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, 2000


                                       OR

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

               For the transition period from ________ to ________


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

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

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

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

         Check here whether the issuer (1) has filed all reports  required to be
filed by Section 13 or 15 (D) of the Securities  Exchange Act of 1934 during the
preceding 12 months (or for such period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]

     As of April 30,  2000,  there  were  1,225,089  shares of the  Registrant's
common stock issued and outstanding.
<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, 2000 and June 30, 1999                            3

         Consolidated Condensed Statement of Income for the Three
         And Nine Months Ended March 31, 2000 and 1999                     4

         Consolidated Condensed Statement of Cash Flows for the
         Nine Months Ended March 31, 2000 and 1999                         5

         Consolidated Condensed Statement of Stockholders'
         Equity for the Nine Months Ended March 31, 2000                   7

         Notes to Consolidated Condensed Financial Statements              8

Item 2.  Management's Discussion and Analysis of Financial Condition
           And Results of Operations                                      10


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                                15

Item 2.  Changes in Securities                                            15

Item 3.  Defaults Upon Senior Securities                                  15

Item 4.  Submission of Matters to a Vote of Security Holders              15

Item 5.  Other Information                                                15

Item 6.  Exhibits and Reports on Form 8-K                                 15

Signatures                                                                16

                                       2
<PAGE>
<TABLE>
<CAPTION>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

             Consolidated Condensed Statement of Financial Condition
                                   (Unaudited)

                                                          March 31,          June 30,
                                                            2000               1999
                                                          ---------          ---------
Assets
<S>                                                   <C>                <C>
  Cash                                                $     710,068      $     523,585
  Short-term interest-bearing deposits                    8,712,130          4,409,228
                                                      -------------      -------------
         Total cash and cash equivalents                  9,422,198          4,932,813
  Interest-bearing deposits                                 158,689            219,463
  Securities available for sale                             498,130            880,900
  Loans                                                 118,954,614        111,641,224
  Allowance for loan losses                                (226,000)          (226,000)
                                                      -------------      -------------
       Net loans                                        118,728,614        111,415,224
  Real estate owned and held for development, net         1,099,182          1,181,720
  Premises and equipment                                  3,250,125          2,839,409
  Federal Home Loan Bank Stock                            1,893,300          1,250,700
  Interest receivable                                     1,010,253            893,854
  Other assets                                              391,681            345,036
                                                      -------------      -------------
         Total assets                                 $ 136,452,172      $ 123,959,119
                                                      =============      =============

Liabilities
  Deposits
      Noninterest bearing                             $   1,669,966      $   1,349,282
      Interest bearing                                   88,013,063         81,118,363
                                                      -------------      -------------
         Total deposits                                  89,683,029         82,467,645
  Federal Home Loan Bank advances
      and other borrowings                               28,241,258         20,632,069
  Interest payable                                          474,218            566,632
  Deferred tax liability                                    321,542            347,089
  Other liabilities                                         846,883            548,612
                                                      -------------      -------------
         Total liabilities                              119,566,930        104,562,047
                                                      -------------      -------------
Stockholders' Equity
   Preferred stock, $.01 par value
       authorized and unissued - 2,000,000 shares
  Common stock, $.01 par value - 8,000,000 shares
      authorized;  1,225,089 and 1,521,142 issued            12,251             15,211
  Paid-in capital                                        10,021,046         12,464,781
  Retained earnings - substantially restricted
                                                          8,022,710          8,131,251
   Unearned ESOP shares - 107,706 and 114,180            (1,077,061)        (1,141,796)
   Unearned compensation                                    (65,870)           (92,714)
   Accumulated other comprehensive income                   (27,834)            20,339
                                                      -------------      -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                   <C>                <C>
         Total stockholders' equity                      16,885,242         19,397,072
                                                      -------------      -------------

         Total liabilities and stockholders' equity    $136,452,172       $123,959,119
                                                       ============       ============
</TABLE>

See notes to Consolidated Condensed Financial Statements.

                                       3
<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,
                                            -------------------------------   -------------------------------
                                                 2000             1999             2000             1999
                                            --------------    -------------   -------------     -------------
 <S>                                           <C>              <C>              <C>              <C>
Interest and Dividend Income
  Loans                                       $ 2,343,987      $ 2,147,964      $ 6,873,080      $ 6,419,724
  Investment securities                             4,491            7,114           16,528           16,362
  Deposits with financial institutions            128,969          121,015          361,229          316,933
  Dividend Income                                  37,659           24,672          103,338           64,320
                                              -----------      -----------      -----------      -----------
       Total interest and dividend income       2,515,106        2,300,765        7,354,175        6,817,339

Interest Expense
  Deposits                                      1,110,329        1,015,877        3,258,506        3,179,019
Federal Home Loan Bank advances
      and other borrowings                        411,582          281,431        1,102,598          678,093
                                              -----------      -----------      -----------      -----------
     Total interest expense                     1,521,911        1,297,308        4,361,104        3,857,112
                                              -----------      -----------      -----------      -----------

Net Interest Income                               993,195        1,003,457        2,993,071        2,960,227
  Provision for losses on loans                                     15,000                            40,000
                                              -----------      -----------      -----------      -----------

Net Interest Income After
  Provision for Losses on Loans                   993,195          988,457        2,993,071        2,920,227
                                              -----------      -----------      -----------      -----------

Other Income
  Service charges on deposit accounts              15,283           11,814           43,961           35,613

  Gain on sale of investment securities            55,644
  Net appraisal income (expense)                   (3,083)           1,032            2,188           (3,503)
  Other income                                      6,777            1,976           21,143            5,365
                                              -----------      -----------      -----------      -----------
       Total other income                          18,977           14,822          122,936           37,475
                                              -----------      -----------      -----------      -----------

Other Expenses
  Salaries and employee benefits                  425,695          334,954        1,215,434          978,267
  Net occupancy expense                            47,822           31,506          128,733           84,953
  Equipment expense                                58,191           43,147          176,497          135,662
  Data processing expense                          48,820           48,401          137,610          126,451
  Deposit insurance expense                         4,554           13,113           29,327           38,305
  Real estate operations, net                      (1,591)          (4,302)         (20,385)         (20,499)
  Advertising expense                              20,308           11,201           66,299           34,714
  Other expenses                                  143,673          128,805          460,524          392,603
                                              -----------      -----------      -----------      -----------
           Total other expenses                   747,472          606,825        2,194,039        1,770,456
                                              -----------      -----------      -----------      -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                           <C>              <C>              <C>              <C>
Income Before Income Tax                          264,700          396,454          921,968        1,187,246
  Income tax expense                               93,590          145,610          364,050          445,500
                                              -----------      -----------      -----------      -----------

Net Income                                    $   171,110      $   250,844      $   557,918      $   741,746
                                              ===========      ===========      ===========      ===========


Net Income Per Share:
      Basic                                   $      0.14      $      0.17      $      0.44       $     0.50

      Diluted                                 $      0.14      $      0.17      $      0.43       $     0.50

Dividends Per Share                           $     0.055      $     0.055      $     0.165       $    0.165
</TABLE>

See Notes to Consolidated Condensed Financial Statements.


                                       4

<PAGE>
<TABLE>
<CAPTION>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                 Consolidated Condensed Statement of Cash Flows
                                   (Unaudited)

                                                                          Nine Months Ended
                                                                               March 31,
                                                                    -----------------------------

                                                                       2000              1999
                                                                    -----------       -----------
<S>                                                               <C>                 <C>
Operating Activities

  Net income                                                      $   557,918         $   741,746
  Adjustments to reconcile net income to net cash
      provided by operating activities
          Provision for loan losses                                                        40,000
          Depreciation                                                238,020             177,191
          Investment securities gains                                 (55,644)
          ESOP stock amortization                                      57,057              70,659
          Amortization of unearned compensation                        15,505               6,511
          Change In
              Interest receivable                                    (116,399)              3,539
              Interest payable                                        (92,414)            (26,480)
              Other assets                                            (46,645)           (137,169)
              Other liabilities                                       319,173            (181,829)

                 Net cash provided by operating activities            876,571             694,168




Investing Activities

  Net change in interest-bearing deposits                              60,774
  Proceeds from paydowns of
      securities available for sale                                                        21,967
   Proceeds from sale of securities
      available for sale                                              358,644
  Purchase of securities available for sale                                              (441,220)
  Net change in loans                                              (7,357,874)         (7,278,877)
  Additions to real estate owned and held for investment              (87,782)           (164,257)
  Proceeds from real estate owned sales                               187,853             319,222
  Purchases of premises and equipment                                (621,785)           (921,745)
   Purchase of FHLB of Indianapolis Stock                            (642,600)           (329,200)

                 Net cash used by investing activities             (8,102,770)         (8,794,110)
</TABLE>

                                       5
<PAGE>
<TABLE>
<CAPTION>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                 Consolidated Condensed Statement of Cash Flows
                                   (Continued)

                                                                          Nine Months Ended
                                                                              March 31,
                                                                  --------------------------------
                                                                     2000                  1999
                                                                  -----------           ----------
<S>                                                             <C>                    <C>
Financing Activities
  Net Change In
       Noninterest-bearing, interest-bearing demand and
          savings deposits                                      $  4,569,095           $  3,141,514
      Certificates of deposit                                      2,646,289             (3,753,451)
  Proceeds from FHLB advances
      and other borrowings                                        22,500,000             11,000,000
  Repayment of FHLB advances
      and other borrowings                                       (14,890,811)            (2,247,413)
 Stock purchase                                                   (2,894,430)              (890,960)
  Dividends paid                                                    (214,559)              (255,128)
                                                                ------------           ------------

             Net cash provided by financing activities            11,715,584              6,994,562



Net Change in Cash and Cash Equivalents                            4,489,385             (1,105,380)

Cash and Cash Equivalents, Beginning of Period                     4,932,813             10,896,745
                                                                ------------           ------------

Cash and Cash Equivalents, End of Period                        $  9,422,198           $  9,791,365



Additional Cash Flow and Supplementary Information

  Interest paid                                                 $  4,453,518           $  3,883,592
  Income tax paid                                                    402,394                935,789
Transfer from loans to other real estate owned                        44,484                112,191
   Cash dividends payable                                             67,383                 79,601
</TABLE>


See Notes to Consolidated Condensed Financial Statements

                                       6

<PAGE>
<TABLE>
<CAPTION>

                                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                                             Crawfordsville, Indiana

                             Consolidated Condensed Statement of Stockholders' Equity
                                                   (Unaudited)



                                           Common Stock
                                       --------------------      Paid-in    Comprehensive      Retained          Unearned
                                       shares       Amount       Capital        Income         Earnings         ESOP Shares
-------------------------------------------------------------------------------------------------------------------------------

<S>                                   <C>           <C>         <C>             <C>            <C>             <C>
 Balance July 1, 1999                 1,521,142     $15,211     $12,464,781                    $8,131,251      $(1,141,796)

  Net income for the nine months
      ended March 31, 2000                                                       $577,918         557,918
                                                                                 --------

  Other comprehensive income,
      net of tax
    Unrealized holding losses arising
        during the period, net of tax
        benefit of $9,556                                                         (14,570)
    Less: Reclassification adjustment
        for gain included in net income,
        net of tax benefit of $22,041                                              33,603
                                                                               ----------
  Unrealized loss on securities                                                   (48,173)
                                                                               ----------
  Other comprehensive income                                                     $529,745
                                                                                 ========
  Cash dividends ($.165 per share)                                                              (199,707)

 Stock purchase                       (296,053)     (2,960)     (2,424,718)                     (466,752)

  ESOP shares earned                                                 (7,678)                                        64,735

  Amortization of unearned
      compensation expense                                          (11,339)

-------------------------------------------------------------------------------------------------------------------------------
  Balance March 31, 2000              1,225,089     $12,251     $10,021,046                    $8,022,710      $(1,077,061)
===============================================================================================================================
</TABLE>


  See Notes to Consolidated Condensed Financial Statement
<PAGE>
<TABLE>
<CAPTION>

                                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                                             Crawfordsville, Indiana

                             Consolidated Condensed Statement of Stockholders' Equity
                                                   (Unaudited)


                                                               Other
                                             Unearned      Comprehensive
                                            Compensation   Income (Loss)         Total
------------------------------------------------------------------------------------------

<S>                                        <C>                 <C>            <C>
 Balance July 1, 1999                      $  (92,714)         $ 20,339       $19,397,072

  Net income for the nine months
      ended March 31, 2000                                                        557,918


  Other comprehensive income,
      net of tax
    Unrealized holding losses arising
        during the period, net of tax
        benefit of $9,556
    Less: Reclassification adjustment
        for gain included in net income,
        net of tax benefit of $22,041

  Unrealized loss on securities                                 (48,173)          (48,173)

  Other comprehensive income

  Cash dividends ($.165 per share)                                               (199,707)

 Stock purchase                                                                (2,894,430)

  ESOP shares earned                                                               57,057

  Amortization of unearned
      compensation expense                     26,844                              15,505

-----------------------------------------------------------------------------------------
  Balance March 31, 2000                   $  (65,870)         $(27,834)      $16,885,242
=========================================================================================
</TABLE>
See Notes to Consolidated Condensed Financial Statement

                                       7


<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, 2000, results of
operations  for the three and nine month periods ending March 31, 2000 and 1999,
and cash flows for the nine month  periods  ended March 31,  2000 and 1999.  The
results of operations  for the three and nine month periods ended March 31, 2000
are not  necessarily  indicative  of the  results  of  operations  which  may be
expected for the fiscal year ending June 30, 2000.


Net Income Per Share

Net income per share for the three and nine month  periods  ended March 31, 2000
and 1999 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, 2000                             March 31, 1999
                                                  --------------                             --------------

                                                     Weighted        Per                        Weighted        Per
                                                      Average        Share                       Average        Share
                                         Income       Shares         Amount         Income       Shares         Amount
                                         ------       ------         ------         ------       ------         ------
<S>                                   <C>            <C>           <C>              <C>          <C>          <C>
Basic Net Income Per Share:
   Net Income Available
   to Common Stockholders             $ 171,110      1,232,010     $    0.14        $ 250,844    1,445,724    $    0.17
                                                                   =========                                  =========

Effect of Dilutive Stock Options
   and Grants                                0           5,220                              0       10,662
                                      --------    ------------                     ----------   ----------

Diluted Net Income Per Share:
   Net Income Available
   To Common Stockholders             $ 171,110      1,237,230     $    0.14       $  250,844    1,456,386    $    0.17
                                      =========      =========     =========       ==========    =========    =========
</TABLE>

                                           8
<PAGE>
<TABLE>
<CAPTION>
                                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                                             Crawfordsville, Indiana


For the Nine Months Ended                         March 31, 2000                             March 31, 1999
                                                  --------------                             --------------

                                                     Weighted        Per                        Weighted        Per
                                                      Average        Share                       Average        Share
                                         Income       Shares         Amount         Income       Shares         Amount
                                         ------       ------         ------         ------       ------         ------
<S>                                   <C>            <C>           <C>             <C>           <C>          <C>
Basic Net Income Per Share:
   Net Income Available
   to Common Stockholders             $ 557,918      1,281,955     $    0.44       $  781,746    1,485,529    $    0.50

Effect of Dilutive Stock Options
   and Grants                                 0          7,318                               0      12,654
                                       --------    ------------                     ----------   ---------
Diluted Net Income Per Share:
   Net Income Available
   To Common Stockholders            $ 557,918       1,289,273     $    0.43       $  741,746    1,498,183    $    0.50
                                     =========       =========     =========       ==========    =========    =========
</TABLE>

                                       9

<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 $136.5 million at
March 31,  2000,  an increase of $12.5  million,  or 10.1  percent from June 30,
1999.  During the nine month  period  ending  March 31,  2000,  interest-earning
assets, including Federal Home Loan Bank stock, increased $11.8 million, or 10.0
percent.  Short-term  interest-earning  deposits increased $4.3 million, or 97.6
percent.  Loans increased $7.3 million,  or 6.6 percent.  Federal Home Loan Bank
Stock increased  $643,000 due to an increase in Federal Home Loan Bank advances.
Deposits  increased $7.2 million,  or 8.7 percent and borrowings  increased $7.6
million, or 36.9 percent, causing a net increase in interest-bearing liabilities
of $14.5  million or 14.3 percent.  The increase in borrowings  was used to fund
loan growth and increase liquidity levels.

         Capital and  Liquidity.  At March 31,  2000,  stockholders'  equity was
$16.9  million or 12.4  percent of total  assets,  compared  with  stockholders'
equity of $19.4 million, or 15.7 percent, at June 30, 1999. With the approval of
the OTS on May 5,  1999,  Montgomery  began  to  repurchase  209,171  shares  of
outstanding  common stock. The repurchase was completed on September 24, 1999 at
a total cost of $2.1 million.  On March 2, 2000, the OTS approved the repurchase
of an additional  136,121 shares of common stock. The repurchase of these shares
was completed on March 31, 2000 at a total cost of $1.3 million.  The repurchase
of stock  during the nine months  ended March 31,  2000  reduced  capital in the
amount of $2.9 million. The Association  continues to exceed all minimum capital
requirements. At March 31, 2000, the Association's tangible and core capital was
$15,009,000,  or 11.1 percent of tangible  assets,  $12,982,000 in excess of the
1.5 percent minimum  required  tangible  capital and $9,605,000 in excess of the
4.0  percent  minimum   required  core  capital.   Risk-based   capital  equaled
$14,513,000,  or 17.2 percent of risk-weighted assets,  $7,742,000 more than the
minimum  8.0  percent  risk-based  level  required.  The  director of the OTS is
required to set minimum  liquidity levels between four and 10 percent of assets.
Current   regulations  require  a  minimum  liquidity  level  of  four  percent.
Montgomery's  average  liquidity  ratio for the nine months ended March 31, 2000
was 8.5 percent.

                                       10
<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 OTS  regulations,  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) and (b)
its "normal"  level of exposure  which is 2% 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 calculate
exposure and making any deduction from  risk-based  capital.  At March 31, 2000,
the  Association's  total assets were $136.5  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.  The  Association's  management
believes  interest-rate  risk is an  important  factor  and  makes  all  reports
necessary  to OTS to  calculate  interest-rate  risk on a  voluntary  basis.  At
December 31, 1999, the most recent date for which information was available from
the OTS, 2.0% of the present value of the Association's assets was approximately
$2.72 million,  which was less than $4.77 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, 1999 NPV  information,  the amount
of the Association's  deduction from capital,  had it been subject to reporting,
would have been approximately $1.03 million.
          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, 1999, and December 31, 1998, 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, 1999 and December 31,
1998,  the  NPV  of  the   Association  was  $18.9  million  and  $19.2  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.

                                       11
<PAGE>
<TABLE>
<CAPTION>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


-------------------- ----------------- ------------------------------------ ------------------------------------
                                              At December 31, 1999                 At December 31, 1998
-------------------- ----------------- ------------------------------------ ------------------------------------
      Assumed              Board
                           Limit
     Change in           % Change          $ Change          % Change           $ Change          % Change
  Interest Rates          in NPV            in NPV            in NPV             in NPV            in NPV
  (Basis Points)
----------------------------------------------------------------------------------------------------------------
                                            (Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
<S>     <C>                    <C>            <C>                  <C>             <C>                 <C>
       +300                   -60            -7,311               -39             -4,644              -24
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
       +200                   -50            -4,774               -25             -2,637              -14
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
       +100                   -30            -2,254               -12             -1,026               -5
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
          0                     0                 0                 0                  0                0
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
       -100                   -30            +1,571                +8               +633               +3
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
        -200                  -50            +2,678               +14             +1,286               +7
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
        -300                  -60            +3,630               +19             +2,157              +11
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
</TABLE>

         In the event of a 300 basis point  change in interest  rates based upon
estimates  as of December  31,  1999,  the  Association  would  experience a 19%
increase in NPV in a declining rate  environment  and a 39% 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, 2000 was  $171,000  compared  to $251,000  for the three  months
ended March 31,  1999,  a decrease of $80,000,  or 31.8  percent.  Net  interest
income decreased $10,000, or 1.0 percent.  Average  interest-earning assets were
$130.0  million for the three  months  ended  March 31, 2000  compared to $118.6
million for the 1999 three-month  period,  an increase of $11.4 million,  or 9.6
percent. Average  interest-bearing  liabilities increased $13.3 million, or 13.1
percent, from $101.3 million to $114.6 million during the comparable three-month

<PAGE>

periods.  Interest rate spread  decreased from 2.64 percent for the three months
ended March 31, 1999 to 2.43  percent for the three months ended March 31, 2000.
Net interest  margin  decreased to 3.06 percent for the three months ended March
31,  2000  from  3.38  percent  for the  three  months  ended  March  31,  1999.
Non-interest  income was $19,000  for the 2000  three-month  period  compared to
$15,000 for the 1999  period.  Non-interest  expense was  $747,000 for the three
months  ended March 31,  2000  compared  to  $607,000  for the 1999  three-month
period,  an increase of $140,000,  or 23.2  percent,  primarily  due to expenses
associated with the operation of the Lafayette,  Indiana opened in April,  1999.
Income  before income tax was $265,000 for the three months ended March 31, 2000
compared to  $396,000  for the 1999  period,  a decrease  of  $132,000,  or 33.2
percent.  Income  tax  expense  decreased  from  $146,000  to  $94,000  for  the
comparable periods.

                                       12
<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


         For the nine  months  ended  March 31,  2000,  net income was  $558,000
compared to $742,000  for the nine months  ended March 31,  1999,  a decrease of
$184,000,  or 24.8 percent.  Net interest income  increased from $33,000 for the
comparable  periods.  Average  interest-earning  assets  increased  from  $114.5
million for the nine months ended March 31, 1999 to $127.1  million for the 2000
nine-month  period while average  interest bearing  liabilities  increased $14.5
during the comparable  periods.  Non-interest income increased $85,000 primarily
due  to a gain  on  the  sale  of  available  for  sale  investment  securities.
Non-interest  expense  increased  $424,000,  or 23.9 percent.  This increase was
primarily  due to an increase in personnel and  operational  costs in connection
with the Lafayette,  Indiana office. Growth in other offices also contributed to
the  increase in expense.  Income tax expense was  $364,000  for the nine months
ended March 31,  2000,  compared to $446,000 for the nine months ended March 31,
1999.

          Interest  Income.  Montgomery's  total  interest  income for the three
months ended March 31, 2000, was $2.5 million,  an increase of $214,000,  or 9.3
percent,  compared to interest income for the three months ended March 31, 1999.
This  increase was primarily  caused by an increase in average  interest-earning
assets from $118.6  million for the three months ended March 31, 1999, to $130.0
million for the three months ended March 31, 2000, an increase of $11.4 million,
or 9.6 percent  principally  due to loan growth.  Average loans  increased  from
$105.9  million for the 1999 three month  period to $118.0  million for the 2000
three month period and average  interest-earning  deposits  decreased from $10.8
million  to $9.6  million  for the  respective  periods.  The  average  yield on
interest-earning  assets was 7.74  percent for the three  months ended March 31,
2000, compared to 7.76 percent for the three months ended March 31, 1999.
          Interest  income for the nine  months  ended  March 31,  2000 was $7.4
million, an increase of $537,000,  or 7.9 percent,  from interest income for the
same period in 1999. Average  interest-earning  assets for the nine months ended
March 31, 2000, was $127.1 million  compared to $114.5 million for the 1999 nine
month period, an increase of $12.6 million, or 11.0 percent,  principally due to
loan growth.  The average yield for the 2000 period was 7.71 percent compared to
7.94 percent for the 1999 period.

          Interest  Expense.  Interest  expense for the three months ended March
31, 2000 was $1.5 million,  which was an increase of $225,000,  or 17.3 percent,
from the three months ended March 31, 1999. Average interest-bearing liabilities
increased  $13.3  million,  or 13.1 percent,  from $101.3  million for the three
months ended March 31, 1999, to $114.6  million for the three months ended March
31, 2000. The average cost of funds  increased from 5.12 percent to 5.31 percent
for the  comparable  periods.  The average cost of deposits  increased from 5.00
percent to 5.18 percent for the comparable three-month periods. The average cost
of  borrowings  increased  from 5.62 percent to 5.73 percent for the  comparable
periods.
         Interest  expense for the nine months  ended March 31,  2000,  was $4.4
million,  an increase of $504,000,  or 13.1 percent,  from the nine months ended
March 31,  1999.  The average cost of funds for the 2000 period was 5.25 percent
compared  to  5.34  percent  for  the  1999  period.  Average   interest-bearing
liabilities  increased  from $96.3  million for the nine months  ended March 31,
1999 to $110.8 million for the 2000 nine month period.

                                       13
<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


         Provision for Losses on Loans.  There was no provision on loans for the
three months ended March 31, 2000 compared to $15,000 for the three months ended
March 31, 1999. During the nine months ended March 31, 1999, a $40,000 provision
was made compared to no provision  being made in the comparable  2000 nine-month
period.  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  $1,072,000 at March 31, 2000,  compared to
$547,000 at June 30, 1999. Non-performing loans to total loans at March 31, 2000
were 0.91 percent  compared to 0.49 percent at June 30, 1999.  The allowance for
losses to  non-performing  loans was 21.1 percent at March 31, 2000  compared to
41.3 percent at June 30, 1999.  The allowance to total loans was 0.19 percent at
March 31, 2000 and 0.20  percent at June 30,  1999.  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, 2000,  totaled $19,000  compared to $15,000 for the three months
ended March 31, 1999, an increase of $4,000, or 28.0 percent.  This increase was
due to an  increase  in service  charges on  deposit  accounts  in the amount of
$3,000,  a decrease in net  appraisal  income of $4,000 and an increase in other
income of $5,000.
         Other income for the nine months ended March 31, 2000, was $123,000, an
increase of $85,000 from the comparable  1999 nine-month  period.  This increase
was primarily due to a gain on the sale of available for sale  securities in the
amount of $56,000 in the 2000 period compared to no gain during the 1999 period.
During the nine months ended March 31, 2000, service charges on deposit accounts
increased  $8,000,  appraisal income increased $5,000 and other income increased
$16,000.  The increase in other income was primarily  due to increased  usage of
debit cards and related ATM transactions.

         Non-Interest Expense.  Montgomery's other expenses for the three months
ended  March 31,  2000,  totaled  $747,000,  an increase  of  $141,000,  or 23.2
percent,  from the three  months  ended March 31,  1999.  Salaries  and employee
benefits  increased  $91,000  primarily  due  to an  increase  in  personnel  to
accommodate  growth and to staff the  Lafayette,  Indiana office which opened in
April 1999.  Net  occupancy  expense  increased  $16,000 and  equipment  expense
increased $15,000 primarily due to the increase in expenses  associated with the
operation of the Lafayette, Indiana office. Advertising expense increased $9,000
and other expenses  increased $15,000  primarily due to Montgomery's  growth and
expansion.
         Non-interest  expense for the nine months ended March 31, 2000 was $2.2
million compared to $1.8 million, an increase of $424,000, or 23.9 percent, from
the nine months ended March 31, 1999.  Salary and  employee  benefits  increased
$237,000,  or 24.2 percent. An increase in personnel due to branch office growth
and the operation of the new  Lafayette,  Indiana  office was the primary factor
for the  increase  in  salary  and  employee  benefits.  Net  occupancy  expense
increased  $44,000,  equipment  expense  increased  $41,000 and data  processing
expense  increased  $11,000.  These increases were primarily due to Montgomery's
growth and expansion. Advertising expense increased $32,000 primarily due to the
advertising  increase to promote the Lafayette,  Indiana office.  Other expenses
for the nine months ended March 31, 2000 were $461,000  compared to $393,000 for

<PAGE>

the nine months ended March 31, 1999,  an increase of $68,000,  or 17.3 percent.
Included  in other  expenses  is  approximately  $6,000 in  expense  related  to
customer  awareness  of the Y2K issue  with the  balance of the  increase  being
generally reflective of Montgomery's growth.

                                       14
<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


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

               27.  Financial Data Schedule

         (b)  Reports on Form 8-K

              Montgomery  filed no reports on form 8-K during the quarter ended
              March 31, 2000.

                                       15

<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 11, 2000                By: /s/ Earl F. Elliott
                                      ---------------------
                                      Earl F. Elliott, President and Chief
                                            Executive Officer



Date:  May 11, 2000                By:  /s/ J. Lee Walden
                                       -------------------
                                       J. Lee Walden, Vice President and Chief
                                            Financial Officer


                                       16