<PAGE> 1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-K/A

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [FEE REQUIRED]

      For the fiscal year ended December 31, 1996 or

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

      For the transition period from                   to

      Commission file number 0-17403.

                        ROOSEVELT FINANCIAL GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)

                     DELAWARE                           43-1498200
          (State or other jurisdiction of            (I.R.S. Employer
          incorporation or organization)            Identification No.)

  900 ROOSEVELT PARKWAY, CHESTERFIELD, MISSOURI            63017
    (Address of principal executive offices)            (Zip Code)

      (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE): (314) 532-6200

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
        6 1/2% NON-CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES A AND
                       SERIES F, PAR VALUE $.01 PER SHARE
                               (Title of Classes)

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

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

   As of February 28, 1997, there were issued and outstanding 42,644,404 shares
of the Registrant's Common Stock. The aggregate market value of the voting
stock held by nonaffiliates of the Registrant, computed by reference to the
closing price of such stock as of February 28, 1997, was $980,821,292. (The
exclusion from such amount of the market value of the shares owned by any
person shall not be deemed an admission by the Registrant that such person
is an affiliate of the Registrant.)

                      DOCUMENTS INCORPORATED BY REFERENCE

   PART III of Form 10-K--Portions of Proxy Statement for the 1997 Annual
Meeting of Stockholders.


<PAGE> 2

   The purpose of this amendment on Form 10-K/A to the Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 (the "Form 10-K") of
Roosevelt Financial Group, Inc., is to amend certain items of the Form 10-K
as follows:

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

   The last nine paragraphs under the caption "Liquidity and Capital
Resources" have been added to discuss the nature and potential impact of the
Company's share repurchase program and preferred stock redemption.

   Item 8.  Financial Statements and Supplementary Data

   The next to last sentence in the second paragraph under the caption "Stock
Repurchase Program" to Note 18 has been added to reflect the maximum amount per
share that the Company can pay for share repurchases in accordance with the
terms of its merger agreement with Mercantile Bancorporation.

   The last sentence of Note 5 on page 65 has been added to indicate that as
a result of the Company's December, 1996 decision to reclassify its entire
securities portfolio from held to maturity to available for sale, it will be
precluded from prospectively classifying any securities as held to maturity
for a minimum period of one year.

   A paragraph to Note 4 on page 64 has been added to disclose the outstanding
commitments to purchase and sell mortgage-backed securities at December 31,
1996.

<PAGE> 3

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

GENERAL

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto, and with reference to
the discussion of the operations and other financial information presented
elsewhere in this report.


RESULTS OF OPERATIONS

Roosevelt's operating results depend primarily upon its net interest income,
which is the difference between the interest income earned on its interest
earning assets (loans, mortgage-backed securities and investment securities)
and the interest expense paid on its interest bearing liabilities (deposits
and borrowings).  Operating results are also significantly affected by
provisions for losses on loans, noninterest income and noninterest expense.
Each of these factors is significantly affected not only by Roosevelt's
operating strategies, but, to varying degrees, by general economic and
competitive conditions and by policies of federal regulatory authorities.

Two of Roosevelt's operating strategies impacted net income in each of the
three years ended December 31, 1996.  The first of these strategies was
growth through acquisition.  In 1994 the Company acquired Farm and Home
Financial Corporation and Home Federal Bancorp of Missouri increasing its
assets by $3.7 billion.  These acquisitions, which were preceded by seven
others in the four years preceding 1994 and followed by a total of five
smaller acquisitions in 1995 and 1996, dramatically increased Roosevelt's
retail customer base and provided opportunities to improve its physical plant
and technology platforms necessary to maintain and grow a retail customer
base.  The second strategy impacting operating results was internal growth
via development of a diversified, retail-based operation.  Actions taken to
achieve this latter strategy primarily affected operating results in 1996 and
included the sale of marginally profitable assets, the repayment of higher
cost wholesale liabilities and the removal of derivative positions which had
been designated as synthetic alterations of some of the assets sold or the
liabilities repaid.

Roosevelt reported net income of $9.7 million for 1996 compared with $27.1
million for 1995 and $41.7 million for 1994. Net income on a fully diluted
per share basis was $0.13 for 1996 compared with $0.56 for 1995 and $0.94 for
1994.  Net income in 1996 was adversely impacted by a $27.4 million pre-tax
charge imposed by the Federal Deposit Insurance Corporation (FDIC) in order
to recapitalize the Savings Association Insurance Fund; an $80.5 million
pre-tax charge related to the termination of interest rate exchange
agreements which had been designated as synthetic alterations of short-term
wholesale borrowings that were repaid during the year; and a $1.5 million
after-tax charge related to the extinguishment of the Company's
long-term debt. Net income in 1995 was adversely impacted by pre-tax charges
of $71.0 million and $27.1 million resulting from marking to market the
Company's financial futures positions used to reduce the interest rate risk
of certain mortgage-backed securities in the available for sale portfolio
and for unrealized losses on the impairment of mortgage-backed securities,
respectively, and by an after-tax charge of approximately $1.6 million for
merger expenses related to the acquisition of WSB Bancorp, Inc. and
Kirksville Bancshares, Inc.  For a further discussion of expenses related to
the termination of interest rate exchange agreements and financial futures,
see "Results of Operations--Net Gain (Loss) from Financial Instruments" and
Note 15 of the Notes to Consolidated Financial Statements.

Net income for 1994 was impacted by merger related expenses related to the
acquisition of Farm & Home Financial Corporation (Farm & Home).  The
components of the merger related expenses (in millions) are as follows:

<TABLE>
<S>                                                 <C>
       Provision for losses on loans                  $ 11.4
       Net loss from financial instruments              38.4
       Provision for real estate losses                  3.7
       Compensation and employee benefits                6.3
       Occupancy                                         5.9
       Transaction related fees                          7.0
       Other                                             1.8
                                                      ------
         Income before income tax expense
          and extraordinary item                        74.5
       Income tax expense                               25.0
                                                      ------
         Income before extraordinary item               49.5
       Extraordinary item (net of tax effect)            7.8
                                                      ------
         Total                                        $ 57.3
                                                      ======
</TABLE>


                                    29
<PAGE> 4

In connection with the acquisition of Farm & Home and a review of the
combined loan portfolio, including the increased concentration of loans in
various geographic areas, and after discussion with the OTS regarding the
level of the allowance for loan losses as compared to a new peer group as a
result of the dramatic increase in size, management recorded an $11.4 million
addition to the allowance.  Net loss from financial instruments totaled $38.4
million and included $25.6 million in loss from the sale of Farm & Home
fixed-rate mortgage-backed securities that did not meet Roosevelt's
asset/liability management objectives.  In addition, $8.9 million of the loss
on financial instruments resulted from the cancellation of interest rate
exchange agreements of Farm & Home.  As a result of Roosevelt's desire to
accelerate the disposition of Farm & Home's real estate owned portfolio,
Roosevelt increased its estimate of reserves required to record its real
estate owned portfolio at its estimated fair value which resulted in the
additional $3.7 million provision.  Compensation and employee benefits
expense totaling $6.3 million related to the severance benefits for the Farm
& Home executives and the Missouri and Texas employees whose employment did
not continue with the combined entity after June 30, 1994.  Occupancy expense
totaled $5.9 million and was comprised of losses on the termination of 11
facility leases, including the write-off of leasehold improvements associated
with the leases, and anticipated losses on the sale of two closed branch
facilities.  Transaction related fees totaled $7.0 million and included
advisory, legal, and accounting fees.  Other expenses totaled $1.8 million
and related to other miscellaneous costs such as printing, travel and
lodging.  The extraordinary item related to early extinguishment of debt and
totaled $7.8 million, net of applicable income taxes.  Roosevelt recorded a
$4.6 million loss due to the retirement of $60.9 million of 10.125%
mortgage-backed bonds.  A loss of $2.6 million was recorded as a result of
the redemption of Farm & Home's 13.0% debentures.  Additionally, a loss of
$637,000 was recorded as a result of the prepayment of $101.0 million of
Federal Home Loan Bank (FHLB) of Des Moines advances.


NET INTEREST INCOME
Net interest income in 1996 was $177.6 million, a decline of $3.8 million or
2.1% from the $181.4 million recorded in 1995.  A change in the composition
of interest-bearing assets and liabilities, a decline in overall interest
rates earned and paid and small decreases in the average balances of
interest-bearing assets and liabilities all contributed to the decline in net
interest income.  Consistent with its strategy to develop its retail
businesses, the Company grew its higher yielding loan portfolios and its
lower costing deposit balances while at the same time shrinking its lower
yielding investment portfolios and higher costing wholesale borrowings.
These actions contributed to an increase in net interest income due to volume
changes of $6.5 million.  However, this favorable impact was more than offset
by a $10.3 million decrease in net interest income resulting from a net
decline in yield earned on assets of 5 basis points partially offset by a 3
basis points decline in the cost of all interest bearing liabilities.  While
the overall decline in interest rates proved beneficial for gross
interest-bearing liabilities it increased the cost of interest rate exchange
agreements which had been utilized by the Company, prior to the cancellation
on September 30, 1996, to manage its interest rate risk.  Under the terms of
these agreements, the Company generally paid a fixed rate of interest and
received a variable rate.  The lower interest rates resulted in an increased
cost in 1996.  Ignoring the impact of the interest rate exchange agreements,
the Company's cost of funds would have declined 15 basis points from 1995.
As a result of the above items, the effective net interest rate spread
decreased 4 basis points from 2.06% in 1995 to 2.02% in 1996.

Net interest income of $181.4 million for 1995 was down 2.3% from $185.7
million for 1994.  The decrease in net interest income was primarily the
result of the average interest rates paid on interest bearing liabilities
increasing more than the average interest rates earned on interest earning
assets.  The average rate earned on interest earning assets increased 77
basis points from 6.58% for 1994 to 7.35% for 1995.  The average rate paid on
interest bearing liabilities increased 107 basis points from 4.41% for 1994
to 5.48% for 1995.  The effective net interest rate spread decreased 23 basis
points from 2.29% for 1994 to 2.06% for 1995, primarily as a result of severe
retail deposit pricing pressure (unrelated to the outright level of interest
rates) in the Company's market areas during 1995.  The decrease in net
interest income due to the decreasing average spread was partially offset by
a growth in interest earning assets and interest bearing liabilities.  The
average balance of interest earning assets and interest bearing liabilities
increased 8.8% and 8.1%, respectively, during 1995 as compared to 1994.


                                    30
<PAGE> 5

The following table presents Roosevelt's average consolidated balance sheets
and reflects the average yield on assets and the average cost of liabilities
for the periods indicated.  Average rates earned and paid are derived by
dividing income or expense by the average balance of assets and liabilities,
respectively.

<TABLE>
<CAPTION>
                                                                             Year Ending December 31,
                                         -------------------------------------------------------------------------------------------
                                                      1996                            1995                           1994
                                         ----------------------------    ----------------------------   ---------------------------
                                                    Interest                        Interest                       Interest
                                         Average    Income/   Average    Average    Income/   Average   Average    Income/  Average
                                         Balance    Expense   Rate %     Balance    Expense   Rate %    Balance    Expense  Rate %
                                         -------    -------   ------     -------    -------   ------    -------    -------  ------
                                                                    (dollars in millions)

<S>                                     <C>         <C>         <C>     <C>         <C>        <C>     <C>         <C>      <C>
Assets
 Cash equivalents                       $    35.1   $   1.8     5.15%   $    18.2   $   1.0    5.49%   $    62.8   $   2.4    3.82%
 Securities held for trading                   --        --       --           --        --      --        120.6       6.5    5.39
 Securities available for sale <F1>       1,516.6     109.8     7.24      1,815.2     135.4    7.46      2,035.1     137.9    6.78
 Securities held to maturity              3,191.5     225.4     7.06      3,683.1     259.3    7.04      2,939.5     179.1    6.09
 Securities purchased under agreement
  to resell                                    --        --       --           --        --      --         21.7       0.9    4.15
 Loans <F2> <F3>                          4,029.0     303.3     7.53      3,301.8     252.1    7.64      2,922.9     206.5    7.06
                                          -------     -----               -------     -----              -------     -----
      Total interest-earning assets       8,772.2     640.3     7.30%     8,818.3     647.8    7.35%     8,102.6     533.3    6.58%
                                                      -----     ----                  -----    ----                  -----    ----
Other assets                                417.0                           327.2                          322.2
                                          -------                         -------                        -------
                                        $ 9,189.2                       $ 9,145.5                      $ 8,424.8
                                          =======                         =======                        =======

Liabilities
  Deposits:
    NOW and money market accounts       $ 1,014.2      30.5     3.01%   $   835.8      22.7    2.73%   $ 1,049.2      23.7    2.26%
    Passbook savings deposits               304.7       7.0     2.31        350.5       8.1    2.31        411.2       9.8    2.38
    Time deposits                         3,690.4     212.3     5.75      3,615.7     203.0    5.61      3,552.6     166.7    4.69
                                          -------     -----               -------     -----              -------     -----
                                          5,009.3     249.8     4.99      4,802.0     233.8    4.87      5,013.0     200.2    3.99

  Borrowings:
    Securities sold under agreements
      to repurchase <F4>                    857.9      54.8     6.39      1,426.1      89.6    6.29      1,193.7      58.0    4.86
    Advances from FHLB <F4>               2,598.5     155.0     5.96      2,236.9     138.1    6.17      1,579.1      79.6    5.04
    Other borrowings                         29.7       3.1    10.26         47.4       4.9   10.34         90.5       9.8   10.83
                                          -------     -----               -------     -----              -------     -----
       Total interest-bearing
         liabilities                      8,495.4     462.7     5.45%     8,512.4     466.4    5.48%     7,876.3     347.6    4.41%
                                                      -----     ----                  -----    ----                  -----    ----
Other liabilities                           178.2                           178.9                          143.8
                                          -------                         -------                        -------
                                          8,673.6                         8,691.3                        8,020.1
Stockholders' equity                        515.6                           454.2                          404.7
                                          -------                         -------                        -------
    Total liabilities and stockholders'
      equity                            $ 9,189.2                       $ 9,145.5                      $ 8,424.8
                                          =======                         =======                        =======
Net interest income                                 $ 177.6                         $ 181.4                        $ 185.7
                                                      =====                           =====                          =====

Interest rate spread <F5>                                       1.85%                          1.87%                          2.17%
                                                                ====                           ====                           ====
Effective net spread <F6>                                       2.02%                          2.06%                          2.29%
                                                                ====                           ====                           ====
<FN>
<F1> The securities available for sale are included in the following table at
     historical cost with the corresponding average rate calculated based upon
     historical balances.
<F2> Average balances include non accrual loans.  Interest on such loans is
     included in interest income upon receipt.
<F3> Interest includes amortization of deferred loan fees.
<F4> Includes the effect of interest rate exchange agreements.
<F5> Equals average rate earned on all assets minus average rate paid on all
     liabilities.
<F6> Net interest income divided by average balance of all interest earning
     assets.
</TABLE>

At December 31, 1996, the weighted average yield on interest-earning assets
was 7.48% and the weighted average cost on interest-bearing liabilities was
5.14%.


                                    31
<PAGE> 6

The following table presents the dollar amount of changes in interest income
and interest expense for major components of interest earning assets and
interest bearing liabilities.  It distinguishes between changes related to
volume and those due to changes in interest rates.  For each category of
interest income and interest expense, information is provided on changes
attributable to (i) changes in volume (i.e., changes in volume multiplied by
prior year rate) and (ii) changes in rate (i.e., changes in rate multiplied
by prior year volume).  For purposes of this table, changes attributable to
both rate and volume, which cannot be segregated, have been allocated to the
change due to rate.

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                      ----------------------------------------------------------------------
                                                 1996 v. 1995                       1995 v. 1994
                                      ---------------------------------  -----------------------------------
                                              INCREASE                           INCREASE
                                             (DECREASE)                         (DECREASE)
                                               DUE TO          TOTAL              DUE TO            TOTAL
                                      ----------------------  INCREASE   -----------------------   INCREASE
                                        VOLUME        RATE   (DECREASE)    VOLUME         RATE    (DECREASE)
                                      ----------    -------- ----------  ----------     --------  ----------
                                                             (IN THOUSANDS)
<S>                                   <C>         <C>        <C>         <C>          <C>         <C>
Interest income:
 Loans                                $  55,518   $  (4,285) $  51,233   $  26,763    $  18,841   $  45,604
 Securities available for sale          (22,663)     (2,997)   (25,660)    (15,584)      13,095      (2,489)
 Securities held to maturity            (34,579)        732    (33,847)     45,560       34,534      80,094
 Securities held for trading                 --          --         --      (6,460)          --      (6,460)
 Securities purchased under
  agreements to resell                       --          --         --        (887)          --        (887)
 Other earning assets                       944        (154)       790      (1,792)         439      (1,353)
                                        -------     -------    -------     -------      -------     -------
   Total interest income              $    (780)  $  (6,704) $  (7,484)  $  47,600    $  66,909   $ 114,509
                                        -------     -------    -------     -------      -------     -------
Interest expense:
 Deposits                             $  10,097   $   5,887  $  15,984   $  (8,427)   $  42,073   $  33,646
 Securities sold under
  agreements to repurchase              (33,687)     (3,730)   (37,417)     10,378       20,876      31,254
 Advances from
  Federal Home Loan Bank                 21,677     (11,661)    10,016      31,582       26,685      58,267
 Other borrowings                        (1,837)         --     (1,837)     (4,602)        (326)     (4,928)
 Interest rate exchange agreements       (3,539)     13,084      9,545      (1,015)       1,635         620
                                        -------     -------    -------     -------      -------     -------
   Total interest expense                (7,289)      3,580     (3,709)     27,916       90,943     118,859
                                        -------     -------    -------     -------      -------     -------
Change in net interest income         $   6,509   $ (10,284) $  (3,775)  $  19,684    $ (24,034)  $  (4,350)
                                        =======     =======    =======     =======      =======     =======
</TABLE>


                                    32
<PAGE> 7

PROVISION FOR LOSSES ON LOANS
The provision for losses on loans charged to earnings is based upon
management's judgement of the amount necessary to maintain the allowance for
loan losses at a level adequate to absorb probable losses.  As part of the
process for determining the adequacy of the allowance for loan losses,
management performs quarterly detailed reviews to identify risks inherent in
the loan portfolio and to assess the overall quality of the portfolio as well
as to determine the amounts of allowances and provisions to be reported.

The provision for loan losses was $1.3 million for 1996, $1.2 million for
1995 and $12.4 million for 1994.  During the three month period ended June
30, 1994,Roosevelt recorded an $11.4 million increase in the provision for
losses on loans.  After combining the Roosevelt, Farm & Home and Home Federal
loan portfolios which resulted in a combined portfolio approximately five
times the size of Roosevelt's March 31, 1994 portfolio (approximately $650
million to $3.0 billion), management determined it was necessary to
substantially increase the allowance for loan losses to achieve higher and
more conservative coverage levels.  Factors considered by management in
determining the necessity and amount of the provision necessary to bring the
overall allowance to the desired level were i) the need to conform Farm &
Home's coverage ratio (ratio of allowance for loan losses to total gross
loans) of .24% at December 31, 1993 to that of Roosevelt's which was .61% at
the comparable date, ii) the previously discussed five fold increase in the
size of the overall loan portfolio coupled with the fact that, at the time,
Roosevelt management had no previous track record of managing a portfolio
that size and iii) the Farm & Home and Home Federal mergers effectively
doubled the overall size of the entity resulting in Roosevelt moving up to a
new peer group whose average allowance for loan losses as a percentage of
total loans far exceeded the allowances of the unadjusted combined entity.
Also, since just prior to the merger, both Farm & Home and Roosevelt had
recently been through examinations by the OTS, Roosevelt initiated
conversations with the OTS to obtain their concurrence with the planned
addition to the allowance for loan losses.  Such concurrence was received and
the resulting $11.4 million provision was recorded.

The provisions for 1996 and 1995 reflect a more normalized level of provision
compared to the large 1994 provision discussed above.  The 1996 and 1995
provisions reflect the Company's strong level of reserves and overall strong
asset quality.  See the caption entitled "Asset Quality" under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

NONINTEREST INCOME (LOSS)
Noninterest income (loss) was $(36.0) million for 1996 as compared to $(55.1)
million for 1995 and $17.3 million for 1994.  The following is a discussion
of the major components of noninterest income (loss):

Retail Banking Fees - Retail banking fees are comprised of service charges
related to deposit accounts, fees for money orders, travelers checks, etc.
and fees related to the telephone bill paying service offered to the Bank's
depositors.  Retail banking fees increased $6.5 million, or 60.3% from $10.7
million for 1995 to $17.2 million for 1996.  Retail banking fees increased
$2.0 million, or 23.3% from $8.7 million for 1994 to $10.7 million for 1995.
Growth in both years is a result of the Company's successful efforts to
develop and grow its retail based operations which resulted in an overall
increase in utilization of these services offered by the Bank.

Insurance and Brokerage Sales Commissions - The Company offers a broad range
of insurance and investment products, including tax deferred annuities and
mutual fund products, to the general public and its customers through
Roosevelt Financial Services, Inc.  Insurance and brokerage sales commissions
increased $988,000, or 13.1% from $7.5 million in 1995 to $8.5 million for
1996.  This followed an increase of $968,000, or 14.8% from $6.5 million for
1994 to $7.5 million for 1995. The positive trend in insurance and brokerage
sales commissions is primarily the result of an increase in the sales volume
of commission generating products as the Company successfully increases its
penetration of its existing customer base as well as attracts new customers.

Loan Servicing Fees (Expenses), Net - Loan servicing fees, which primarily
consists of loan servicing revenue, net of the amortization of purchased
mortgage servicing rights, increased $3.6 million, or 48.4% from $7.4 million
for 1995 to $11.0 million for 1996. This increase is due primarily to several
purchases of loan servicing rights in 1996 that totaled $41.9 million
which represented $3.5 billion in unpaid principal balances.  Loan
servicing fees in 1995 increased $1.5 million, or 21.1% from $7.4 million
recorded in 1994 primarily as a result of a $1.5 million gain realized
upon the sale of $3.3 million book value of purchased mortgage servicing
rights.  The amortization of purchased mortgage servicing rights totaled
$6.6 million, $4.2 million and $5.6 million for 1996, 1995 and 1994,
respectively.  During 1995, the balance of mortgage loans serviced by
Roosevelt for others decreased from approximately $2.8 billion at December
31, 1994 to $2.0 billion at December 31, 1995.  This decrease resulted
from the normal amortization of the principal balance of mortgage loans
outstanding and the sale of purchased mortgage servicing rights discussed
previously.

                                    33
<PAGE> 8

Net Gain (Loss) from Financial Instruments - In the conduct of its business
operations, Roosevelt has determined the need to sell or terminate certain
assets, liabilities or off-balance sheet positions due to various unforeseen
events.  Fundamental to the conduct of such sale or termination activities is
the effect such transactions will have on the future volatility of the
Company's net market value.  Consequently, in pursuing such sale or
termination activities, Roosevelt does not seek net gains in a reporting
period to the detriment of earnings in future periods.  Following is a
discussion of the assets, liabilities and off-balance sheet items that were
sold and/or terminated during 1996, 1995 and 1994.

Net gain (loss) from financial instruments is as follows:

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                           -------------------------------------------------
                                                              1996               1995                1994
                                                           ----------        -----------          ----------
                                                                             (in thousands)

<S>                                                        <C>               <C>                  <C>
Mortgage-backed securities held to maturity                $      --         $       --           $    (231)
Investment securities held to maturity                            --                 --                 209
Mortgage-backed securities held for trading                       --                 --              (4,545)
Mark to market of financial futures contracts                     --            (71,022)             39,508
Mortgage-backed securities available for sale                  8,466             23,885             (28,208)
Investment securities available for sale                         719                 --                (115)
Cancellation cost of interest rate exchange, cap
  and floor agreements (See Note 15)                         (70,711)                --              (8,910)
Options expense                                              (15,108)           (11,079)             (8,368)
                                                            --------          ---------            --------
                                                           $ (76,634)        $  (58,216)          $ (10,660)
                                                            ========          =========            ========
</TABLE>

The net loss from financial instruments increased $18.4 million in
1996 as compared to 1995. In 1996, the Company ceased using financial
futures contracts as a means of reducing the interest rate risk of
certain mortgage-backed securities in its available for sale portfolio.
Hence, no amount of mark to market gains or losses were realized in
1996. As part of its retail transition strategy, the Company sold in
1996 those securities which were determined to be marginally profitable.
This, and prevailing market conditions, contributed to the decline in net
gains on sales of mortgage-backed and investment securities. As discussed
more fully in the following paragraphs the Company terminated all of its
interest rate exchange agreements in 1996. Options expense increased in
1996 primarily as a result of the purchase of new interest rate cap agreements
to reduce the interest rate risk of adjustable rate mortgage-backed
securities. The principal causes of the $47.6 million increase in net
loss between 1995 and 1994 include: a $110.5 million decline in the
market value of financial futures contracts; a $52.2 million increase
in net gains on sales of mortgage-backed and investment securities
resulting from favorable option-adjusted spread differentials in the
market place at the dates of their respective sales; and a decline in
cancellation costs of interest rate exchange agreements. The $8.9 million
cancellation cost realized in 1994 related to the Company's acquisition
of Farm and Home Savings as previously discussed.

As a result of its continuing transition to a more retail-oriented
institution, the Company was able to substantially reduce in 1996,
principally during the third and fourth quarters, its need for derivative
financial instruments in managing its interest rate risk.

Accordingly, the Company terminated all of its interest rate exchange
agreements, $970 million notional amount of its interest rate floor
agreements and $500 million notional amount of its interest rate cap
agreements.  The terminations of the interest rate exchange agreements were
accounted for in accordance with the provisions of Emerging Issues Task Force
Issue 84-7 (EITF 84-7) which requires that gains or losses on the termination
of such agreements be recognized when the offsetting gain or loss is
recognized on the designated asset or liability.  That is, to the extent that
the designated assets or liabilities still exist, any gain or loss on the
termination of the agreement designated as a synthetic alteration would be
deferred and amortized over the shorter term of the remaining contractual
life of the agreement or the remaining life of the asset or liability.

During the third quarter 1996, interest rate exchange agreements designated
against available for sale fixed rate mortgage-backed securities were
cancelled resulting in a $16.1 million gain which was recognized as the above
mentioned assets against which the agreements had been designated were
concurrently sold.

The remaining interest rate exchange agreements designated against short-term
wholesale borrowings were also cancelled at a cost of $68.0 million which
costs were deferred to be amortized because the underlying liabilities
against which the agreements had been designated still existed at
September 30, 1996. Efforts to further the previously discussed retail
transition continued in the fourth quarter of 1996 and resulted in
shrinkage in the Company's total assets by $1.3 billion.  This shrinkage
resulted primarily from the sale of investment and mortgage-backed
securities with the proceeds being utilized to further reduce short-term
wholesale borrowings.  Further, the Company completed two acquisitions of
thrifts during October of 1996 which further reduced such borrowings by
replacing them as a funding source with the acquired retail deposits.
Upon repayment of  the designated short-term wholesale borrowings, all
existing net deferred swap cancellation costs and certain other deferred
gains and losses related to previously terminated interest rate cap and
floor agreements in total amounting to $80.5 million were recognized
during the fourth quarter of 1996.

The terminations of the $970 million notional amount interest rate floor and
$500 million notional amount cap agreements were accounted for in accordance
with the provisions of Issue 8A of the American Institute of Certified Public
Accountants Issues Paper "Accounting for Options" (Issues Paper).  In
accordance with the conclusions expressed in the Issues Paper, the excess of
the unamortized time value of the options (the premium) over the amount of
cash received upon termination amounting to $6.4 million was recognized in
earnings when the options were terminated.

During August 1996, the Staff of the Securities and Exchange Commission
(Staff) performed a regular review of the Company's 1995 Form 10-K in
conjuction with Registration Statements on Form S-4 filed by the Company
related to three then-pending acquisitions.

As a result of this review, the Staff questioned the Company's original
accounting treatment surrounding the deferral and recognition of gains and
losses on financial futures contracts used to reduce the interest rate risk
of certain mortgage backed

                                    34
<PAGE> 9
securities in the Company's available for sale portfolio.  The Company
originally recognized a $34.8 million charge to fourth quarter 1995 earnings
regarding the cessation of deferral accounting.

At issue was the Staff's contention that the financial futures contracts did
not meet the "high correlation" criteria of Statement of Financial Accounting
Standards No. 80 "Accounting for Futures Contracts", thus not qualifying for
deferral accounting from the inception of the hedge in March 1994 and
requiring the recognition of subsequent gains and losses in income.  The
Company originally ceased deferral accounting when management concluded that
high correlation measured using the "cumulative dollar approach" was unlikely
to be achieved on a consistent basis.

Accordingly, at the Staff's request, the Company in 1996 restated its 1994
and 1995 consolidated financial statements to reflect the cessation of
deferral accounting, from the inception of the hedge, with respect to the
aforementioned financial futures contracts.  The restatement had the effect
of increasing previously reported 1994 net income and decreasing previously
reported 1995 net income by $18.0 million (on a fully-diluted per share
basis, an increase of $0.48 for 1994 and a decrease of $0.43 for 1995).  This
restatement was one of the timing of recognition of gains and losses in the
Statement of Operations and had no impact on total stockholders' equity at
any date since both the financial futures contracts and the related
mortgage-backed securities have been previously marked to market through
stockholders' equity at each reporting period.

Subsequent to December 31, 1995, the Company terminated all of its financial
futures positions and maintained its interest rate risk management position
by principally redesignating existing interest rate exchange agreements to
the available for sale portfolio.  Such interest rate exchange agreements
were utilized prior to the redesignation to manage the interest rate risk of
short-term wholesale borrowings.

In connection with its acquisition of Farm and Home in 1994, the Company sold
securities, primarily mortgage-backed securities, repaid portions of Farm and
Home's debt and terminated various interest rate exchange agreements all as
part of its efforts to rebalance its asset/liability mix following the
acquisition.  These actions, and a net improvement in the fair value of
financial futures all contributed to the $10.7 million net loss from
financial instruments in 1994.

Options expense is comprised of amortization of the premiums paid for various
interest rate cap, floor and collar agreements.  The increase in options
expense from 1995 to 1996 and 1994 to 1995 is primarily attributable to
increased notional amounts of interest cap agreements necessitated by the
generation of larger balances of adjustable rate assets in need of interest
rate cap protection.

Unrealized Losses on Impairment of Mortgage-backed Securities - The Company
purchased ownership interests in ten pools of privately issued
adjustable-rate mortgage-backed securities issued in 1989 through 1991 by
Guardian Savings and Loan Association (Guardian).  All of such Guardian
pools in which the Company purchased and currently holds an ownership
interest were rated AA  or AAA by Standard & Poors and Aa2 or Aaa by Moodys,
at the date of issuance of the securities.

Guardian issued its securities with several classes available for purchase.
Certain classes are subordinate to the position of senior classes in that
such subordinate classes absorb all credit losses and must be completely
eliminated before any losses flow to senior position holders.  The Guardian
securities purchased by the Company (the Guardian Securities) were
purchases of the most senior positions, thus intended to be protected by the
subordination credit enhancement feature.

Guardian was placed in conservatorship on June 21, 1991 by the Office of
Thrift Supervision, which appointed the Resolution Trust Corporation (RTC) as
conservator.  Subsequent to the conservatorship, the RTC replaced Guardian as
the servicer for the loans underlying the securities.  Effective November
1994, Bank of America assumed servicing responsibilities from the RTC.
Guardian was a niche player in the California mortgage market whose lending
decisions relied more on the value of the mortgaged property and the
borrower's equity in the property and less on the borrower's income and
credit standing.  All collateral underlying the Guardian Securities have the
following loan pool characteristics:

      * First lien, 30-year, six-month adjustable-rate loans tied to either
        the cost of funds index, one-year constant maturity treasury rate,
        or LIBOR.

      * 100% of the loans were originated in California.

      * The weighted average loan-to-value ratio at origination was
        approximately 66%.

Beginning in mid-1993 and continuing currently, the loan pools backing the
securities have been affected by high delinquency and foreclosure rates, and
higher than anticipated losses on the ultimate disposition of real estate
acquired through foreclosure (REO).  This has resulted in rating agency
downgrades, principally in April and May, 1994 and again in 1995 and 1996 to
the current ratings reflected in the tables on page 38 and substantial
deterioration in the amount of the loss absorption capacity provided by the
subordinated classes.

                                    35
<PAGE> 10

At December 31, 1994 and March 31, 1995, the Guardian securities owned by the
Company were performing according to their contractual terms, and all
realized losses from the disposition of REO were being absorbed by the
subordinate classes (or in the case of Pool 1990-7 at March 31, 1995, by
unamortized purchase discounts).  However, to the extent that subsequent to
March 31, 1995, the pools continue to realize losses on the disposition of
REO at levels comparable to the then current rate, the remaining balances of
the subordinate classes may not be adequate to protect the Company from
incurring some credit losses on certain of its ten pools.  As a result of
this deterioration and the continuing receipt of subsequent information, the
Company has determined that the underlying investments represented by seven
pools in which, subsequent to March 31, 1995, the subordination protection
has been either totally eliminated or has become potentially inadequate
should be considered "other than temporarily" impaired under the provisions
of Statement of Financial Accounting Standards No. 115.  As a result of this
determination, the Company recorded a $22.0 million pre-tax write-down ($14.4
million after tax or approximately $0.32 per share) for the three months
ended March 31, 1995 to reflect the impairment of these seven pools.  The
amount of the write-down was based on discounted cash flow analyses performed
by management (based upon assumptions regarding delinquency levels,
foreclosure rates and loss ratios on REO disposition in the underlying
portfolio).  Discounted cash flow analyses were utilized to estimate fair
value due to the absence of a ready market for the Guardian Securities.

In addition to the Guardian Securities discussed above, the Company has an
investment of approximately $4.5 million at December 31, 1996 after the
write-down discussed below, in another private issuer mortgage-backed
security, LB Multifamily Mortgage Trust Series 1991-4 (Lehman 91-4),
possessing similar performance characteristics to the Guardian Securities
that has also been determined to be other than temporarily impaired.
Accordingly, the Company has recorded a $5.1 million pre-tax write-down ($3.4
million after tax or approximately $0.08 per share) to reflect the impairment
of this security at March 31, 1995.

Management believes that these write-downs are adequate based upon its
evaluation.

As reflected in the following table, the Company's remaining investment at
December 31, 1996 in the Guardian Securities is approximately $55.3 million,
after the desecuritization of Guardian Pool 1990-9 discussed below:
<TABLE>
<CAPTION>
                                                                              (in millions)
<S>                                                                             <C>
        Investment in Guardian Securities, March 31, 1995                        $ 118.9

        Purchase of remaining senior position of Pool 1990-9                          .6
        Net principal payments received                                            (30.6)
        Desecuritization of Guardian Pool 1990-9 (see discussion below)            (33.6)
                                                                                  ------

        Investment in Guardian Securities, December 31, 1996                     $  55.3
                                                                                  ======
</TABLE>

Subsequent to March 31, 1995, the date of the impairment charge, through
December 31, 1996 the following events have occurred with respect to the
Guardian Securities and Lehman 91-4.

      *     During the quarter ended June 30, 1995, the Company completed its
            planned desecuritization of Guardian Pool 1990-9 and has assumed
            servicing of the underlying whole loans and REO properties
            received through the desecuritization.  As a result of this
            process, $1.1 million representing principal, interest and
            servicing related funds advanced by previous servicers to
            certificate holders on properties which were in REO at the time
            of the desecuritization was reimbursed to the servicer, $28.8
            million was transferred to mortgage loans and $2.7 million (net
            of $4.9 million of charge-offs discussed below) was transferred
            to residential REO.  REO properties and properties in
            foreclosure were written down $4.9 million to their estimated
            fair values by charges to existing unallocated REO reserves
            ($1.4 million) and loan loss reserves ($1.8 million) and to
            existing unamortized purchase discounts ($1.7 million).

      *     As expected, there were several additional rating agency
            downgrades, principally related to those Guardian pools that
            are no longer protected by remaining credit enhancement and
            which had been determined to be other than temporarily impaired
            and written down to estimated fair value by the Company during
            the quarter ended March 31, 1995.

      *     As expected, based on the low levels remaining at March 31, 1995,
            the subordination protection related to Guardian Pools 1990-1,
            1990-2, 1990-4, 1990-5, 1990-7, 1990-8 and Lehman 1991-4 was
            fully absorbed.

      *     The remaining pool Guardian 89-11, determined at March 31, 1995 to
            be other than temporarily impaired and written down to estimated
            fair value, continues to perform according to the contractual
            terms and is protected by the remaining subordination of 7.88%
            of the remaining unpaid principal balance of the pool.  Such
            remaining subordination percentage compares to the original
            subordination percentage of 8.50%.

                                    36
<PAGE> 11

      *     The two remaining Guardian pools (89-10 and 91-2), which are not
            considered to be other than temporarily impaired, continue to
            perform according to their contractual terms and are protected
            by remaining subordination of 7.85% and 18.87%, respectively.
            These remaining subordination levels compare to 8.50% and
            17.00%, respectively, at the date of issuance of the securities.

      *     In excess of $30.0 million in net principal payments have been
            received since March 31, 1995.

Accordingly, at December 31, 1996, management continues to believe that the
recorded investment in the above mentioned Guardian and Lehman pools is
recoverable.



                                    37
<PAGE> 12

Presented below is information at December 31, 1996 relating to Roosevelt's
investment in the Guardian pools, segregated between the seven pools
determined to be other than temporarily impaired and the two pools which, in
the opinion of management, continue to be adequately protected from loss
through substantial remaining subordination. The immediately succeeding table
also includes information related to Lehman 91-4 which has been determined to
be other than temporarily impaired.

<TABLE>
                                  POOLS DETERMINED TO BE OTHER THAN TEMPORARILY IMPAIRED
                                                     December 31, 1996
                                                   (dollars in thousands)

<CAPTION>
                                                   Subordination As a     Regarding Roosevelt's Interests
                                                       Percent of         -------------------------------
                               Rating                 Pool Balance        Original                           Percent of Pools
Pool     Issue       ---------------------------  --------------------      Par     Remaining  Remaining    Current or Less Than
Number   Date        Agency   At Issue   Current   At Issue   Current     At Issue     Par     Investment    90 Days Delinquent
------   ----        ------   --------   -------   --------   -------     --------     ---     ----------    ------------------

GUARDIAN POOLS
--------------

<S>    <C>           <C>       <C>        <C>      <C>        <C>        <C>        <C>       <C>                 <C>
89-11  11/30/89       S & P     AA         CCC      8.50%      7.88%      $ 33,750   $ 7,095   $ 5,134             74%
                      Moody     Aa2        B3

90-1   1/30/90        S & P     AA          D       8.50%        --          3,000       605       462             78%
                      Moody     Aa2        Caa

90-2   2/27/90        S & P     AA          D       8.50%        --         27,500     5,154     3,820             82%
                      Moody     Aa2        Caa

90-4   4/30/90        S & P     AA          D       8.75%        --         46,428    10,165     7,970             72%
                      Moody     Aa2        Caa

90-5   5/31/90        S & P     AA          D       8.75%        --         45,000    11,930     9,880             76%
                      Moody     Aa2        Caa

90-7   7/25/90        S & P     AA          D       8.75%        --         68,025    16,074    12,436             75%
                      Moody     Aa2        Caa

90-8   9/21/90        S & P     AAA        C       14.00%        --         15,000     3,956     2,801             71%
                      Moody     Aaa        B3                             --------   -------   -------

<S>                  <C>       <C>        <C>      <C>        <C>        <C>        <C>       <C>                 <C>
Total Guardian                                                            $238,703   $54,979   $42,503
                                                                          ========   =======   =======

<CAPTION>
LEHMAN POOL
-----------

<S>    <C>           <C>       <C>        <C>      <C>        <C>        <C>        <C>       <C>                 <C>
91-4   7/30/91        S & P     AA         D       23.00%        --       $ 14,000    $8,615    $4,459             84%
                      Moody     Aa3        Caa                            ========   =======   =======
</TABLE>

<TABLE>
                    GUARDIAN POOLS DETERMINED TO BE ADEQUATELY PROTECTED BY REMAINING CREDIT ENHANCEMENT
                                                      December 31, 1996
                                                   (dollars in thousands)

<CAPTION>
                                                   Subordination As a     Regarding Roosevelt's Interests
                                                       Percent of         -------------------------------
                               Rating                 Pool Balance        Original                           Percent of Pools
Pool     Issue       ---------------------------  --------------------      Par     Remaining  Remaining    Current or Less Than
Number   Date        Agency   At Issue   Current   At Issue   Current     At Issue     Par     Investment    90 Days Delinquent
------   ----        ------   --------   -------   --------   -------     --------     ---     ----------    ------------------

<S>    <C>           <C>       <C>        <C>      <C>        <C>        <C>        <C>       <C>                 <C>
89-10  10/27/89       S & P     CCC        CCC      8.50%      7.85%       $ 9,000   $ 1,405   $ 1,420             83%
                      Moody     B3         Ba3

91-2   3/28/91        S & P     AA         BB      17.00%     18.87%        39,831    11,330   $11,330             73%
                      Moody     Aaa        Baa3                            -------   -------   -------

Totals                                                                     $48,831   $12,735   $12,750
                                                                           =======   =======   =======
</TABLE>


                                    38
<PAGE> 13


NONINTEREST EXPENSE
General and Administrative - General and administrative expense increased
$35.7 million to $123.4 million for 1996 as compared to $87.7 million for
1995.  General and administrative expense in 1996 was adversely impacted by a
$27.4 million pre-tax charge imposed by the Federal Deposit Insurance
Corporation (FDIC) in order to recapitalize the Savings Association Insurance
Fund.  Without this charge, general and administrative expense in 1996 would
have increased $8.3 million , or 9.5% to $96.0 million for 1996 versus $87.7
for 1995.  This increase was due primarily to a $7.5 million increase in
compensation and employee benefits and a $4.1 million increase in other
noninterest expense which was partially offset by a $2.6 million decrease in
federal insurance premiums.  The increases in compensation and employee
benefits and other noninterest expense is primarily attributable to increased
costs associated with the mobilization of the Bank's retail efforts.  The
decrease in federal insurance premiums resulted from reductions in the rates
charged by the FDIC on the Company's deposits insured by both the Bank
Insurance Fund and the Savings Association Insurance Fund.  The Legislation
enacted to recapitalize the Savings Association Insurance Fund also provided
for further reductions in premiums charged for deposits insured by the
Savings Association Insurance Fund beginning January, 1997.  As a result, the
Company expects to realize further declines in the cost of federal deposit
insurance premiums thereafter.

General and administrative expense decreased $23.3 million, or 21.0% to $87.7
million for 1995 as compared to $111.0 million for 1994.  The major reasons
for the decrease in 1995 are due to 1994 including $19.8 million of
merger-related costs and the fact that 1995 general and administrative
expense was also positively impacted by efficiencies totaling $6.3 million
realized as a result of the Farm & Home merger.  The merger expenses related
primarily to $5.2 million in severance expense (included in "Compensation
and employee benefits"), $5.3 million in costs to dispose of excess
facilities incident to the acquisition of Farm & Home (included in
"Occupancy") and $9.3 million of transaction costs (included in "Other").

Provision for Real Estate Losses - Provisions for real estate losses totaled
$4.6 million for 1994.  During 1994, in connection with the acquisition of
Farm & Home, a  provision of $3.7 million was established.  This provision
represented a 25% reduction in net carrying value of REO to accommodate a
change in strategy whereby Roosevelt would accelerate the disposition of Farm
& Home's real estate portfolio.  Additionally, during 1994, a $839,000
provision was recorded related to six non-residential real estate properties.


INCOME TAXES
Income taxes include federal income taxes and applicable state income taxes.
Roosevelt's effective tax rates were 34.4%, 27.5% and 33.9% for 1996, 1995
and 1994, respectively.  The principal reasons for the Company's effective
tax rate being below the statutory rate for each year are the resolution of
federal tax issues after completion of examinations by the Internal Revenue
Service.

EXTRAORDINARY ITEMS
Roosevelt recorded losses on extraordinary items of $1.5 million and $7.8
million, net of income taxes, for 1996 and 1994, respectively. The  1996 loss
was the result of two transactions.  First, the Company called its 9.5%
subordinated notes resulting in an $812,000 pre-tax loss.  Second, the
Company defeased its remaining 10.125% mortgage-backed bonds resulting in a
pre-tax loss of approximately $1.4 million.  The $7.8 million loss for 1994
was the result of three transactions.  First, Roosevelt recorded a loss
totaling $4.6 million relating to the retirement of a portion of its 10.125%
mortgage-backed bonds.  Second, Roosevelt recorded a loss totaling $2.6
million relating to the retirement of the 13.0% subordinated debentures
previously issued by Farm & Home.  Third, Roosevelt recorded a loss totaling
$637,000 relating to the prepayment of advances from FHLB of Des Moines
originally entered into by Farm & Home.

FINANCIAL CONDITION
Total assets decreased $1.2 billion or 13.5% to $7.8 billion at December 31,
1996 from $9.0 billion at December 31, 1995.  In 1996 the Company continued
to focus on its strategies of originating a larger percentage of its assets,
diversifying its balance sheet from only mortgage and real estate related
assets and expanding its retail deposit base with a simultaneous shift within
that base toward checking and transaction accounts.  Additional strategies to
further the transition were undertaken primarily in the third and fourth
quarters and included the removal of marginally profitable assets, lessening
the use of higher cost wholesale fundings, simplifying the balance sheet by
using fewer derivatives as synthetic alterations and increasing the capital
to assets ratio so as to be better positioned to take advantage of future
opportunities.  All of these strategies were part of the Company's continuing
efforts to transition itself from a traditional thrift to a full service
retail bank and resulted not only in balance sheet shrinkage but also in
changes in the composition of the balance sheet.

The Company originated approximately $1.4 billion and purchased an additional
$291.6 million of loans in 1996 as compared to originations and purchases of
$688.6 million and $321.1 million in 1995.  Additionally, the Company
securitized and sold approximately $210.0 million of long term fixed rate
mortgages in 1996 and experienced principal repayments of approximately
$897.0 million contributing to the growth in net loans in 1996 of $720.6
million.  The 1996 originations included $796.6 million of adjustable rate
mortgage loans, $318.4  million of fixed rate mortgage loans, $226.2 million
of adjustable rate consumer loans and $65.6 million of fixed rate consumer
loans.  Consumer loans totaled $348.3 million or 8.1% of gross loans

                                    39
<PAGE> 14
at December 31, 1996 versus $125.6 million or 3.5% at December 31, 1995.
Total net loans were $4.3 billion or 55.1% of total assets at December 31,
1996 as compared to $3.6 billion or 39.7% at December 31, 1995.

The Company's total investment portfolios declined $2.0 billion or 38.8% to
$3.2 billion at December 31, 1996 as compared to $5.2 billion at December 31,
1995.  The Company transferred all held to maturity investment portfolios to
the available for sale portfolio in December of 1996.  This action was
undertaken to provide the Company maximum flexibility to manage its
portfolio.  Proceeds from the sale of securities were used to fund loan
originations and to repay short-term higher cost wholesale borrowings.  Total
investment securities represented 40.5% of total assets at December 31, 1996,
down from 57.2% at December 31, 1995.

Total liabilities declined $1.2 billion or 14.3% to $7.3 billion at December
31, 1996 versus $8.5 billion at December 31, 1995.  Growth in deposits of
$439.6 million (including $228.2 million resulting from the three
acquisitions completed in 1996) was more than offset by reductions in
securities sold under agreements to repurchase, advances from the Federal
Home Loan Bank, and other borrowings totaling $1.7 billion.  Total deposits
represented 73.3% of total liabilities at December 31, 1996, as compared to
57.6% at December 31, 1995.  The composition of deposits also changed.
Demand deposits at December 31, 1996 represented 27.6% of total deposits as
compared to 25.0% at December 31, 1995.  Proceeds from the sales of mortgage
loans and investment securities were used to repay, primarily in the fourth
quarter, short-term higher cost wholesale borrowings.


                                    40
<PAGE> 15

ASSET QUALITY

Maintaining a low level of nonperforming assets is critical to the success of
a financial institution.  As the percentage of assets that are classified as
nonperforming assets changes, so do expectations regarding interest income,
potential provisions for losses and operating expenses incurred to manage and
resolve these assets.

The following table sets forth the amounts and categories of nonperforming
assets. Loans are placed on nonaccrual status when the collection of
principal and/or interest becomes doubtful.  Troubled debt restructurings
involve forgiving a portion of interest or principal on any loans or making
loans at a rate materially less than that of market rates.  Foreclosed assets
include assets acquired in settlement of loans.  "Other than temporarily
impaired" mortgage-backed securities represent private issuer mortgage-backed
securities that have been determined to be "other than temporarily impaired"
under the provisions of Statement of Financial Accounting Standards No. 115
and for which the previously existing credit enhancement support, in the form
of subordination, has been totally absorbed and therefore any future losses
will flow directly to the Company as a senior position holder. These
securities were issued with several classes available for purchase.  Certain
classes are subordinate to the position of senior classes in that such
subordinate classes absorb all credit losses and must be completely
eliminated before any losses flow to senior position holders.  The securities
purchased by the Company were purchases of the most senior positions, thus
intended to be protected by the subordination credit enhancement feature.  In
an attempt toward a conservative presentation, the Company includes the
entire estimated fair value of these securities (approximately 74% of the
unpaid principal balances at December 31, 1996) in this table when the credit
enhancement, in the form of subordination, is exhausted even though a
substantial portion of the underlying loans (approximately 76% at December
31, 1996) are either current or less than 90 days delinquent.  In addition,
the remaining amount of "other than temporarily impaired" mortgage-backed
securities that continue to be protected by remaining credit enhancement, but
for which the Company has concluded it is probable that such credit
enhancement will be absorbed before the duration of the underlying security,
are disclosed in the paragraphs following the table as other potential
problem assets.  See the caption entitled "Unrealized Losses on Impairment of
Mortgage-Backed Securities Held to Maturity" under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
further details.

<TABLE>
<CAPTION>
                                                               December 31,
                                        ---------------------------------------------------------
                                           1996        1995        1994        1993       1992
                                           ----        ----        ----        ----       ----
                                                          (dollars in thousands)
<S>                                     <C>        <C>         <C>         <C>         <C>
Nonperforming Assets

Nonaccruing loans:
  Residential                            $ 9,659    $  7,895    $  5,666    $  9,524    $ 12,249
  Commercial real estate                   1,968       1,415       1,626         985       7,988
  Consumer                                   597         193         269         217         217
                                          ------      ------      ------      ------      ------
    Total                                 12,224       9,503       7,561      10,726      20,454
                                          ------      ------      ------      ------      ------
Accruing loans delinquent more
  than 90 days:
  Residential                             10,126      10,500       4,598       4,056       2,110
  Commercial real estate                      --          --         482          --          --
  Consumer                                    --          --          --          --           4
  Land                                        --          --          --         360         394
                                          ------      ------      ------      ------      ------
    Total                                 10,126      10,500       5,080       4,416       2,508
                                          ------      ------      ------      ------      ------
Troubled-debt restructurings:
  Commercial real estate                      53         661       2,757       2,127       1,363
                                          ------      ------      ------      ------      ------
Foreclosed/Repossessed assets:
  Residential                              4,761       5,340       2,703       1,373       2,049
  Commercial real estate                   7,804      11,483      16,085      15,998      20,500
  Consumer                                   238          11          --          --          16
                                          ------      ------      ------      ------      ------
    Total                                 12,803      16,834      18,788      17,371      22,565
                                          ------      ------      ------      ------      ------
    Total nonperforming
      loans and REO                       35,206      37,498      34,186      34,640      46,890
    Total nonperforming loans
      and REO as a percentage
      of total assets                        .45%        .42%        .41%        .46%        .78%
                                          ======      ======      ======      ======      ======
Other than temporarily impaired
 mortgage-backed securities with
 approximately 76% of the underlying
 loans either current or less
 than 90 days delinquent                  41,828      43,429          --          --          --
                                          ------      ------      ------      ------      ------
Total "nonperforming assets"             $77,034    $ 80,927    $ 34,186    $ 34,640    $ 46,890
                                          ======      ======      ======      ======      ======
Total "nonperforming assets"
 as a percentage of total assets             .99%        .90%        .41%        .46%        .78%
                                          ======    ========      ======      ======      ======
</TABLE>

Nonperforming assets have decreased $3.9 million to $77.0 million at December
31, 1996 as compared to $80.9 millon at December 31, 1995.  Non-accruing
loans increased $2.7 million, accruing loans delinquent more than 90 days
decreased $374,000 and foreclosed repossessed assets decreased $4.0
million.  Other than temporarily impaired mortgage-backed securities
decreased $1.6 million.  For a further discussion of such securities, see
the caption entitled "Unrealized Losses on Impairment of Mortgage-Backed
Securities Held to Maturity" under the heading "Results of Operations" for
further details.

                                    41
<PAGE> 16

Not included in the preceding table is a private issuer mortgage-backed
security with a carrying value of $5.1 million which was performing according
to its contractual terms at December 31,1996.  However, this security was
determined by the Company to be "other than temporarily impaired" and written
down to fair value, since at March 31, 1995, the subordination protection had
been reduced to the point where the Company concluded it was not probable
that the security would continue to perform to 100% of its contractual terms
over the course of its remaining life.  The security will be included in the
preceding non-performing asset table in future periods when, and if, the
remaining subordination is exhausted.  The following table is a
reconciliation of the amount of currently performing, other than temporarily
impaired mortgage-backed securities at March 31, 1995 to such amount at
December 31, 1996.

<TABLE>
<CAPTION>
                                                                              (in millions)
<S>                                                                             <C>
      Amount of currently performing, other than temporarily impaired
      mortgage-backed securities at March 31, 1995                                $ 52.4

      Principal payments received                                                   (9.4)

      Addition of Guardian Pools 1990-1,1990-2, 1990-4, 1990-5, 1990-7, 1990-8
      and Lehman Pool 91-4 to the nonperforming asset table as subordination
      protection was absorbed between March 31, 1995 and December 31, 1996         (37.9)

      Amount outstanding of the currently performing, other than temporarily        ----
      impaired mortgage-backed security at December 31, 1996                      $  5.1
                                                                                    ====
</TABLE>

To monitor the credit risk inherent in its private issuer mortgage-backed
security portfolio, the Company tracks the major factors effecting the
performance of its portfolio including i) a review of delinquencies,
foreclosures, repossessions, and recovery rates relative to the underlying
mortgage loans collateralizing each security, ii) the level of available
subordination or other credit enhancement and iii) the rating assigned to
each security by independent national rating agencies.


ASSET/LIABILITY MANAGEMENT

The Company's primary objective regarding asset/liability management is to
position the Company such that changes in interest rates do not have a
material adverse impact upon net interest income or the net market value of
the Company.  See Note 3 - Fair Value Consolidated Balance Sheets of the
Notes to Consolidated Financial Statements for additional information
regarding the calculation of net market value.  The Company's primary
strategy for accomplishing its asset/liability management objective is
achieved by matching the weighted average maturities of assets, liabilities,
and off-balance sheet items (duration matching).  A portion of the duration
matching strategy has involved, more historically than currently, the use
of derivative financial instruments such as interest rate exchange
agreements, interest rate cap and floor agreements and, to a much more
limited extent, financial futures contracts.  The Company uses derivative
financial instruments solely for risk management purposes. None of the
Company's derivative instruments are what are termed leveraged
instruments. These types of instruments are riskier than the derivatives used
by the Company in that they have embedded options that enhance their
performance in certain circumstances but dramatically reduce their
performance in other circumstances. The Company is not a dealer nor does it
make a market in such instruments.  The Company does not trade the
instruments and the Board of Directors' approved policy governing the
Company's use of these instruments strictly forbids speculation of any kind.

Net market value as prescribed by Statement of Financial Accounting Standards
No. 107 "Disclosures about Fair Value of Financial Instruments" (SFAS 107) is
calculated by adjusting stockholders' equity for differences between the
estimated fair values and the carrying values (historical cost basis) of the
Company's assets, liabilities, and off-balance sheet items.  Net market
value, as calculated by the Company and presented herein, should not be
confused with the value of the Company's stock or of the amounts
distributable to stockholders in connection with a sale of the Company or in
the unlikely event of its liquidation. Under SFAS 107 certain valuations,
such as the estimated value of demand deposits, are not considered as part of
the net market value calculation.  As a result the Company calculates an
economic net market which is comprised of net market value as calculated
under SFAS 107 plus the estimated value of demand deposits. The economic net
market value (including the estimated value of demand deposits totaling $33.2
million and $19.6 million at December 31, 1996 and 1995, respectively) as
calculated by the Company increased to approximately $557.6 million at
December 31, 1996 as compared to approximately $481.5 million at December 31,
1995.  To measure the impact of interest rate changes, the Company
recalculates its net market value on a pro forma basis assuming
instantaneous, permanent parallel shifts in the yield curve, in varying
amounts both upward and downward.  Larger increases or decreases in the
Company's net market value as a result of these assumed interest rate changes
indicate greater levels of interest rate sensitivity than do smaller
increases or decreases in net market value.  The Company endeavors to
maintain a position whereby it experiences no material change in net market

                                    42
<PAGE> 17
value as a result of assumed 100 and 200 basis point increases and decreases
in general levels of interest rates.

The OTS issued a regulation, effective January 1, 1994, which uses a similar
methodology to measure the interest rate risk exposure of thrift
institutions.  This exposure is a measure of the potential decline in the net
portfolio value of the institution based upon the effect of an assumed 200
basis point increase or decrease in interest rates.  "Net portfolio value" is
the present value of the expected net cash flow from the institution's
assets, liabilities, and off-balance sheet contracts.  Under the OTS
regulation, an institution's "normal" level of interest rate risk in the
event of this assumed change in interest rates is a decrease in the
institution's net portfolio value in an amount not exceeding two percent of
the present value of its assets.  The regulation provides for a two quarter
lag between calculating interest rate risk and recognizing any deduction from
capital.  The amount of that deduction is one-half of the difference between
(a) the institution's actual calculated exposure to the 200 basis point
interest rate increase or decrease (whichever results in the greater pro
forma decrease in net portfolio value) and (b) its "normal" level of exposure
which is two percent of the present value of its assets.  The OTS recently
announced that it will delay the effectiveness of the regulation until it
adopts the process by which an association may appeal an interest rate risk
capital deduction determination.

Utilizing this measurement concept, the interest rate risk of the Company at
December 31, 1996 is as follows:

<TABLE>
<CAPTION>
                                                                          (DOLLARS IN THOUSANDS)

<S>                                                    <C>             <C>             <C>           <C>
Basis point changes in interest rates                       -200            -100            +100           +200
Change in net market value due to changes in
  interest rates (Company methodology)                  $(18,066)       $ (3,812)       $(11,229)      $(38,463)
Interest rate exposure deemed "normal" by the OTS      $(155,928)            N/A             N/A      $(155,928)
</TABLE>

The Company's operating strategy is designed to avoid material negative
changes in net market value.  As of December 31, 1996, the Company believes
it has accomplished its objectives as the pro forma changes in net market
value brought about by changes in interest rates are not material relative to
the Company's net market value.  A net unrealized market value loss when
rates increase indicates the duration of the Company's assets is slightly
longer than the duration of the Company's liabilities.  A loss when rates
decrease is due primarily to borrowers prepaying their loans resulting in the
Company's assets repricing down more quickly than the Company can reprice its
liabilities.



                                    43
<PAGE> 18

MATURITY GAP ANALYSIS
Thrift institutions have historically presented a Gap Table as a measure of
interest rate risk.  The Gap Table presents the projected maturities and
periods to repricing of a thrift's rate sensitive assets and liabilities.
The OTS has concluded such an analysis has limitations, however, for reasons
of consistency the following discussion presents the Company's traditional
Maturity Gap Analysis.

The Company's one year cumulative gap, which represents the difference
between the amount of interest sensitive assets maturing or repricing in one
year and the amount of interest sensitive liabilities maturing or repricing
in the same period was (2.51%) at December 31, 1996.  A negative cumulative
gap indicates that interest sensitive liabilities exceed interest sensitive
assets at a specific date.  In a rising interest rate environment
institutions with negative maturity gaps generally will experience a more
rapid increase in interest expense paid on liabilities than the interest
income earned on assets.  Conversely, in an environment of falling interest
rates, interest expense paid on liabilities will generally decrease more
rapidly than the interest income earned on assets.  A positive gap will have
the opposite effect.

The following table presents the projected maturities and periods to
repricing of the Company's rate sensitive assets and liabilities as of
December 31, 1996, adjusted to account for anticipated prepayments.

<TABLE>
<CAPTION>
                                                         Over 3          Over 1       Over 3
                                                         Months           Year         Years
                                          Up to 3       Through         Through       Through        Over
                                          Months         1 Year         3 Years       5 Years       5 Years        Total
                                         --------      ---------       ---------     ---------     ---------      -------
                                                                     (Dollars in Thousands)

<S>                                   <C>            <C>            <C>              <C>          <C>          <C>
ASSETS:
Mortgage loans and mortgage-backed
 securities:
 Balloon and adjustable rate first
   mortgage loans                     $  1,723,549    $ 2,445,512    $   604,528      $ 227,306    $  15,625    $ 5,016,520
 One to four family residential first
   mortgages and contracts                 186,969        147,191        429,465        281,251      586,266      1,631,142
 Five or more family residential and
   nonresidential first mortgages and
   contracts                                62,830         32,011         58,772         16,277       13,144        183,034
 Second mortgages                              787            124            163             28           14          1,116
Non-mortgage loans:
 Consumer                                  228,681         20,735         45,990         11,626       20,185        327,217
 Commercial                                 13,723          2,681          4,233            426           --         21,063
 Investments and interest bearing
  deposits                                 206,380          4,218          8,548         10,651        1,031        230,828
Premiums (discounts) and deferred
  loan fees, net                            23,027         12,252          6,966          3,488       12,293         58,026
                                        ----------      ---------      ---------        -------      -------      ---------
Total rate sensitive assets              2,445,946      2,664,724      1,158,665        551,053      648,558      7,468,946
                                        ----------      ---------      ---------        -------      -------      ---------
LIABILITIES:
    Fixed maturity deposits                753,849      1,610,511      1,165,995        238,506      102,544      3,871,405
    NOW, Super NOW, and other
     transaction accounts                   29,906         36,044         64,880         51,905      207,617        390,352
    Money market deposit accounts          796,046             --             --             --           --        796,046
    Passbook accounts                       27,202         26,207         47,172         37,737      150,950        289,268
    FHLB advances                        1,607,756        216,000          9,500          2,500        2,000      1,837,756
    Other borrowings                         3,095             --             --             --           --          3,095
                                        ----------      ---------      ---------        -------      -------      ---------
Total rate sensitive liabilities         3,217,854      1,888,762      1,287,547        330,648      463,111      7,187,922
Effect of interest rate floor
  agreements on rate sensitive
  liabilities                              350,000       (150,000)      (200,000)            --           --             --
                                        ----------      ---------      ---------        -------      -------      ---------
  Total rate sensitive liabilities
  adjusted for impact of interest
  rate floor agreements                  3,567,854      1,738,762      1,087,547        330,648      463,111      7,187,922
                                        ----------      ---------      ---------        -------      -------      ---------
Maturity gap                          $ (1,121,908)   $   925,962    $    71,118      $ 220,405    $ 185,447    $   281,024
                                        ==========      =========      =========        =======      =======      =========
Gap as a percent of total assets            (14.39)%        11.88%          (.91)%         2.83%        2.38%
                                        ==========      =========      =========        =======      =======
Cumulative maturity gap               $ (1,121,908)   $  (195,946)   $  (124,828)     $  95,577    $ 281,024
                                        ==========      =========      =========        =======      =======
Cumulative gap as a percent of
  total assets                              (14.39)%        (2.51)%        (1.60)%         1.23%        3.61%
                                        ==========      =========      =========        =======      =======
</TABLE>


                                    44

<PAGE> 19

In preparing the table above, it has been assumed that (i) balloon and
adjustable-rate first mortgage loans will prepay at a rate of 18% per year,
(ii) fixed-rate first mortgage loans on residential properties of five or
more units and nonresidential properties will prepay at a rate of 10% per
year, (iii) fixed maturity deposits will not be withdrawn prior to maturity,
(iv) passbook and NOW accounts will be withdrawn at a rate of approximately
10% in each of the first two periods and at other assumed rates ranging from
20% to 100% thereafter, (v) fixed-rate mortgage loans on one- to four-family
residences with terms to maturity of 10 years or less will prepay at a rate
of 20% per year, (vi) second mortgage loans on one- to four-family residences
will prepay at a rate of 30% per year, and (vii) fixed-rate first mortgage
loans on one- to four-family residential properties with remaining terms to
maturity of over 10 years will prepay annually as follows:

<TABLE>
<CAPTION>
                                        PREPAYMENT ASSUMPTIONS
MORTGAGE LOAN            --------------------------------------------------
INTEREST RATE             OVER 10 TO 20 YEARS            20 YEARS AND OVER
-------------            ---------------------          -------------------

<S>                           <C>                            <C>
Less than 8%                     8.00%                          8.00%
8 to 10%                        23.00                          23.00
10 to 12%                       22.00                          22.00
12 to 14%                       22.00                          22.00
14 to 16%                       22.00                          22.00
16% and over                    22.00                          22.00
</TABLE>

The above assumptions do not necessarily indicate the impact of general
interest rate movements.  Accordingly, certain assets and liabilities
indicated as repricing within a stated period may in fact reprice at
different times and at different rate levels.

The amounts in the table could be significantly affected by external factors,
such as prepayment rates other than those assumed, early withdrawals of
deposits, changes in the correlation of various interest-bearing instruments,
and competition.  Additionally, decisions by the Company to sell assets,
retire debt, or cancel interest rate exchange arrangements early would also
change the maturity/repricing and spread relationships.


LIQUIDITY AND CAPITAL RESOURCES

OTS regulations require federally insured savings institutions to maintain a
specified ratio (presently 5.0%) of cash and short-term United States
Government, government agency, and other specified securities to net
withdrawable accounts and borrowings due within one year.  The Company has
maintained liquidity in excess of required amounts having had ratios of
5.05%, 5.64%, and 5.91% at December 31, 1996, 1995, and 1994, respectively.

The Company's cash flows are comprised of cash flows from operating,
investing and financing activities.  Cash flows provided by operating
activities, consisting primarily of interest received on investments
(principally loans and mortgage-backed securities) less interest paid on
deposits and other short-term borrowings, were $125.2 million for the year
ended December 31, 1996  Net cash related to investing activities, consisting
primarily of purchases of mortgage-backed securities and originations and
purchases of loans, offset by principal repayments on mortgage-backed
securities and loans and sales of mortgage-backed securities available for
sale, provided $1.5 billion for the year ended December 31, 1996.  Net cash
related to financing activities, consisting of proceeds, net of repayments,
from FHLB advances, proceeds from securities sold under agreements to
repurchase and excess of deposits receipts over withdrawals, utilized $1.6
billion for the year ended December 31, 1996.

At December 31, 1996, the Company had commitments outstanding to originate
fixed-rate mortgage loans of approximately $27.8 million and adjustable-rate
mortgages of approximately $66.5 million.  At December 31, 1996, the Company
had outstanding commitments to purchase and sell mortgage-backed securities
of approximately $199.3 million and $160.0 million, respectively.  The
Company expects to satisfy such commitments through its primary source of
funds.

OTS regulations impose various restrictions or requirements on associations
with respect to their ability to pay dividends or make other distributions of
capital.  The OTS utilizes a three-tiered approach to permit associations,
based on their capital level and supervisory condition, to make capital
distributions which include dividends, stock redemptions or repurchases,
cash-out mergers, interest payments on certain convertible debt, and other
transactions charged to the capital account.  Tier 1 associations, which are
associations that before and after the proposed distribution meet or exceed
their fully phased-in capital requirements, may make capital distributions
during any calendar year up to the greater of 100% of net income for the
year-to-date plus 50% of the amount by which the lesser of the association's
tangible, core, or total capital exceeds its fully phased-in capital
requirement, as measured at the beginning of the calendar year.  As of
December 31, 1996, the Bank's excess capital over its fully phased-in core
capital requirement was approximately $192.0 million.  The Company is also
subject to Delaware law which limits dividends to an amount equal to the
excess of a corporation's net assets over paid-in capital or, if there is no
excess, to its net profits for the current and immediately preceding fiscal
year.  See "Regulation -- Limitations on Dividends and Other Capital
Distributions."

                                    45
<PAGE> 20

Certain liquidity risks are inherent in asset/liability management.  Such
risks include, among others, changes in interest rates, which can cause
margin calls on reverse repurchase agreements as a result of changes in the
value of collateral, and timing delays when the receipt of interest,
principal or repayments on loans and mortgage-backed securities does not
correspond with the timing of the funding of the related liability.  The
Company has implemented policies through which it endeavors to manage these
liquidity risks.  Liquidity is maintained at levels which exceed the amounts
required for regulatory purposes.

The Company's merger agreement with Mercantile Bancorporation Inc. requires
the redemption of all the Company's issued and outstanding shares of
preferred stock on May 16, 1997. In addition, under the same agreement,
Roosevelt is required to use its reasonable best efforts, subject to
prudent business practices, to acquire in open market transactions prior
to the closing date of the planned merger up to 6,998,380 of its own
common shares at a cost per share in each transaction not to exceed $22.00.

The Company anticipates that prior to the above mentioned redemption date,
most if not all, existing preferred shareholders will elect to convert their
preferred shares into common shares due to the significant currently existing
value differential between post-conversion shares and the $50.00 per share
redemption price. To the extent that certain preferred shareholders allow
their shares to be redeemed at $50.00 per share by not electing conversion
prior to the May 16, 1997 redemption date, such redemptions, if any, are
anticipated to be funded by the Company from either then existing cash on
hand or with funds provided from dividends from Roosevelt Bank. To the
extent that all preferred shareholders elect to convert their shares into
common stock prior to the May 16, 1997 redemption date, total stockholders'
equity of the Company will not be impacted by such conversion. Any actual
cash redemptions will have the impact of reducing the Company's stockholders'
equity by the redemption price of $50.00 per share plus accrued and unpaid
dividends for each share of preferred stock so redeemed.

The Company's above mentioned share repurchases are being conducted pursuant
to a stock repurchase program authorized by the Board of Directors of
Roosevelt Financial Group, Inc. on December 15, 1994 and expanded by that
same board on January 2, 1997 and is discussed in more detail in the following
paragraphs.

On December 15, 1994, the Board of Directors of Roosevelt Financial Group,
Inc. authorized the Company to acquire up to 1,750,000 shares of its own
common stock, subject to market conditions, prior to December 31, 1997. The
stock repurchased is to be held in treasury in order to fund, from time to
time, the Company's benefit programs. Shares of stock repurchased may also
be retired, from time to time, if not needed for other corporate purposes.
Through December 31, 1996, 281,500 shares of common stock of the Company
have been repurchased pursuant to the stock repurchase program at a weighted
average price of $15.98 per share.

On January 2, 1997, the Board of Directors of the Company authorized an
expansion of the capacity of the above mentioned stock repurchase plan by an
additional 5,529,880 shares. This expansion, when coupled with the remaining
authorization prior to the expansion (1,468,500 shares), resulted in a total
authorization of 6,998,380 shares, the number of shares that the Company has
agreed to use its reasonable best efforts, subject to prudent business
practices, to acquire in open market transactions prior to the closing date
of its planned merger with Mercantile Bancorporation Inc. The cost per share
in each such transaction cannot exceed $22.00. Subsequent to December 31, 1996
and through February 13, 1997, an additional 1,600,000 shares have been
repurchased at a weighted average price of $21.08.

The above mentioned share repurchases to date have been funded by the Company
from dividends from Roosevelt Bank. As a result of the recent trading range
of Roosevelt's common stock exceeding the $22.00 per share maximum specified
in the merger agreement, above which the Company is precluded from executing
any repurchase transactions, the Company cannot predict the amount, if any,
of additional share repurchases which may be accomplished prior to the
anticipated closing date of the merger. To the extent that the price of the
Company's common stock falls to $22.00 or below, the Company anticipates
future repurchases will be funded by either then existing cash on hand at
the Company, or with funds provided to the Company from dividends from
Roosevelt Bank.

With respect to potential future dividends from Roosevelt Bank, the Company
does not intend to allow the Bank to declare any such dividends that would
result in the Bank not being classified as well capitalized under existing
regulatory capital adequacy guidelines.

Future share repurchases, if any, prior to the anticipated effective date
of the merger with Mercantile, are expected to reduce total shareholders'
equity of the Company only in the unlikely event that such shares are not
reissued in connection with either Company benefit programs or to fund the
anticipated conversion, prior to May 16, 1997, of the Company's existing
preferred stock into common stock.

The potential funding by the Company of future share repurchases or preferred
stock redemptions, if any, utilizing Roosevelt Bank dividends as a funding
source is not anticipated to have a material adverse impact on the Company's
future operating income or earnings per share.

IMPACT OF INFLATION AND CHANGING PRICES

Unlike most industrial companies, virtually all of the assets and liabilities
of a financial institution are monetary in nature.  As a result, interest
rates have a more significant impact on a financial institution's performance
than do the general levels of inflation.  Interest rates do not necessarily
move in the same direction or in the same magnitude as the price of goods and
services.  In the current interest rate environment, liquidity and the
maturity structure of the Company's assets and liabilities are critical to
the maintenance of acceptable performance levels.

                                    46

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

IMPACT OF PROSPECTIVE ACCOUNTING PRONOUNCEMENTS

During June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinquishments of
Liabilities" (SFAS 125).  SFAS 125 provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishments
of liabilities based on consistent application of a financial components
approach that focuses on control.  It distinguishes transfers of financial
assets that are sales from transfers that are secured borrowings.  Under the
financial components approach, after a transfer of financial assets, an
entity recognizes all financial and servicing assets it controls and
liabilities it has incurred and derecognizes financial assets it no longer
controls and liabilities that have been extinguished.  The financial
components approach focuses on the assets and liabilities that exist after
the transfer.  Many of these assets and liabilities are components of
financial assets that existed prior to the transfer.  If a transfer does not
meet the criteria for a sale, the transfer is accounted for as a secured
borrowing with pledge of collateral.

SFAS 125 extends the "available-for-sale" or "trading" approach in SFAS 115
to nonsecurity financial assets that can contractually be prepaid or
otherwise settled in such a way that the holder of the asset would not
recover substantially all of its recorded investment.  Thus, nonsecurity
financial assets (no matter how acquired) such as loans, other receivables,
interest-only strips or residual interests in securitization trusts that are
subject to prepayment risk that could prevent recovery of substantially all
of the recorded amount are to be reported at fair value with the change in
fair value accounted for depending on the asset's classification as
"available-for-sale" or "trading".  SFAS 125 also amends SFAS 115 to prevent
a security from being classified as held-to-maturity if the security can be
prepaid or otherwise settled in such a way that the holder of the security
would not recover substantially all of its recorded investment.

SFAS 125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996, and is to
be applied prospectively.  Earlier or retroactive application is not
permitted.  Also, the extension of the SFAS 115 approach to certain
nonsecurity financial assets and the amendment to SFAS 115 is effective for
financial assets held on or acquired after January 1, 1997.
Reclassifications that are necessary because of the amendment do not call
into question an entity's intent to hold other debt securities to maturity in
the future.  The adoption of SFAS 125 is not expected to have a material
impact on the Company's financial statements.



                                    47

<PAGE> 21

<TABLE>
                                            SELECTED QUARTERLY FINANCIAL DATA
                                                       (UNAUDITED)

<CAPTION>
                                                                     QUARTERS ENDED IN 1996
                                                 ---------------------------------------------------------------
                                                  MARCH 31           JUNE 30       SEPT. 30             DEC. 31
                                                 ----------         ---------     ----------           ---------
                                                          (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                               <C>               <C>            <C>                 <C>
Total interest income                             $ 166,143         $ 162,280      $ 160,588           $ 151,300
Total interest expense                              119,769           118,984        117,257             106,714
                                                   --------          --------       --------            --------
  Net interest income                                46,374            43,296         43,331              44,586
Provision for losses on loans                          (300)             (300)          (300)               (362)
Noninterest income excluding net gain (loss) from
  financial instruments                               8,177             9,755         11,022              11,713
Net gain (loss) from financial instruments              341               521          1,781             (79,277)
Noninterest expense                                 (21,718)          (23,428)       (52,858)            (25,405)
                                                   --------          --------       --------            --------
Income (loss) before income tax expense
  and extraordinary item                             32,874            29,844          2,976             (48,745)
Income tax expense (benefit)                         11,309            10,116          1,016             (16,606)
                                                   --------          --------       --------            --------
Income (loss) before extraordinary item              21,565            19,728          1,960             (32,139)
Extraordinary item                                       --                --         (1,452)                 --
                                                   --------          --------       --------            --------
Net income (loss)                                 $  21,565         $  19,728      $     508           $ (32,139)
                                                   ========          ========       ========            ========
Net income (loss) attributable to common stock    $  20,508         $  18,671      $    (541)          $ (33,186)
                                                   ========          ========       ========            ========

Primary earnings per share:
  Income (loss) before extraordinary item         $    0.48         $    0.44      $    0.02           $   (0.76)
  Extraordinary item                                     --                --          (0.03)                 --
                                                   --------          --------       --------            --------
    Net income (loss)                             $    0.48         $    0.44      $   (0.01)          $   (0.76)
                                                   ========          ========       ========            ========

Fully-diluted earnings per share:
  Income (loss) before extraordinary item         $    0.46         $    0.42      $    0.02           $   (0.76)
  Extraordinary item                                     --                --          (0.03)                 --
                                                   --------          --------       --------            --------
    Net income (loss)                             $    0.46         $    0.42      $   (0.01)          $   (0.76)
                                                   ========          ========       ========            ========

<CAPTION>
                                                                     QUARTERS ENDED IN 1995
                                                 ---------------------------------------------------------------
                                                  MARCH 31           JUNE 30       SEPT. 30             DEC. 31
                                                 ----------         ---------     ----------           ---------
                                                          (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                               <C>               <C>            <C>                 <C>
Total interest income                             $ 156,436         $ 162,576      $ 163,920           $ 164,863
Total interest expense                              108,123           116,893        120,700             120,717
                                                   --------          --------       --------            --------
  Net interest income                                48,313            45,683         43,220              44,146
Provision for losses on loans                          (300)             (300)          (300)               (300)
Noninterest income (loss) excluding
  net gain (loss) from financial instruments        (19,480)            7,443          8,872               6,241
Net gain (loss) from financial instruments          (32,804)          (22,935)         1,620              (4,097)
Noninterest expense                                 (21,493)          (21,740)       (20,875)            (23,558)
                                                   --------          --------       --------            --------
Income (loss) before income tax expense
  and extraordinary item                            (25,764)            8,151         32,537              22,432
Income tax expense (benefit)                         (9,589)            2,291         11,040               6,516
                                                   --------          --------       --------            --------
Net income (loss)                                 $ (16,175)        $   5,860      $  21,497           $  15,916
                                                   ========          ========       ========            ========
Net income (loss) attributable to common stock    $ (17,247)        $   4,803      $  20,440           $  14,859
                                                   ========          ========       ========            ========

Primary earnings (loss) per share                 $   (0.43)        $    0.12      $    0.50           $    0.37
                                                   ========          ========       ========            ========

Fully-diluted earnings (loss) per share           $   (0.43)        $    0.12      $    0.47           $    0.35
                                                   ========          ========       ========            ========
</TABLE>

Net gain (loss) from financial instruments for the quarter ended December 31,
1996 was impacted by the recognition of previously deferred expense related
to the termination of interest rate exchange, cap and floor agreements of $80.5
million. Noninterest expense for the quarter ended September 30, 1996 was
impacted by the one-time SAIF assessment of $27.4 million.  See notes 15 and 19
of Notes to Consolidated Financial Statements and "Management's Discussion and
Analysis-Results of Operations" for further discussion.

                                    48
<PAGE> 22

Net gain (loss) from financial instruments was impacted by $(34.0) million,
$(27.8) million, $135,000 and $(9.5) million for the quarters ended March 31,
June 30, September 30 and December 31, 1995, respectively as a result of the
mark to market of the Company's financial futures positions used to reduce
the interest rate risk of certain mortgage-backed securities in the available
for sale portfolio.  Non-interest income for the quarter ended March 31, 1995
was impacted by a $27.1 million impairment charge related to certain
mortgage-backed securities.  See Notes 5 and 15 of Notes to Consolidated
Financial Statements and "Management's Discussion and Analysis-Results of
Operations" for further discussion.




                                    49
<PAGE> 23
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                       INDEPENDENT AUDITORS' REPORT



The Board of Directors
Roosevelt Financial Group, Inc.
Chesterfield, Missouri:

We have audited the accompanying consolidated balance sheets of Roosevelt
Financial Group, Inc. and subsidiaries (the Company) as of December 31, 1996
and 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1996.  These consolidated financial statements are
the responsibility of the Company's management.  Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Roosevelt
Financial Group, Inc. and subsidiaries as of December 31, 1996 and 1995, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1996, in conformity with generally
accepted accounting principles.

We have also audited, in accordance with generally accepted auditing
standards, the supplemental fair value consolidated balance sheets of the
Company as of December 31, 1996 and 1995.  As described in Note 3, the
supplemental fair value consolidated balance sheets have been prepared by
management to present relevant financial information that is not provided by
the historical cost consolidated balance sheets and is not intended to be a
presentation in conformity with generally accepted accounting principles.  In
addition, the supplemental fair value consolidated balance sheets do not
purport to present the net realizable, liquidation, or market value of the
Company as a whole.  Furthermore, amounts ultimately realized by the Company
from the disposal of assets may vary significantly from the fair values
presented.  In our opinion, the supplemental fair value consolidated balance
sheets referred to above present fairly, in all material respects, the
information set forth therein.




KPMG Peat Marwick LLP


St. Louis, Missouri
January 20, 1997





                                    50
<PAGE> 24
<TABLE>

                                                   ROOSEVELT FINANCIAL GROUP, INC.
                                                          AND SUBSIDIARIES
                                                     CONSOLIDATED BALANCE SHEETS
                                                       (dollars in thousands)
<CAPTION>

                                                                                                       December 31,
                                                                                           --------------------------------

                                                                                               1996                 1995
                                                                                           -----------          -----------
<S>                                                                                        <C>                  <C>
                                       ASSETS

Cash and cash equivalents                                                                  $    48,642          $    15,433
Securities available for sale:
      Investment securities                                                                    183,227              159,857
      Mortgage-backed securities                                                             2,974,530            1,446,604
Securities held to maturity:
      Investment securities                                                                         --              119,186
      Mortgage-backed securities                                                                    --            3,430,954
Loans                                                                                        4,298,469            3,577,892
Real estate owned                                                                               12,438               15,433
Office properties and equipment, net                                                            54,966               52,466
Other assets                                                                                   224,140              195,236
                                                                                             ---------            ---------
                                                                                           $ 7,796,412          $ 9,013,061
                                                                                             =========            =========

                             LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                                                   $ 5,347,071          $ 4,907,497
Securities sold under agreements to repurchase                                                   3,095            1,082,814
Advances from Federal Home Loan Bank                                                         1,837,756            2,377,138
Other borrowings                                                                                    --               47,523
Other liabilities                                                                              111,063              101,183
                                                                                             ---------            ---------
        Total liabilities                                                                    7,298,985            8,516,155
                                                                                             ---------            ---------
Stockholders' equity:
      Preferred stock - $.01 par value; $50 preference value; 6.5% non-cumulative
       perpetual convertible; aggregate preference value of $64,441 and $65,050
       at December 31, 1996 and 1995, respectively; 3,000,000 shares authorized
       and 1,288,825 and 1,301,000 shares issued and outstanding
       at December 31, 1996 and 1995, respectively                                                  13                   13
      Common stock - $.01 par value; 90,000,000 shares authorized;
       44,183,124 and 41,991,701 shares issued
       and outstanding at December 31, 1996 and 1995, respectively                                 442                  420
      Paid-in capital                                                                          298,283              262,381
      Retained earnings - subject to certain restrictions                                      202,550              223,606
      Unrealized gain (loss) on securities available for sale,
       net of taxes                                                                             (2,226)              12,019
      Unamortized restricted stock awards                                                       (1,635)              (1,533)
                                                                                             ---------            ---------
           Total stockholders' equity                                                          497,427              496,906
                                                                                             ---------            ---------
                                                                                           $ 7,796,412          $ 9,013,061
                                                                                             =========            =========

                                    See accompanying notes to consolidated financial statements.
</TABLE>

                                    51
<PAGE> 25


<TABLE>
                                                   ROOSEVELT FINANCIAL GROUP, INC.
                                                          AND SUBSIDIARIES
                                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                        (dollars in thousands, except per share information)
<CAPTION>
                                                                                        Year Ended December 31,
                                                                     ---------------------------------------------------------
                                                                        1996                   1995                    1994
                                                                     ---------               ---------               ---------
<S>                                                                  <C>                     <C>                     <C>
Interest income:
   Loans                                                             $ 303,304               $ 252,071               $ 206,467
   Securities available for sale                                       109,784                 135,444                 137,933
   Securities held to maturity                                         225,415                 259,262                 179,168
   Securities held for trading                                              --                      --                   6,460
   Other                                                                 1,808                   1,018                   3,258
                                                                     ---------               ---------               ---------
     Total interest income                                             640,311                 647,795                 533,286
                                                                     ---------               ---------               ---------
Interest expense:
   Deposits                                                            249,820                 233,836                 200,190
   Other borrowings                                                    194,270                 223,508                 138,915
   Interest rate exchange agreements, net                               18,634                   9,089                   8,469
                                                                     ---------               ---------               ---------
     Total interest expense                                            462,724                 466,433                 347,574
                                                                     ---------               ---------               ---------
     Net interest income                                               177,587                 181,362                 185,712
Provision for losses on loans                                            1,262                   1,200                  12,432
                                                                     ---------               ---------               ---------
       Net interest income after provision for losses on loans         176,325                 180,162                 173,280
                                                                     ---------               ---------               ---------
Noninterest income (loss):
   Retail banking fees                                                  17,157                  10,706                   8,682
   Insurance and brokerage sales commissions                             8,494                   7,506                   6,538
   Loan servicing fees, net                                             10,982                   7,401                   7,359
   Net loss from financial instruments                                 (76,634)                (58,216)                (10,660)
   Gain on sales of real estate acquired for development and sale        1,633                   1,656                   3,414
   Gain on sale of loan servicing rights                                    --                   1,510                      --
   Unrealized losses on impairment of mortgage-backed securities            --                 (27,063)                     --
   Other                                                                 2,401                   1,360                   1,923
                                                                     ---------               ---------               ---------
     Total noninterest income (loss)                                   (35,967)                (55,140)                 17,256
                                                                     ---------               ---------               ---------
Noninterest expense:
   General and administrative:
     Compensation and employee benefits                                 42,304                  34,780                  42,570
     Occupancy                                                          18,081                  18,758                  23,939
     Federal deposit insurance premiums                                  9,145                  11,743                  12,018
     Savings Association Insurance Fund special assessment              27,410                      --                      --
     Other                                                              26,469                  22,385                  32,468
                                                                     ---------               ---------               ---------
       Total general and administrative                                123,409                  87,666                 110,995
   Provision for real estate losses                                         --                      --                   4,581
                                                                     ---------               ---------               ---------
       Total noninterest expense                                       123,409                  87,666                 115,576
                                                                     ---------               ---------               ---------
         Income before income tax expense and extraordinary items       16,949                  37,356                  74,960
Income tax expense                                                       5,835                  10,258                  25,384
                                                                     ---------               ---------               ---------
         Income before extraordinary items                              11,114                  27,098                  49,576
Extraordinary items                                                     (1,452)                     --                  (7,849)
                                                                     ---------               ---------               ---------
         Net income                                                  $   9,662               $  27,098               $  41,727
                                                                     =========               =========               =========

         Net income attributable to common stock                     $   5,452               $  22,855               $  36,543
                                                                     =========               =========               =========
Per share data:
   Primary earnings per share:
     Income before extraordinary items                                 $  0.16                 $  0.56                 $  1.17
     Extraordinary items                                                 (0.03)                     --                   (0.21)
                                                                       -------                 -------                 -------
        Net income                                                     $  0.13                 $  0.56                 $  0.96
                                                                       =======                 =======                 =======
   Fully diluted earnings per share:
     Income before extraordinary items                                 $  0.16                 $  0.56                 $  1.15
     Extraordinary items                                                 (0.03)                     --                   (0.21)
                                                                       -------                 -------                 -------
         Net income                                                    $  0.13                 $  0.56                 $  0.94
                                                                       =======                 =======                 =======

                                    See accompanying notes to consolidated financial statements.
</TABLE>

                                    52
<PAGE> 26
<TABLE>

                                         ROOSEVELT FINANCIAL GROUP, INC.
                                               AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
                                             (DOLLARS IN THOUSANDS)
<CAPTION>
                                                           Preferred stock          Common stock
                                                       --------------------    -----------------------
                                                                                                         Paid-in     Retained
                                                         Shares      Amount     Shares          Amount   capital     earnings
                                                       ----------    ------    ----------       ------   --------    --------
<S>                                                     <C>           <C>      <C>               <C>     <C>         <C>
Balance, December 31, 1993                              2,492,440     $ 25     10,291,922        $103    $179,979    $186,780
Net income (including pooled company)                          --       --             --          --          --      41,727
Issuance of 319,000 shares of 6.5% non-cumulative
  perpetual convertible preferred stock                   319,000        3             --          --      21,270          --
Issuance of common stock in the acquisition of
  Home Federal Bancorp of Missouri, Inc.                       --       --      1,121,142          11      48,220          --
Issuance of common stock for stock options and
  employee stock plans                                         --       --      1,294,991          13       5,932          --
Three-for-one stock split                                      --       --     25,157,436         252        (252)         --
Cash dividends declared (including pooled company):
    Common stock                                               --       --             --          --          --     (13,944)
    Preferred stock                                            --       --             --          --          --      (5,184)
Purchase of common stock for treasury                          --       --             --          --          --          --
Unrealized loss on securities available
  for sale, net (including pooled company)                     --       --             --          --          --          --
Other pre-merger transactions of pooled company        (1,492,440)     (15)     2,308,036          23         506          --
                                                       ----------     ----     ----------        ----    --------    --------
Balance, December 31, 1994                              1,319,000       13     40,173,527         402     255,655     209,379
Net income                                                     --       --             --          --          --      27,098
Purchase of common stock for treasury                          --       --             --          --          --          --
Issuance of common stock for stock options and
  employee stock plans                                         --       --        243,763           3       1,531      (1,572)
Issuance of common stock in the acquisition of
 Kirksville Bancshares, Inc.                                   --       --      1,521,435          15       5,426      15,475
Exchange of preferred stock for common stock              (18,000)      --         52,976          --        (231)         --
Amortization of restricted stock awards                        --       --             --          --          --          --
Cash dividends declared:
    Common stock                                               --       --             --          --          --     (22,531)
    Preferred stock                                            --       --             --          --          --      (4,243)
Unrealized gain on securities available for sale, net          --       --             --          --          --          --
                                                       ----------     ----     ----------        ----    --------    --------
Balance, December 31, 1995                              1,301,000       13     41,991,701         420     262,381     223,606
Net income                                                     --       --             --          --          --       9,662
Purchase of common stock for treasury                          --       --             --          --          --          --
Issuance of common stock for stock options and
 employee stock plans                                          --       --        219,991           2       2,748        (205)
Issuance of common stock for acquisitions                      --       --      1,925,776          19      33,155          --
Exchange of preferred stock for common stock              (12,175)      --         45,656           1          (1)         --
Amortization of restricted stock awards                        --       --             --          --          --          --
Cash dividends declared:
  Common stock                                                 --       --             --          --          --     (26,303)
  Preferred stock                                              --       --             --          --          --      (4,210)
Unrealized loss on securities available for sale, net          --       --             --          --          --          --
                                                       ----------     ----     ----------        ----    --------    --------
Balance, December 31, 1996                              1,288,825     $ 13     44,183,124        $442    $298,283    $202,550
                                                       ==========     ====     ==========        ====    ========    ========

                             See accompanying notes to consolidated financial statements.


                                                    52


</TABLE>
<TABLE>

                                         ROOSEVELT FINANCIAL GROUP, INC.
                                               AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
                                             (DOLLARS IN THOUSANDS)
<CAPTION>

                                                                                        Unrealized
                                                                                       gain (loss)
                                                                                      on securities
                                                              Treasury stock          available for     Unamortized      Total
                                                         -------------------------      sale, net       restricted    stockholders'
                                                           Shares         Amount        of taxes       stock awards      equity
                                                         ----------     ----------    -------------    ------------   ------------

<S>                                                       <C>            <C>          <C>                 <C>            <C>
Balance, December 31, 1993                                     --        $    --      $     11,575        $     --       $ 378,462
Net income (including pooled company)                          --             --                --              --          41,727
Issuance of 319,000 shares of 6.5% non-cumulative
  perpetual convertible preferred stock                        --             --                --              --          21,273
Issuance of common stock in the acquisition of
  Home Federal Bancorp of Missouri, Inc.                       --             --                --              --          48,231
Issuance of common stock for stock options and
  employee stock plans                                         --             --                --              --           5,945
Three-for-one stock split                                      --             --                --              --              --
Cash dividends declared (including pooled company):
    Common stock                                               --             --                --              --         (13,944)
    Preferred stock                                            --             --                --              --          (5,184)
Purchase of common stock for treasury                      (10,000)         (150)               --              --            (150)
Unrealized loss on securities available
  for sale, net (including pooled company)                      --            --           (35,248)             --         (35,248)
Other pre-merger transactions of pooled company                 --            --                --              --             514
                                                         ---------       -------      ------------        --------      ----------
Balance, December 31, 1994                                 (10,000)         (150)          (23,673)             --         441,626
Net income                                                      --            --                --              --          27,098
Purchase of common stock for treasury                     (214,500)       (3,426)               --              --          (3,426)
Issuance of common stock for stock options and
  employee stock plans                                     209,976         3,345                --          (1,621)          1,686
Issuance of common stock in the acquisition
 of Kirksville Bancshares, Inc.                                 --            --                --              --          20,916
Exchange of preferred stock for common stock                14,524           231                --              --              --
Amortization of restricted stock awards                         --            --                --              88              88
Cash dividends declared:
    Common stock                                                --            --                --              --         (22,531)
    Preferred stock                                             --            --                --              --          (4,243)
Unrealized gain on securities available for sale, net           --            --            35,692              --          35,692
                                                         ---------       -------      ------------        --------      ----------
Balance, December 31, 1995                                      --            --            12,019          (1,533)        496,906
Net income                                                      --            --                --              --           9,662
Purchase of common stock for treasury                      (57,000)         (923)               --              --            (923)
Issuance of common stock for stock options
 and employee stock plans                                   57,000           923                --            (242)          3,226
Issuance of common stock for acquisitions                       --            --                --              --          33,174
Exchange of preferred stock for common stock                    --            --                --              --              --
Amortization of restricted stock awards                         --            --                --             140             140
Cash dividends declared:
  Common stock                                                  --            --                --              --         (26,303)
  Preferred stock                                               --            --                --              --          (4,210)
Unrealized loss on securities available for sale, net           --            --           (14,245)             --         (14,245)
                                                         ---------       -------      ------------        --------      ----------
Balance, December 31, 1996                                      --       $    --      $     (2,226)       $ (1,635)     $  497,427
                                                         =========       =======      ============        ========      ==========




                               See accompanying notes to consolidated financial statements.
</TABLE>

                                    53
<PAGE> 27


<TABLE>
                                                   ROOSEVELT FINANCIAL GROUP, INC.
                                                          AND SUBSIDIARIES
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           (in thousands)
<CAPTION>
                                                                                             Year Ended December 31,
                                                                              ----------------------------------------------------
                                                                                  1996               1995                1994
                                                                              -----------        ------------         ------------

<S>                                                                           <C>                <C>                  <C>
Cash flows from operating activities:
 Net income                                                                   $     9,662        $     27,098         $     41,727
 Adjustments to reconcile net income to net
   cash provided by operating activities:
      Extraordinary loss on early extinguishment of debt                            1,452                  --                7,849
      Recognition of previously deferred expense related to the
        termination of interest rate exchange agreements                           80,468                  --                   --
      Depreciation and amortization                                                 4,668               4,294                5,814
      Amortization of discounts and premiums, net                                  41,709               9,900               16,383
      Decrease (increase) in accrued interest receivable                            8,169              (7,645)              (2,310)
      (Decrease) increase in accrued interest payable                             (14,845)             11,119               (1,023)
      Provision for losses on loans and real estate                                 1,262               1,200               17,013
      Unrealized losses on impairment of mortgage-backed securities                    --              27,063                   --
      (Increase) in securities held for trading, net                                   --                  --              (87,138)
      Decrease in loans receivable held for sale, net                                  --                  --               86,579
      Other, net                                                                   (7,371)            (31,514)              22,674
                                                                              -----------        ------------         ------------
         Net cash provided by operating activities                                125,174              41,515              107,568
                                                                              -----------        ------------         ------------
Cash flows from investing activities:
   Principal payments and maturities of securities available for sale             228,942             126,291              313,775
   Principal payments and maturities of securities held to maturity               941,702             835,059              783,067
   Principal payments on loans                                                    897,046             699,307              727,348
   Proceeds from sales of securities available for sale                         2,317,700             945,941            2,633,590
   Proceeds from sales of loans                                                    30,211                  --                   --
   Purchase of securities available for sale                                     (617,089)           (737,735)          (2,905,255)
   Purchase of securities held to maturity                                       (573,971)         (1,234,320)          (1,312,918)
   Purchase of loans                                                             (291,556)           (321,097)            (146,772)
   Originations of loans                                                       (1,406,742)           (688,576)            (680,794)
   Fees paid for interest rate cap and floor agreements, net                      (43,642)                 --              (35,078)
   Net proceeds from sales of real estate                                          10,408              10,889                9,253
   Purchase of office properties and equipment                                     (4,890)             (2,402)              (7,556)
   (Purchase) sale of purchased mortgage servicing rights, net                    (41,846)              3,971                   --
   Cash and cash equivalents from acquisitions, net of cash paid                   11,303             (19,201)              31,087
   Payments on sales or exchanges of branch deposits, net                              --                  --              (67,337)
   Proceeds from sale of loan production facilities                                    --                  --               75,150
                                                                              -----------        ------------         ------------
         Net cash provided by (used in) investing activities                    1,457,576            (381,873)            (582,440)
                                                                              -----------        ------------         ------------
Cash flows from financing activities:
   Repayment of mortgage-backed bonds                                                  --                  --              (60,820)
   Redemption of subordinated notes                                               (28,750)                 --              (31,022)
   Defeasance of mortgage-backed bonds                                            (21,048)                 --              (72,375)
   Proceeds from FHLB advances                                                 17,952,500          15,513,000           14,551,256
   Principal payments on FHLB advances                                        (18,500,000)        (14,851,000)         (14,115,980)
   Fees paid for termination of interest rate exchange agreements, net            (50,791)                 --                   --
   Excess of deposit receipts over withdrawals (withdrawals over receipts)        210,162            (173,894)            (578,888)
   (Decrease) increase in securities sold under agreements
    to repurchase, net                                                         (1,082,098)           (125,313)             617,726
   Proceeds from issuance of preferred stock                                           --                  --               21,273
   Proceeds from exercise of stock options                                          1,920               1,107                6,459
   Purchase of treasury stock                                                        (923)             (3,426)                (150)
   Cash dividends paid                                                            (30,513)            (26,789)             (18,056)
                                                                              -----------        ------------         ------------
         Net cash (used in) provided by financing activities                   (1,549,541)            333,685              319,423
                                                                              -----------        ------------         ------------
Net increase (decrease) in cash and cash equivalents                               33,209              (6,673)            (155,449)
Cash and cash equivalents at beginning of year                                     15,433              22,106              177,555
                                                                              -----------        ------------         ------------
Cash and cash equivalents at end of year                                      $    48,642        $     15,433         $     22,106
                                                                              ===========        ============         ============
</TABLE>
                                                                    (Continued)

                                    54
<PAGE> 28

SUPPLEMENTAL DISCLOSURES RELATED TO THE CONSOLIDATED STATEMENTS OF
CASH FLOWS

The Company paid interest of $477.6 million, $455.3 million, and $348.6
million during 1996, 1995, and 1994, respectively.  The Company paid income
taxes of $28.7 million, $37.1 million, and $6.5 million during 1996, 1995,
and 1994, respectively.

<TABLE>
Cash and cash equivalents obtained from acquisitions, net of cash paid, are
summarized as follows:

<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31,
                                                                      ---------------------------------------------------
                                                                         1996                1995                 1994
                                                                         ----                ----                 ----
                                                                                        (in thousands)

<S>                                                                   <C>                 <C>                 <C>
   Fair value of assets purchased                                     $(267,477)          $ (98,763)          $  (556,990)
   Liabilities assumed                                                  234,303              73,731               491,755
   Issuance of common stock                                              33,174                 --                 48,231
                                                                      ---------           ---------           -----------
   Cash received (paid) from acquisitions                                    --             (25,032)              (17,004)
   Cash and cash equivalents acquired                                    11,303               5,831                48,091
                                                                      ---------            --------           -----------
   Cash and cash equivalents from acquisitions,
       net of cash paid                                               $  11,303           $ (19,201)          $    31,087
                                                                      =========           =========           ===========

Noncash investing and financing activities are summarized below:

<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31,
                                                                      ---------------------------------------------------
                                                                         1996                1995                 1994
                                                                         ----                ----                 ----
                                                                                        (in thousands)

<S>                                                                   <C>                 <C>                 <C>
   Noncash transfers from securities held for
      trading to securities available for sale                        $      --            $     --           $   242,429
   Noncash transfers from securities available for
      sale to securities held to maturity                                    --                  --               107,318
   Noncash transfers from securities held to maturity to
      securities available for sale                                   3,169,728              85,165                26,368
   Desecuritization resulting in transfer of mortgage-backed
      securities held to maturity to loans and real estate owned             --              33,603                    --
   Securitization of loans held for sale                                210,083                  --                    --
   Redesignation of interest rate exchange and cap agreements to
      securities available for sale                                      42,131               4,369                    --



                                 See accompanying notes to consolidated financial statements.
</TABLE>

                                    55
<PAGE> 29


                  ROOSEVELT FINANCIAL GROUP, INC.
                          AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994


(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of Roosevelt
Financial Group, Inc. (the Company); its three wholly-owned subsidiaries,
Roosevelt Bank (the Bank), Missouri State Bank and Trust Company (MSB), a
Missouri-chartered bank, and F & H Realty (Realty), a Missouri-chartered real
estate investment company; and the Bank's and MSB's wholly-owned
subsidiaries.  All significant intercompany accounts and transactions have
been eliminated in consolidation. Certain reclassifications have been made to
the 1995 and 1994 consolidated financial statements to conform to the 1996
presentation. Results of operations of companies acquired and accounted for
as purchases are included from their respective dates of acquisition. When
acquired in a pooling of interests transaction, current and prior period
financial statements are restated to include the accounts of the acquired
companies, if significant.

In preparing the consolidated financial statements, management of the Company
is required to make estimates and assumptions which significantly affect
the reported amounts in the consolidated financial statements. Significant
estimates which are particularly susceptible to change in a short period
of time include the determination of the allowances for losses on loans and
real estate.

Investment and Mortgage-Backed Securities

At the time of purchase, debt and equity securities are segregated into one
of three categories: trading, held to maturity, or available for sale.

Trading securities are purchased and held principally for the purpose of
reselling them within a short period of time. Unrealized gains and losses
on trading securities are included in earnings.

Securities classified as held to maturity are accounted for at cost, adjusted
for the amortization of premiums and accretion of discounts which are
recognized in interest income over the period to maturity for investment
securities, or the estimated life of mortgage-backed securities using the
level-yield method because the Company has both the ability and the intent to
hold such securities to maturity.

Securities not classified as either trading or held to maturity are
considered to be available for sale. Gains and losses realized on the sale of
these securities are based on the specific identification method. Unrealized
gains and losses on available for sale securities are excluded from earnings
and reported as a net amount as a separate component of stockholders' equity
until realized.

Unrealized losses on all debt securities are recognized if any market
valuation differences are deemed to be other than temporary.

Derivative Financial Instruments

The Company uses derivative financial instruments as part of its overall
interest rate risk strategy.  Derivative financial instruments which have
been utilized by the Company include interest rate exchange agreements
(swaps), interest rate cap, floor, and collar agreements, and to a lesser
extent, financial futures contracts.  Interest rate swap, cap, floor, and
collar agreements have been used to synthetically alter the rate and/or term
characteristics of specified interest-bearing assets or liabilities.
Financial futures contracts have been used to achieve a position whereby the
estimated exposure of a certain position to interest rate movements is offset
by approximately equal, but opposite, results in the financial futures
contracts.

                                    56
<PAGE> 30

Interest rate swaps are agreements to exchange interest payment streams on an
agreed upon notional amount.  Typically, the Company pays a fixed rate and
receives a variable rate based upon a specified floating rate index.  The
Company makes no interest payments on its interest rate cap, floor, and collar
agreements but is entitled to receive an interest payment on an agreed upon
notional amount when the agreements are "in the money" (e.g. when the
specified floating rate index exceeds or falls below, respectively, a rate
specified in the agreement).  All such receipts or payments are recorded as a
net component of interest expense in the accompanying consolidated financial
statements.

The Company has entered into interest rate swap, cap, floor, or collar
agreements with nationally recognized commercial and investment banking firms
or the Federal Home Loan Bank.  Typically, the Company pays a fee (premium)
to enter an interest rate cap, floor, or collar agreement which is capitalized
and then amortized over the life of the agreement on a straight-line basis.
No such premium is paid to enter into swap agreements.  At the time the
agreements are initiated, the Company designates which assets or liabilities
are being synthetically altered by the agreement.  Agreements which have been
designated against available for sale assets are thereafter reported at their
fair value with unrealized gains or losses reflected as a separate component
of stockholders' equity.  Agreements designated against other
interest-bearing assets or liabilities are reported at amortized cost.

Gains and losses resulting from terminated interest rate swap agreements or
interest rate cap, floor, and collar agreements that are in the money are
recognized consistent with the gain or loss on the asset or liability that
was being synthetically altered by the agreement.  To the extent that the
designated asset or liability still exists, any gain or loss on the
termination of the agreement is deferred and amortized over the shorter term
of the remaining contractual life of the agreement or remaining life of the
asset or liability.  Gains and losses resulting from terminated interest
rate cap, floor, and collar agreements that are not in the money are
recognized at the time of termination.  Interest rate cap, floor, and
collar agreements may be redesignated to different assets or liabilities
during their lives.  At the time of redesignation, the agreements are
marked-to-market with the resulting gain or loss being deferred and
amortized as if the agreement were canceled.

Gains or losses on financial futures contracts which qualify as hedges are
deferred. The unamortized balance of such deferred gains or losses is applied
to the carrying value of the hedged items. Amortization of the net deferred
gains or losses is applied to the interest component of the hedged items
using the level-yield method. Gains or losses in the market value of
financial futures contracts which do not qualify for hedge accounting are
recognized currently.

Loans

Loans are stated at the principal amount outstanding, net of deferred loan
fees, allowance for losses, and any discounts or premiums on purchased loans.
The deferred fees, discounts, and premiums are amortized using the
level-yield method over the estimated life of the loan.

Generally, a loan is classified as nonaccrual and the accrual of interest on
such loan is discontinued when the contractual payment of principal or
interest has become more than 90 days past due or management has serious
doubts about further collectibility of principal or interest, even though the
loan is currently performing. When a loan is placed on nonaccrual status,
accrued but unpaid interest is reversed. Generally, loans are restored to
accrual status when the obligation is brought current, has performed in
accordance with the contractual terms for a reasonable period of time, and the
ultimate collectibility of the total contractual principal and interest is no
longer in doubt.

Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan", as amended by Statement of Financial Accounting Standards No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures" (collectively SFAS 114). SFAS 114 addresses the accounting by
creditors for impairment of certain loans by specifying how the allowance for
loan losses related to such loans should be determined.  As SFAS 114 does not
apply to residential

                                    57
<PAGE> 31

mortgage and consumer loans which are collectively evaluated for impairment
and which represent in excess of 95% of the Company's total loan portfolio,
the initial and continuing application of SFAS 114 has had no significant
impact on the Company's consolidated financial statements. Relative to the
Company's commercial real estate loan portfolio, a loan is considered to be
impaired when it is probable that the Bank will be unable to collect all
amounts due according to the contractual terms of the loan agreement.
Impairment is measured based on the underlying value of the collateral.

Loans Serviced for Others

Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 122, "Accounting for Mortgage Servicing Rights"
(SFAS 122).  Accordingly, the Company recognizes as separate assets the
rights to service mortgage loans, whether the rights are acquired through
purchases of servicing or through the origination or purchase of loans with a
definitive plan to sell or securitize the loans with servicing retained.  The
fair value of capitalized servicing rights assigned to such purchased or
originated loans is based upon the present value of estimated future cash
flows associated with the servicing.  SFAS 122 also requires that an
enterprise assess its capitalized mortgage servicing rights for impairment
based upon the fair value of those rights.  For purposes of measuring
impairment, the Company stratifies its servicing rights based upon the
interest rate characteristics of the underlying loans, and compares the fair
value for each strata to the unamortized recorded value.  The fair value is
based upon the net present value of expected future cash flows discounted at
a rate commensurate with the risks involved.  The Company's adoption of SFAS
122 did not have a material impact on the Company's consolidated financial
statements.

Servicing fees related to loans serviced for others are recognized when loan
payments are received. Ancillary income from loan servicing is recorded when
received. Operational costs to service such loans are charged to expense as
incurred and are included in general and administrative expenses in the
accompanying consolidated statements of operations.

The capitalized costs of mortgage servicing rights are amortized over the
estimated remaining lives of the underlying loans using the level-yield
method.  Amortization of mortgage servicing rights is recorded as a component
of "Loan servicing fees, net" in the consolidated statements of operations.

Real Estate Owned

Real estate owned includes properties acquired through foreclosure and
properties acquired for development and sale. Real estate acquired through
foreclosure is transferred to real estate owned at fair value, which
represents the new recorded basis of the property. Subsequently, properties
are evaluated and any additional declines in value are provided for in an
allowance for losses on real estate. Real estate acquired for development and
sale is carried at the lower of cost or net realizable value.

Allowances for Losses

Allowances for losses on loans and real estate owned are established when a
loss is probable and can be reasonably estimated. These allowances are
provided based on past experience and the prevailing market conditions.
Management's evaluation of loss considers various factors including, but not
limited to, general economic conditions, loan portfolio composition, prior
loss experience, estimated sales price, and holding and selling costs.
Provisions for loan losses are recorded to maintain the Company's overall
allowance for loan losses within an acceptable range to cover probable credit
losses inherent in the portfolio.

Management believes that the allowances for losses on loans and real estate
owned are adequate. While management uses available information to recognize
losses, future additions to the allowances may be necessary based on changes
in economic conditions.

                                    58
<PAGE> 32

Office Properties and Equipment

Office properties and equipment are stated at cost, less accumulated
depreciation and leasehold amortization.  Depreciation of office buildings
and improvements and furniture and equipment is computed on the straight-line
method over the estimated useful lives of the related assets. Leasehold
improvements are amortized over the shorter of their estimated useful lives
or the term of the related lease.

Income Taxes

Income taxes are accounted for using the asset and liability method. Under
this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to the differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

Earnings Per Share

Net income for primary earnings per share is adjusted for the dividends on
convertible preferred stock.  The average number of common shares and common
equivalent shares outstanding for 1996, 1995, and 1994 was 42,698,851,
40,620,932, and 37,943,933, respectively.

Fully diluted earnings per share has been computed using the weighted average
number of common shares and common equivalent shares, including the effect of
the assumed conversion of convertible preferred stock into common stock, if
dilutive.  The average number of common shares and common equivalent shares
outstanding for 1996, 1995, and 1994 for the purpose of calculating fully
diluted earnings per share was 42,731,792, 40,628,697, and 39,005,360,
respectively.

Cash Flows

For the purpose of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks, and other highly liquid debt instruments
with an initial maturity of three months or less.

Impact of Prospective Accounting Pronouncements

During June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinquishments of
Liabilities" (SFAS 125).  SFAS 125 provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishments
of liabilities based on consistent application of a financial components
approach that focuses on control.  It distinguishes transfers of financial
assets that are sales from transfers that are secured borrowings.  Under the
financial components approach, after a transfer of financial assets, an
entity recognizes all financial and servicing assets it controls and
liabilities it has incurred and derecognizes financial assets it no longer
controls and liabilities that have been extinguished.  The financial
components approach focuses on the assets and liabilities that exist after
the transfer.  Many of these assets and liabilities are components of
financial assets that existed prior to the transfer.  If a transfer does not
meet the criteria for a sale, the transfer is accounted for as a secured
borrowing with pledge of collateral.

SFAS 125 extends the "available-for-sale" or "trading" approach in SFAS 115
to nonsecurity financial assets that can contractually be prepaid or
otherwise settled in such a way that the holder of the asset would not
recover substantially all of its recorded investment.  Thus, nonsecurity
financial assets (no matter how acquired) such as loans, other receivables,
interest-only strips, or residual interests in securitization trusts that are
subject to

                                    59
<PAGE> 33

prepayment risk that could prevent recovery of substantially all of
the recorded amount are to be reported at fair value with the change in
fair value accounted for depending on the asset's classification as
"available-for-sale" or "trading".  SFAS 125 also amends SFAS 115 to prevent
a security from being classified as held-to-maturity if the security can be
prepaid or otherwise settled in such a way that the holder of the security
would not recover substantially all of its recorded investment.

SFAS 125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996, and is to
be applied prospectively.  Earlier or retroactive application is not
permitted.  Also, the extension of the SFAS 115 approach to certain
nonsecurity financial assets and the amendment to SFAS 115 is effective for
financial assets held on or acquired after January 1, 1997.
Reclassifications that are necessary because of the amendment do not call
into question an entity's intent to hold other debt securities to maturity in
the future.  The adoption of SFAS 125 is not expected to have a material
impact on the Company's financial statements.

(2)  BUSINESS COMBINATIONS

During the fourth quarter of 1996, the Company completed the acquisitions of
Community Charter Corporation (CCC), Sentinel Financial Corporation
(Sentinel), and Mutual Bancompany, Inc. (Mutual).  A total of 1,925,776
shares of the Company's common stock were issued in connection with these
acquisitions. Total assets of the acquired institutions were approximately
$269.4 million. These transactions were structured to qualify as tax free
reorganizations and were accounted for under the purchase method of
accounting.  Operating results of the acquired entities are included in the
accompanying consolidated statements of operations from their respective
acquisition dates and are not material to the consolidated financial
statements.

During the fourth quarter of 1995, the Company completed the acquisitions of
Kirksville Bancshares, Inc. (Kirksville) and WSB Bancorp, Inc. (WSB).  A
total of 1,521,435 shares of the Company's common stock were issued in
connection with the Kirksville transaction, which was accounted for as a
pooling of interests.  The Company paid a total cash consideration of
approximately $25.0 million in a purchase transaction to acquire WSB.  Total
assets of the acquired institutions were approximately $227.6 million.  These
transactions were structured to qualify as tax free reorganizations.  The
effect of these transactions was not material to the consolidated financial
statements and operating results of the acquired entities are included since
the respective acquisition dates.

On June 30, 1994, the Company completed the acquisition of Farm & Home
Financial Corporation (Farm & Home) whose assets totaled $3.1 billion.  As a
result of this transaction, the Company issued 17,993,838 shares of common
stock.   The transaction was structured to qualify as a tax free
reorganization.   The transaction was accounted for as a pooling of interests
and, accordingly, the consolidated financial statements of the Company
include the results of Farm & Home for all periods presented.

<TABLE>
Other acquisition and sale activity of Farm & Home during 1994 is summarized
as follows:

<CAPTION>

                      Nature                           Items Sold,
Date              of Transactions                  Purchased, or Exchanged                      Cash Consideration
----              ---------------                  -----------------------                      ------------------
<S>               <C>                              <C>                                          <C>
July 1, 1994      Sale of loan production          $75.2 million of Texas home builder          Received $75.2 million
                  business in Texas                lines of credit and six land acquisition
                                                   and development/rehab loans

June 24, 1994     Sale of Corpus Christi, Texas    $54.8 million of branch deposits             Paid $53.9 million
                  branch facility and deposit      and $927,000 of related deposit
                  accounts                         account loans and furniture and
                                                   fixtures

June 3, 1994      Sale of deposit accounts         $13.6 million of branch deposits             Paid $13.4 million
                  of branch                        and $177,000 of related deposit
                                                   account loans
</TABLE>

                                    60
<PAGE> 34

On April 22, 1994, the Company completed the acquisition of Home Federal
Bancorp of Missouri, Inc. (Home Bancorp).  Each holder of the common stock of
Home Bancorp received 0.4945 of a share of common stock of the Company on a
pre-split basis and $7.50 in cash for each share of Home Bancorp common stock
held for a total consideration of $68.3 million.  Home Bancorp's total
consolidated assets were $532.7 million.  The transaction was structured to
qualify as a tax free reorganization.  The transaction was accounted for
under the purchase method of accounting.  Operating results of Home Bancorp
are included since the acquisition date.

                                    61
<PAGE> 35
(3)  FAIR VALUE CONSOLIDATED BALANCE SHEETS

The Company's primary objective in managing interest rate risk is to position
the Company such that changes in interest rates do not have a material
adverse impact upon the net market value of the Company.  Net market value
considers the fair value of financial instruments (assets, liabilities, and
off-balance-sheet items), in contrast to the accompanying consolidated
balance sheets which are historical cost based.  The estimated fair values of
the Company's assets and liabilities, and the related carrying amounts from
the accompanying consolidated balance sheets, are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                  DECEMBER 31, 1996            DECEMBER 31, 1995
                                                             --------------------------   ---------------------------
                                                               CARRYING        FAIR         CARRYING         FAIR
                                                                AMOUNT         VALUE         AMOUNT          VALUE
                                                             -----------    -----------   -----------     -----------
<S>                                                          <C>            <C>           <C>             <C>
ASSETS:
Cash and cash equivalents                                    $    48,642    $    48,642   $    15,433     $    15,433
Securities available for sale:
    Investment securities                                        183,227        183,227       159,857         159,857
    Mortgage-backed securities                                 2,915,521      2,915,521     1,433,648       1,433,648
    Interest rate exchange, cap, and floor agreements             59,009         59,009        12,956          12,956
Securities held to maturity:
    Investment securities                                             --             --       119,186         120,517
    Mortgage-backed securities                                        --             --     3,430,954       3,431,341
Loans                                                          4,298,469      4,387,911     3,577,892       3,708,014
Office properties and equipment, net                              54,966         55,762        52,466          53,262
Deferred losses on interest rate exchange agreements                  --             --        20,831              --
Unamortized fees on interest rate
    cap, floor, and collar agreements                             14,004         10,378        38,049          37,302
Other assets                                                     222,574        199,326       151,789         159,548
                                                             -----------    -----------   -----------     -----------
                                                             $ 7,796,412    $ 7,859,776   $ 9,013,061     $ 9,131,878
                                                             ===========    ===========   ===========     ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits                                                     $ 5,347,071    $ 5,355,106   $ 4,907,497     $ 4,954,183
Securities sold under agreements to repurchase                     3,095          3,095     1,082,814       1,083,048
Advances from Federal Home Loan Bank                           1,837,756      1,837,556     2,377,138       2,378,419
Other borrowings                                                      --             --        47,523          50,260
Deferred gains on interest rate exchange agreements                   --             --         5,661              --
Interest rate exchange agreements                                     --             --            --         108,698
Other liabilities                                                111,063        139,629        95,522          95,292
                                                             -----------    -----------   -----------     -----------
    Total liabilities                                          7,298,985      7,335,386     8,516,155       8,669,900
Net market value                                                      --        524,390            --         461,978
Stockholders' equity                                             497,427             --       496,906              --
                                                             -----------    -----------   -----------     -----------
                                                             $ 7,796,412    $ 7,859,776   $ 9,013,061     $ 9,131,878
                                                             ===========    ===========   ===========     ===========
NON-FINANCIAL INSTRUMENTS:
Demand deposits                                              $        --    $    33,161   $        --     $    19,552
Commitments to extend credit                                 $   111,584    $   111,498   $   225,324     $   225,752
                                                             ===========    ===========   ===========     ===========
</TABLE>

                                    62
<PAGE> 36

Net market value is not intended to represent the value of the Company's
stock or the amounts distributable to stockholders in connection with a sale
of the Company or in the unlikely event of its liquidation. Such amounts
ascribe no value to intangible assets or to the going concern value of the
enterprise.

The following methods and assumptions were used by the Company in estimating
fair value disclosures:

Cash and cash equivalents - Due to the short-term nature of these financial
instruments, carrying value approximates fair value.

Investment securities and mortgage-backed securities - Fair values are based
on quoted market prices or dealer quotes.  Where such quotes are not
available, fair value is estimated using quoted market prices for similar
securities, or in limited instances discounted cash flow analyses.  Stock in
the Federal Home Loan Bank is valued at cost, which represents redemption
value and approximates fair value.

Interest rate exchange, cap, floor, and collar agreements - The fair values
of these agreements, are estimated by comparing the contractual rates the
Company is paying or receiving to market rates quoted on new agreements
with similar maturities by counterparties of similar creditworthiness.

Loans - The fair value of loans is estimated by discounting future cash flows
at market interest rates for loans of similar credit risk, terms, and
maturities, taking into consideration repricing characteristics and
prepayment risk.

Office properties and equipment - The fair value of office properties is
estimated based upon in-house appraised values for the Company's properties.
The net book value of office equipment is assumed to approximate its fair
value.

Other assets and liabilities - The estimated fair value of other assets,
which includes intangibles, and real estate owned, and other liabilities
represents the sum of all contractual financial receivables or obligations
adjusted for the tax effects.

Deposits with defined maturities - The fair value of certificates of deposit
accounts is based on the discounted values of contractual cash flows using
rates currently offered in the marketplace for accounts of similar remaining
maturities.

Deposits without defined maturities - For the purposes of calculating "Net
Market Value," no consideration is given to the economic value of the Bank's
long-term relationships with its depositors.  For deposit liabilities without
defined maturities, fair value is assumed to be the amount payable on demand
at the reporting date.  By ignoring what is commonly referred to as a core
deposit intangible, no consideration is given to the present value of the
Company's expected future profitability derived from those customer
relationships.  However, such value as calculated by the Company is
disclosed, net of applicable income taxes, under the heading "Non-Financial
Instruments."  The aforementioned value has been calculated by comparing the
rates paid on deposits to a rate paid on a wholesale borrowing having a
maturity equal to the expected maturity of the deposits reduced by the cost
to service and insure such deposits.

Securities sold under agreements to repurchase - Fair values are based on the
discounted value of contractual cash flows using dealer quoted rates for
agreements of similar terms and maturities.

Advances from Federal Home Loan Bank - The fair value of advances from the
Federal Home Loan Bank (FHLB) is based on discounted values of contractual
cash flows using rates currently offered in the marketplace for instruments
with similar terms and maturities.

Other borrowings - Fair values are based on quoted market prices, dealer
quotes, or on the discounted values of contractual cash flows using market
derived spreads.

                                    63
<PAGE> 37

Commitments to extend credit - The fair value of commitments is estimated
using the fees currently charged to enter into similar agreements, taking
into account the remaining terms of the agreements and the present
creditworthiness of the counterparties.  For fixed-rate loan commitments,
fair value also considers the difference between current levels of interest
rates and the committed rates.

Income taxes - The estimated income tax effects arising from the differences
between fair values and tax bases of financial instruments is calculated and
included in the fair value disclosure of other assets or other liabilities.
The effect of the restoration to taxable income of the Bank's bad debt
reserves for income tax purposes resulting from the unlikely event of
liquidation has not been included.

(4)  SECURITIES AVAILABLE FOR SALE

The amortized cost and market value of securities available for sale at
December 31, 1996 are summarized as follows:
<TABLE>
<CAPTION>

                                                                                   GROSS         GROSS
                                                                  AMORTIZED     UNREALIZED     UNREALIZED      MARKET
                                                                    COST          GAINS          LOSSES         VALUE
                                                                -----------     ----------     ----------    ----------
                                                                                    (in thousands)

<S>                                                             <C>                <C>          <C>          <C>
Investment Securities:
  U.S. Government and agency obligations                        $    12,113        $   292      $     (7)    $   12,398
  Corporate securities                                               14,280          1,041          (284)        15,037
                                                                  ---------         ------       -------      ---------
                                                                     26,393          1,333          (291)        27,435
  FHLB stock                                                        155,792             --            --        155,792
                                                                  ---------         ------       -------      ---------
                                                                    182,185          1,333          (291)       183,227
                                                                  ---------         ------       -------      ---------
 Mortgage-backed Securities:
   Mortgage-backed certificates:
    GNMA                                                            105,705          2,481          (251)       107,935
    FNMA                                                            128,557          1,713          (456)       129,814
    FHLMC                                                           135,524          2,207        (1,510)       136,221
   Private pass-throughs                                          2,331,504         18,713       (15,600)     2,334,617
   Collateralized mortgage obligations                              170,219          1,889        (3,747)       168,361
   Other                                                             35,274          3,942          (643)        38,573
   Derivative financial instruments:
     Interest rate cap agreements                                    71,410            550       (14,627)        57,333
     Interest rate floor agreements                                     145          1,531            --          1,676
                                                                  ---------         ------       -------      ---------
                                                                  2,978,338         33,026       (36,834)     2,974,530
                                                                  ---------         ------       -------      ---------
                                                                 $3,160,523        $34,359      $(37,125)    $3,157,757
                                                                  =========         ======       =======      =========
</TABLE>

                                    64

<PAGE> 38

The amortized cost and market value of securities available for sale at
December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>

                                                                                   GROSS         GROSS
                                                                  AMORTIZED     UNREALIZED     UNREALIZED      MARKET
                                                                    COST          GAINS          LOSSES         VALUE
                                                                -----------     ----------     ----------    ----------
                                                                                    (in thousands)

<S>                                                              <C>               <C>          <C>          <C>
Investment Securities:
  U.S. Government and agency obligations                         $   10,671        $   439      $    (25)    $   11,085
  Corporate securities                                               14,882          1,887            (6)        16,763
                                                                  ---------         ------       -------      ---------
                                                                     25,553          2,326           (31)        27,848
  FHLB stock                                                        132,009             --            --        132,009
                                                                  ---------         ------       -------      ---------
                                                                    157,562          2,326           (31)       159,857
                                                                  ---------         ------       -------      ---------
 Mortgage-backed Securities:
  Mortgage-backed certificates:
     GNMA                                                           694,541         17,996          (538)       711,999
     FNMA                                                           342,405          4,440          (313)       346,532
     FHLMC                                                          308,839          6,380          (803)       314,416
  Other                                                              59,512          3,090        (1,901)        60,701
  Derivative financial instruments:
     Interest rate exchange agreements                               (4,294)            --        (2,234)        (6,528)
     Interest rate cap agreements                                    23,997             --       (15,259)         8,738
     Interest rate floor agreements                                   4,271          6,475            --         10,746
                                                                  ---------         ------       -------      ---------
                                                                  1,429,271         38,381       (21,048)     1,446,604
                                                                  ---------         ------       -------      ---------
                                                                 $1,586,833        $40,707      $(21,079)    $1,606,461
                                                                  =========         ======       =======      =========
</TABLE>

The amortized cost and market value of debt securities available for sale
at December 31, 1996, by contractual maturity, are summarized as follows:
<TABLE>
<CAPTION>
                                                                   AMORTIZED       MARKET
                                                                     COST          VALUE
                                                                   ---------      -------
                                                                       (in thousands)

<S>                                                             <C>            <C>
Due in one year or less                                         $     3,860    $     3,868
Due after one year through five years                                21,374         22,220
Due after five years through ten years                                1,126          1,313
Due after ten years                                                      33             34
                                                                 ----------     ----------
                                                                     26,393         27,435
Mortgage-backed securities                                        2,978,338      2,974,530
                                                                 ----------     ----------
                                                                $ 3,004,731    $ 3,001,965
                                                                 ==========     ==========
</TABLE>

At December 31, 1996 and 1995, accrued interest receivable on securities
available for sale totaled $19.9 million and $8.0 million, respectively.

Securities available for sale with an amortized cost and approximate market
value of $1.2 billion and $1.1 billion at December 31, 1996 and 1995,
respectively, were pledged to secure deposits and advances from the FHLB.

At December 31, 1996, the Company had outstanding commitments to purchase
and sell mortgage-backed securities of approximately $199.3 million and
$160.0 million, respectively.

Gross realized gains on the sale of or early redemption by the issuer of
securities available for sale totaled $27.8 million, $25.0 million, and $15.4
million for 1996, 1995, and 1994, respectively.  Gross realized losses on
such securities totaled $18.6 million, $1.1 million, and $43.6 million for
1996, 1995, and 1994, respectively.

                                    65
<PAGE> 29

(5)  SECURITIES HELD TO MATURITY

In December 1996, the Company reclassified its entire investment and
mortgage-backed securities portfolios from held to maturity to available for
sale.  The securities transferred consisted of investment securities with
approximate amortized cost and market values of $114.3 million and $114.9
million, respectively, and mortgage-backed securities with approximate
amortized cost and market values of $3.1 billion.  This action was taken to
provide the Company maximum flexibility to manage its portfolio. As a
result of the Company's decision to reclassify its entire securities
portfolio from held to maturity to available for sale, it will not be able to
classify any securities as held to maturity for a minimum period of one
year from the initial reclassification date.

The amortized cost and market value of securities held to maturity at
December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>

                                                                                   GROSS         GROSS
                                                                  AMORTIZED     UNREALIZED     UNREALIZED      MARKET
                                                                    COST          GAINS          LOSSES         VALUE
                                                                -----------     ----------     ----------    ----------
                                                                                    (in thousands)

<S>                                                             <C>               <C>         <C>          <C>
Investment Securities:
  U.S. Government and agency obligations                        $   113,554        $  1,242    $      --     $   114,796
  Corporate securities                                                5,632              89           --           5,721
                                                                  ---------         -------      -------       ---------
                                                                    119,186           1,331           --         120,517
                                                                  ---------         -------      -------       ---------
Mortgage-backed Securities:
  Mortgage-backed certificates:
     GNMA                                                            13,895             177         (243)         13,829
     FNMA                                                           131,874           1,919         (422)        133,371
     FHLMC                                                          239,026           3,287         (742)        241,571
  Private pass-throughs                                           2,705,311          21,618      (21,758)      2,705,171
  Collateralized mortgage obligations                               340,848           2,556       (6,005)         37,399
                                                                  ---------         -------     --------       ---------
                                                                  3,430,954          29,557      (29,170)      3,431,341
                                                                  ---------         -------     --------       ---------
                                                                $ 3,550,140        $ 30,888    $ (29,170)    $ 3,551,858
                                                                  =========         =======     ========      ==========
</TABLE>

At December 31, 1995, accrued interest receivable on securities held to
maturity totaled $23.1 million.

Securities held to maturity with an amortized cost and approximate market
value of $1.4 billion at December 31, 1995, were pledged to secure
securities sold under agreements to repurchase, other borrowings, and
interest rate exchange agreements.

During 1995, certain private issuer mortgage-backed securities held by the
Company were determined to be other than temporarily impaired. As a result,
the Company recorded a $27.1 million pre-tax write-down ($17.8 million after
tax) to reflect the impairment of such securities.  The amount of the
write-down was based on discounted cash flow analyses performed by
management (based upon assumptions regarding delinquency levels, foreclosure
rates, and loss ratios on REO disposition in the underlying portfolio).
Discounted cash flow analyses were utilized to estimate fair value due to
the absence of a ready market for the securities.

On November 15, 1995, the FASB issued a special report, "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities, Questions and Answers" (the Report).  The Report was
issued as an aid in understanding and implementing SFAS 115.  The Report
provided transition guidance for an enterprise that adopted SFAS 115 prior to
the issuance of the Report.  The guidance allowed a one-time reassessment of
the classification of securities as of a single measurement date without
tainting the classification of the remaining held to maturity debt securities.
Such reassessment and transfers were to be completed no later than December 31,
1995.  On December 31, 1995, the Company transferred into the available for
sale portfolio from the held to maturity category mortgage-backed securities
with an amortized cost and market value of $67.5 million and investment
securities with an amortized cost and market value of $17.6 million.

                                    66

<PAGE> 40

(6)  LOANS

Loans are summarized as follows:
<TABLE>
<CAPTION>

                                                                         DECEMBER 31,
                                                               ------------------------------
                                                                  1996                1995
                                                               -----------        -----------
                                                                        (in thousands)
<S>                                                            <C>                <C>
   Real Estate:
     Residential                                               $ 3,791,145        $ 3,320,098
     Commercial                                                    153,375            137,507
     Construction                                                   27,876             11,969
   Consumer loans                                                  348,280            125,633
                                                                ----------         ----------
                                                                 4,320,676          3,595,207
   Add (Deduct):
     Loans in process                                              (10,131)            (4,266)
     Purchased loan premiums                                        21,914             17,359
     Unearned discounts                                           (12,283)             (9,105)
     Deferred loan costs                                             1,012                552
     Allowance for losses                                          (22,719)           (21,855)
                                                                ----------         ----------
                                                               $ 4,298,469        $ 3,577,892
                                                                ==========         ==========
Weighted average interest rate at end of year                         7.69%              7.58%
                                                                      ====               ====
</TABLE>

Gross loans at December 31, 1996, by contractual maturity, were as follows
(in thousands):
<TABLE>
<CAPTION>


                                         Residential     Commercial     Construction    Consumer        Total
                                         -----------     ----------     ------------    --------        -----
<S>                                     <C>              <C>             <C>           <C>          <C>
Adjustable-rate loans:
  Due within one year                   $    31,088      $   4,553       $  7,282      $ 138,245    $   181,168
  After one but within five years             9,438         14,274          1,762          8,528         34,002
  After five but within ten years            32,430         11,616            138         59,530        103,714
  After ten years                         2,525,202         14,356             --          6,533      2,546,091
                                          ---------        -------        -------       --------     ----------
                                          2,598,158         44,799          9,182        212,836      2,864,975
                                          ---------        -------        -------       --------     ----------
Fixed-rate loans:
  Due within one year                        11,370          7,239         17,705         18,179         54,493
  After one but within five years            33,017         55,413            989         90,879        180,298
  After five but within ten years           104,116         38,654             --          5,442        148,212
  After ten years                         1,044,484          7,270             --         20,944      1,072,698
                                          ---------        -------        -------       --------     ----------
                                          1,192,987        108,576         18,694        135,444      1,455,701
                                          ---------        -------        -------       --------     ----------
                                        $ 3,791,145      $ 153,375       $ 27,876      $ 348,280    $ 4,320,676
                                          =========        =======        =======       ========     ==========
</TABLE>

At December 31, 1996 and 1995, accrued interest receivable on loans totaled
approximately $25.7 million and $22.3 million, respectively.

Nonaccrual loans totaled $12.2 million, $9.5 million, and $7.6 million at
December 31, 1996, 1995, and 1994, respectively.  If interest on these loans
had been recognized, such income would have been $924,000, $1.1 million, and
$686,000 for 1996, 1995, and 1994, respectively. During 1996, 1995, and 1994
these nonaccrual loans contributed $246,000, $203,000, and $221,000 to
interest income, respectively. In addition, at December 31, 1996, 1995, and
1994 the Company had troubled debt restructurings aggregating $53,000,
$661,000, and $2.8 million, respectively.  During 1996, 1995, and 1994, these
troubled debt restructurings contributed $22,000, $175,000, and $184,000 to
interest income, respectively.  Had these loans not been restructured,
interest income would have been $26,000, $211,000, and $222,000 for 1996,
1995, and 1994, respectively.

As of December 31, 1996, the Company had outstanding commitments to originate
fixed-rate mortgage loans of approximately $27.8 million, adjustable-rate
mortgage loans of approximately $66.5 million, fixed-rate residential
construction loans of approximately $11.3 million, and adjustable-rate
residential construction loans of approximately $4.3 million.  The Company
also had outstanding commitments to originate fixed-rate non-residential
construction loans of approximately $484,000 and variable-rate
non-residential construction loans of approximately $1.2 million.
Commitments to extend credit may involve, to varying degrees, elements of
credit risk and interest rate risk in excess of the amount recognized in the
consolidated balance sheets.  The amount of credit loss in the event of
nonperformance by the other party to the commitment is represented by the
contractual amount of the commitment.  Interest rate risk on commitments to
extend credit results from the possibility that interest rates may have moved
unfavorably from the position of the Company since the time the commitment was
made.

                                    67
<PAGE> 41

The Company services mortgage loans for its own account and also services
mortgage loans for third-party investors under loan servicing agreements.
Pursuant to these agreements, the Company typically collects from the
borrower monthly payments of principal and interest on mortgage loans and
additional amounts towards payment of real estate taxes and insurance.  The
Company retains its servicing fee from such payments and remits the balance
of the principal and interest payments to the investors in the mortgage loans
or associated mortgage-backed securities.  At December 31, 1996 and 1995, the
Company serviced 116,882 mortgage loans totaling $8.4 billion and 78,698
mortgage loans totaling $5.0 billion, respectively. Of these amounts, $3.5
billion and $3.0 billion were serviced on the Company's own behalf at
December 31, 1996 and 1995, respectively.

Activity in mortgage servicing rights originated and purchased, which is
recorded in other assets in the accompanying consolidated balance sheets, is
summarized as follows:
<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                                               ---------------------------------------
                                                                  1996           1995           1994
                                                               ---------       --------       --------
                                                                             (in thousands)

<S>                                                            <C>             <C>            <C>
Balance, beginning of year                                     $  15,862       $ 22,556       $ 28,117
Purchases                                                         41,846            812             --
Originations                                                       1,252             --             --
Sales                                                                 --         (3,273)            --
Amortization                                                      (6,570)        (4,233)        (5,561)
                                                                  ------         ------         ------
Balance, end of year                                           $  52,390       $ 15,862       $ 22,556
                                                                  ======         ======         ======
</TABLE>

(7) REAL ESTATE OWNED

Real estate owned is summarized as follows:
<TABLE>
<CAPTION>

                                                                      December 31,
                                                                -----------------------
                                                                  1996           1995
                                                                --------       --------
                                                                    (in thousands)

<S>                                                             <C>            <C>
Acquired through foreclosure                                    $ 14,511       $ 19,098
Acquired for development and sale                                    216            705
                                                                 -------        -------
                                                                  14,727         19,803
Less allowance for losses                                         (2,289)        (4,370)
                                                                 -------        -------
                                                                $ 12,438       $ 15,433
                                                                 =======        =======
</TABLE>

(8) ALLOWANCE FOR LOSSES ON LOANS AND REAL ESTATE

Activity in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                                               ---------------------------------------
                                                                  1996           1995           1994
                                                               ---------       --------       --------
                                                                             (in thousands)

<S>                                                            <C>             <C>            <C>
Balance, beginning of year                                     $  21,855       $ 22,915       $  9,056
Provision charged to expense                                       1,262          1,200         12,432
Additions acquired through acquisitions                            1,242          1,166          2,483
Charge-offs, net                                                  (1,640)        (3,426)        (1,056)
                                                                --------        -------        -------
Balance, end of year                                           $  22,719       $ 21,855       $ 22,915
                                                                ========        =======        =======
</TABLE>

                                    68
<PAGE> 42

Activity in the allowance for losses on real estate owned is summarized as
follows:
<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                                               ---------------------------------------
                                                                  1996           1995           1994
                                                               ---------       --------       --------
                                                                             (in thousands)

<S>                                                            <C>             <C>            <C>
Balance, beginning of year                                     $   4,370       $  6,484       $  3,737
Provision for real estate losses                                      --             --          4,581
Additions acquired through acquisitions                               --             --            197
Charge-offs                                                       (2,081)        (2,114)        (2,031)
                                                                 -------         ------         ------
Balance, end of year                                           $   2,289       $  4,370       $  6,484
                                                                 =======         ======         ======
</TABLE>

(9)  OFFICE PROPERTIES AND EQUIPMENT, NET

Office properties and equipment are summarized as follows:
<TABLE>
<CAPTION>

                                                                      December 31,
                                                                -----------------------
                                                                  1996           1995
                                                                --------       --------
                                                                    (in thousands)

<S>                                                             <C>            <C>
Land, office buildings, and improvements                        $ 55,527       $ 53,601
Furniture and equipment                                           26,987         23,056
Leasehold improvements                                             4,774          4,349
                                                                  ------         ------
                                                                  87,288         81,006
Less accumulated depreciation and amortization                    32,322         28,540
                                                                  ------         ------
                                                                $ 54,966       $ 52,466
                                                                  ======         ======
</TABLE>

Depreciation and amortization expense on office properties and equipment
totaled $4.7 million, $4.3 million, and $5.8 million, for 1996, 1995, and
1994, respectively.

The Company and its subsidiaries lease certain premises and equipment under
operating leases which expire through the year 2014, with certain lease
agreements containing renewal options. Minimum lease payments (in thousands)
for the years ending December 31 are summarized as follows:

<TABLE>
<CAPTION>
<S>                                                             <C>
              1997                                              $  3,106
              1998                                                 2,750
              1999                                                 1,508
              2000                                                 1,009
              2001                                                   776
              2002 through 2014                                    2,136
                                                                  ------
                                                                $ 11,285
                                                                  ======
</TABLE>

Rent expense totaled $3.1 million, $2.8 million, and $4.7 million for 1996,
1995, and 1994, respectively.

                                    69
<PAGE> 43

(10) INTANGIBLE ASSETS

Intangible assets and fair value in excess of cost of net assets acquired
(negative goodwill), included in other assets and other liabilities,
respectively, in the accompanying consolidated balance sheets are summarized
as follows:
<TABLE>

<CAPTION>

                                                                      December 31,
                                                                -----------------------
                                                                  1996           1995
                                                                --------       --------
                                                                    (in thousands)

<S>                                                             <C>            <C>
Intangible assets:
  Goodwill                                                      $  4,259       $    671
  Core deposit intangibles                                        41,156         33,457
                                                                  ------         ------
                                                                  45,415         34,128
  Less accumulated amortization                                    7,670          4,896
                                                                  ------         ------
                                                                  37,745         29,232
Negative goodwill, net of accumulated amortization                (3,569)        (4,173)
                                                                  ------         ------
                                                                $ 34,176       $ 25,059
                                                                  ======         ======
</TABLE>

The presentation of intangible assets in accordance with generally accepted
accounting principles does not recognize the future economic benefit
associated with certain of the Company's intangible assets whose amortization
is tax deductible.  Such intangible assets approximated $8.2 million at
December 31, 1996.  The future benefit associated with such tax deductible
intangibles is approximately $2.9 million.

Goodwill (including negative goodwill) and core deposit intangibles resulted
from business combinations which were accounted for using the purchase method
of accounting and from branch deposit acquisitions.  These intangibles are
amortized on a straight line basis over the period that it is expected to be
benefited, not to exceed ten years. Intangible assets are periodically
reviewed for possible impairment when events or changed circumstances affect
the underlying basis of the assets.

(11) DEPOSITS

Deposits are summarized as follows:
<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,
                                                  --------------------------------------------------------------------------------
                                                                   1996                                       1995
                                                  ------------------------------------       -------------------------------------
                                                                   PERCENT     AVERAGE                       PERCENT       AVERAGE
                                                     AMOUNT        OF TOTAL      RATE           AMOUNT       OF TOTAL        RATE
                                                  -----------      --------    -------       -----------     --------      -------
                                                                             (dollars in thousands)
<S>                                               <C>              <C>         <C>           <C>              <C>           <C>
Demand deposits:
   NOW                                            $   390,352        7.3%        0.81%       $   343,036        7.0%        0.96%
   Passbook                                           289,268        5.4         2.31            327,219        6.7         2.31
   Money market demand                                796,046       14.9         4.19            555,277       11.3         4.12
                                                    ---------       ----                       ---------      -----
      Total demand deposits                         1,475,666       27.6         2.93          1,225,532       25.0         2.75
                                                    ---------       ----                       ---------      -----
Certificates of deposit:
   2.00% to 3.99%                                       3,929         .1         2.76             44,903         .9         3.78
   4.00% to 5.99%                                   2,826,377       52.9         5.44          2,278,911       46.4         5.40
   6.00% to 7.99%                                   1,010,813       18.9         6.52          1,324,401       27.0         6.53
   8.00% to 9.99%                                      29,164         .5         8.88             33,207         .7         9.03
   10.00% & above                                         699         --        11.11                674         --        11.16
                                                    ---------       ----                       ---------      -----
      Total certificates of deposit                 3,870,982       72.4         5.75          3,682,096       75.0         5.82
                                                    ---------       ----                       ---------      -----
Unearned discount on brokered
  certificates                                            (49)        --                            (117)        --           --
Net adjustment related to purchase
   method of accounting                                   472         --                             (14)        --           --
                                                    ---------      -----                       ---------      -----
                                                  $ 5,347,071      100.0%        4.97%       $ 4,907,497      100.0%        5.05%
                                                    =========      =====         ====          =========      =====         ====
</TABLE>

                                    70
<PAGE> 44

The scheduled maturities of certificates of deposit are summarized as follows:
<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                          -----------------------------------------------------------------
                                                        1996                               1995
                                          --------------------------------     ----------------------------
                                                                  PERCENT                          PERCENT
                                              AMOUNT              OF TOTAL        AMOUNT           OF TOTAL
                                          ------------            --------     -----------         --------
                                                                (dollars in thousands)

<S>                                        <C>                   <C>           <C>                  <C>
Due within:
   One year                                $ 2,364,151            61.2%        $ 2,204,654           59.9%
   Two years                                   625,054            16.1             741,149           20.1
   Three years                                 540,614            13.9             250,594            6.8
   Four years                                  135,908             3.4             279,177            7.6
   Five years                                  102,673             2.7             119,912            3.3
   Thereafter                                  102,582             2.7              86,610            2.3
                                             ---------           -----           ---------          -----
                                           $ 3,870,982           100.0%        $ 3,682,096          100.0%
                                             =========           =====           =========          =====
</TABLE>

At December 31, 1996 and 1995, accrued interest payable on deposits totaled
$8.2 million and $7.2 million, respectively.

Certificate of deposit accounts with balances of $100,000 or greater totaled
$332.2 million and $262.8 million at December 31, 1996 and 1995,
respectively.  At December 31, 1996, $63.8 million will mature within three
months, $70.3 million will mature in three to six months, $84.4 million will
mature in six months to one year, and $113.7 million will mature after one
year.

Interest expense on deposits by type is summarized as follows:
<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                                               ---------------------------------------
                                                                  1996           1995           1994
                                                               ---------       --------       --------
                                                                             (in thousands)

<S>                                                            <C>            <C>            <C>
Passbook                                                       $   7,035      $   8,063      $   9,821
NOW and money market demand                                       30,501         22,782         23,706
Certificates of deposit                                          212,284        202,991        166,663
                                                                 -------        -------        -------
                                                               $ 249,820      $ 233,836      $ 200,190
                                                                 =======        =======        =======
</TABLE>

(12)  SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Mortgage-backed securities sold under agreements to repurchase are treated as
financings.  The securities underlying the agreements are book entry
securities and are delivered, by appropriate entry, to the major investment
banking firms (dealers) used in the transactions.  The dealers may have sold,
loaned, or otherwise disposed of such securities to other parties in the
normal course of their operations, and have agreed to resell to the Company
the same securities or substantially identical securities at the maturities
of the agreements.

The carrying value and market value of securities sold under agreements to
repurchase are summarized as follows:
<TABLE>
<CAPTION>

                                                                                    DECEMBER 31,
                                                                ------------------------------------------------------
                                                                          1996                          1995
                                                                -----------------------       ------------------------
                                                                CARRYING         MARKET       CARRYING        MARKET
                                                                 VALUE           VALUE         VALUE          VALUE
                                                                 -----           -----         -----          -----
                                                                                  (in thousands)

<S>                                                             <C>             <C>        <C>            <C>
Agreements involving:
  Same securities                                               $  3,095        $ 4,018    $   897,261    $   928,600
  Substantially identical securities                                  --             --        185,553        186,600
                                                                  ------         ------      ---------      ---------
                                                                   3,095          4,018      1,082,814      1,115,200
  Accrued interest payable                                             8             --          5,534             --
                                                                  ------         ------      ---------      ---------
                                                                $  3,103        $ 4,018    $ 1,088,348    $ 1,115,200
                                                                  ======         ======      =========      =========
</TABLE>

                                    71
<PAGE> 45

At December 31, 1996 and 1995, the scheduled maturities of securities sold
under agreements to repurchase are summarized as follows:
<TABLE>
<CAPTION>

                                                                                     December 31,
                                                                                ----------------------
                                                                                 1996         1995
                                                                                -------    -----------
                                                                                    (in thousands)
<S>                                                                             <C>        <C>
Maturing within 30 days                                                         $ 3,095    $   951,602
30 - 90 days                                                                         --         34,462
Over 90 days                                                                         --         96,750
                                                                                 ------      ---------
                                                                                $ 3,095    $ 1,082,814
                                                                                 ======      =========
</TABLE>

Financial data pertaining to the weighted average cost, the level of
securities sold under agreements to repurchase, and the related interest
expense is as follows:
<TABLE>
<CAPTION>

                                                                               AT OR FOR THE YEAR ENDED DECEMBER 31,
                                                                              ----------------------------------------
                                                                                 1996           1995          1994
                                                                              ----------    -----------    -----------
                                                                                     (dollars in thousands)

<S>                                                                           <C>           <C>            <C>
Weighted average interest rate at end of year                                      3.70%          5.84%          5.96%
Weighted daily average interest rate during the year                               5.50           5.93           4.47
Daily average of securities sold under
   agreements to repurchase                                                   $ 857,924     $1,426,101     $1,193,671
Maximum securities sold under agreements to
   repurchase at any month end                                                1,235,970      1,685,869      1,650,963
Interest expense during the year                                                 47,140         84,557         53,303
</TABLE>

                                    72
<PAGE> 46

(13) ADVANCES FROM FEDERAL HOME LOAN BANK

Advances from the FHLB are summarized as follows:
<TABLE>
<CAPTION>

                                                                 DECEMBER 31,
                                          --------------------------------------------------------
                                                    1996                          1995
                                          ------------------------       -------------------------
                                                         WEIGHTED                        WEIGHTED
                                                         AVERAGE                         AVERAGE
DUE IN                                     AMOUNT         RATE            AMOUNT          RATE
------                                    --------       ------          --------        ------
                                                         (dollars in thousands)

<S>                                    <C>                <C>          <C>                <C>
1996                                   $        --          --%        $ 2,077,000        5.74%
1997                                     1,113,756        5.74             165,756        6.57
1998                                       569,500        5.43              57,500        5.73
1999                                        75,000        5.56                  --          --
2000                                        77,500        5.60              75,000        5.76
2003                                         2,000        6.39               2,000        6.39
                                        ----------                      ----------
                                         1,837,756        5.63           2,377,256        5.80
Net adjustment related to purchase
 method of accounting                           --          --                (118)         --
                                        ----------        ----          ----------
                                       $ 1,837,756        5.63%        $ 2,377,138        5.80%
                                        ==========        ====          ==========        ====
</TABLE>

Financial data pertaining to the weighted average cost, the level of FHLB
advances, and the related interest expense is as follows:
<TABLE>
<CAPTION>

                                                                               AT OR FOR THE YEAR ENDED DECEMBER 31,
                                                                              ----------------------------------------
                                                                                 1996           1995          1994
                                                                              ----------    -----------    -----------
                                                                                     (dollars in thousands)

<S>                                                                         <C>            <C>            <C>
Weighted average interest rate at end of year                                      5.63%          5.80%          5.90%
Weighted daily average interest rate during the year                               5.55           5.99           4.80
Daily average of FHLB advances                                              $ 2,598,545    $ 2,236,899    $ 1,579,100
Maximum FHLB advances at any month end                                        2,868,756      2,460,000      1,857,000
Interest expense during the year                                                144,089        134,073         75,800
</TABLE>

The Company is required to maintain mortgage-backed securities with a market
value of 100% of outstanding collateralized advances and qualifying loans
with principal balances aggregating 150% of outstanding noncollateralized
advances.  FHLB stock is also pledged as collateral for these advances.

During April 1994, the Company terminated a $100.0 million advance from the
FHLB while restructuring its portfolio in order to maintain the Company's
then existing interest rate position.  This resulted in a pretax loss
totaling approximately $980,000 in 1994, which has been recorded, net of its
tax effect, as an extraordinary item.

                                    73
<PAGE> 47

(14)  OTHER BORROWINGS

Other borrowings are summarized as follows:
<TABLE>
<CAPTION>

                                                                     December 31,
                                                               ------------------------
                                                                  1996          1995
                                                               ---------       --------
                                                                  (in thousands)
<S>                                                            <C>             <C>
Mortgage-backed bonds (net of unamortized discount
    of $92 at December 31, 1995)
    10.125% due April 15, 2018                                 $      --       $ 19,664

Subordinated notes, 9.5% due August 1, 2002                           --         27,859
                                                                --------        -------
                                                               $      --       $ 47,523
                                                                ========        =======
</TABLE>

During 1996, the Company called the subordinated notes at par plus accrued
interest.  This resulted in a pretax loss totaling approximately $812,000,
representing the write off of a previously unamortized debt discount which
has been recorded, net of its tax effect, as an extraordinary item.  Also
during 1996,  the Company defeased mortgage-backed bonds totaling $19.7
million.  During 1994, the Company repurchased and defeased mortgage-backed
bonds totaling $54.3 million.  These transactions resulted in pretax losses
totaling approximately $1.4 million and $7.2 million in 1996 and 1994,
respectively, which have been recorded, net of their tax effects, as
extraordinary items.

During 1991, the Company, under the name Farm & Home, issued $31.0 million of
13.0% subordinated debentures in exchange for all of its then existing 13.0%
Series A Cumulative Exchangeable Preferred Stock.  The debentures, which were
recorded net of discount of $4.0 million, had a net book value of $27.0
million at December 31, 1993, were scheduled to mature in 2016, and had an
effective interest rate of 13.58%.  In June 1994, using the proceeds from the
issuance of 319,000 shares of preferred stock and cash reserves, these
debentures were called at par.  This resulted in a pretax loss totaling $4.0
million which has been recorded, net of its tax effect, as an extraordinary
item.

(15)  INTEREST RATE RISK MANAGEMENT

The Company's primary objective regarding asset and liability management is
to position the Company such that changes in interest rates do not have a
material adverse effect on net interest income or the net market value of the
Company. The Company's primary strategy for accomplishing its asset and
liability management objectives is achieved by matching the weighted average
maturities of assets, liabilities, and off-balance sheet items (duration
matching). A portion of the duration matching strategy has involved, more
historically than currently, the use of derivative financial instruments such
as interest rate exchange agreements, interest rate cap and floor agreements
and, to a much lesser extent, interest rate collar agreements and financial
futures contracts.

The Company uses derivative financial instruments solely for risk management
purposes. None of the Company's derivative instruments are what are termed
leveraged instruments. These types of instruments are riskier than the
derivatives used by the Company in that they have embedded options that
enhance their performance in certain circumstances, but dramatically reduce
their performance in other circumstances. The Company is not a dealer nor
does it make a market in such instruments.  The Company does not trade the
instruments and the Board of Directors' approved policy governing the
Company's use of these instruments strictly forbids speculation of any kind.

                                    74
<PAGE> 48

The risks generally associated with interest rate exchange agreements are
also the same as for interest rate cap, floor, and collar agreements.  Such
risks are the risk that the counterparty in the agreement may default
("credit risk"), the risk that at the time of any such default, interest
rates may have moved favorably from the perspective of the nondefaulting
party ("market risk") and the risk that interest accrued and due to the
Company previously reflected in the consolidated balance sheets may not be
received as a result of the default. The Company's interest rate exchange
agreements and interest rate cap and floor agreements have been entered into
with nationally recognized commercial and investment banking firms or the
FHLB.  As such, the Company does not anticipate nonperformance by the
counterparties. Financial futures contracts are subject to similar market
risks as interest rate exchange agreements; however, credit risk is
substantially mitigated due to the requirement that participants settle
changes in the value of their positions daily.

The Company cancelled all of its interest rate exchange agreements during the
third quarter of 1996, accordingly there are no such agreements outstanding
at December 31, 1996. Interest rate exchange agreements at December 31, 1995
are summarized as follows:

<TABLE>
<CAPTION>
                                                                            DECEMBER 31, 1995
                                                  -------------------------------------------------------------------
                                                  NOTIONAL           AVERAGE        AVERAGE      WEIGHTED
                                                  PRINCIPAL           RATE           RATE        AVERAGE        FAIR
DESIGNATED AGAINST                                 AMOUNT           RECEIVED         PAID        MATURITY       VALUE
------------------                                ---------         --------        -------      --------       -----
                                                                (dollars in thousands)
<S>                                               <C>                 <C>            <C>         <C>         <C>
Fixed rate available for sale
mortgage-backed securities:
  Fixed interest rate paid                        $  260,000          5.84%          6.27%       4.25 yrs    $   (6,528)
                                                  ----------                                                 ----------

Short-term wholesale
borrowings maturing or
repricing within 100 days or less:
  Fixed interest rate paid                           795,000          5.88           8.99        5.82 yrs      (122,468)
  Variable interest
      rate paid                                      159,000          7.36           5.94        6.05 yrs        13,770
                                                  ----------                                                 ----------
                                                     954,000          6.13           8.48                      (108,698)
                                                  ----------                                                 ----------
      Total                                       $1,214,000          6.06%          8.01%                   $ (115,226)
                                                  ==========          ====           ====                    ==========
</TABLE>

                                    75
<PAGE> 49

Interest rate cap, floor, and collar agreements are summarized as follows
(dollars in thousands):
<TABLE>
<CAPTION>
                                   NOTIONAL    AVERAGE    CURRENT    WEIGHTED
CAPS:                              PRINCIPAL   CONTRACT    INDEX     AVERAGE    AMORTIZED    FAIR
DESIGNATED AGAINST                  AMOUNT       RATE      RATE      MATURITY      COST      VALUE
------------------                ----------   --------   -------    --------   ---------    -----
<S>                               <C>         <C>           <C>       <C>        <C>        <C>
Adjustable rate available for
sale mortgage-backed securities
   December 31, 1996              $3,302,500     8.50%      5.58%     6.22 yrs.  $ 71,410   $ 57,333
                                  ==========     ====       ====                 ========   ========
   December 31, 1995              $2,152,500     8.15%      5.85%     3.40 yrs.  $ 23,997   $  8,738
                                  ==========     ====       ====                 ========   ========

Short-term wholesale borrowings
maturing or repricing
within 100 days or less
   December 31, 1996              $   --           --%        --%        --      $     --   $     --
                                  ==========     ====       ====                 ========   ========
   December 31, 1995              $  400,000     9.63%      5.88%     8.92 yrs.  $ 12,876   $  6,135
                                  ==========     ====       ====                 ========   ========

FLOORS:
DESIGNATED AGAINST
------------------
Adjustable rate available for
sale mortgage-backed securities
   December 31, 1996              $  150,000     7.50%      5.52%      .61 yrs.  $    145   $  1,676
                                  ==========     ====       ====                 ========   ========
   December 31, 1995              $  615,000     5.12%      4.76%     5.06 yrs.  $  4,271   $ 10,746
                                  ==========     ====       ====                 ========   ========

Interest-bearing retail deposits
   December 31, 1996              $  450,000     6.33%      5.50%     4.52 yrs.  $ 13,938   $ 10,327
                                  ==========     ====       ====                 ========   ========
   December 31, 1995              $  955,000     5.32%      5.01%     6.27 yrs.  $ 25,035   $ 31,116
                                  ==========     ====       ====                 ========   ========

COLLAR:
DESIGNATED AGAINST
------------------
Interest-bearing retail deposits
   December 31, 1996              $   25,000  5.25%/10.25%  5.88%     1.84 yrs.  $     66   $     51
                                  ==========  ===========   ====                 ========   ========
   December 31, 1995              $   25,000  5.25%/10.25%  5.88%     2.84 yrs.  $    138   $     51
                                  ==========  ===========   ====                 ========   ========
</TABLE>

                                    76
<PAGE> 50

Changes in the notional amounts of interest rate exchange, cap, floor, and
collar agreements and related recognized net losses were as follows.
<TABLE>
<CAPTION>
                                                                 INTEREST       INTEREST       INTEREST         INTEREST
                                                               RATE EXCHANGE    RATE CAP      RATE FLOOR       RATE COLLAR
                                                                AGREEMENTS     AGREEMENTS     AGREEMENTS       AGREEMENTS
                                                               -------------   ----------     ----------       ----------
                                                                                     (in thousands)
<S>                                                            <C>            <C>            <C>                <C>
Notional balance at December 31, 1994                          $ 1,574,000    $ 2,552,500    $ 1,570,000        $ 25,000

Maturities                                                        (360,000)            --             --              --
                                                               -----------    -----------    -----------        --------
Notional balance at December 31, 1995                            1,214,000      2,552,500      1,570,000          25,000

Purchases                                                          100,000      1,500,000             --              --
Maturities                                                              --       (250,000)            --              --
Terminations                                                    (1,314,000)      (500,000)      (970,000)             --
                                                               -----------    -----------    -----------        --------
Notional balance at December 31, 1996                          $        --    $ 3,302,500    $   600,000        $ 25,000
                                                               ===========    ===========    ===========        ========
</TABLE>

As a result of its continuing transition to a more retail-oriented
institution, the Company was able to substantially reduce in 1996,
principally during the third and fourth quarters, its need for derivative
financial instruments in managing its interest rate risk.

Accordingly, the Company terminated all of its interest rate exchange
agreements, $970 million notional amount of its interest rate floor
agreements, and $500 million notional amount of its interest rate cap
agreements.  The terminations of the interest rate exchange agreements were
accounted for in accordance with the provisions of Emerging Issues Task Force
Issue 84-7 (EITF 84-7) which requires that gains or losses on the termination
of such agreements be recognized when the offsetting gain or loss is
recognized on the designated asset or liability.  That is, to the extent that
the designated assets or liabilities still exist, any gain or loss on the
termination of the agreement designated as a synthetic alteration would be
deferred and amortized over the shorter term of the remaining contractual
life of the agreement or the remaining life of the asset or liability.

During the third quarter 1996, interest rate exchange agreements designated
against available for sale fixed rate mortgage-backed securities were
cancelled resulting in a $16.1 million gain which was recognized as the above
mentioned assets against which the agreements had been designated were
concurrently sold.  The remaining interest rate exchange agreements
designated against short-term wholesale borrowings were also cancelled at a
cost of $68.0 million which costs were deferred to be amortized because the
underlying liabilities against which the agreements had been designated still
existed at September 30, 1996.

Efforts to further the previously discussed retail transition continued in
the fourth quarter of 1996 and resulted in shrinkage in the Company's total
assets by $1.3 billion.  This shrinkage resulted primarily from the sale of
investment and mortgage-backed securities with the proceeds being utilized to
further reduce short-term wholesale borrowings.  Further, the Company
completed two acquisitions of thrifts during October of 1996 which further
reduced such borrowings by replacing them as a funding source with the
acquired retail deposits.  Upon repayment of  the designated short-term
wholesale borrowings, all existing net deferred swap cancellation costs and
certain other deferred gains and losses related to previously terminated
interest rate cap and floor agreements in total amounting to $80.5 million
were recognized during the fourth quarter of 1996.

The terminations of the $970 million notional amount interest rate floor and
$500 million notional amount cap agreements were accounted for in accordance
with the provisions of Issue 8A of the American Institute of Certified Public
Accountants Issues Paper "Accounting for Options" (Issues Paper).  In
accordance with the conclusions expressed in the Issues Paper, the excess of
the unamortized time value of the options (the premium) over the amount of
cash received upon termination amounting to $6.4 million was recognized in
earnings when the options were terminated.

The recognized net losses referred to above totaling $70.7 million are
reflected in the caption "Net Gain (Loss) from Financial Instruments" in the
accompanying consolidated financial statements (see Note 16).

                                    77
<PAGE> 51

At December 31, 1996, unamortized fees related to the purchase of interest
rate cap, floor, and collar agreements totaled $85.6 million.  The annual
amortization of the unamortized fees is summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                INTEREST-
                                        AVAILABLE                BEARING
                                        FOR SALE               LIABILITIES                TOTAL
                                        ---------              -----------                -----
<S>                                     <C>                     <C>                     <C>
      1997                              $ 11,608                $  2,618                $ 14,226
      1998                                10,960                   2,375                  13,335
      1999                                 9,411                   1,864                  11,275
      2000                                 8,329                   1,864                  10,193
      2001                                 7,312                   1,864                   9,176
      2002 through 2006                   23,935                   3,419                  27,354
                                        --------                --------                --------
                                        $ 71,555                $ 14,004                $ 85,559
                                        ========                ========                ========
</TABLE>
Prior to 1996, the Company utilized short positions in financial futures
contracts to reduce the interest rate risk of certain adjustable rate agency
mortgage-backed securities in the available for sale portfolio.  Each short
position is a contract representing a commitment to sell a $1.0 million,
ninety day maturity Eurodollar deposit. Futures contract price changes
settle on a daily basis whereby the Company either makes or receives a cash
payment. Such cash receipt or payment is recorded against the change in the
value of certain adjustable rate agency mortgage-backed securities held in
the available for sale portfolio.

Futures contracts utilized to reduce the interest rate risk of certain
adjustable rate government agency mortgage-backed securities in the available
for sale portfolio are summarized as follows:

<TABLE>
<CAPTION>
                                                                Contracts
                                          -------------------------------------------------------
                                                                                       Recognized
                                                                   Face                   Gain
                                          Number                  Amount                 (Loss)
                                          ------                  ------               ----------
                                                          (Dollars in Millions)
<S>                                       <C>                <C>                        <C>
At or for the Year Ended:
December 31, 1996                             --             $     --                   $     --
December 31, 1995                          4,115             $  4,115                   $  (71.0)
December 31, 1994                         11,072             $ 11,072                   $   39.5
</TABLE>

During August 1996, the Staff of the Securities and Exchange Commission
(Staff) performed a regular review of the Company's 1995 Form 10-K in
conjuction with Registration Statements on Form S-4 filed by the Company
related to three pending acquisitions. As a result of this review, the Staff
questioned the Company's original accounting treatment surrounding the deferral
and recognition of gains and losses on financial futures contracts used to
reduce the interest rate risk of certain mortgage backed securities in the
Company's available for sale portfolio.  The Company originally recognized a
$34.8 million charge to fourth quarter 1995 earnings regarding the cessation of
deferral accounting.

At issue was the Staff's contention that the financial futures contracts did
not meet the "high correlation" criteria of Statement of Financial Accounting
Standards No. 80 "Accounting for Futures Contracts", thus not qualifying for
deferral accounting from the inception of the hedge in March 1994 and
requiring the recognition of subsequent gains and losses in income.  The
Company originally ceased deferral accounting when management concluded that
high correlation measured using the "cumulative dollar approach" was unlikely
to be achieved on a consistent basis.

Accordingly, at the Staff's request, the Company in 1996 restated its 1994
and 1995 consolidated financial statements to reflect the cessation of
deferral accounting, from the inception of the hedge, with respect to the
aforementioned financial futures contracts.  The restatement had the effect
of increasing previously reported 1994 net income and decreasing previously
reported 1995 net income by

                                    78
<PAGE> 52

$18.0 million (on a fully-diluted per share basis, an increase of $0.48 for 1994
and a decrease of $0.43 for 1995).  This restatement was one of the timing of
recognition of gains and losses in the Statement of Operations and had no impact
on total stockholders' equity at any date since both the financial futures
contracts and the related mortgage-backed securities had been previously marked
to market through stockholders' equity at each reporting period.

Subsequent to December 31, 1995, the Company terminated all of its financial
futures positions and maintained its interest rate risk management position
by principally redesignating existing interest rate exchange agreements to
the available for sale portfolio.  Such interest rate exchange agreements were
utilized prior to the redesignation to manage the interest rate risk of
short-term wholesale borrowings.

(16)  NET GAIN (LOSS) FROM FINANCIAL INSTRUMENTS

Net gain (loss) from financial instruments is summarized as follows:
<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31,
                                                                            ---------------------------------------
                                                                               1996            1995          1994
                                                                               ----            ----          ----
                                                                                          (in thousands)
<S>                                                                         <C>           <C>              <C>
   Mortgage-backed securities held to maturity                              $       --    $        --      $    (231)
   Investment securities held to maturity                                           --             --            209
   Mortgage-backed securities held for trading                                      --             --         (4,545)
   Mark to market of financial futures contracts                                    --        (71,022)        39,508
   Mortgage-backed securities available for sale                                 8,466         23,885        (28,208)
   Investment securities available for sale                                        719             --           (115)
   Cancellation cost of interest rate exchange,
     cap, and floor agreements (See Note 15)                                   (70,711)            --         (8,910)
   Options expense                                                             (15,108)       (11,079)        (8,368)
                                                                               -------      ---------        -------
                                                                            $  (76,634)   $   (58,216)     $ (10,660)
                                                                               =======      =========        =======
</TABLE>

(17)  INCOME TAXES

Prior to 1996, if certain conditions were met, savings and loan associations
and savings banks were allowed special bad debt deductions in determining
taxable income based on either specified experience formulas or on a
percentage of taxable income before such deduction.  Bad debt deductions in
excess of actual losses were tax-preference items, and were subject to a
minimum tax.  The Company used the percentage of taxable income method for
1995 and 1994 in determining the bad debt deduction for tax purposes.

The special bad debt deduction accorded thrift institutions is covered under
Section 593 of the Internal Revenue Code (IRC).  On August 20, 1996, the
Small Business Job Protection Act of 1996 (the Act) was signed into law.
This Act included the repeal of certain portions of Section 593 effective
for tax years beginning after December 31, 1995. As a result, thrift
institutions are no longer allowed a percentage method bad debt deduction.
The repeal of the thrift reserve method generally requires thrift
institutions to recapture into income the portion of tax bad debt reserves
accumulated since 1987 (base year reserve).  The recapture will generally be
taken into income ratably over six tax years.  However, if the Company meets
a residential loan requirement for tax years beginning in 1996 and 1997,
recapture of the reserve can be deferred until the tax year beginning in
1998.  At December 31, 1996, the Company had bad debts deducted for tax
purposes in excess of the base year reserve of approximately $15.3 million.
The Company has recognized a deferred income tax liability for this amount.

Certain events covered by IRC Section 593(e), which was not repealed, will
trigger a recapture of the base year reserve.  The base year reserve of
thrift institutions would be recaptured if a thrift ceases to qualify as a
bank for federal income tax purposes.  The base year reserves of thrift
institutions also remain subject to income tax penalty provisions which, in
general, require recapture upon certain stock redemptions of, and excess
distributions to, stockholders.  At December 31, 1996, retained earnings
included approximately $93.0 million of base year reserves, for which no
deferred federal income tax liability has been recognized.

                                    79
<PAGE> 53

Income tax expense (benefit) before extraordinary items is summarized as
follows:
<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31,
                                                                               ------------------------------------
                                                                               1996            1995            1994
                                                                               ----            ----            ----
                                                                                          (in thousands)

<S>                                                                             <C>           <C>          <C>
Current:
   Federal                                                                      $ 2,962       $   (437)     $ 38,520
   State                                                                             --            (21)        2,699
Deferred:
   Federal                                                                        2,873         10,309       (14,805)
   State                                                                             --            407        (1,030)
                                                                                  -----         ------       -------
                                                                                $ 5,835       $ 10,258      $ 25,384
                                                                                  =====         ======       =======
</TABLE>

The reasons for the difference between the expected income taxes, computed at
the federal statutory rate of 35%, and the actual income taxes are summarized
as follows:
<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31,
                                                                                 ----------------------------------
                                                                                 1996          1995            1994
                                                                                 ----          ----            ----
                                                                                          (in thousands)
<S>                                                                            <C>           <C>           <C>
      Computed "expected" income tax                                           $ 5,932       $ 13,075      $ 26,236
      State income taxes, net of federal tax benefit                                --            278         1,085
      Resolution of federal tax issues                                            (241)        (2,188)       (3,110)
      Nondeductible acquisition costs                                               --            101         2,469
      Other, net                                                                   144         (1,008)       (1,296)
                                                                                 -----        -------       -------
                                                                               $ 5,835       $ 10,258      $ 25,384
                                                                                 =====        =======       =======
</TABLE>

The components of the deferred tax assets and deferred tax liabilities are
summarized as follows:
<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,
                                                                              ------------------------
                                                                                 1996           1995
                                                                                 ----           ----
                                                                                  (in thousands)
<S>                                                                           <C>             <C>
Deferred tax assets:
   Unrealized losses on securities                                            $   6,470       $ 12,506
   Litigation settlement                                                            843          1,604
   Purchased mortgage service rights                                              4,527          3,704
   Provision for losses on loans                                                  7,306          7,412
   Other                                                                          6,271          4,278
                                                                                 ------         ------
     Total deferred tax assets                                                   25,417         29,504
                                                                                 ------         ------
Deferred tax liabilities:
   FHLB stock dividends                                                           8,228          8,203
   Purchase accounting adjustments                                                1,943          2,294
   Bad debt reserves in excess of base year                                       5,858          4,792
   Deferred income                                                                3,624          7,275
   Other                                                                          4,043          2,346
                                                                                -------         ------
      Total deferred tax liabilities                                             23,696         24,910
                                                                                -------         ------
         Net deferred tax asset                                               $   1,721       $  4,594
                                                                                =======         ======
</TABLE>

A valuation allowance would be provided on deferred tax assets when it is
more likely than not that some portion of the assets will not be realized.
The Company has not established a valuation allowance as of December 31,
1996 or 1995, due to management's belief that all criteria for
recognition have been met, including the existence of a history of
taxes paid sufficient to support the realization of deferred tax assets.

                                    80

<PAGE> 54

(18) STOCKHOLDERS' EQUITY

Preferred Stock

Each share of the Company's preferred stock is convertible, at the option of
the holder, into 3.75 shares of the Company's common stock, par value $.01
per share.  The preferred stock is redeemable, at the option of the Company,
in whole at any time or in part, from time to time, on or after May 16, 1997
at $50 per share, plus accrued and unpaid dividends. As part of the merger
agreement with Mercantile Bancorporation Inc. (See Note 24), the Company
is required to redeem its preferred stock on May 16, 1997.

Stock Repurchase Program

On December 15, 1994, the Board of Directors of Roosevelt Financial Group,
Inc. authorized the Company to acquire up to 1,750,000 shares of its own
common stock, subject to market conditions, prior to December 31, 1997.  The
stock repurchased is to be held in treasury in order to fund, from time to
time, the Company's benefit programs.  Shares of stock repurchased may also
be retired, from time to time, if not needed for other corporate purposes.
Through December 31, 1996, 281,500 shares of common stock of the Company
have been repurchased pursuant to the stock repurchase program at a
weighted average price of $15.98 per share.

On January 2, 1997, the Board of Directors of the Company authorized an
expansion of the capacity of the above-mentioned stock repurchase plan by an
additional 5,529,880 shares.  This expansion, when coupled with the
remaining authorization prior to the expansion (1,468,500 shares), resulted in
a total authorization of 6,998,380 shares, the number of shares that the
Company has agreed to use its reasonable best efforts, subject to prudent
business practices, to acquire in open market transactions prior to the
closing date of its planned merger with Mercantile Bancorporation Inc.  (See
Note 24).  The cost per share in each such transaction cannot exceed $22.00.
Subsequent to December 31, 1996 and through February 13, 1997, an additional
1,600,000 shares have been repurchased at a weighted average price of $21.08
per share (unaudited).


(19) REGULATORY CAPITAL REQUIREMENTS AND OTHER MATTERS

The Company and the subsidiary banks are subject to various regulatory
capital requirements administered by the federal banking agencies.  Failure
to meet minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Company's consolidated financial
statements.  Under capital adequacy guidelines, the Company and the subsidiary
banks must meet specific capital guidelines that involve quantitative
measures of assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices.  The Company and the
subsidiary banks' capital amounts and classifications are also subject to
quantitative judgements by the regulators about components, risk-weightings
and other factors.  Management believes, as of December 31, 1996 the Company
and the subsidiary banks' meet all capital adequacy requirements.

The subsidiary banks are also subject to the regulatory framework for prompt
corrective action.  The most recent notification from the regulatory agencies
categorized the banks as well capitalized.  To be categorized as well
capitalized, the banks must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the following
table.  There are no conditions or events since the dates of the
aforementioned notifications that management believes have
changed the banks' category.

                                    81

<PAGE> 55

The Company and the banks' actual and required capital amounts and ratios as
of December 31, 1996 are as follows:
<TABLE>
<CAPTION>


                                                                                                REQUIREMENTS TO BE WELL-CAPITALIZED
                                                                                 CAPITAL            UNDER PROMPT AND CORRECTIVE
                                                   ACTUAL                     REQUIREMENTS               ACTION PROVISIONS
                                           ----------------------        ----------------------     ---------------------------
                                            AMOUNT          RATIO         AMOUNT         RATIO          AMOUNT         RATIO
                                           --------        ------        --------       -------        --------       -------
                                                                         (DOLLARS IN MILLIONS)
<S>                                        <C>             <C>           <C>              <C>         <C>              <C>
Total Capital:<F1>
 Roosevelt Financial Group, Inc.           $  480.9        12.52%        $  307.3         8.00%            N/A           N/A
 Roosevelt Bank                               444.2        11.75            302.5         8.00        $  378.1         10.00%
 Missouri State Bank                            8.0        13.35              4.8         8.00             6.0         10.00

Tangible Capital: <F2>
 Roosevelt Bank                               423.2         5.44            116.6         1.50             N/A           N/A

Core (Leverage) Capital: <F2>
 Roosevelt Bank                               425.3         5.47            233.3         3.00             N/A           N/A

Tier I Capital: <F1>
 Roosevelt Financial Group, Inc.              461.9        12.02            153.7         4.00             N/A           N/A
 Roosevelt Bank                               425.3        11.25              N/A          N/A           226.9          6.00
 Missouri State Bank                            7.3        12.11              2.4         4.00             3.6          6.00

Tier I Capital:
 Roosevelt Bank <F2>                          425.3         5.47              N/A          N/A           388.8          5.00
 Missouri State Bank <F3>                       7.3        14.37              N/A          N/A             2.5          5.00

<FN>
<F1> To risk-weighted assets.
<F2> To adjusted total assets.
<F3> To average adjusted assets.
</TABLE>

The Office of Thrift Supervision (OTS) has adopted a rule incorporating an
interest rate risk component into its risk-based capital requirements which
utilizes a methodology to measure the interest rate risk exposure of
institutions.  This exposure is a measure of the potential decline in the net
portfolio value of the institution based upon the effect of an assumed 200
basis point increase or decrease in interest rates.  "Net portfolio value" is
the present value of the expected net cash flow from the institution's
assets, liabilities and off-balance sheet contracts.  Under the OTS
regulation, an institution's "normal" level of interest rate risk in the
event of this assumed change in interest rates is a decrease in the
institution's net portfolio value in an amount not exceeding two percent of
the present value of its assets.  The amount of the required deduction is
one-half of the difference between (a) the institution's actual calculated
exposure to the 200 basis point interest rate increase or decrease (whichever
results in the greater pro forma decrease in net portfolio value) and (b) its
"normal" level of exposure which is two percent of the present value of its
assets.  The OTS recently announced that it will delay the effectiveness of
the regulation until it adopts the process by which an institution may appeal
an interest rate risk capital deduction determination.  Utilizing this
measurement concept, the Bank's interest rate risk at December 31, 1996 would
not be greater than normal as defined by the OTS, thus not requiring any
additional risk-based capital.

In September, 1996 legislation was enacted to recapitalize the Savings
Association Insurance Fund (SAIF).  The legislation provided for a one-time
assessment to be imposed on all deposits assessed at the SAIF rates, as of
March 31, 1995.  The special assessment ratio was established at 0.657% of
deposits by the Federal Deposit Insurance Corporation and resulted in an
assessment of $27.4 million or $17.8 million after the effect of taxes.

                                    82
<PAGE> 56

(20)  STOCK OPTION AND INCENTIVE PLAN

The 1986 Stock Option and Incentive Plan (Plan) was adopted to enable the
Company to attract and retain key personnel.  The Plan, which terminated
January 29, 1997, provided for the granting of incentive stock options,
nonqualified stock options, restricted stock awards, and stock
appreciation rights.  The Plan authorized the issuance of up to 4,500,000
shares of the Company's common stock. The 1994 Non-Employee Director Stock
Option Plan authorizes the issuance of up to 150,000 shares of the
Company's common stock.

The Company accounts for stock-based compensation under the Plan in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and, accordingly, recognizes no compensation
expense as the exercise price of the Company's employee stock options equals
the market price of the underlying stock on the date of grant.  In October
1995, the FASB issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123).  Upon adoption in 1996,
the Company elected the pro forma disclosure alternative provided in SFAS 123
versus the recognition provisions.

Information on the Company's stock options are summarized as follows:
<TABLE>
<CAPTION>

                                                                                     AVERAGE PRICE          PER SHARE OPTION
                                                                SHARES                 PER SHARE              PRICE RANGE
                                                             ------------            -------------          ----------------
<S>                                                           <C>                       <C>                  <C>
   Outstanding and exercisable
       at December 31, 1993                                    2,364,475                $   5.26             $3.00-13.75
         Granted                                                 205,500                   13.89
         Exercised                                            (1,420,347)                   4.63
                                                              ----------
   Outstanding and exercisable
       at December 31, 1994                                    1,149,628                    7.67             $3.00-15.50
         Assumed in merger                                        93,506                    4.09
         Granted                                                 150,000                   16.54
         Forfeited                                                (9,000)                  16.08
         Exercised                                              (349,680)                   4.53
                                                              ----------
   Outstanding and exercisable
       at December 31, 1995                                    1,034,454                    9.62             $3.00-18.00
         Assumed in mergers                                      182,553                    6.73
         Granted                                                 148,800                   19.81
         Exercised                                              (194,527)                   9.89
                                                              ----------                  ------
   Outstanding and exercisable
       at December 31, 1996                                    1,171,280                $  10.42             $3.00-20.62
                                                              ==========                  ======
</TABLE>

The Company's stock options outstanding and exercisable at December 31,
1996 by range of exercise prices, is further detailed as follows:

<TABLE>
<CAPTION>
                                                                                   SHARES
                                                    PER SHARE OPTION               UNDER              AVERAGE PRICE
                                                      PRICE RANGE                  OPTION               PER SHARE
                                                    ----------------               ------             -------------

<S>                                                 <C>                          <C>                  <C>
                                                     $ 3.00 - $ 4.99               233,288               $ 4.04
                                                       5.00 -   8.99               416,562                 6.80
                                                       9.00 -  11.99                14,230                 9.27
                                                      12.00 -  14.99               196,400                13.71
                                                      15.00 -  17.99               164,000                16.34
                                                      18.00 -  21.00               146,800                19.95
                                                                                 ---------               ------
                                                                                 1,171,280               $10.42
                                                                                 =========               ======
</TABLE>

Presented below is pro forma net income and earnings per share, as required
by SFAS 123, determined as if the Company had accounted for stock options
granted in 1996 and 1995 under the provisions of SFAS 123.  For purposes of
providing the pro forma disclosures required under SFAS 123, the fair value
of stock options granted in 1996 and 1995 were estimated at the date of grant
using the Black-Scholes option pricing model.  The Black-Scholes option pricing
model was originally developed for use in estimating the fair value of traded
options which have different characteristics than the Company's employee
stock options.  The model is also sensitive to changes in the subjective
assumptions which can materially affect the fair value estimate.  As a
result, management believes that the Black-Scholes model may not necessarily
provide a reliable single measure of the fair value of employee stock
options.

The following weighted-average assumptions were used in the option pricing
model:  a risk-free interest rate of 6.22% and 4.83% for 1996 and 1995,
respectively; an expected life of the option of 4.9 years and 5 years
for 1996 and 1995, respectively; and an expected dividend yield of 3.18%
and 3.40% and a volatility factor 25.41% and 32.92% for 1996 and 1995,
respectively. For purposes of the pro forma disclosures, the estimated
fair value of the options is amortized to expense over the options'
vesting period.

                                    83
<PAGE> 57

Had compensation cost for the Company's stock-based compensation plans been
determined consistent with the recognition provisions of SFAS 123, net income
and earnings per share would have been as follows:
<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                                 -----------------------
(In thousands, except per share amounts)                                          1996           1995
                                                                                  ----           ----

<S>                                                                              <C>           <C>
Pro forma net income                                                             $ 8,957       $ 26,598
Pro forma earnings per share:
   Primary                                                                       $  0.11       $   0.55
   Fully diluted                                                                 $  0.11       $   0.55
</TABLE>

Due to the inclusion of only 1996 and 1995 option grants, the effects of
applying SFAS 123 in 1996 and 1995 may not be representative of the pro forma
impact in future years.


(21)  EMPLOYEE BENEFITS PROGRAMS

Substantially all employees are included in a trusteed defined benefit
pension plan.  Benefits contemplated by the plan are funded through payments
to the Financial Institutions Retirement Fund, which operates a
multi-employer plan and does not report relative plan assets and actuarial
liabilities of the individual participating companies.  The cost of funding
is charged to current operations.  There is no unfunded liability for past
service.  In addition, the Company maintains a retirement plan for outside
directors.  Pension expense totaled $1,580,000, $1,367,000, and $359,000 for
1996, 1995, and 1994, respectively.

The Company maintains a thrift savings plan, qualifying under Section 401(k)
of the Internal Revenue Code, administered by the Financial Institutions
Thrift Plan, and covering substantially all employees.  Participants may
designate up to 15% of their annual compensation as their contribution to the
plan.  Contributions by employees of up to 6% of their annual compensation
are partially or fully matched by the Company based on each employee's number
of years of service.  Matching contributions by the Company totaled
$1,110,000, $936,000, and $866,000 for 1996, 1995, and 1994, respectively.

The Company also sponsors an Employee Stock Ownership Plan (ESOP) which
covers substantially all employees with more than one year of employment who
have attained the age of twenty-one.  The ESOP provides for a grant of the
Company's stock equal to 1% of the annual compensation of each eligible
employee up to annual compensation of $75,000.  Contributions are made on
December 31 of each year for all eligible employees on that date.  Dividends
on shares held in each employee's account are reinvested.  Contributions made
to the ESOP by the Company totaled $302,000, $247,000, and $448,000 for 1996,
1995, and 1994, respectively.

In addition, the Company sponsors an unfunded retiree medical, dental, and
death benefits plan covering eligible employees who retired prior to July 1,
1990 and retired directors from Farm & Home.  The plan is contributory with
retiree contributions adjusted from time to time.  The Company accounts for
the plan in accordance with Statement of Financial Accounting Standards No.
106, "Employers Accounting for Postretirement Benefits Other than Pensions"
(SFAS 106). The plan's impact on the Company's consolidated financial
statements is not material, therefore the disclosures required by SFAS 106
are not presented.

(22) LITIGATION

The Company and its subsidiaries are subject to a number of lawsuits and
claims, some of which involve substantial amounts arising out of the conduct
of its business.  Management, after review and consultation with outside
legal counsel, is of the opinion that the ultimate disposition of such
litigation and claims will not have a material adverse effect of the
Company's consolidated financial statements.

                                    84
<PAGE> 58

<TABLE>
(23)  PARENT COMPANY FINANCIAL INFORMATION

<CAPTION>
                                                                 1996 DECEMBER 31, 1995
---------------------------------------------------------------------------------------
                                                                     (in thousands)
<S>                                                            <C>           <C>
CONDENSED BALANCE SHEETS
Assets:
    Cash                                                       $  31,091     $    2,616
    Investment in subsidiaries                                   467,066        517,080
    Investment securities available for sale                          --          2,531
    Other assets                                                   1,627          4,946
                                                                --------       --------
                                                               $ 499,784     $  527,173
                                                                ========       ========
Liabilities and Stockholders' Equity:
    Subordinated notes                                         $      --     $   27,859
    Other liabilities                                              2,357          2,408
    Stockholders' equity                                         497,427        496,906
                                                                --------       --------
                                                               $ 499,784     $  527,173
                                                                ========      =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                       Year Ended December 31,
                                                                               --------------------------------------
                                                                                 1996           1995          1994
                                                                               --------      ---------     ----------
                                                                                           (in thousands)

<S>                                                                            <C>           <C>           <C>
CONDENSED STATEMENTS OF OPERATIONS
Interest income                                                                $    330      $      82     $      241
Interest expense                                                                  1,672          2,867          5,276
                                                                                 ------        -------        -------
   Net interest expense                                                          (1,342)        (2,785)        (5,035)
Dividends received from subsidiaries                                             81,050         52,050         45,650
Equity in undistributed earnings (losses) of subsidiaries                       (69,402)       (22,682)         8,918
Other income                                                                         25              1             --
General and administrative expenses                                                (927)          (684)        (7,469)
                                                                                 ------        -------        -------
  Income before income tax benefit and extraordinary item                         9,404         25,900         42,064
Income tax benefit                                                                 (784)        (1,198)        (2,280)
                                                                                 ------        -------        -------
  Income before extraordinary item                                               10,188         27,098         44,344
Extraordinary item, net of income tax effect                                       (526)            --         (2,617)
                                                                                 ------        -------        -------
  Net income                                                                   $  9,662      $  27,098     $   41,727
                                                                                 ======        =======        =======
</TABLE>

                                    85
<PAGE> 59

<TABLE>
<CAPTION>
                                                                                       Year Ended December 31,
                                                                               --------------------------------------
                                                                                 1996           1995          1994
                                                                               --------      ---------     ----------
                                                                                           (in thousands)

<S>                                                                           <C>            <C>             <C>
CONDENSED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
   Net income                                                                 $   9,662      $  27,098       $ 41,727
   Equity in earnings of subsidiaries                                           (11,648)       (29,368)       (54,568)
   Extraordinary loss on early extinguishment of debt                               812             --          3,965
   Other, net                                                                     4,334            517            270
                                                                                -------       --------        -------
      Net cash provided by (used in) operating activities                         3,160         (1,753)        (8,606)
                                                                                -------       --------        -------
Cash flows from investing activities:
   Dividends received                                                            81,050         52,050         45,650
   Additional investment in subsidiary                                               --        (21,463)       (19,036)
   Proceeds from maturities and sales of securities available for sale            2,531            800             --
                                                                                -------       --------        -------
      Net cash provided by investing activities                                  83,581         31,387         26,614
                                                                                -------       --------        -------
Cash flows from financing activities:
   Redemption of subordinated notes                                             (28,750)            --        (31,022)
   Cash dividends paid                                                          (30,513)       (26,789)       (18,056)
   Proceeds from issuance of preferred stock                                         --             --         21,273
   Purchase of treasury stock                                                      (923)        (3,426)          (150)
   Exercise of stock options                                                      1,920          1,107          6,459
                                                                                -------       --------        -------
      Net cash used in financing activities                                     (58,266)       (29,108)       (21,496)
                                                                                -------       --------        -------
      Net increase (decrease) in cash                                            28,475            526        (3,488)
Cash at beginning of year                                                         2,616          2,090          5,578
                                                                                -------       --------        -------
Cash at end of year                                                           $  31,091      $   2,616       $  2,090
                                                                                =======       ========        =======
</TABLE>

(24) PLANNED MERGER WITH MERCANTILE BANCORPORATION INC.

Roosevelt Financial Group, Inc. announced on December 23, 1996 its plans to
merge with Mercantile Bancorporation Inc.  Pursuant to the merger agreement,
shareholders of the Company will be able to elect to receive either $22 in cash
or .4211 shares of Mercantile Bancorporation Inc. common stock, up to 13 million
shares.  Plans call for the merger, which is subject to the approval of
shareholders of the Company and all appropriate regulatory agencies, to be
completed in mid-1997.

                                    86
<PAGE> 60

                            SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.

                                   ROOSEVELT FINANCIAL GROUP, INC.


March 14, 1997                     By    /s/ Gary W. Douglass
                                     -------------------------------------
                                     Gary W. Douglass
                                     Executive Vice President and
                                     Chief Financial Officer

                                    86