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   September 30, 2000
                                        ------------------


                                       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)

     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 October 31, 2000,  there were  1,244,790  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 September 30, 2000 and June 30, 2000                          3

        Consolidated Condensed Statement of Income for the Three
        Months Ended September 30, 2000 and 1999                            4

        Consolidated Condensed Statement of Cash Flows for the
        Three Months Ended September 30, 2000 and 1999                      5

        Consolidated Condensed Statement of Stockholders'
        Equity for the Three Months Ended September 30, 2000                7

        Notes to Consolidated Condensed Financial Statements                8

Item 2. Management's Discussion and Analysis of Financial Condition
        And Results of Operations                                           9


PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                  14

Item 2. Changes in Securities and Use of Proceeds                          14

Item 3. Defaults Upon Senior Securities                                    14

Item 4. Submission of Matters to a Vote of Security Holders                14

Item 5. Other Information                                                  14

Item 6. Exhibits and Reports on Form 8-K                                   14

Signatures                                                                 15

<PAGE>

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

             Consolidated Condensed Statement of Financial Condition
                                   (Unaudited)

                                                                      September 30,           June 30,
                                                                          2000                  2000
                                                                      ------------          ------------
Assets
<S>                                                                   <C>                   <C>
  Cash                                                                $  1,087,298          $    394,392
  Short-term interest-bearing deposits                                  11,858,218            10,131,874
                                                                      ------------          ------------
         Total cash and cash equivalents                                12,945,516            10,526,266
  Interest-bearing deposits                                                239,313               258,689
  Investment securities available for sale                                 588,945               443,917
  Loans                                                                119,202,948           119,356,784
  Allowance for loan losses                                               (226,000)             (226,000)
                                                                      ------------          ------------
       Net loans                                                       118,976,948           119,130,784
  Premises and equipment                                                 3,234,063             3,236,258
  Federal Home Loan Bank stock                                           1,893,300             1,893,300
  Foreclosed assets and real estate held for development, net            1,570,298             1,301,996
  Interest receivable                                                      908,955               951,010
  Other assets                                                             361,256               380,038
                                                                      ------------          ------------
         Total assets                                                 $140,718,594          $138,122,258
                                                                      ============          ============

Liabilities
  Deposits
      Noninterest bearing                                             $  2,426,452          $  2,580,192
      Interest bearing                                                  96,203,620            88,926,339
                                                                      ------------          ------------
                Total deposits                                          98,630,072            91,506,531
  Federal Home Loan Bank advances                                       23,241,258            28,241,258
  Interest payable                                                         679,637               534,341
  Other liabilities                                                      1,051,532               859,417
                                                                      ------------          ------------
         Total liabilities                                             123,602,499           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;  1,244,790 issued                                          12,448                12,448
  Paid-in capital                                                       10,173,769            10,176,190
  Retained earnings - substantially restricted                           8,145,439             8,102,308
  Unearned ESOP shares                                                  (1,034,576)           (1,055,482)
  Unearned compensation                                                   (188,706)             (199,633)
  Accumulated other comprehensive income (loss)                              7,721               (55,120)
                                                                      ------------          ------------

         Total stockholders' equity                                     17,116,095            16,980,711
                                                                      ------------          ------------

         Total liabilities and stockholders' equity                   $140,718,594          $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
                                                                         September 30,
                                                             ----------------------------------
                                                                 2000                   1999
                                                             ----------              ----------
Interest and Dividend Income

<S>                                                          <C>                     <C>
  Loans                                                      $2,360,812              $2,237,377
  Investment securities                                           5,518                   7,546
  Deposits with financial institutions                          197,366                  97,282
  Federal Home Loan Bank stock                                   40,453                  29,044
                                                             ----------              ----------
       Total interest and dividend income                     2,604,149               2,371,249
                                                             ----------              ----------
Interest Expense
  Deposits                                                    1,327,277               1,050,996
  Federal Home Loan Bank advances                               408,418                 320,936
                                                             ----------              ----------
       Total interest expense                                 1,735,695               1,371,932
                                                             ----------              ----------
Net Interest Income                                             868,454                 999,317
  Provision for losses on loans
                                                             ----------              ----------

Net Interest Income After
  Provision for Losses on Loans                                 868,454                 999,317
                                                             ----------              ----------
Other Income
  Service charges on deposit accounts                            15,910                  13,814
  Loss on sale of available for sale securities                    (535)
  Real estate operations, net                                     6,203                   5,701
  Other income                                                   13,957                   8,230
                                                             ----------              ----------
       Total other income                                        35,535                  27,745
                                                             ----------              ----------

Other Expenses
  Salaries and employee benefits                                419,186                 366,322
  Net occupancy expense                                          46,910                  42,688
  Equipment expense                                              55,666                  60,819
  Data processing expense                                        43,911                  50,735
  Deposit insurance expense                                       4,649                  12,349
  Advertising expense                                            20,173                  25,144
  Other expenses                                                151,735                 155,418
                                                             ----------              ----------
           Total other expenses                                 742,230                 713,475
                                                             ----------              ----------

Income Before Income Tax                                        161,759                 313,587
  Income tax expense                                             54,885                 122,225
                                                             ----------              ----------

Net Income                                                   $  106,874              $  191,362
                                                             ==========              ==========

Net Income Per Share
  Basic                                                      $     0.10              $     0.14
  Diluted                                                          0.10                    0.14

Dividends Per Share                                               0.055                   0.055


</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)

                                                                            Three Months Ended
                                                                               September 30,
                                                                   -----------------------------------
                                                                      2000                    1999
                                                                   -----------             -----------
Operating Activities

<S>                                                                <C>                     <C>
  Net income                                                       $   106,874             $   191,362
  Adjustments to reconcile net income to net cash
    provided by operating activities
    Depreciation                                                        76,376                  78,590
    Loss on sale of securities available for sale                          535
    ESOP stock amortization                                             19,324                  20,967
    Amortization of unearned compensation                               10,088                   5,768
    Change in
      Interest receivable                                               42,055                 (77,740)
      Interest payable                                                 145,296                  (1,456)
      Other assets                                                      18,782                  43,429
      Other liabilities                                                150,897                 289,676
                                                                   -----------             -----------

      Net cash provided by operating activities                        570,227                 550,596
                                                                   -----------             -----------


Investing Activities

  Net change in interest bearing deposits                               19,376
  Proceeds from sale of securities
      available for sale                                                 8,495
  Purchase of securities available for sale                            (50,000)
  Net change in loans                                                 (163,104)             (3,219,217)
  Additions to real estate owned and held for investment               (55,173)                (68,144)
  Proceeds from real estate owned sales                                 94,742                  70,520
  Purchases of premises and equipment                                  (65,111)               (227,986)
  Purchase of FHLB of Indianapolis stock                                                      (400,000)
                                                                   -----------             -----------

          Net cash used by investing activities                       (210,775)             (3,844,827)
                                                                   ------------            ------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                 Consolidated Condensed Statement of Cash Flows
                                   (Continued)

                                                                            Three Months Ended
                                                                               September 30,
                                                                   -----------------------------------

                                                                      2000                    1999
                                                                   -----------             -----------
Financing Activities

<S>                                                                <C>                     <C>
  Net change in
      Noninterest-bearing, interest-bearing demand and
        savings deposits                                           $   651,868             $ 2,653,592
      Certificates of deposit                                        6,471,673                 646,443
  Proceeds from FHLB advances                                                                5,000,000
  Repayment of FHLB advances                                        (5,000,000)             (2,054,458)
  Stock purchase                                                                            (1,630,436)
  Dividends paid                                                       (63,743)                (77,385)
                                                                   -----------             -----------

          Net cash provided by financing activities                  2,059,798               4,537,756
                                                                   -----------             -----------

Net Change in Cash and Cash Equivalents                              2,419,250               1,243,525

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

Cash and Cash Equivalents, End of Period                           $12,945,516             $ 6,176,338
                                                                   ===========             ===========

Additional Cash Flow and Supplementary Information

  Interest Paid                                                    $ 1,590,399             $ 1,373,388
  Income Tax Paid                                                      102,000                  30,655
  Transfer from Loans to Other Real Estate Owned                       316,941
  Cash Dividends Payable                                                62,659                  68,587



</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)


                              Common Stock
                            --------------------                                                            Accumulated
                                                                                                               Other
                                                             Comprehen-                           Unearned  Comprehensive
                                                  Paid-in       sive     Retained      Unearned   Compensa-   Income
                              Shares     Amount   Capital      Income    Earnings     ESOP Shares   tion      (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 three
 months ended
 September 30, 2000                                          $106,874     106,874                                           106,874

Other comprehensive income,
 net of tax
 Unrealized gain on
  securities                                                   62,841                                          62,841        62,841
                                                             --------

Other comprehensive income                                   $169,715
                                                             ========
Cash dividends ($.055 per
 share)                                                                   (63,743)                                          (63,743)

ESOP shares earned                                   (1,582)                            20,906                               19,324


Amortization of unearned
 compensation expense                                  (839)                                        10,927                   10,088

-----------------------------------------------------------------------------------------------------------------------------------
Balance September 30, 2000  1,244,790  $12,448  $10,173,769            $8,145,439  $(1,034,576)  $(188,706) $   7,721   $17,116,095
===================================================================================================================================

</TABLE>

  See Notes to Consolidated Condensed Financial Statement.


<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 September 30, 2000, results
of operations for the three month periods ended September 30, 2000 and 1999, and
cash flows for the three month  periods ended  September 30, 2000 and 1999.  The
results of  operations  for the three month period ended  September 30, 2000 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 month  periods  ended  September 30, 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                 September 30, 2000                             September 30, 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        $ 106,874     1,111,593     $    0.10       $  191,362     1,369,146     $    0.14
                                                             =========                                    =========

Effect of Dilutive Stock
  Options and Grants                     0         9,675                              0        10,146
                                 ---------     ---------                     ----------     ---------

Diluted Net Income Per Share:
   Net Income Available
   To Common Stockholders        $ 106,874     1,121,268     $    0.10       $  191,362     1,379,292     $    0.14
                                 =========     =========     =========       ==========     =========     =========

</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  $140.7  million at
September 30, 2000,  an increase of $2.6  million,  or 1.9 percent from June 30,
2000.  During this three month period  interest-earning  assets  increased  $1.7
million,  or 1.6 percent.  Short-term  interest-earning  deposits increased $1.7
million, or 17.0 percent.  Loans decreased $154,000, or 0.1 percent.  Foreclosed
assets and real estate held for development increased $268,000, or 20.6 percent.
Deposits increased $7.1 million, or 7.8 percent, primarily due to an increase in
public funds deposits and FHLB advances decreased $5.0 million, or 17.7 percent,
causing a net  increase in  interest-bearing  liabilities  of 1.9  percent.  The
increase in deposits was primarily used to decrease FHLB advances.

     Capital and  Liquidity.  At September  30, 2000,  stockholders'  equity was
$17.1  million or 12.2  percent of total  assets,  compared  with  stockholders'
equity of $17.0  million,  or 12.3 percent,  at June 30, 2000.  The  Association
continues to exceed all minimum  regulatory capital  requirements.  At September
30, 2000, the Association's  tangible and core capital was $15,327,000,  or 10.9
percent of tangible  assets,  $13,147,000  in excess of the 1.5 percent  minimum
required  tangible  capital and $9,662,000 in excess of the 4.0 percent  minimum
required core capital.  Risk-based capital equaled $14,713,000,  or 16.9 percent
of risk-weighted assets, $7,760,000 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.  The  Association's  average liquidity
ratio for the three months ended September 30, 2000, was 8.5 percent.

                 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% 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
September 30, 2000 the  Association's  total assets were $140.7 million and risk
based capital was 16.9 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  OTS to  calculate  interest-rate  risk  on a
voluntary basis. At June 30, 2000, the most recent date for which information is
available  from the OTS, 2.0% of the present value of the  Association's  assets
was approximately $2.75 million, which was less than $4.22 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 June 30, 2000 NPV information,  the amount
of the Association's  deduction from capital,  had it been subject to reporting,
would have been approximately $730,000.
     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 the  Association'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 June 30, 2000 and June 30, 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 those  assumptions
utilized by the OTS in assessing  the interest risk of the thrifts it regulates.
Based upon these assumptions at June 30, 2000, and June 30, 1999, the NPV of the
Association was $18.5 million and $19.8 million, respectively. NPV is calculated
by the OTS for the purposes of interest rate risk  assessment  and should not be
considered as an indicator of value of the Association.

<TABLE>
<CAPTION>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

-------------------------------------------------------------------------------------------
                                       At June 30, 2000                 At June 30,1999
-------------------------------------------------------------------------------------------
  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)
-------------------------------------------------------------------------------------------

<S><C>                    <C>        <C>              <C>         <C>             <C>
   +300                   -60        -6,421           -35         -6,573          -33
-------------------------------------------------------------------------------------------
   +200                   -50        -4,224           -23         -4,122          -21
-------------------------------------------------------------------------------------------
   +100                   -30        -2,011           -11         -1,809           -9
-------------------------------------------------------------------------------------------
      0                     0             0             0              0            0
-------------------------------------------------------------------------------------------
   -100                   -30        +1,367            +7         +1,166           +6
-------------------------------------------------------------------------------------------
   -200                   -50        +1,970           +11         +2,187          +11
-------------------------------------------------------------------------------------------
   -300                   -60        +2,685           +15         +3,329          +17
-------------------------------------------------------------------------------------------

</TABLE>

     In the event of a 300  basis  point  change in  interest  rate  based  upon
estimates as of June 30, 2000, the Association  would  experience a 15% increase
in NPV in a declining  rate  environment  and a 35%  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-earning  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
September 30, 2000, was $107,000 compared to $191,000 for the three months ended
September  30,  1999,  a decrease  of $84,000.  Net  interest  income  decreased
$131,000,  or 13.1 percent,  primarily due to a decrease in interest rate spread
from  2.54  percent  to  1.95  percent  for  the  comparable  periods.   Average
interest-earning  assets  were  $134.6  million  with an  average  yield of 7.74
percent for the three months ended September 30, 2000 compared to $128.4 million
with  an  average   yield  of  7.73  percent  for  the  1999   period.   Average
interest-bearing  liabilities  increased  $14.2  million from $105.8  million to
$120.0   million   during  the   comparable   periods.   The  average   cost  of
interest-bearing  liabilities  increased from 5.19 percent to 5.78 percent.  Net
interest margin decreased from 3.26 percent for the three months ended September
30,  1999 to 2.58  percent  for the  three  months  ended  September  30,  2000.
Non-interest  income was $36,000  for the 2000  three-month  period  compared to
$28,000 for the 1999  period.  Non-interest  expense was  $742,000 for the three
months ended  September  30, 2000  compared to $713,000 for the 1999 period,  an
increase of $29,000,  or 4.0 percent.  Income before income tax was $162,000 for
the three months ended  September  30, 2000,  compared to $314,000 for the three
months ended  September  30,  1999,  a decrease of $152,000.  Income tax for the
three months ended September 30, 2000, was $55,000  compared to $122,000 for the
three months ended September 30, 1999.

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

     Interest  Income.  Montgomery's  total interest income for the three months
ended  September  30, 2000,  was $2.6 million,  an increase of $233,000,  or 9.8
percent,  compared to interest  income for the three months ended  September 30,
1999.   This   increase  was   primarily   caused  by  an  increase  in  average
interest-earning assets from $122.7 million for the three months ended September
30, 1999,  to $134.6  million for the three months ended  September 30, 2000, an
increase of $11.9 million,  or 9.7 percent.  Average loans increased from $112.6
million  for the 1999  period to $119.3  million  for the 2000  period,  average
interest-earning  deposits  decreased  from $7.7  million to $12.9  million  and
average  investment  securities  decreased  from  $897,000 to  $486,000  for the
respective  periods.  The  average  yield on  interest-earning  assets  was 7.74
percent for the three months ended September 30, 2000,  compared to 7.73 percent
for the three months ended September 30, 1999.

     Interest Expense. Interest expense for the three months ended September 30,
2000, was $1.7 million compared to $1.4 million for the 1999 period, an increase
of $364,000,  or 26.5 percent.  Average  interest-bearing  liabilities increased
$14.2 million,  or 13.4 percent,  from $105.8 million for the three months ended
September 30, 1999, to $120.0  million for the three months ended  September 30,
2000. The average cost of funds  increased from 5.19 percent to 5.78 percent for
the  comparable  periods and the average  cost of deposits  increased  from 5.05
percent  to 5.67  percent.  In  addition,  the  average  rate  on FHLB  advances
increased from 5.68 percent to 6.20 percent for the comparable periods.

     Provision  for Losses on Loans.  There was no provision for losses on loans
made for either of the three 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
allowance for loss accounts.  Loans delinquent ninety days or more were $574,000
at  September  30, 2000  compared to $990,000 at June 30,  2000.  Non-performing
loans to total loans at September  30, 2000 were 0.48  percent  compared to 0.83
percent at June 30, 2000. The allowance for loan losses to non-performing  loans
was 39.4  percent at  September  30, 2000  compared to 22.8  percent at June 30,
2000. The allowance to total loans was 0.19 percent at September 30, 2000 and at
June  30,  2000.  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
September  30, 2000,  totaled  $36,000  compared to $28,000 for the three months
ended  September  30, 1999, an increase of $8,000,  or 28.1 percent.  During the
comparable periods,  service charges on deposit accounts increased $2,000 due to
an increase in the number of demand deposit  accounts and other income increased
$6,000.

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

     Non-Interest  Expense.  Montgomery's  other  expenses  for the three months
ended  September 30, 2000 totaled  $742,000,  compared to $713,000 for the three
months  ended  September  30,  1999,  an increase of  $29,000,  or 4.0  percent.
Salaries and employee benefits increased $53,000 primarily due to an increase in
personnel to accommodate  growth.  Net occupancy  expense  increased  $4,000 and
equipment expense decreased  $5,000.  Data processing  expense decreased $7,000.
The 1999  period  included  $8,000  related  to Year 2000  testing.  Advertising
expense decreased $5,000 primarily due to the increased  advertising in the 1999
period to promote the opening of the Lafayette office operation.  Other expenses
decreased  $4,000 for the three months ended  September 30, 2000 compared to the
same  1999  period.   Included  in  other   expenses  on  the  1999  period  was
approximately $5,000 in expense related to customer awareness of the Y2K issue.

     Income Tax Expense. Income tax expense for the three months ended September
30, 2000 was $55,000  compared to $122,000 for the three months ended  September
30, 1999, due to the change in taxable income.


<PAGE>



                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

Part II.  OTHER INFORMATION

Item 1.  Legal Proceedings    None.
--------------------------

Item 2.  Changes in Securities and Use of Proceeds    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
               September 30, 2000.

<PAGE>

                    MONTGOMERY SAVINGS, A FEDERAL ASSOCIATION
                             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:  November 10, 2000          By:      /s/ J. Lee Walden
                                     -----------------------------------------
                                     J. Lee Walden, President and Chief
                                         Executive Officer

Date:  November 10, 2000          By:      /s/ Steven V. Brier
                                     -----------------------------------------
                                     Steven V. Brier, Vice President and Chief
                                         Financial Officer