through operations or indirectly  through  appreciation in value
of the business or real property, these activities involve greater and different
risks than those  associated  with thrift  lending and can affect  adversely the
savings  association's  regulatory  capital  calculations.  See  "Regulation  --
Regulatory  Capital." At June 30, 1996, Home Federal's  aggregate  investment in
HSC was $2.9 million.  For the year ended June 30, 1996, HSC reported  income of
$455,000  from these  operations.  HSC's  office is  located at 222 West  Second
Street,  Seymour,  Indiana.  The  consolidated  statements of operations of Home
Federal and its subsidiaries included elsewhere herein include the operations of
HSC.  Intercompany  balances  and  transactions  have  been  eliminated  in  the
consolidation.

         The following  table sets forth certain  information  regarding each of
the joint ventures in which HSC was involved at June 30, 1996.

<TABLE>
<CAPTION>
                                                                                                     Loans from
                                                                                                    Home Federal
                                                                                                     Outstanding
                                                      Date HSC Entered           Equity             at June 30,
Name                            Type of Project       into the Project         Investment               1996
--------------------        ---------------------     ----------------      -------------          --------------

<S>                         <C>                          <C>                <C>                     <C>       
Consortium Partners          Owns Family Financial        11/31/83           $   605,000             $      ---
                             Life Insurance
                             Company of New
                             Orleans

Coventry Associates          Real estate development       8/31/89           $   156,000             $      ---
                             in Seymour, Indiana

Heritage Woods II            Rental Apartment             11/15/89           $   132,000             $  145,000
                             project of low income
                             housing (22 units)

Admirals Woods               Real estate development       4/20/93           $   301,000             $      ---
                             in Indianapolis, Indiana

Home-Breeden                 Real estate development        7/1/94            $1,224,000             $      ---
                             in Columbus, Indiana

</TABLE>

<PAGE>


         HSC has a 19% interest in Consortium Partners, a Louisiana partnership,
which owns 50% of the outstanding  shares of the Family Financial Life Insurance
Company  of  New  Orleans  ("Family  Financial").   The  remaining  50%  of  the
outstanding shares of Family Financial is owned  proportionately by the partners
of  Consortium  Partners.  Family  Financial  sells life,  accident,  and health
insurance  as  well  as  annuity  products  to the  customers  of the  partners'
parent-thrifts. HSC receives (1) dividends paid on Family Financial shares owned
directly by it, (2) a pro rata  allocation of dividends  received on shares held
by  Consortium  Partners,  which are  divided  among the  partners  based on the
actuarially  determined value of Family  Financial's  various lines of insurance
generated  by  customers  of these  partners,  and (3)  commissions  on sales of
insurance  products  made to customers.  For the year ended June  30,1996,  Home
Federal had income of $366,000,  on a consolidated  basis,  from commissions and
dividends paid on Family Financial activities.

         HSC markets  LINSCO Private Ledger  full-service  securities  brokerage
services.  For fiscal 1996, HSC received $935,000 in commissions from its LINSCO
Private Ledger activities.

         In August,  1989, HSC entered into a financing  agreement with Greemann
Real Estate,  Inc. to purchase and develop  Coventry  Place, a residential  real
estate  subdivision  in Seymour,  Indiana.  HSC is to receive a development  fee
equal to 4% of  total  development  costs.  For the year  ended  June 30,  1996,
development fees of $3,000 were accrued. In addition to the interest on the loan
which was paid off in April,  1996, HSC will receive 65% of the net profit after
the payment of all interest, development and sales fees.

         In  November,  1989,  HSC  invested  $184,000  as a limited  partner in
Heritage Woods II, a low income housing project in Columbus,  Indiana.  Over the
next six years,  HSC will receive tax credits equal to  approximately  9% of its
investment in the project.

         On April 20, 1993, HSC entered into a joint venture agreement with Gary
L. Sager and Emily Sager to develop a  moderately-priced  27 lot  subdivision in
Marion County,  Indiana,  called Admirals Woods. The joint venture  subsequently
executed loan documents with HSC for an acquisition and development  loan in the
amount of $980,000. In addition to interest on the loan, HSC will receive 50% of
the profits after all interest,  development and sales costs.  The loan was paid
off in December, 1995.

         On July 1,  1994,  HSC  entered  into a joint  venture  agreement  with
Breeden  Investment  Group,  Inc. to develop a 221 lot starter home  subdivision
with  additional   multi-family  and  commercial  land   ("McCullough's   Run").
McCullough's  Run is  located  on the  east  side  of  Columbus,  Indiana.  Loan
documents were executed on July 1, 1994 for land  acquisition and development of
phases I and II in an amount not to exceed $1,700,000.  As additional phases are
developed  for sale,  additional  financing  will be  required.  In  addition to
interest on the loan, HSC will receive 50% of all profits.

         Home Federal also  organized  another  service  corporation  subsidiary
under Indiana law, HomeFed  Financial Corp., as a financing  subsidiary to issue
subordinated debt, collateralized mortgage obligations,  and similar securities.
This  corporation is currently a shell  corporation and has never engaged in any
business operations.

Employees

         As of June 30, 1996,  Home Federal  employed 240 persons on a full-time
basis and 13 persons on a part-time basis. None of Home Federal's  employees are
represented by a collective bargaining group.  Management considers its employee
relations to be excellent.

Competition

         Home Federal  operates in south central Indiana and makes almost all of
its  loans to,  and  accepts  almost  all of its  deposits  from,  residents  of
Bartholomew,  Jackson, Jefferson,  Jennings, Scott, Ripley, Washington,  Decatur
and Marion counties in Indiana.

<PAGE>

         Home  Federal  is  subject  to  competition   from  various   financial
institutions,  including  state and  national  banks,  state and federal  thrift
associations,  and other companies or firms,  including  brokerage houses,  that
provide similar services in the areas of Home Federal's home and branch offices.
Also, in Seymour and Columbus,  Home Federal must compete with banks and savings
institutions in  Indianapolis.  To a lesser extent,  Home Federal  competes with
financial and other  institutions  in the market areas  surrounding  Cincinnati,
Ohio and  Louisville,  Kentucky.  Home Federal also  competes  with money market
funds  which  currently  are not  subject  to  reserve  requirements,  and  with
insurance  companies  with  respect to its  Individual  Retirement  and  annuity
accounts.

         Under  current  law,  bank  holding   companies  may  acquire   savings
associations.  Savings associations may also acquire banks under federal law. To
date, several bank holding company  acquisitions of healthy savings associations
in Indiana have been completed.  Affiliations  between banks and healthy savings
associations  based in Indiana may also increase the  competition  faced by Home
Federal and the Company.

         In  addition,   The  Riegle-Neal   Interstate   Banking  and  Branching
Efficiency Act of 1994 (the "Riegle-Neal Act") permits bank holding companies to
acquire  banks in other  states and,  with state  consent and subject to certain
limitations, allows banks to acquire out-of-state branches either through merger
or de novo expansion.  The State of Indiana  recently passed a law  establishing
interstate  branching  provisions for Indiana state chartered  banks  consistent
with those established by the Riegle-Neal Act (the "Indiana Branching Law"). The
Indiana Branching Law authorizes Indiana banks to branch interstate by merger or
de novo expansion and authorizes out-of-state banks meeting certain requirements
to branch into Indiana by merger or de novo expansion. The Indiana Branching Law
became effective March 15, 1996, provided that prior to June 1, 1997, interstate
mergers and de novo branches are not permitted to out-of-state  banks unless the
laws of their home states  permit  Indiana  banks to merge or  establish de novo
branches  on a  reciprocal  basis.  This  new  legislation  may also  result  in
increased competition for Home Federal and the Company.

         Because of recent changes in Federal law,  interstate  acquisitions  of
banks are less restricted than they were under prior law.  Savings  associations
have certain powers to acquire savings  associations  based in other states, and
Indiana  law  expressly  permits  reciprocal   acquisition  of  Indiana  savings
associations.  In addition, Federal savings associations are permitted to branch
on an interstate basis.

         The primary factors  influencing  competition for deposits are interest
rates, service and convenience of office locations.  Competition is affected by,
among other things,  the general  availability  of lendable  funds,  general and
local economic conditions,  current interest rate levels, and other factors that
are not readily predictable.

Regulation

         General

         Home Federal,  as a federally chartered stock savings bank, is a member
of the Federal  Home Loan Bank  System  ("FHLB  System")  and its  deposits  are
insured by the Savings Association Insurance Fund ("SAIF") which is administered
by the FDIC. Home Federal is subject to extensive regulation by the OTS. Federal
associations may not enter into certain  transactions  unless certain regulatory
tests are met or they obtain prior governmental  approval,  and the associations
must  file  reports  with the OTS about  their  activities  and their  financial
condition. Periodic compliance examinations of Home Federal are conducted by the
OTS which has, in conjunction with the FDIC in certain  situations,  examination
and enforcement  powers.  This supervision and regulation are intended primarily
for the  protection of depositors  and federal  deposit  insurance  funds.  Home
Federal is also subject to certain reserve requirements under regulations of the
Board of Governors of the Federal Reserve System ("FRB").

<PAGE>

         Congress  is  considering   legislation  that  would   consolidate  the
supervision   and  regulation  of  all  U.S.   financial   institutions  in  one
administrative body (the  "Legislation").  It cannot be predicted with certainty
whether  or when the  Legislation  will be  enacted  or the extent to which Home
Federal would be affected thereby.

         An OTS  regulation  establishes  a schedule for the  assessment of fees
upon all savings  associations to fund the operations of the OTS. The regulation
also  establishes a schedule of fees for the various types of  applications  and
filings made by savings associations with the OTS. The general assessment, to be
paid on a  semiannual  basis,  is based  upon the  savings  association's  total
assets, including consolidated  subsidiaries,  as reported in a recent quarterly
thrift financial report. Currently, the assessment rates range from .0172761% of
assets for  associations  with assets of $67.0  million or less to .0045864% for
associations  with assets in excess of $35.0  billion.  Home  Federal's  current
semiannual assessment, based upon total assets at March 31, 1996, is $67,000.

         Home Federal is also subject to federal and state regulation as to such
matters as loans to officers,  directors,  or principal  shareholders,  required
reserves,  limitations as to the nature and amount of its loans and investments,
regulatory  approval of any merger or consolidation,  issuance or retirements of
their own securities,  and limitations upon other aspects of banking operations.
In addition,  the  activities  and  operations  of Home Federal are subject to a
number of additional  detailed,  complex and sometimes  overlapping  federal and
state laws and regulations.  These include state usury and consumer credit laws,
state  laws  relating  to  fiduciaries,  the  Federal  Truth-In-Lending  Act and
Regulation Z, the Federal  Equal Credit  Opportunity  Act and  Regulation B, the
Fair Credit  Reporting  Act,  the  Community  Reinvestment  Act,  anti-redlining
legislation and anti-trust laws.

Federal Home Loan Bank System

         Home  Federal  is a member of the FHLB  System,  which  consists  of 12
regional  banks.  The Federal  Housing  Finance Board  ("FHFB"),  an independent
agency,  controls the FHLB System including the FHLB of  Indianapolis.  The FHLB
System  provides  a  central  credit  facility   primarily  for  member  savings
associations and other member financial  institutions.  Home Federal is required
to hold  shares of  capital  stock in the FHLB of  Indianapolis  in an amount at
least equal to the greater of 1% of the aggregate principal amount of its unpaid
residential  mortgage loans, home purchase contracts and similar  obligations at
the end of each  calendar  year,  .3% of its  assets  or 1/20 (or  such  greater
fraction  established  by the FHLB) of outstanding  FHLB advances,  commitments,
lines of credit and letters of credit.  Home Federal is currently in  compliance
with this requirement.  At June 30, 1996, Home Federal's  investment in stock of
the FHLB of Indianapolis was $3.8 million.

         In past years,  Home Federal has received  dividends on its FHLB stock.
All 12  FHLB's  are  required  by law to  provide  funds for the  resolution  of
troubled  savings  associations  and to establish  affordable  housing  programs
through direct loans or interest subsidies on advances to members to be used for
lending   at   subsidized   interest   rates   for  low-  and   moderate-income,
owner-occupied  housing projects,  affordable rental housing,  and certain other
community  projects.  These contributions and obligations could adversely affect
the FHLB's  ability to pay  dividends and the value of FHLB stock in the future.
For the year ending June 30, 1996, dividends paid to Home Federal by the FHLB of
Indianapolis totaled $271,000,  for an annual rate of 7.9%. A reduction in value
of such stock may result in a corresponding reduction of Home Federal's capital.

         The FHLB of Indianapolis serves as a reserve or central bank for member
institutions  within its assigned  region.  It is funded primarily from proceeds
derived from the sale of consolidated  obligations of the FHLB System.  It makes
advances to members in accordance  with policies and  procedures  established by
the FHFB and the Board of Directors of the FHLB of Indianapolis.

         All FHLB advances  must be fully  secured by  sufficient  collateral as
determined by the FHLB.  Eligible  collateral includes first mortgage loans less
than 90 days delinquent or securities  evidencing interests therein,  securities
(including  mortgage-backed  securities)  issued,  insured or  guaranteed by the
federal  government  or any agency  thereof,  FHLB  deposits  and,  to a limited
extent, real estate with

<PAGE>
readily  ascertainable  value  in which a  perfected  security  interest  may be
obtained.  Other forms of collateral  may be accepted as over  collateralization
or, under certain  circumstances,  to renew outstanding advances.  All long-term
advances are required to provide funds for  residential  home  financing and the
FHLB has  established  standards of community  service that members must meet to
maintain access to long-term advances.

         Interest rates charged for advances vary  depending upon maturity,  the
cost of funds to the FHLB of  Indianapolis  and the  purpose  of the  borrowing.
Under  current law,  savings  associations  which cease to be  Qualified  Thrift
Lenders are ineligible to receive advances from their FHLB.

         Liquidity

         For each  calendar  month,  Home  Federal is  required  to  maintain an
average daily balance of liquid assets (cash,  certain time  deposits,  bankers'
acceptances,  specified  United  States  Government,  state  or  federal  agency
obligations,   shares  of  certain  mutual  funds  and  certain  corporate  debt
securities  and  commercial  paper) equal to an amount not less than a specified
percentage of its net withdrawable  deposit accounts plus short-term  borrowings
during the preceding  calendar month. This liquidity  requirement may be changed
from  time to  time  by the OTS to any  amount  within  the  range  of 4% to 10%
depending upon economic conditions and the savings flows of member institutions,
and  is  currently  5%.  OTS  regulations   also  require  each  member  savings
institution to maintain an average daily balance of short-term  liquid assets at
a  specified  percentage  (currently  l %) of the total of its net  withdrawable
deposit accounts and short-term  borrowings during the preceding calendar month.
Monetary   penalties  may  be  imposed  for  failure  to  meet  these  liquidity
requirements.  The monthly average  liquidity of Home Federal for June, 1996 was
10.1% which  exceeded  the  applicable  5%  liquidity  requirement.  Its average
short-term  liquidity ratio for June, 1996 was 5.3%. Home Federal has never been
subject to monetary penalties for failure to meet its liquidity requirements.

         Insurance of Deposits

         Deposit  Insurance.  The FDIC is an  independent  federal  agency  that
insures the deposits,  up to prescribed  statutory  limits, of banks and thrifts
and  safeguards  the safety and soundness of the banking and thrift  industries.
The FDIC administers two separate  insurance funds, the BIF for commercial banks
and state  savings  banks and the SAIF for savings  associations  and banks that
have  acquired  deposits  from  savings  associations.  The FDIC is  required to
maintain  designated  levels of reserves in each fund.  The reserves of the SAIF
are currently below the level required by law,  primarily  because a significant
portion of the assessments  paid into the SAIF have been used to pay the cost of
prior thrift  failures,  while the reserves of the BIF met the level required by
law in May, 1995.  Thrifts are generally  prohibited  from  converting  from one
insurance fund to the other until the SAIF meets its  designated  reserve level,
except  with the  prior  approval  of the FDIC in  certain  limited  cases,  and
provided certain fees are paid. The insurance fund conversion  provisions to not
prohibit a SAIF member from  converting to a bank charter or merging with a bank
during  the  moratorium  as  long as the  resulting  bank  continues  to pay the
applicable  insurance  assessments to the SAIF during such period and as long as
certain other conditions are met.

         Assessments.  The  FDIC is  authorized  to  establish  separate  annual
assessment rates for deposit insurance for members of the BIF and members of the
SAIF.  The FDIC may  increase  assessment  rates for either fund if necessary to
restore the fund's  ratio of reserves  to insured  deposits to the target  level
within a reasonable  time and may  decrease  such rates if such target level has
been met. The FDIC has established a risk-based  assessment system for both SAIF
and BIF members.  Under this system,  assessments vary depending on the risk the
institution  poses to its deposit  insurance fund. Such risk level is determined
based on the  institution's  capital  level and the FDIC's level of  supervisory
concern about the institution.

         Because  of the  differing  reserve  levels  of the  SAIF  and the BIF,
deposit insurance assessments paid by well-capitalized  BIF-insured institutions
were recently  reduced  significantly  below the level paid by  well-capitalized
SAIF-insured  institutions.  Assessments paid by  well-capitalized  SAIF-insured
institutions exceeded those paid by well-capitalized BIF-insured institutions by
approximately $0.19 per $100 in deposits in late

<PAGE>

1995 and exceeded  them by $0.23 per $100 in deposits  beginning  in 1996.  Such
premium disparity could have a negative  competitive  impact on Home Federal and
other institutions with SAIF deposits.

         Congress   has  recently   considered   many   proposals   designed  to
recapitalize the SAIF and eliminate the significant  premium  disparity  between
the BIF  and  the  SAIF.  Among  those  considered  is a  recapitalization  plan
providing for a special assessment, estimated at approximately $0.85 per $100 of
SAIF  deposits  held at some time in 1995, in order to increase SAIF reserves to
the level  required by law.  Certain  BIF-insured  banks  holdings  SAIF-insured
deposits would pay a lower special  assessment.  In addition,  the cost of prior
thrift  failures would be shared by both the SAIF and the BIF. Such cost sharing
might  increase BIF  assessments  by $0.02 to $0.025 per $100 in deposits.  SAIF
assessments for  well-capitalized  SAIF-insured  institutions  would be set at a
significantly  lower level after the  legislation  is adopted and could never be
reduced below the level set for well-capitalized  BIF-insured institutions.  The
recapitalization  plan also  provides  for the merger of the SAIF and the BIF on
January 1, 1998, subject to certain  conditions.  It has also been proposed that
the savings  association  charter be eliminated in connection  with the proposed
merger of the BIF and SAIF.

         Home Federal had $486.3 million in deposits subject to SAIF assessments
at June 30, 1996. If the one-time special assessment in the legislative proposal
is enacted into law, Home Federal will pay an additional after-tax assessment of
approximately  $2.5  million  (based upon  deposits at June 30, 1996) which will
reduce  capital and  earnings  for the quarter in which any such  assessment  is
recorded.  However,  it is expected that  quarterly  SAIF  assessments  would be
reduced significantly sometime after adoption of the legislation.

         No  assurances  can  be  given  that  the  SAIF  recapitalization  plan
discussed  above or any other plan will be enacted  into law or in which form it
may be  enacted.  In  addition,  the  Company  can give no  assurances  that the
disparity  between BIF and SAIF assessments will be eliminated.  If the proposed
legislation is not adopted, SAIF premiums may increase and the disparity between
BIF and SAIF premiums may become greater, with a resulting adverse effect on the
Company's operations.

         Regulatory Capital

         Currently,  savings  associations are subject to three separate minimum
capital-to-assets  requirements:  (i) a leverage limit,  (ii) a tangible capital
requirement,  and (iii) a risk-based  capital  requirement.  The leverage  limit
requires that savings  associations  maintain  "core  capital" of at least 3% of
total assets. Core capital is generally defined as common  stockholders'  equity
(including retained income), noncumulative perpetual preferred stock and related
surplus,   certain  minority  equity   interests  in  subsidiaries,   qualifying
supervisory  goodwill  (on a declining  basis until  1995),  purchased  mortgage
servicing  rights (which may be included in an amount up to 50% of core capital,
but which are to be reported on an association's  balance sheet at the lesser of
90% of their fair market value, 90% of their original pruchase price, or 100% of
their remaining unamortized book value), and purchased credit card relationships
(which  may  be  included  in  an  amount  up  to  25%  of  core  capital)  less
nonqualifying  intangibles.  Under the tangible capital  requirement,  a savings
association  must maintain  tangible  capital (core capital less all  intangible
assets except  purchased  mortgage  servicing rights which may be included after
making the above-noted  adjustments) of at least 1.5% of total assets. Under the
risk-based capital requirements,  a minimum amount of capital must be maintained
by a savings  association to account for the relative risks inherent in the type
and amount of assets held by the savings  association.  The  risk-based  capital
requirement   requires  a  savings  association  to  maintain  capital  (defined
generally for these purposes as core capital plus general  valuation  allowances
and  permanent  or maturing  capital  instruments  such as  preferred  stock and
subordinated  debt  less  assets  required  to be  deducted)  equal  to  8.0% of
risk-weighted  assets.  Assets are  ranked as to risk in one of four  categories
(0-100%)  with a credit  risk-free  asset such as cash  requiring no  risk-based
capital and an asset with a significant  credit risk such as a non-accrual  loan
being  assigned  a  factor  of  100%.  At June 30,  1996,  based on the  capital
standards  then in effect,  Home  Federal  was in  compliance  with all  capital
requirements.

<PAGE>

         The OTS has  delayed  implementation  of a rule  which  sets  forth the
methodology  for  calculating an interest rate risk component to be incorporated
into the OTS regulatory capital rule. Under the rule, only savings  associations
with "above normal"  interest rate risk  (institutions  whose  portfolio  equity
would decline in value by more than 2% of assets in the event of a  hypothetical
200-basis point move in interest rates) will be required to maintain  additional
capital  for  interest  rate risk under the  risk-based  capital  framework.  An
institution  with an "above  normal"  level of  exposure  will have to  maintain
additional  capital  equal to  one-half  the  difference  between  its  measured
interest rate risk (the most adverse change in the market value of its portfolio
resulting from a 200-basis point move in interest rates divided by the estimated
market  value of its  assets)  and 2%,  multiplied  by the  market  value of its
assets.  That  dollar  amount of  capital  is in  addition  to an  institution's
existing risk-based capital  requirement.  The OTS has stated that it intends to
reduce or eliminate the leverage  ratio capital  requirements  once the interest
rate risk component rule is  implemented.  Although the OTS has decided to delay
implementation  of this rule, it will  continue to closely  monitor the level of
interest rate risk at individual institutions and it retains the authority, on a
case-by-case  basis, to impose  additional  capital  requirements for individual
institutions with significant interest rate risk.

         The  following is a summary of Home  Federal's  regulatory  capital and
capital requirements at June 30, 1996:

                                 Tangible            Core           Risk-based
                                  capital           capital          capital
                                  -------           -------          -------
                                            (Dollars in Thousands)
  Regulatory capital              $51,859           $51,859            $54,513

  Minimum capital requirement       9,396            18,791             35,320
                                  -------           -------            -------
  Excess capital                  $42,463           $33,068            $19,193
                                  =======           =======            =======

  Regulatory capital ratio          8.28%             8.28%             12.35%

  Minimum capital ratio             1.50%             3.00%              8.00%



         If an association is not in compliance  with its capital  requirements,
the OTS is required to prohibit  asset growth and to impose a capital  directive
that may restrict,  among other  things,  the payment of dividends and officers'
compensation.  In  addition  to the  specific  sanctions  provided in FIRREA for
failing to meet the capital  requirements,  the OTS and the FDIC  generally  are
authorized to take enforcement  actions against a savings association that fails
to meet its capital  requirements,  which  actions may include  restrictions  on
operations  and banking  activities,  the imposition of a capital  directive,  a
cease and desist order,  civil money  penalties or harsher  measures such as the
appointment  of a  receiver  or  conservator  or a forced  merger  into  another
institution.

         Prompt Corrective Regulatory Action

         The  Federal  Deposit  Insurance  Corporation  Improvement  Act of 1991
("FedICIA") requires, among other things, federal bank regulatory authorities to
take "prompt  corrective  action" with respect to institutions  that do not meet
minimum capital  requirements.  For these  purposes,  FedICIA  establishes  five
capital  tiers:  well  capitalized,  adequately  capitalized,  undercapitalized,
significantly  undercapitalized,  and critically  undercapitalized.  At June 30,
1996, Home Federal was categorized as "well capitalized."

         An  institution  is deemed to be "well  capitalized"  if it has a total
risk-based capital ratio of 10% or greater, a Tier I risk-based capital ratio of
6% or greater,  and a leverage  ratio of 5% or greater,  and is not subject to a
regulatory order, agreement or directive to meet and maintain a specific capital
level for any  capital  measure.  An  institution  is  deemed to be  "adequately
capitalized" if it has a total risk-based capital ratio of 8% or greater, a Tier
I  risk-based  capital of 4% or greater,  and  generally a leverage  ratio of 4%
greater.  An  institution is deemed to be  "undercapitalized"  if it has a total
risk-based  capital ratio of less than 8%, a Tier I risk-based  capital ratio of
less  than  4%,  or  generally  a  leverage  ratio  of  less  than  4%;  and (d)

<PAGE>

"significantly  undercapitalized"  if it has a total risk-based capital ratio of
less than 6%, a Tier I risk-based  capital  ratio of less than 3%, or a leverage
ratio  of  less  than  3%.   An   institution   is  deemed  to  be   "critically
undercapitalized"  if it has a ratio  of  tangible  equity  (as  defined  in the
regulations) to total assets that is equal to or less than 2%.

         "Undercapitalized"  institutions are subject to growth  limitations and
are  required to submit a capital  restoration  plan.  If an  "undercapitalized"
institution  fails to submit,  or fails to implement in a material  respect,  an
acceptable  plan,  it is treated as if it is  "significantly  undercapitalized."
"Significantly  undercapitalized"  institutions  are subject to one or more of a
number of requirements and restrictions,  including an order by the FDIC to sell
sufficient voting stock to become adequately capitalized, requirements to reduce
total  assets and cease  receipt  of  deposits  from  correspondent  banks,  and
restrictions    on    compensation    of   executive    officers.    "Critically
undercapitalized"  institutions  may  not,  beginning  60  days  after  becoming
"critically  undercapitalized,"  make any  payment of  principal  or interest on
certain subordinated debt or extend credit for a highly leveraged transaction or
enter into any transaction outside the ordinary course of business. In addition,
"critically  undercapitalized"  institutions  are  subject to  appointment  of a
receiver or conservator.

         Capital Distributions Regulation

         An OTS regulation imposes limitations upon all "capital  distributions"
by savings associations, including cash dividends, payments by an institution 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 regulation  establishes a three-tiered system of regulation,  with
the greatest  flexibility  being afforded to  well-capitalized  institutions.  A
savings  association  which has total  capital  (immediately  prior to and after
giving effect to the capital  distribution)  that is at least equal to its fully
phased-in  capital   requirements  would  be  a  Tier  l  institution  ("Tier  1
Institution").  An  institution  that has total  capital  at least  equal to its
minimum  capital  requirements,  but  less  than  its  fully  phased-in  capital
requirements,  would  be  a  Tier  2  institution  ("Tier  2  Institution").  An
institution  having  total  capital  that  is  less  than  its  minimum  capital
requirements would be a Tier 3 institution ("Tier 3 Institution").  However,  an
institution which otherwise  qualifies as a Tier 1 institution may be designated
by the OTS as a Tier 2 or Tier 3  institution  if the OTS  determines  that  the
institution  is "in need of more  than  normal  supervision."  Home  Federal  is
currently a Tier l Institution.

         A Tier 1 Institution could, after prior notice but without the approval
of the OTS, make capital  distributions during a calendar year up to 100% of its
net income to date during the calendar  year plus an amount that would reduce by
one-half  its  "surplus  capital  ratio" (the  excess  over its fully  phased-in
capital  requirements)  at the beginning of the calendar  year.  Any  additional
amount of capital distributions would require prior regulatory approval.

         The OTS has proposed  revisions to these regulations which would permit
savings  associations  to declare  dividends in amounts  which would assure that
they remain adequately  capitalized following the dividend declaration.  Savings
associations  in a holding company system which are rated Camel 1 or 2 and which
are  not in  troubled  condition  would  need  to  file a  notice  with  the OTS
concerning such dividend declaration.

         Safety and Soundness Standards

         On February 2, 1995, the federal banking  agencies adopted final safety
and soundness standards for all insured depository institutions.  The standards,
which were issued in the form of guidelines rather than  regulations,  relate to
internal   controls,   information   systems,   internal  audit  systems,   loan
underwriting  and  documentation,  compensation  and interest rate exposure.  In
general,  the standards are designed to assist the federal  banking  agencies in
identifying and addressing  problems at insured depository  institutions  before
capital becomes impaired.  If an institution fails to meet these standards,  the
appropriate  federal  banking  agency may  require the  institution  to submit a
compliance  plan.  Failure to submit a compliance plan may result in enforcement
proceedings. Additional standards on earnings and classified assets are expected
to be issued in the near future.

<PAGE>


         Real Estate Lending Standards

         OTS regulations require savings  associations to establish and maintain
written  internal  real estate  lending  policies.  Each  association's  lending
policies  must  be  consistent  with  safe  and  sound  banking   practices  and
appropriate  to the size of the  association  and the  nature  and  scope of its
operations.   The  policies  must  establish   loan  portfolio   diversification
standards;  establish prudent underwriting  standards,  including  loan-to-value
limits, that are clear and measurable;  establish loan administration procedures
for the  association's  real  estate  portfolio;  and  establish  documentation,
approval,   and  reporting   requirements   to  monitor   compliance   with  the
association's real estate lending policies.

         The association's written real estate lending policies must be reviewed
and approved by the association's board of directors at least annually. Further,
each association is expected to monitor  conditions in its real estate market to
ensure that its lending  policies  continue to be appropriate for current market
conditions.

         Federal Reserve System

         Under FRB  regulations,  Home Federal is required to maintain  reserves
against its  transaction  accounts  (primarily  checking and NOW  accounts)  and
non-personal  money  market  deposit  accounts.  The  effect  of  these  reserve
requirements  is to increase Home  Federal's  cost of funds.  Home Federal is in
compliance with its reserve  requirements.  A federal savings association,  like
other depository  institutions  maintaining reservable accounts, may borrow from
the Federal Reserve Bank "discount  window," but the FRB's  regulations  require
the  savings  association  to  exhaust  other  reasonable  alternative  sources,
including  borrowing from its regional FHLB,  before  borrowing from the Federal
Reserve  Bank.   FedICIA   imposes   certain   limitations  on  the  ability  of
undercapitalized depository institutions to borrow from Federal Reserve Banks.

         Holding Company Regulation

         The Company (the "Holding  Company") is regulated as a "non-diversified
unitary savings and loan holding company" within the meaning of the Home Owners'
Loan Act,  as amended  ("HOLA"),  and  subject to  regulatory  oversight  of the
Director of the OTS. As such, the Holding Company is registered with the OTS and
thereby  subject to OTS  regulations,  examinations,  supervision  and reporting
requirements.  As a  subsidiary  of a savings  and loan  holding  company,  Home
Federal is subject to certain  restrictions  in its  dealings  with the  Holding
Company and with other companies affiliated with the Holding Company.

         HOLA generally  prohibits a savings and loan holding  company,  without
prior  approval of the Director of the OTS,  from (i)  acquiring  control of any
other savings association or savings and loan holding company or controlling the
assets  thereof or (ii) acquiring or retaining more than 5% of the voting shares
of a savings  association or holding  company thereof which is not a subsidiary.
Additionally, under certain circumstances, a savings and loan holding company is
permitted to acquire, with the approval of the Director of the OTS, up to 15% of
previously  unissued voting shares of an  under-capitalized  savings association
for cash without that savings association being deemed controlled by the holding
company.  Except with the prior approval of the Director of the OTS, no director
or officer of a savings and loan holding company or person owning or controlling
by proxy or  otherwise  more than 25% of such  company's  stock may also acquire
control of any savings institution,  other than a subsidiary institution, or any
other savings and loan holding company.

         The Holding Company's Board of Directors  presently intends to continue
to operate the Holding  Company as a unitary  savings and loan holding  company.
There are generally no restrictions on the permissible  business activities of a
unitary  savings  and loan  holding  company.  However,  if the  Director of OTS
determines that there is reasonable  cause to believe that the continuation by a
savings and loan holding  company of an activity  constitutes  a serious risk to
the  financial  safety,  soundness,  or  stability  of  its  subsidiary  savings
association,  the  Director  of the OTS may impose such  restrictions  as deemed
necessary  to address  such risk and  limiting  (i) payment of  dividends by the
savings association, (ii) transactions between the savings association and its

<PAGE>


affiliates,  and (iii) any  activities  of the  savings  association  that might
create a serious  risk  that the  liabilities  of the  holding  company  and its
affiliates may be imposed on the savings association.

         Notwithstanding  the above rules as to permissible  business activities
of unitary  savings  and loan  holding  companies,  if the  savings  association
subsidiary of such a holding  company fails to meet the Qualified  Thrift Lender
("QTL") test,  then such unitary  holding  company  would become  subject to the
activities  restrictions  applicable to multiple holding companies.  (Additional
restrictions on securing  advances from the FHLB also apply).  See  "--Qualified
Thrift Lender." At June 30, 1996, Home Federal's asset composition was in excess
of that required to qualify Home Federal as a Qualified Thrift Lender.

         If the  Holding  Company  were to acquire  control  of another  savings
institution other than through a merger or other business  combination with Home
Federal,  the Holding Company would thereupon become a multiple savings and loan
holding  company.  Except where such acquisition is pursuant to the authority to
approve  emergency  thrift   acquisitions  and  where  each  subsidiary  savings
association meets the QTL test, the activities of the Holding Company and any of
its  subsidiaries   (other  than  Home  Federal  or  other  subsidiary   savings
associations) would thereafter be subject to further restrictions. HOLA provides
that,  among other  things,  no multiple  savings  and loan  holding  company or
subsidiary thereof which is not a savings association shall commence or continue
for a limited period of time after becoming a multiple  savings and loan holding
company or subsidiary  thereof,  any business activity other than (i) furnishing
or performing  management  services for a subsidiary savings  association,  (ii)
conducting an insurance agency or escrow business,  (iii) holding,  managing, or
liquidating assets owned by or acquired from a subsidiary  savings  institution,
(iv) holding or managing  properties  used or occupied by a  subsidiary  savings
institution,  (v) acting as trustee under deeds of trust,  (vi) those activities
previously  directly  authorized by the FSLIC by regulation as of March 5, 1987,
to be  engaged  in by  multiple  holding  companies  or (vii)  those  activities
authorized  by the FRB as  permissible  for bank holding  companies,  unless the
Director  of the OTS by  regulation  prohibits  or limits  such  activities  for
savings and loan holding  companies.  Those activities  described in (vii) above
must also be approved by the Director of the OTS prior to being  engaged in by a
multiple holding company.

         The Director of the OTS may also approve acquisitions  resulting in the
formation of a multiple  savings and loan holding company which controls savings
associations  in more than one state,  if the multiple  savings and loan holding
company involved controls a savings  association which operated a home or branch
office in the state of the association to be acquired as of March 5, 1987, or if
the  laws of the  state in which  the  institution  to be  acquired  is  located
specifically permit institutions to be acquired by state-chartered  institutions
or savings and loan holding  companies  located in the state where the acquiring
entity is located (or by a holding  company that controls  such  state-chartered
savings institutions).  Also, the Director of the OTS may approve an acquisition
resulting in a multiple  savings and loan holding  company  controlling  savings
associations  in more than one  state in the case of  certain  emergency  thrift
acquisitions.

         No subsidiary saving  association of a savings and loan holding company
may declare or pay a dividend on its permanent or  nonwithdrawable  stock unless
it  first  gives  the  Director  of the  OTS 30  days  advance  notice  of  such
declaration and payment.  Any dividend  declared during such period,  or without
the giving of such notice, shall be invalid.

         Federal Securities Law

         The shares of Common Stock of the Holding  Company are registered  with
the SEC under the Securities  Exchange Act of 1934 (the "1934 Act"). The Holding
Company is subject  to the  information,  proxy  solicitation,  insider  trading
restrictions  and  other  requirements  of the 1934 Act and the rules of the SEC
thereunder.  If the  Holding  Company  has fewer than 300  shareholders,  it may
deregister  its  shares  under  the 1934  Act and  cease  to be  subject  to the
foregoing requirements.

<PAGE>

         Shares  of Common  Stock  held by  persons  who are  affiliates  of the
Holding Company may not be resold without registration unless sold in accordance
with the resale  restrictions  of Rule 144 under the Securities Act of 1933 (the
"1933  Act").  If the  Holding  Company  meets the  current  public  information
requirements  under Rule 144, each affiliate of the Holding Company who complies
with the other  conditions of Rule 144 (including a two-year  holding period and
conditions  that require the  affiliate's  sale to be  aggregated  with those of
certain  other  persons)  will be able to  sell in the  public  market,  without
registration,  a number of shares not to exceed, in any three-month  period, the
greater of (i) l % of the outstanding  shares of the Holding Company or (ii) the
average  weekly  volume of trading in such  shares  during  the  preceding  four
calendar weeks.

         Qualified Thrift Lender

         Under  current OTS  regulations,  the QTL test  requires that a savings
association  have at least 65% of its  portfolio  assets  invested in "qualified
thrift  investments"  on a monthly  average  basis in 9 out of every 12  months.
Qualified  thrift  investments  under the QTL test  include:  (i) loans  made to
purchase, finance, construct,  improve or repair domestic residential housing or
manufactured housing; (ii) home equity loans; (iii) mortgage-backed  securities;
(iv) direct or indirect  existing  obligations  of either the FDIC or the Fedeal
Savings and Loan Insurance  Corporation ("FSLIC") for ten years from the date of
issuance,  if issued prior to July 1, 1989; (v) obligations of the FDIC,  FSLIC,
FSLIC  Resolution  Fund and the  Resolution  Trust  Corporation  for a five year
period from July 1, 1989, if issued after such date; (vi) FHLB stock;  (vii) 50%
of the dollar amount of residential mortgage loans originated and sold within 90
days of origination;  (viii) investments in service  corporations that derive at
least  80%  of  their  gross  revenues  from  activities   directly  related  to
purchasing,   refinancing,   constructing,   improving  or  repairing   domestic
residential real estate or manufactured  housing; (ix) 200% of the dollar amount
of   loans   and   investments   made  to   acquire,   develop   and   construct
one-to-four-family  residences that are valued at no more than 60% of the median
value of homes  constructed  in the area; (x) 200% of the dollar amount of loans
for the  acquisition  or improvement  of  residential  real property,  churches,
schools,  and nursing  homes  located  within,  and loans for any purpose to any
small  business  located  within,  an area  where  credit  needs  of its low and
moderate  income  residents are determined not to have been adequately met; (xi)
loans  for the  purchase,  construction,  improvement  or  upkeep  of  churches,
schools, nursing homes and hospitals not qualified under (x); (xii) up to 10% of
portfolio assets held in consumer loans or loans for educational  purposes;  and
(xiii) FHLMC and FNMA stock.  However,  the aggregate  amount of  investments in
categories  (vii)-(xiii)  which may be taken  into  account  for the  purpose of
whether an institution meets the QTL test cannot exceed 15% of portfolio assets.
Portfolio assets under the QTL test include all of an association's  assets less
(i)  goodwill  and other  intangibles,  (ii) the value of  property  used by the
association to conduct its business,  and (iii) its liquid assets as required to
be maintained under law up to 20% of total assets.

         A savings  association  which  fails to meet the QTL test  must  either
convert to a bank (but its deposit  insurance  assessments  and payments will be
those of and paid to SAIF) or be subject to the following penalties:  (i) it may
not enter into any new activity except for those permissible for a national bank
and for a savings association; (ii) its branching activities shall be limited to
those  of a  national  bank;  (iii) it shall  not be  eligible  for any new FHLB
advances; and (iv) it shall be bound by regulations applicable to national banks
respecting  payment of dividends.  Three years after  failing the QTL test,  the
association must (i) dispose of any investment or activity not permissible for a
national  bank and a savings  association  and (ii) repay all  outstanding  FHLB
advances.  If such a savings  association  is  controlled  by a savings and loan
holding  company,  then such holding  company  must,  within a  prescribed  time
period,  become  registered as a bank holding  company and become subject to all
rules  and  regulations   applicable  to  bank  holding   companies   (including
restrictions as to the scope of permissible business activities).

         A savings  association  failing to meet the QTL test may requalify as a
QTL if it thereafter  meets the QTL test. In the event of such  requalification,
it shall not be subject to the penalties  described above. A savings association
which  subsequently  again  fails to  qualify  under the QTL test  shall  become
subject to all of the described  penalties  without  application  of any waiting
period.

<PAGE>

         At June 30, 1996, 81.4% of Home Federal's  portfolio assets (as defined
on that date) were invested in qualified thrift  investments (as defined on that
date),  and therefore Home  Federal's  asset  composition  was in excess of that
required  to qualify  Home  Federal as a QTL.  Home  Federal  does not expect to
significantly  change its lending or  investment  activities in the near future,
and therefore  expects to continue to qualify as a QTL, although there can be no
such assurance.

         Community Reinvestment Act Matters

         Federal law requires that ratings of depository  institutions under the
Community Reinvestment Act of 1977 ("CRA") be disclosed. The disclosure includes
both a  four-unit  descriptive  rating -- using terms such as  satisfactory  and
unsatisfactory -- and a written  evaluation of each  institution's  performance.
Each FHLB is required to establish standards of community  investment or service
that its members must maintain for continued  access to long-term  advances from
the FHLBs. The standards take into account a member's  performance under the CRA
and its record of lending to first-time home buyers.  The FHLBs have established
an  "Affordable  Housing  Program" to subsidize the interest rate of advances to
member associations engaged in lending for long-term,  low- and moderate-income,
owner-occupied  and affordable  rental housing at subsidized rates. Home Federal
is  participating  in this program.  The  examiners  have  determined  that Home
Federal has an outstanding record of meeting community credit needs.

Taxation

         Federal Taxation

         The Holding  Company and its  subsidiary  file a  consolidated  federal
income tax return on the accrual  basis for each fiscal year ending June 30. The
consolidated   federal   income  tax  return  has  the  effect  of   eliminating
intercompany   distributions,   including  dividends,   in  the  computation  of
consolidated  taxable income.  Income of the Holding Company generally would not
be taken into  account in  determining  the bad debt  deduction  allowed to Home
Federal,  regardless  of whether a  consolidated  tax return is filed.  However,
certain  "functionally  related" losses of the Holding Company would be required
to be taken into account in determining the permitted bad debt deduction  which,
depending  upon  the  particular  circumstances,   could  reduce  the  bad  debt
deduction.  Home  Federal's  federal income tax returns have not been audited in
the last five years.

         Historically,  savings  associations,  such as Home Federal,  have been
permitted to compute bad debt deductions using either the bank experience method
or the percentage of taxable income method.  However,  for years beginning after
December 31, 1995,  Home Federal will no longer be able to use the percentage of
taxable  income method of computing its allocable tax bad debt  deduction.  Home
Federal will be required to compute its allocable deduction using the experience
method.  As a result of the repeal of the  percentage of taxable  income method,
reserves  taken  after  1987  using the  percentage  of  taxable  income  method
generally  must be included  in future  taxable  income over a six-year  period,
although  a  two-year  delay  may  be  permitted  for  institutions   meeting  a
residential  mortgage loan origination test. In addition,  the pre-1988 reserve,
in which no deferred  taxes have been  recorded,  will not have to be recaptured
into  income  unless (i) Home  Federal no longer  qualifies  as a bank under the
Code, or (ii) excess dividends are paid out by Home Federal.

         Depending  on the  composition  of its items of income and  expense,  a
savings  institution  may be subject to the  alternative  minimum tax. A savings
institution must pay an alternative  minimum tax equal to the amount (if any) by
which 20% of  alternative  minimum  taxable  income  ("AMTI"),  as reduced by an
exemption  varying with AMTI,  exceeds the regular tax due. AMTI equals  regular
taxable  income   increased  or  decreased  by  certain  tax   preferences   and
adjustments,  including depreciation  deductions in excess of that allowable for
alternative  minimum tax purposes,  tax-exempt interest on most private activity
bonds  issued  after  August 7, 1986  (reduced by any related  interest  expense
disallowed  for  regular  tax  purposes),  the  amount  of the bad debt  reserve
deduction  claimed in excess of the deduction based on the experience method and
75% of the excess of adjusted current earnings over AMTI (before this adjustment

<PAGE>

and before any alternative tax net operating loss).  AMTI may be reduced only up
to 90% by net operating loss carryovers,  but alternative  minimum tax paid that
is  attributable  to most  preferences  (although  not to  post-August  7,  1986
tax-exempt interest) can be credited against regular tax due in later years.

         On August 20, 1996, the "Small Business Job Protection Act of 1996" was
passed into law. One  provision of this act repeals the special bad debt reserve
method for thrift  institutions  currently  provided  for in Section  593 of the
Internal Revenue Code ("IRC").  The provision  requires thrifts to recapture any
reserves  accumulated after 1987 but forgives taxes owed on reserves accumulated
prior to 1988.  Thrift  institutions  will be given six years to account for the
recaptured  excess  reserves,  beginning with the first taxable year after 1995,
and will be permitted to delay the timing of this recapture for one or two years
subject  to  whether  they meet  certain  residential  loan  test  requirements.
Management does not believe that this  legislation  will have a material adverse
effect on the Home Federal's consolidated financial position.

         State Taxation

         Home  Federal  is  subject  to  Indiana's  Financial  Institutions  Tax
("FIT"),  which is imposed at a flat rate of 8.5% on  "adjusted  gross  income."
"Adjusted  gross  income,"  for purposes of FIT,  begins with taxable  income as
defined by Section 63 of the Code, and thus, incorporates federal tax law to the
extent that it affects the computation of taxable income. Federal taxable income
is then adjusted by several Indiana modifications.  Other applicable state taxes
include generally applicable sales and use taxes plus real and personal property
taxes.

         Home  Federal's  state  income tax returns have not been audited in the
last five years.

Current Accounting Issues

         Statement  of  Financial  Accounting  Standards  No. 121 ("SFAS  121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed  Of," is effective  for fiscal years  beginning  after  December 15,
1995.  This  statement  establishes  accounting  standards for the impairment of
long-lived  assets,  certain  liabilities,  certain  intangibles  and  goodwill.
Management  does not believe the adoption of this statement will have a material
effect on the financial position or results of operations of Home Federal.

         Statement  of  Financial  Accounting  Standards  No. 122 ("SFAS  122"),
"Accounting for Mortgage  Servicing  Rights - an Amendment of FASB Statement No.
65," is  effective  for fiscal years  beginning  after  December 15, 1995.  This
Statement  specifies  condition under which mortgage  servicing rights should be
accounted for separately from the underlying mortgage loans.  Management has not
yet  quantified  the effect of this new standard on the  consolidated  financial
statements.

         Statement  of  Financial  Accounting  Standards  No. 123 ("SFAS  123"),
"Accounting  for  Stock-Based  Compensation,"  was issued in October 1995 and is
effective  for fiscal years  beginning  after  December 15, 1995.  Companies can
either elect the new method of accounting or disclose in a note to the financial
statements  the pro forma effect of adopting the  standard.  The Company has not
yet  determined if it will elect to change to the fair value method,  nor has it
determined  the effect the new standard will have on net income and earnings per
share should it elect to make such a change.  Adoption of the new standard  will
have no effect on the Company's cash flows.

         Statement  of  Financial  Accounting  Standards  No. 125 ("SFAS  125"),
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of Liabilities,"  was issued in June 1996 and provides  accounting and reporting
standards for transfers and servicing of financial assets and extinguishments of
liabilities. SFAS 125 applies to transactions occurring after December 31, 1996.
Management  has not yet  quantified  the  effect  of this  new  standard  on the
consolidated financial statements.

<PAGE>

Item 2.           Properties.

         At June 30, 1996,  Home Federal  conducted  its business  from its main
office at 222 West Second Street, Seymour, Indiana and 15 full-service branches.
Home Federal owns one building located at 218 West Second Street, Seymour, which
it uses for certain administrative  operations.  The headquarters of its Private
Ledger operations,  conducted through its service  corporation  subsidiary,  are
located at 501 Washington  Street,  Columbus,  Indiana.  Information  concerning
these properties, as of June 30, 1996, is presented in the following table:

<TABLE>
<CAPTION>


                                                                   Net Book
                                                                   Value of
                                                                   Property,       Approximate
           Description and                       Owned or         Furniture &        Square             Lease
               Address                            Leased           Fixtures          Footage         Expiration
               -------                            ------           --------          -------         ----------
                                                                     (Dollars in Thousands)
<C>                                              <C>               <C>                 <C>             <C>      
Principal Office
222 West Second Street                             Owned            $ 1,061             9,200            N/A

Operations Center
218 West Second Street                             Owned            $ 1,668            20,000            N/A

Branch Offices:
Columbus Branches:
     501 Washington Street                         Owned            $   647            14,800            N/A
     3805 25th Street                              Owned            $   314             4,500            N/A
     2751 Brentwood Drive                          Owned            $   574             3,200            N/A
     4330 West Jonathon Moore Pike                 Owned            $   842             2,600            N/A

Hope Branch                                      1/2 Owned          $    43             2,000           4/99
332 Jackson Street                              1/2 Leased

Austin Branch
67 West Main Street                                Owned            $    53             3,600            N/A

Brownstown Branch                                                                                     Month to
101 North Main Street                             Leased            $    11             2,400           Month

North Vernon Branches
     111 North State Street                        Owned            $   426             1,900            N/A
     1540 North State Street                      Leased            $    66             1,600           10/02

Osgood Branch
S. Buckeye Street                                  Owned            $   117             1,280            N/A

Salem Branch
R.R. #1, Highway 60 W.                             Owned            $    63             2,000            N/A

Seymour Branch
1117 E. Tipton Street                              Owned            $   450             6,800            N/A

Batesville Branch
12 W. Pearl Street                                 Owned            $   716             2,175            N/A

Madison Branch
201 Clifty Drive                                   Owned            $   474             2,550            N/A

Loan Origination Office:
115 East North Street                             Leased            $    23             2,440           8/97
Greensburg, Indiana
</TABLE>


<PAGE>

         Home Federal owns its computer and data  processing  equipment which is
used for  accounting,  financial  forecasting,  and general  ledger  work.  Home
Federal also has  contracted for the data  processing and reporting  services of
AT&T GIS  headquartered  in Dayton,  Ohio.  The  contract  with AT&T  expires in
October 2000. The cost of these data  processing  services is currently  $43,400
per month through October, 1998.

Item 3.           Legal Proceedings.

         Neither the Company,  Home Federal nor its  subsidiaries  is a party to
any pending legal proceedings,  other than routine litigation  incidental to its
business activities.

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

         No  matter  was  submitted  to  the  Corporation's  or  Home  Federal's
shareholders during the quarter ended June 30, 1996.

Item 4.5.         Executive Officers of Home Federal Bancorp.

         Presented below is certain information regarding the executive officers
of HFB who are not also directors.

                                              Position with HFB
     Lawrence E. Welker                 Executive Vice President, Treasurer,
                                        Chief Financial Officer and Secretary
     
     Gerald L. Armstrong                Chief Operating Officer and
                                       Executive Vice President

         Lawrence  E. Welker (age 49) has been  employed by Home  Federal  since
1979.  He was  Controller  from 1979 to 1982.  In 1982,  he was elected as Chief
Financial  Officer  and  Treasurer,  and in 1994 he  became  an  Executive  Vice
President.

         Gerald L.  Armstrong  (age 56) has been  employed by Home Federal since
February,  1992 as its Executive Vice President,  and Chief  Operating  Officer.
Before being employed by Home Federal, he was President, Chief Executive Officer
and a Director of Seymour  National Bank, a commercial  bank located in Seymour,
Indiana.

                                     PART II

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

         Home Federal  converted from mutual to stock form effective January 14,
1988 (the "Conversion). Home Federal then reorganized effective March 1, 1993 by
converting each outstanding share of its common stock, par value $.01 per share,
into one share of common  stock,  without  par value,  of Home  Federal  Bancorp
("HFB"),  a unitary savings and loan holding  company  organized in Indiana (the
"Reorganization").  HFB's  principal  asset is 100% of the  outstanding  capital
stock of Home  Federal.  HFB's  common stock  ("Common  Stock") is quoted on the
National   Association  of  Securities   Dealers   Automated   Quotation  System
("NASDAQ"),  National Market System, under the symbol "HOMF." HFB's Common Stock
was substituted on the NASDAQ,  National Market System for Home Federal's common
stock on March 1, 1993,  subject to the  Reorganization.  Home Federal's  common
stock had been quoted on the NASDAQ,  National  Market  System since its initial
issuance pursuant to the Conversion on January 14, 1988. For certain information
related  to the  stock  prices  and  dividends  paid by HFB,  see  "Management's
Discussion  and Analysis of Financial  Condition  and Results of  Operations  --
Quarterly  Results of  Operations"  on page 6 of HFB's 1996  Shareholder  Annual
Report (the "Shareholder Annual Report").  As of August 30, 1996, there were 595
shareholders of record of HFB's Common Stock.

<PAGE>


         It is  currently  the policy of HFB's Board of Directors to continue to
pay  quarterly  dividends,  but any future  dividends are subject to the Board's
discretion  based on its  consideration  of HFB's operating  results,  financial
condition, capital, income tax considerations, regulatory restrictions and other
factors.
         Since  HFB has no  independent  operations  or  other  subsidiaries  to
generate  income,  its ability to  accumulate  earnings  for the payment of cash
dividends to its  shareholders  is directly  dependent  upon the ability of Home
Federal to pay dividends to the Company.

         Under OTS regulations,  a converted savings association may not declare
or pay cash  dividends  if the effect would be to reduce its net worth below the
amount required for the liquidation account created at the time it converted. In
addition,  under OTS regulations,  the extent to which a savings association may
make  a  "capital  distribution,"  which  includes,  among  other  things,  cash
dividends, will depend upon in which one of three categories,  based upon levels
of capital, that savings association is classified.  Home Federal is a "tier one
institution" and therefore would be able to pay cash dividends to HFB during any
calendar  year up to 100% of its net income  during that  calendar year plus the
amount that would  reduce by one half its  "surplus  capital  ratio" (the excess
over its capital  requirements)  at the  beginning  of the  calendar  year.  See
"Regulation--Capital Distributions Regulation" in Item 1 hereof. Prior notice of
any  dividend to be paid by Home Federal to the Company will have to be given to
the OTS.

         Income of Home Federal  appropriated  to bad debt reserves and deducted
for federal  income tax purposes is not available for payment of cash  dividends
or other  distributions  to HFB without the payment of federal  income  taxes by
Home  Federal on the amount of such income  deemed  removed from the reserves at
the then-current  income tax rate. At June 30, 1996,  approximately $6.0 million
of Home Federal's  retained income  represented bad debt deductions for which no
federal income tax provision had been made. See "Taxation--Federal  Taxation" in
Item 1 hereof.

         Unlike Home Federal,  generally  there is no regulatory  restriction on
the payment of dividends by HFB, subject to the determination of the Director of
the OTS that there is reasonable  cause to believe that the payment of dividends
constitutes  a serious risk to the financial  safety,  soundness or stability of
Home Federal.  Indiana law,  however,  would prohibit HFB from paying a dividend
if, after giving effect to the payment of that  dividend,  HFB would not be able
to pay its debts as they  become due in the usual  course of  business  or HFB's
assets  would be less than the sum of its total  liabilities  plus  preferential
rights of holders of preferred stock, if any.

         On November 22, 1994, the Board of Directors of HFB declared a dividend
of one common share purchase right (a "Right" or "Rights") for each  outstanding
share of  Common  Stock.  The  dividend  was  paid on  December  6,  1994 to the
shareholders  of record as of November 22, 1994.  If and when the Rights  become
exercisable,  each Right will entitle the registered holder to purchase from HFB
one Common Share at a purchase price of $60.00 (the "Purchase  Price"),  subject
to adjustment as described in the Rights Agreement  between the Company and Bank
One, Indianapolis,  NA (the "Rights Agreement") which specifies the terms of the
Rights.  The  Rights  will  be  represented  by  the  outstanding  Common  Share
certificates  and  the  Rights  cannot  be  bought,  sold  or  otherwise  traded
separately  from the Common Shares until the  "Distribution  Date," which is the
earliest to occur of (i) 10 calendar days following a public announcement that a
person or group (an "Acquiring Person") has (a) acquired beneficial ownership of
15% or more of the outstanding  Common Shares or (b) become the beneficial owner
of an amount of the outstanding  Common Shares (but not less than 10%) which the
Board of Directors determines to be substantial and which ownership the Board of
Directors determines is intended or may be reasonably  anticipated,  in general,
to cause HFB to take actions  determined  by the Board of Directors to be not in
HFB's best long-term  interests (an "Adverse Person"),  or (ii) 10 business days
following  the  commencement  or  announcement  of an intention to make a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 30% or more of such outstanding Common Shares.

         The Rights have  certain  anti-takeover  effects.  The Rights may cause
substantial  dilution to a person or group that attempts to acquire HFB on terms
not  approved  by the Board of  Directors  of HFB,  except  pursuant to an offer


<PAGE>

conditioned on a substantial number of Rights being acquired.  The Rights should
not  interfere  with any merger or other  business  combination  approved by the
Board of  Directors  since the Rights may be  redeemed  by HFB at $.01 per Right
prior to the time that a person or group has  acquired  beneficial  ownership of
15% or more of the Common Shares.

Item 6.           Selected Financial Data.

         The  information  required by this item is incorporated by reference to
the material under the heading "Summary of Selected Consolidated Financial Data"
on page 5 of the Shareholder Annual Report.

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

         The  information  required by this item is incorporated by reference to
pages 7 to 13 of the Shareholder Annual Report.

Item 8.           Financial Statements and Supplementary Data.

         The Corporation's  Consolidated  Financial Statements and Notes thereto
contained on pages 14 to 32 of the  Shareholder  Annual Report are  incorporated
herein by reference.  HFB's Quarterly Results of Operations  contained on page 6
of the Shareholder Annual Report are incorporated herein by reference.

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

         There are no such  changes  and  disagreements  during  the  applicable
period.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

         The  information  required by this item with  respect to  directors  is
incorporated by reference to pages 2 to 4 of the  Corporation's  Proxy Statement
for  its  1996  annual   shareholder   meeting  (the  "1996  Proxy  Statement").
Information  concerning the  Corporation's  executive  officers who are not also
directors is included in Item 4.5 in Part I of this report.

         The  information  required by this item with respect to the  compliance
with Section 16(a) of the  Securities  Exchange Act of 1934 is  incorporated  by
reference to page 11 of the 1996 Proxy Statement.

Item 11. Executive Compensation.

         The  information  required  by this  item  with  respect  to  executive
compensation  is  incorporated  by  reference to pages 4 to 11 of the 1996 Proxy
Statement.

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

         The  information  referred by this item is incorporated by reference to
pages 1 to 3 of the 1996 Proxy Statement.

Item 13. Certain Relationships and Related Transactions.

         The  information  required by this item is incorporated by reference to
page 10 of the 1996 Proxy Statement.

<PAGE>

                                     PART IV


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

         (a)      List the following documents filed as a part of the report:

Financial Statements                                             Page in 1996
                                                                  Shareholder
                                                                 Annual Report
Consolidated Balance Sheets as of
     June 30, 1996 and 1995...........................................14
Consolidated Statements of Income for each of
     the years in the three-year period ended
     June 30, 1996....................................................15
Consolidated Statements of  Shareholders' Equity
     for each of the years in the three-year period
     ended June 30, 1996..............................................16
Consolidated Statements of Cash Flows for each
     of the years in the three-year period ended
     June 30, 1996....................................................17
Notes to Consolidated Financial Statements............................18
Report of Deloitte & Touche LLP
     Independent Auditors.............................................32

         (b)      Reports on Form 8-K

         Registrant has filed no reports on Form 8-K for the quarter ending June
30, 1996.

(c)      The exhibits filed herewith or incorporated by reference herein are set
         forth on the Exhibit Index on page 35.

         (d) All schedules are omitted as the required information either is not
applicable or is included in the  Consolidated  Financial  Statements or related
notes.

<PAGE>

                                   SIGNATURES



         Pursuant  to the  requirements  of Section  13 or 15(d) the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on behalf of the undersigned,  thereto duly authorized,  this 26th day
of September, 1996.



                                              HOME FEDERAL BANCORP

DATE: September 26, 1996                      /s/ John K. Keach. Jr.
                                              John K. Keach, Jr., President and
                                              Chief Executive Officer

         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 on this 26th day of September,
1996.




/s/  Lawrence E. Welker                      /s/ John K. Keach. Jr.
-------------------------------------        -----------------------------------
Lawrence E. Welker, Executive                John K. Keach, Jr.,
Vice President, Treasurer,                   President and Chief
Chief Financial Officer and Secretary        Executive Officer
(Principal Financial Officer)                (Principal Executive
                                             Officer)

/s/ Mark A. Dennis                           /s/John K. Keach. Jr.
-------------------------------------        -----------------------------------
Mark A. Dennis, Vice                         John K. Keach, Jr., Director
President and Controller
(Principal Accounting Officer)

/s/ John K. Keach. Sr.                       /s/ John T. Beatty
-------------------------------------        -----------------------------------
John K. Keach, Sr., Director                 John T. Beatty, Director

/s/Lewis Essex                               /s/ Harold Force
-------------------------------------        -----------------------------------
Lewis Essex, Director                        Harold Force, Director

/s/ David W. Laitinenen                      /s/ Harvard W. Nolting. Jr.
-------------------------------------        -----------------------------------
David W. Laitinen, Director                  Harvard W. Nolting, Jr., Director


<PAGE>

                                  EXHIBIT INDEX

Reference to
Regulation S-K                                                        Sequential
Exhibit Number                     Document                          Page Number
2             Agreement and Plan of Reorganization
              (incorporated by reference from Exhibit A to
              Registrant's Registration Statement on Form S-4
              (Registration No. 33-55234)).

3(a)          Articles of Incorporation (incorporated by
              reference from Exhibit B to Registrant's
              Registration Statement on Form S-4 (Registration
              No. 33-55234)).

3(b)          Code of By-Laws (incorporated by reference from
              Exhibit C to Registrant's Registration Statement on
              From S-4 (Registration No. 33-55234)).

4(a)          Article 6 of the  Articles of  Incorporation
              (incorporated by reference from Exhibit B to
              Registrant's  Registration Statement on Form
              S-4 (Registration No.
              33-55234)).

4(b)          Article III of the Code of By-Laws (incorporated by
              reference from Exhibit C to Registrant's Registration
              Statement on From S-4 (Registration No. 33-55234)).

10(a)         Stock Option Plan (incorporated by reference from
              Exhibit 10(a) to Registrant's Registration Statement
              on Form S-4 (Registration No. 33-55234)).

10(b)         1993 Stock Option Plan (incorporated by reference
              from Exhibit 10(b) to Registrant's Form 10-K for the
              year ended June 30, 1994).

10(c)         Employment Agreement with Lawrence E. Welker
              (incorporated by reference from Exhibit 10(c) to
              Registrants Registration Statement on Form S-4
              (Registration No. 33-55234)).

10(d)         Employment Agreement with John K. Keach, Jr.
              (incorporated by reference from Exhibit 10(d) to
              Registrant's Registration Statement on Form S-4
              (Registration No. 33-55234)).

10(f)         Employment Agreement with Gerald L. Armstrong
              (incorporated by reference from Exhibit 10(f) to
              Registrant's Registration Statement on Form S-4
              (Registration No. 33-55234)).

<PAGE>

10(g)         April 1, 1989 Promissory Note and related
              documents pertaining to the Illinois Building
              (incorporated by reference from Exhibit 10(f) to
              Home Federal Savings Bank's Form 10-K for the year
              ended June 30, 1989).

10(i)         Stock Option Agreement with Harvard W. Nolting, Jr.
              (incorporated by reference from Exhibit 10(i) to Home
              Federal Savings Bank's Form 10-K for the fiscal year
              ended June 30, 1991).

10(j)         Stock Option Agreement with David W. Laitinen
              (incorporated by reference from Exhibit 10(j) to Home
               Federal  Savings  Bank's  Form 10-K for the
              fiscal year ended June 30, 1991).

10(k)         Stock Option Agreement with John T. Beatty
              (incorporated by reference from Exhibit 10(k) to Home
              Federal Savings Bank's Form 10-K for the fiscal year
              ended June 30, 1991).

10(l)         Stock Option Agreement with Harold Force
              (incorporated by reference from Exhibit 10(l) to
              Home Federal Savings Bank's Form 10-K for the fiscal
              year ended June 30, 1991).

10(n)         Executive  Supplemental   Retirement  Income
              Agreement   with   John   K.   Keach,    Jr.
              (incorporated   by  reference  from  Exhibit
              10(n) to Home  Federal  Savings  Bank's Form
              10-K  for the  fiscal  year  ended  June 30,
              1991)  and  First   Amendment  to  Executive
              Supplemental   Retirement  Income  Agreement
              (incorporated   by  reference  from  Exhibit
              10(n)  to  Registrant's  Form  10-K  for the
              fiscal year ended June 30, 1992).

10(o)         Executive  Supplemental   Retirement  Income
              Agreement    with    Lawrence    E.   Welker
              (incorporated   by  reference  from  Exhibit
              10(o) to Home  Federal  Saving  Bank's  Form
              10-K  for the  fiscal  year  ended  June 30,
              1991)  and  First   Amendment  to  Executive
              Supplemental   Retirement  Income  Agreement
              (incorporated   by  reference  from  Exhibit
              10(o)  to  Registrant's  Form  10-K  for the
              fiscal year ended June 30, 1992).

10(p)         Executive Supplemental Retirement Income 
              Agreement with Buryl S. Line (incorporated by
              reference from Exhibit 10(p) to
              Home Federal Savings Bank's Form 10-K for 
              the fiscal year ended June 30, 1991).

10(v)         Deferred Compensation Agreement with John K.
              Keach,  Sr.  (incorporated by reference from
              Exhibit  10(v) to Home Federal  Savings Bank
              Form 10-K for the fiscal year ended June 30,
              1992)  and  First   Amendment   to  Deferred
              Compensation   Agreement   (incorporated  by
              reference from Exhibit 10(v) to Registrant's
              Form 10-K for the year ended June 30, 1994).
<PAGE>

10(w)         Deferred Compensation Agreement with Buryl S. Line
              (incorporated by reference from Exhibit 10(w) to Home
              Federal Savings Bank Form 10-K for the fiscal year ended
              June 30, 1992).

10(x)         Executive  Supplemental   Retirement  Income
              Agreement    with   Gerald   L.    Armstrong
              (incorporated   by  reference  from  Exhibit
              10(x) to Home Federal Savings Bank Form 10-K
              for the fiscal year ended June 30, 1992) and
              First  Amendment to  Executive  Supplemental
              Retirement Income Agreement (incorporated by
              reference from Exhibit 10(x) to Registrant's
              Form 10-K for the year ended June 30, 1994).

10(y)         Employment    Agreement   with   Gerald   L.
              Armstrong  (incorporated  by reference  from
              Exhibit l0(aa) to Home Federal  Savings Bank
              Form 10-K for the fiscal year ended June 30,
              1992).

10(ab)        Stock  Option   Agreement   with  Gerald  L.
              Armstrong  (incorporated  by reference  from
              Exhibit 10(ab) to Home Federal  Savings Bank
              Form 10-K for the fiscal year ended June 30,
              1992).

10(ac)        Director  Deferred  Compensation   Agreement
              with John Beatty  (incorporated by reference
              from Exhibit l0(ac) to Home Federal  Savings
              Bank Form  10-K for the  fiscal  year  ended
              June 30, 1992).

10(ad)        Director  Deferred  Compensation   Agreement
              with Lewis Essex  (incorporated by reference
              from Exhibit 10(ad) to Home Federal  Savings
              Bank Form 1 0-K for the  fiscal  year  ended
              June 30, 1992).

10(ae)        Director  Deferred  Compensation   Agreement
              with Harold Force (incorporated by reference
              from Exhibit 10(ae) to Home Federal  Savings
              Bank Form  l0-K for the  fiscal  year  ended
              June 30, 1992).

10(af)        Director Deferred Compensation Agreement with
              David W. Laitinen (incorporated by reference from
              Exhibit 10(af) to Home Federal Savings Bank Form 10-K
              for the fiscal year ended June 30, 1992).

10(ag)        Director Deferred Compensation Agreement with
              William Nolting (incorporated by reference from
              Exhibit 10(ag) to Home Federal Savings Bank Form 10-K
              for the fiscal year ended June 30, 1992).

10(ah)        Non-Qualified Stock Option Agreement, dated December
              22, 1992, with John T. Beatty (incorporated by reference
              from Exhibit 10(ah) to Registrant's Form 10-K for the
              year ended June 30, 1994).
<PAGE>

10 (ai)       Non-Qualified Stock Option Agreement, dated December
              22, 1992, with Lewis W. Essex (incorporated by reference
              from Exhibit 10(ai) to Registrant's Form 10-K for the
              year ended June 30, 1994).

10 (aj)       Non-Qualified Stock Option Agreement, dated December
              22, 1992, with Harold Force (incorporated by reference
              from Exhibit 10(aj) to Registrant's Form 10-K for the
              year ended June 30, 1994).

10 (ak)       Non-Qualified Stock Option Agreement, dated December
              22, 1992, with David W. Laitinen (incorporated by reference
              from Exhibit 10(ak) to Registrant's Form 10-K for the
              year ended June 30, 1994).

10 (al)       Non-Qualified Stock Option Agreement, dated December
              22, 1992, with Harvard W. Nolting, Jr (incorporated by
              reference from Exhibit 10(al) to Registrant's Form 10-K
              for the year ended June 30, 1994).

10(am)        Non-Qualified Stock Option Agreement,  dated
              August  24,   1993,   with  John  T.  Beatty
              (incorporated   by  reference  from  Exhibit
              10(am)  to  Registrant's  Form  10-K for the
              year ended June 30, 1994).

10 (an)       Non-Qualified Stock Option Agreement, dated August 24,
              1993, with Lewis W. Essex (incorporated by reference
              from Exhibit 10(an) to Registrant's Form 10-K for the
              year ended June 30, 1994).

10 (ao)       Non-Qualified Stock Option Agreement, dated August 24,
              1993, with Harold Force (incorporated by reference
              from Exhibit 10(ao) to Registrant's Form 10-K for the
              year ended June 30, 1994).

10 (ap)       Non-Qualified Stock Option Agreement, dated August 24,
              1993, with David W. Laitinen (incorporated by reference
              from Exhibit 10(ap) to Registrant's Form 10-K for the
              year ended June 30, 1994).

10 (aq)       Non-Qualified Stock Option Agreement, dated August 24,
              1993, with Harvard W. Nolting, Jr. (incorporated by reference
              from Exhibit 10(aq) to Registrant's Form 10-K for the
              year ended June 30, 1994).

<PAGE>

10 (ar)       Rights Agreement, dated as of November 22, 1994,
              between Registrant and Bank One, Indianapolis, NA,
              as Rights Agent (incorporated by reference from Exhibit 1
              to Registrant's Registration Statement on Form 8-A filed
              with the SEC on December 5, 1994).

10 (as)       1995 Stock Option Plan (incorporated by reference
              from Exhibit A to Registrant's Proxy Statement for its
              1995 annual shareholder meeting).

13            1996 Shareholder Annual Report.                         _______

21            Subsidiaries of the Registrant (incorporated by
              reference from Exhibit 21 to Registrant's Form
              10-K for the year ended June 30, 1993).

23.1          Independent Auditors' Consent.                          _______

27            Financial Data Schedule (to be filed electronically)