SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------

                                   FORM 10-QSB

(Mark One)

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

     For the quarterly period ended   March 31, 2001
                                      --------------

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

                            For the transition period from ________ to ________

                         Commission file number 0-29312

                        MONTGOMERY FINANCIAL CORPORATION
              (Exact Name of Small Business Issuer in its Charter)

          Indiana                                   35-1962246
          -------                                   ----------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
Incorporation or organization)

        119 East Main Street
      Crawfordsville, Indiana                         47933
      -----------------------                         -----
(Address of Principal Executive Offices)           (Zip Code)

                                 (765) 362-4710
              (Registrant's telephone number, including area code)

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Check  whether the issuer filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     As of April 30,  2001,  there  were  1,207,698  shares of the  Registrant's
common stock issued and outstanding.


       Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]

<PAGE>


                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


                                   Form 10-QSB

                                      Index
                                                                        Page No.
                                                                        --------
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Condensed Statement of Financial Condition
         As of March 31, 2001 and June 30, 2000                             3

         Consolidated Condensed Statement of Income for the Three
         And Nine Months Ended March 31, 2001 and 2000                      4

         Consolidated Condensed Statement of Cash Flows for the
         Nine Months Ended March 31, 2001 and 2000                          5

         Consolidated Condensed Statement of Stockholders'
         Equity for the Nine Months Ended March 31, 2001                    7

         Notes to Consolidated Condensed Financial Statements               8

Item 2.  Management's Discussion and Analysis of Financial Condition
         And Results of Operations                                         11


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                                 16

Item 2.  Changes in Securities                                             16

Item 3.  Defaults Upon Senior Securities                                   16

Item 4.  Submission of Matters to a Vote of Security Holders               16

Item 5.  Other Information                                                 16

Item 6.  Exhibits and Reports on Form 8-K                                  16

Signatures                                                                 17



<PAGE>
<TABLE>
<CAPTION>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

             Consolidated Condensed Statement of Financial Condition
                                   (Unaudited)

                                                                         March 31,              June 30,
                                                                           2001                   2000
                                                                     ----------------       ----------------
<S>                                                                  <C>                    <C>
Assets
  Cash                                                               $       551,419        $       394,392
  Short-term interest-bearing deposits                                    14,812,387             10,131,874
                                                                     ---------------        ---------------
         Total cash and cash equivalents                                  15,363,806             10,526,266
  Interest-bearing deposits                                                  238,816                258,689
  Investment securities available for sale                                   340,174                443,917
  Loans                                                                  119,135,333            119,356,784
  Allowance for loan losses                                                 (226,000)              (226,000)
                                                                     ----------------       ---------------
       Net loans                                                         118,909,333            119,130,784
  Premises and equipment                                                   3,248,310              3,236,258
  Federal Home Loan Bank Stock                                             1,893,300              1,893,300
  Foreclosed assets and real estate held for development, net              1,594,368              1,301,996
  Interest receivable                                                        835,444                951,010
  Other assets                                                               501,429                380,038
                                                                     ---------------        ---------------

         Total assets                                                   $142,924,980           $138,122,258
                                                                     ===============        ===============
Liabilities
  Deposits
      Noninterest bearing                                            $     1,990,807        $     2,580,192
      Interest bearing                                                   104,578,968             88,926,339
                                                                     ---------------        ---------------
  Total deposits                                                         106,569,775             91,506,531
  Federal Home Loan Bank advances                                         17,629,678             28,241,258
  Interest payable                                                           584,425                534,341
  Other liabilities                                                        1,209,005                859,417
                                                                     ---------------        ---------------

         Total liabilities                                               125,992,883            121,141,547
                                                                     ---------------        ---------------


Stockholders' Equity
  Preferred stock, $.01 par value
       authorized and unissued - 2,000,000 shares
  Common stock, $.01 par value - 8,000,000 shares
      authorized;  1,208,584 and 1,244,790 issued                             12,086                 12,448
  Paid-in capital                                                          9,877,120             10,176,190
  Retained earnings - substantially restricted                             8,177,951              8,102,308
  Unearned ESOP shares                                                      (992,766)            (1,055,482)
  Unearned compensation                                                     (166,851)              (199,633)
  Accumulated other comprehensive income (loss)                               24,557                (55,120)
                                                                     ---------------        ----------------

         Total stockholders' equity                                       16,932,097             16,980,711
                                                                     ---------------        ---------------

         Total liabilities and stockholders' equity                  $   142,924,980        $   138,122,258
                                                                     ===============        ===============

</TABLE>

See notes to Consolidated Condensed Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                   Consolidated Condensed Statement of Income
                                   (Unaudited)

                                                   Three Months Ended                   Nine Months Ended
                                                        March 31,                            March 31,
                                           -------------------------------    ------------------------------
                                                2001            2000             2001               2000
                                           --------------   --------------    --------------    ------------
<S>                                        <C>               <C>              <C>               <C>
Interest and Dividend Income
  Loans                                    $2,405,735        $2,343,987       $7,225,620        $6,873,080
  Investment securities                         3,579             4,491           13,074            16,528
  Deposits with financial institutions        117,299           128,969          439,778           361,229
  Dividend Income                              37,347            37,659          118,252           103,338
                                           ----------        ----------       ----------        ----------
       Total interest and dividend income   2,563,960         2,515,106        7,796,724         7,354,175
                                           ----------        ----------       ----------        ----------

Interest Expense
  Deposits                                  1,380,180         1,110,329        4,094,376         3,258,506
  Federal Home Loan Bank advances             257,978           411,582          978,459         1,102,598
                                           ----------        ----------       ----------        ----------
       Total interest expense               1,638,158         1,521,911        5,072,835         4,361,104
                                           ----------        ----------       ----------        ----------

Net Interest Income                           925,802           993,195        2,723,889         2,993,071
  Provision for Losses on Loans                     0                 0                0                 0
                                           ----------        ----------       ----------        ----------

Net Interest Income After
  Provision for Losses on Loans               925,802           993,195        2,723,889         2,993,071
                                           ----------        ----------       ----------        ----------

Other Income
  Service charges on deposit accounts          32,245            15,283           78,505            43,961
  Gain(loss) on sale of investment securities    (736)                            34,593            55,644
  Real estate operations, net                     508             1,591           11,393            20,385
  Other income                                  5,775             6,777           43,397            21,143
                                           ----------        ----------       ----------        ----------
       Total other income                      37,792            23,651          167,888           141,133
                                           ----------        ----------       ----------        ----------

Other Expenses
  Salaries and employee benefits              458,587           425,695        1,355,156         1,215,434
  Net occupancy expense                        54,253            47,822          150,320           128,733
  Equipment expense                            61,033            58,191          172,568           176,497
  Data processing expense                      42,985            48,820          130,334           137,610
  Deposit insurance expense                     4,857             4,554           14,148            29,327
  Advertising expense                          15,506            20,308           47,958            66,299
  Other expenses                              147,452           146,756          469,243           458,336
                                           ----------        ----------       ----------        ----------
           Total other expenses               784,673           752,146        2,339,727         2,212,236
                                           ----------        ----------       ----------        ----------

Income Before Income Tax                      178,921           264,700          552,050           921,968
  Income tax expense                           73,500            93,590          221,000           364,050
                                           ----------        ----------       ----------        ----------

Net Income                                 $  105,421        $  171,110       $  331,050        $  557,918
                                           ==========        ==========       ==========        ==========
Net Income Per Share:
      Basic                                $     0.10        $     0.14       $     0.31        $     0.44
      Diluted                              $     0.10        $     0.14       $     0.30        $     0.43

Dividends Per Share                        $    0.055        $    0.055       $    0.165        $    0.165

</TABLE>

See Notes to Consolidated Condensed Financial Statements.

<PAGE>
<TABLE>
<CAPTION>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                 Consolidated Condensed Statement of Cash Flows
                                   (Unaudited)

                                                                   Nine Months Ended
                                                                       March 31,
                                                            -----------------------------
                                                                2001             2000
                                                            ------------     ------------
Operating Activities
<S>                                                          <C>              <C>
  Net income                                                 $  331,050       $  557,918
  Adjustments to reconcile net income to net cash
      provided by operating activities
      Depreciation                                              222,225          238,020
     (Gain) loss on sale of securities available for sale       (34,593)         (55,644)
     ESOP stock amortization                                     62,045           57,057
      Amortization of unearned compensation                      30,265           15,505
      Change In
          Interest receivable                                   115,566         (116,399)
          Interest payable                                       50,084          (92,414)
          Other assets                                         (121,391)         (46,645)
          Other liabilities                                     298,238          319,173
                                                             ----------         --------

             Net cash provided by operating activities          953,489          876,571
                                                             ----------         --------







Investing Activities

  Net change in interest bearing deposits                        19,873           60,774
  Proceeds from sale of securities
       available for sale                                       320,273          358,644
  Purchase of securities available for sale                     (50,000)
  Net change in loans                                           (95,490)      (7,357,874)
  Additions to real estate owned and held for investment       (103,478)         (87,782)
  Proceeds from Real Estate Owned Sales                          94,742          187,853
  Purchases of premises and equipment                          (200,972)        (621,785)
  Purchase of FHLB of Indianapolis stock                                        (642,600)
                                                             ----------       -----------

             Net cash used by investing activities              (15,052)      (8,102,770)
                                                             -----------      -----------

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                 Consolidated Condensed Statement of Cash Flows
                                   (Continued)

                                                                     Nine Months Ended
                                                                          March 31,
                                                             ----------------------------------
                                                                 2001                  2000
                                                             ------------          ------------
Financing Activities
<S>                                                          <C>                   <C>
  Net Change In
       Noninterest-bearing, interest-bearing demand and
          savings deposits                                   $  2,877,215          $  4,569,095
       Certificates of deposit                                 12,186,029             2,646,289
  Proceeds from FHLB advances
     and other borrowings                                         906,493            22,500,000
  Repayment of FHLB advances
     and other borrowings                                     (11,518,073)          (14,890,811)
  Stock purchase                                                 (365,936)           (2,894,430)
  Dividends paid                                                 (186,625)             (214,559)
                                                             -------------         -------------
             Net cash provided by financing activities          3,899,103            11,715,584
                                                             ------------          ------------


Net Change in Cash and Cash Equivalents                         4,837,540             4,489,385

Cash and Cash Equivalents, Beginning of Period                 10,526,266             4,932,813
                                                             ------------          ------------

Cash and Cash Equivalents, End of Period                     $ 15,363,806          $  9,422,198
                                                             ============          ============


Additional Cash Flow and Supplementary Information

  Interest Paid                                              $  5,022,751          $  4,453,518
  Income Tax Paid                                                 165,000               402,394
  Transfer from Loans to Other Real Estate Owned                  316,941                44,484
  Cash Dividends Payable                                           66,837                67,383

</TABLE>

See Notes to Consolidated Condensed Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

            Consolidated Condensed Statement of Stockholders' Equity
                                   (Unaudited)

                                                                                                              Accumulated
                                Common Stock                                                                      Other
                             ------------------   Paid-in Comprehensive  Retained    Unearned     Unearned    Comprehensive
                              Shares     Amount   Capital    Income      Earnings   ESOP Shares Compensation  Income (Loss)  Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>        <C>      <C>          <C>       <C>         <C>           <C>         <C>       <C>
Balance July 1, 2000         1,244,790  $12,448  $10,176,190            $8,102,308  $(1,055,482)  $(199,633)  $(55,120) $16,980,711

Net income for the nine
    months ended
    March 31, 2001                                            $331,050     331,050                                          331,050
                                                              --------

Other comprehensive income,
    net of tax
  Unrealized holding gains
      arising during the
      period, net of tax
      expense of $65,937                                       100,571
  Less: Reclassification
      adjustment for gain
      included in net income,
      net of tax expense
      of $13,699                                                20,894
                                                              --------
Unrealized gain on securities                                   79,677                                          79,677       79,677
                                                              --------

Other comprehensive income                                    $410,727
                                                              ========
Cash dividends ($.165 per
   share)                                                                 (185,715)                                        (185,715)

Stock purchase                 (36,206)    (362)    (295,882)              (69,692)                           (365,936)

ESOP shares earned                                      (671)                            62,716                              62,045

  Amortization of unearned
      compensation expense                            (2,517)                                        32,782                  30,265

------------------------------------------------------------------------------------------------------------------------------------

  Balance March 31, 2001     1,208,584  $12,086   $9,877,120            $8,177,951    $(992,766)  $(166,851)  $ 24,557  $16,932,097

====================================================================================================================================

</TABLE>

See Notes to Consolidated Condensed Financial Statements.


<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana



              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Basis of Presentation

The unaudited interim  consolidated  condensed financial  statements include the
accounts of Montgomery  Financial  Corporation  ("Montgomery"),  its subsidiary,
Montgomery   Savings,  A  Federal   Association  (the   "Association")  and  its
subsidiary, MSA SERVICE CORP.

The unaudited  interim  consolidated  condensed  financial  statements have been
prepared in accordance with the instructions to Form 10-QSB and,  therefore,  do
not include all  information  and  disclosures  required by  generally  accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management,  the  financial  statements  reflect all  adjustments  necessary  to
present fairly Montgomery's  financial position as of March 31, 2001, results of
operations for the three and nine-month  periods ending March 31, 2001 and 2000,
and cash flows for the  nine-month  periods  ended March 31, 2001 and 2000.  The
results of operations for the three and nine-month  periods ended March 31, 2001
are not  necessarily  indicative  of the  results  of  operations  which  may be
expected for the fiscal year ending June 30, 2001.


Net Income Per Share

Net income per share for the three and  nine-month  periods ended March 31, 2001
and 2000 are computed by dividing net earnings by the weighted average shares of
common stock outstanding during the period.

<TABLE>
<CAPTION>

For the Three Months Ended                        March 31, 2001                                     March 31, 2000
                                                  --------------                                     --------------

                                                    Weighted           Per                             Weighted           Per
                                                     Average          Share                             Average          Share
                                         Income       Shares         Amount             Income           Shares         Amount
                                         ------       ------         ------             ------           ------         ------
Basic Net Income Per Share:
<S>                                    <C>           <C>             <C>              <C>               <C>             <C>
   Net Income Available
   to Common Stockholders              $ 105,421     1,080,784       $  0.10          $  171,110        1,232,010       $  0.14
                                                                     =======                                            =======
Effect of Dilutive Stock Options
   and Grants                                  0        16,117                                 0            5,220
                                       ---------     ---------                        ----------        ---------

Diluted Net Income Per Share:
   Net Income Available
   To Common Stockholders              $ 105,421     1,096,901       $  0.10          $  171,110        1,237,230       $  0.14
                                       =========     =========       =======          ==========        =========       =======
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

For the Nine Months Ended                         March 31, 2001                                     March 31, 2000
                                                  --------------                                     --------------

                                                      Weighted         Per                              Weighted          Per
                                                       Average        Share                              Average         Share
                                        Income          Shares        Amount           Income             Shares         Amount
                                        ------          ------        ------           ------             ------         ------
Basic Net Income Per Share:
<S>                                    <C>           <C>             <C>              <C>               <C>             <C>
   Net Income Available
   to Common Stockholders              $ 331,050     1,081,060       $  0.31          $  557,918        1,281,955       $  0.44
                                                                     =======                                            =======
Effect of Dilutive Stock Options
   and Grants                                  0        11,827                                 0            7,318
                                       ---------     ---------                        ----------        ---------

Diluted Net Income Per Share:
   Net Income Available
   To Common Stockholders              $ 331,050     1,092,887       $  0.30          $  557,918        1,289,273       $  0.43
                                       =========     =========       =======          ==========        =========       =======
</TABLE>
<TABLE>
<CAPTION>

Other Comprehensive Income
                                                                        2001
                                                   ---------------------------------------------
                                                    Before-Tax          Tax           Net-of-Tax
Three months ended March 31,                          Amount      Benefit(Expense)      Amount
                                                   ------------   ----------------    ----------
Unrealized gains (losses) on securities
<S>                                                    <C>           <C>              <C>
     Unrealized holding gains arising
         during the year                               $38,624       $(15,295)        $ 23,329
     Less: reclassifications adjustment for losses
         realized in net income                           (736)           291             (445)
                                                     ----------      --------         ---------

Net unrealized gains                                 $  39,360       $(15,586)        $ 23,774
                                                     =========       =========        ========


                                                                        2000
                                                   ---------------------------------------------
                                                    Before-Tax          Tax           Net-of-Tax
Three months ended March 31,                          Amount      Benefit(Expense)      Amount
                                                   ------------   ----------------    ----------
Unrealized losses on securities
     Unrealized holding losses arising
         during the year                             $  (9,696)      $  3,840         $ (5,856)
     Less: reclassifications adjustment for gains
         realized in net income
                                                     ----------      --------         ---------

Net unrealized losses                                $  (9,696)      $  3,840         $ (5,856)
                                                     ==========      ========         =========


                                                                         2001
                                                   ---------------------------------------------
                                                    Before-Tax           Tax          Net-of-Tax
Nine months ended March 31,                           Amount       Benefit(Expense)     Amount
                                                   ------------    ----------------   ----------
Unrealized gains on securities
     Unrealized holding gains arising
         during the year                             $ 166,508       $(65,937)        $100,571
     Less: reclassifications adjustment for gains
         realized in net income                         34,593        (13,699)          20,894
                                                     ---------       ---------        --------

Net unrealized gains                                 $ 131,915       $(52,238)        $ 79,677
                                                     =========       =========        ========
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


                                                                        2000
                                                   ---------------------------------------------
                                                    Before-Tax          Tax           Net-of-Tax
Nine months ended March 31,                           Amount      Benefit(Expense)      Amount
                                                    -----------   ----------------    ----------

Unrealized gains (losses) on securities
<S>                                                  <C>             <C>              <C>
     Unrealized holding losses arising
         during the year                             $ (24,126)      $  9,556         $(14,570)
     Less: reclassifications adjustment for gains
         realized in net income                         55,644        (22,041)          33,603
                                                     ----------      ---------        ---------

Net unrealized losses                                $ (79,770)      $ 31,597         $(48,173)
                                                     ==========      ========         =========
</TABLE>



<PAGE>



                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


Item 2.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Forward-Looking Statements. When used in this Form 10-QSB or future filings
by Montgomery with the Securities and Exchange Commission, in Montgomery's press
releases or other public shareholder communications,  or in oral statements made
with the  approval of an  authorized  executive  officer,  the words or phrases,
"will likely  result",  "are expected to", "will  continue",  "is  anticipated",
"estimate",  "project",  "believe",  or  similar  expressions  are  intended  to
identify  "forward-looking   statements"  within  the  meaning  of  the  Private
Securities  Litigation Reform Act of 1995.  Montgomery wishes to caution readers
not to place undue reliance on any such forward-looking statements,  which speak
only as of the date made, and to advise readers that various factors,  including
regional and national economic conditions,  changes in levels of market interest
rates,  credit  risks of lending  activities,  and  competitive  and  regulatory
factors,  could  affect  Montgomery's  financial  performance  and  could  cause
Montgomery's  actual results for future periods to differ  materially from those
anticipated  or  projected.  Montgomery  does not  undertake,  and  specifically
disclaims any obligation,  to revise any  forward-looking  statements to reflect
the occurrence of anticipated or unanticipated events or circumstances after the
date of such statements.

     Financial Condition. Montgomery's total assets were $142.9 million at March
31, 2001, an increase of $4.8 million, or 3.5 percent from June 30, 2000. During
this nine-month period interest-earning assets, including Federal Home Loan Bank
stock,  increased  $4.3  million,  or 3.3 percent.  Short-term  interest-earning
deposits  increased $4.7 million,  or 46.2 percent.  This increase was primarily
due to an increase in deposit  accounts  with a decrease in loan  growth.  Loans
decreased $221,000,  or 0.2 percent.  Foreclosed assets and real estate held for
development  increased  $292,000,  or 22.5  percent.  Deposits  increased  $15.1
million,  or 16.5 percent primarily due to an increase in public funds deposits.
The increase in deposits  was  primarily  used to reduce  Federal Home Loan Bank
advances.  Federal Home Loan Bank  advances  decreased  $10.6  million,  or 37.6
percent, causing a net decrease in interest-bearing liabilities of $5.0 million,
or 4.3 percent.

     Capital and Liquidity. At March 31, 2001, Montgomery's stockholders' equity
was $16.9 million,  or 11.8 percent of total assets,  a decrease of $49,000 from
June 30, 2000.  Montgomery began to repurchase  62,240 shares of its outstanding
common  stock  on  December  5,  2000.  As of March  31,  2001,  Montgomery  had
repurchased 36,206 shares at a total cost of $366,000. The Association continues
to exceed all minimum capital requirements. At March 31, 2001, the Association's
tangible and core capital was $15.5 million, or 10.9 percent of tangible assets,
$13.4 million in excess of the 1.5 percent minimum required tangible capital and
$9.8  million  in excess  of the 4.0  percent  minimum  required  core  capital.
Risk-based  capital  equaled  $15.0  million,  or 17.2 percent of  risk-weighted
assets,  $8.0  million  more  than the  minimum  8.0  percent  risk-based  level
required.






<PAGE>


                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


     Asset/Liability   Management.   The   Association,   like  other  financial
institutions,   is  subject  to  interest-rate  risk  to  the  extent  that  its
interest-bearing   liabilities   reprice   on  a   different   basis   than  its
interest-bearing  assets.  The OTS  issued a  regulation  which  provides  a Net
Portfolio Value ("NPV") approach to the quantification of interest-rate risk. In
essence,  this approach  calculates the difference  between the present value of
liabilities,  expected  cash flows from  assets and cash flows from off  balance
sheet contracts.  Under this OTS regulation,  an institution's "normal" level of
interest-rate  risk in the event of an  assumed  change in  interest  rates is a
decrease in the  institution's  NPV in an amount not  exceeding 2 percent of the
present value of its assets.  Under the  regulation,  thrift  institutions  with
greater than "normal"  interest-rate  exposure must take a deduction  from their
total capital available to meet their risk-based capital requirement. 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 NPV) or (b) its
"normal"  level of  exposure  which is 2  percent  of the  present  value of its
assets. The regulation does exempt all institutions under $300 million in assets
with risk-based  capital above 12 percent from reporting  information to the OTS
to calculate exposure and making any deduction from risk-based capital. At March
31, 2001,  the  Association's  total assets were $142.9  million and  risk-based
capital was 17.2 percent;  therefore the Association would have been exempt from
calculating or making any risk-based capital reduction. Montgomery's management,
however,  believes  interest-rate  risk is an  important  factor  and  makes all
reports  necessary  to the OTS to  calculate  interest-rate  risk on a voluntary
basis.  At December  31,  2000,  the most recent date for which  information  is
available  from the OTS, 2 percent  of the  present  value of the  Association's
assets was approximately $2.78 million,  which was less than $3.46 million,  the
greatest  decrease in NPV  resulting  from a 200 basis point  change in interest
rates. As a result, the Association, for OTS reporting purposes, would have been
required to make a deduction  from total capital in  calculating  its risk-based
capital  requirement  had this rule been in effect and had the  Association  not
been  exempt  from  reporting  on such  date.  Based on  December  31,  2000 NPV
information, the amount of the Association's deduction from capital, had it been
subject to reporting, would have been approximately $340,000.
     It has been and  continues to be a priority of the  Association's  Board of
Directors  and  management  to manage  interest-rate  risk and thereby limit any
negative  effect  of  changes  in  interest  rates  on  Montgomery's   NPV.  The
Association's Interest Rate Risk Policy,  established by the Board of Directors,
promulgates  acceptable  limits on the  amount  of  change in NPV given  certain
changes in interest  rates.  Specific  strategies  have included  shortening the
amortized  maturity of fixed-rate  loans and increasing the volume of adjustable
rate loans to reduce the average maturity of the Association's  interest-earning
assets.  FHLB advances are used in an effort to match the effective  maturity of
the Association's interest-bearing liabilities to its interest-earning assets.
     Presented  below,  as of December  31, 2000,  and December 31, 1999,  is an
analysis  of the  Association's  estimated  interest-rate  risk as  measured  by
changes in NPV for  instantaneous  and  sustained  parallel  shifts in  interest
rates, up and down 300 basis points in 100 point increments,  compared to limits
set by the Board.  Assumptions used in calculating the amounts in this table are
assumptions utilized by the OTS in assessing the interest risk of the thrifts it
regulates.  Based upon these  assumptions  at December 31, 2000 and December 31,
1999,  the  NPV  of  the   Association  was  $19.4  million  and  $18.9  million
respectively. NPV is calculated by the OTS for the purpose of interest-rate risk
assessment  and  should  not be  considered  as an  indicator  of  value  of the
Association.



<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


--------------------------------------------------------------------------------
                                   At December 31, 2000     At December 31, 1999
--------------------------------------------------------------------------------

   Assumed             Board
  Change in            Limit
Interest Rates       % Change     $ Change    % Change     $ Change   % Change
(Basis Points)        in NPV       in NPV      in NPV       in NPV     in NPV
--------------------------------------------------------------------------------
                                    (Dollars in Thousands)
--------------------------------------------------------------------------------
    +300               -60         -5,549        -29        -7,311       -39
--------------------------------------------------------------------------------
    +200               -50         -3,463        -18        -4,774       -25
--------------------------------------------------------------------------------
    +100               -30         -1,524         -8        -2,254       -12
--------------------------------------------------------------------------------
       0                 0              0          0             0         0
--------------------------------------------------------------------------------
    -100               -30           +781         +4        +1,571        +8
--------------------------------------------------------------------------------
    -200               -50         +1,630         +8        +2,678       +14
--------------------------------------------------------------------------------
    -300               -60         +2,745        +14        +3,630       +19
--------------------------------------------------------------------------------

     In the event of a 300  basis  point  change in  interest  rate  based  upon
estimates  as of December  31,  2000,  the  Association  would  experience a 14%
increase in NPV in a declining rate  environment  and a 29% decrease in NPV in a
rising environment. During periods of rising rates, the value of monetary assets
and liabilities declines. Conversely, during periods of falling rates, the value
of monetary assets and liabilities  increases.  However, the amount of change in
value of specific assets and liabilities due to changes in rates is not the same
in a rising rate environment as in a falling rate environment  (i.e., the amount
of value  increase  under a specific  rate  decline  may not equal the amount of
value  decrease  under an identical  upward rate  movement).  Based upon the NPV
methodology,  the  increased  level of  interest  rate risk  experienced  by the
Association   in  recent   periods  was  primarily  due  to  the  maturities  of
interest-bearing  assets increasing more than the maturities on interest-bearing
liabilities  due to the increase in fixed-rate  residential  mortgage  loans and
non-residential loans.

     Results of Operations.  Montgomery's  net income for the three months ended
March 31,  2001,  was  $105,000  compared to $171,000 for the three months ended
March 31, 2000, a decrease of $66,000. Net interest income decreased $67,000, or
6.8 percent. Average interest-earning assets increased $776,000, or 0.6 percent,
from $130.0 million for the three months ended March 31, 2000, to $130.8 million
for the 2001 three-month period. Average interest-bearing  liabilities increased
$1.7  million  from  $114.6  million to $116.3  million  during  the  comparable
three-month  period.  Interest rate spread  decreased  from 2.43 percent for the
three months  ended March 31,  2000,  to 2.21 percent for the three months ended
March 31,  2001.  Net  interest  margin  decreased to 2.83 percent for the three
months  ended March 31, 2001 from 3.06  percent for the three months ended March
31,  2000.  Non-interest  income was  $38,000  for the 2001  three-month  period
compared to $24,000 for the 2000 period.  Non-interest  expense was $785,000 for
the three  months  ended  March  31,  2001  compared  to  $752,000  for the 2000
three-month period, an increase of $33,000, or 4.3 percent. Income before income
tax was $179,000 for the three months ended March 31, 2001  compared to $265,000
for the 2000 period,  a decrease of $86,000.  Income tax expense  decreased from
$94,000 to $74,000 for the comparable periods.


<PAGE>



                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


     For the nine months ended March 31, 2001, net income was $331,000  compared
to $558,000  for the nine months  ended March 31,  2000, a decrease of $227,000.
Net interest income  decreased from $3.0 million for the nine months ended March
31, 2000 to $2.7 million for the nine months ended March 31, 2001, a decrease of
$269,000, or 9.0 percent. Average interest-earning assets increased $5.5 million
from $127.1  million for the nine months ended March 31, 2000, to $132.6 million
for the  2001  nine-month  period  while  average  interest-bearing  liabilities
increased  $7.2  million  during the  comparable  periods.  Non-interest  income
increased  $27,000  and  non-interest  expense  increased  $127,000.  Income tax
expense was  $221,000  for the nine months  ended  March 31,  2001,  compared to
$364,000 for the nine months ended March 31, 2000.

     Interest  Income.  Montgomery's  total interest income for the three months
ended March 31, 2001, was $2.6 million,  an increase of $49,000, or 1.9 percent,
compared to interest  income for the three  months  ended March 31,  2000.  This
increase was primarily caused by an increase in average  interest-earning assets
from $130.0 million for the three months ended March 31, 2000, to $130.7 million
for the three  months  ended March 31,  2001,  an increase of  $776,000,  or 0.6
percent  principally  due to mortgage loan growth.  Average loans increased from
$117.0  million for the 2000  three-month  period to $119.2 million for the 2001
three-month  period and average  interest-earning  deposits  decreased from $9.6
million  to $9.3  million  for the  respective  periods.  The  average  yield on
interest-earning  assets was 7.84  percent for the three  months ended March 31,
2001, compared to 7.74 percent for the three months ended March 31, 2000.
     Interest income for the nine months ended March 31, 2001, was $7.8 million,
an increase of  $443,000,  or 6.0  percent,  from  interest  income for the same
period in 2000. Average  interest-earning assets for the nine months ended March
31, 2001, was $132.6 million  compared to $127.1 million for the 2000 nine-month
period,  an increase of $5.5 million,  or 4.3 percent,  principally  due to loan
growth.  The average yield for the 2001 period was 7.84 percent compared to 7.71
percent for the 2000 period.

     Interest  Expense.  Interest  expense for the three  months ended March 31,
2001, was $1.6 million,  which was an increase of $116,000, or 7.6 percent, from
the three  months  ended March 31, 2000.  Average  interest-bearing  liabilities
increased $1.7 million, or 1.5 percent, from $114.6 million for the three months
ended March 31,  2000,  to $116.3  million for the three  months ended March 31,
2001.  Average  interest-bearing  deposits  increased  $12.5 million and average
borrowings  decreased $11.1 million for the comparable periods. The average cost
of funds increased from 5.31 percent to 5.63 percent for the comparable periods.
The average cost of deposits increased from 5.18 percent to 5.60 percent for the
comparable  three-month  periods.  The average cost of borrowings increased from
5.73 percent to 5.85 percent for the comparable periods.
     Interest  expense  for the nine  months  ended  March  31,  2001,  was $5.1
million,  an increase of $712,000,  or 16.3 percent,  from the nine months ended
March 31,  2000.  The average cost of funds for the 2001 period was 5.73 percent
compared  to  5.25  percent  for  the  2000  period.  Average   interest-bearing
liabilities  increased  from $110.8  million for the nine months ended March 31,
2000 to $118.0 million for the 2001 nine-month period.



<PAGE>




                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


     Provision  for Losses on Loans.  There was no provision for losses on loans
made for either of the three or  nine-month  comparable  periods.  Provision  or
adjustment  entries are made based on the Internal Loan and Asset Review Policy.
A review is  performed  at least  quarterly  to  determine  the  adequacy of the
current balance in the allowance for losses on loans.  Loans  delinquent  ninety
days or more were $1,050,000 at March 31, 2001, compared to $990,000 at June 30,
2000.  Non-performing  loans to total loans at March 31, 2001 were 0.88  percent
compared  to 0.83  percent  at June  30,  2000.  The  allowance  for  losses  to
non-performing loans was 21.5 percent at March 31, 2001 compared to 22.8 percent
at June 30,  2000.  The  allowance  to total loans was 0.19 percent at March 31,
2001 and at June 30, 2000. After review of the current loans  delinquent  ninety
days or more at March 31, 2001, it was determined  this level of delinquency was
abnormal and a reduction in the total  delinquency  will be made.  Montgomery is
continually  re-evaluating  the level of the  allowance  for loan  losses as the
amount  of  non-residential  mortgage  loans and  other  new loan  products  are
offered.

     Non-Interest  Income.  Montgomery's other income for the three months ended
March 31, 2001  totaled  $38,000  compared to $24,000 for the three months ended
March 31,  2000,  an increase of $14,000.  Service  charges on deposit  accounts
increased  $17,000  primarily  due to  implementation  of new fee  schedules for
demand deposit  accounts.  Loss on the sale of available for sale securities was
$1,000 while no gain or loss was recorded for the  comparable  2000  three-month
period.  Real estate  operations net income  decreased $1,000 for the comparable
periods and other income decreased $1,000.
     Other  income for the nine months ended March 31, 2001,  was  $168,000,  an
increase of $27,000 from the comparable 2000 nine-month period.  During the nine
months  ended March 31,  2001,  service  charges on deposit  accounts  increased
$35,000 and gain on the sale of securities available for sale decreased $21,000.
Income from real estate  operation  decreased  $9,000 and other income increased
$22,000 from the 2000 nine-month period.

     Non-Interest  Expense.  Montgomery's  other  expenses  for the three months
ended March 31, 2001 totaled $785,000,  an increase of $33,000,  or 4.3 percent,
from the three  months ended March 31,  2000.  Salaries  and  employee  benefits
increased  $33,000  primarily  due to an increase in  personnel  to  accommodate
growth.  Net occupancy  expense increased $6,000 and equipment expense increased
$3,000.  Data processing  expense decreased $6,000 and other expenses  increased
$1,000  primarily due to  Montgomery's  growth.  Advertising  expense  decreased
$5,000 primarily due to increased  advertising in the 2000 period to promote the
newly opened Lafayette office operation.
     Non-interest  expense for the nine months  ended March 31,  2001,  was $2.3
million,  an increase of $127,000,  or 5.8  percent,  from the nine months ended
March 31,  2000.  Salary and  employee  benefits  increased  $140,000  due to an
increase in personnel to accommodate  growth and a decrease in deferred loan fee
costs due to a decrease in mortgage loan  originations.  Net  occupancy  expense
increased  $22,000,  equipment  expense  decreased  $4,000  and data  processing
expense decreased $7,000. Advertising expense decreased $18,000 primarily due to
the  increased  advertising  during  the 2000  period to promote  the  Lafayette
office. Other expense increased $11,000 primarily due to Montgomery's growth.


<PAGE>




                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


     Income Tax Expense. Income tax expense for the three months ended March 31,
2001 was $74,000  compared to $94,000 for the three  months ended March 31, 2001
due to the decrease in taxable income.
     Income tax expense for the  comparable  nine-month  periods  decreased from
$364,000 for the 2000 period to $221,000  for the 2001 period,  again due to the
decrease in net taxable income.



Part II.  OTHER INFORMATION

Item 1.  Legal Proceedings    None.

Item 2.  Changes in Securities    None.

Item 3.  Defaults Upon Senior Securities    None.

Item 4.  Submission of Matters to a Vote of Security Holders    None.

Item 5.  Other Information    None.

Item 6.  Exhibits and Reports on Form 8-K

    (a)  Exhibits

          3(ii) Montgomery Financial Corporation's Amended and Restated By-laws.

    (b)  Reports on Form 8-K

          Montgomery filed no reports on Form 8-K during the quarter ended March
          31, 2001.


<PAGE>



                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


                                   SIGNATURES

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


                                    Montgomery Financial Corporation



Date:  May 14, 2001                 By:   /s/ J. Lee Walden
                                        ----------------------------------------
                                        J. Lee Walden, President and Chief
                                            Executive Officer



Date:  May 14, 2001                 By:   /s/  Steven V. Brier
                                       -----------------------------------------
                                       Steven V. Brier, Vice President and Chief
                                          Financial Officer