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   December 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 ________

                         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 January 31, 2001,  there were  1,215,190  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 December 31, 2000 and June 30, 2000                         3

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

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

         Consolidated Condensed Statement of Stockholders'
         Equity for the Six Months Ended December 31, 2000                 7

         Notes to Consolidated Condensed Financial Statements              8

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


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                                17

Item 2.  Changes in Securities                                            17

Item 3.  Defaults Upon Senior Securities                                  17

Item 4.  Submission of Matters to a Vote of Security Holders              17

Item 5.  Other Information                                                17

Item 6.  Exhibits and Reports on Form 8-K                                 17

Signatures                                                                18


<PAGE>


                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

             Consolidated Condensed Statement of Financial Condition
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                       December 31,              June 30,
                                                                           2000                    2000
                                                                     ---------------        ----------------
Assets
<S>                                                                  <C>                    <C>
  Cash                                                               $       453,279        $        394,392
  Short-term interest-bearing deposits                                     7,086,430              10,131,874
                                                                     ---------------        ----------------
         Total cash and cash equivalents                                   7,539,709              10,526,266
  Interest-bearing deposits                                                  238,816                 258,689
  Investment securities available for sale                                   389,100                 443,917
  Loans                                                                  120,377,637             119,356,784
  Allowance for loan losses                                                 (226,000)               (226,000)
                                                                     ---------------        ----------------
       Net loans                                                         120,151,637             119,130,784
  Premises and equipment                                                   3,288,064               3,236,258
  Federal Home Loan Bank Stock                                             1,893,300               1,893,300
  Foreclosed assets and real estate held for development, net              1,561,813               1,301,996
  Interest receivable                                                        908,822                 951,010
  Other assets                                                               479,045                 380,038
                                                                     ---------------        ----------------

         Total assets                                                $   136,450,306        $    138,122,258
                                                                     ===============        ================
Liabilities
  Deposits
      Noninterest bearing                                            $     5,043,587        $      2,580,192
      Interest bearing                                                    94,170,392              88,926,339
                                                                     ---------------        ----------------
  Total deposits                                                          99,213,979              91,506,531
  Federal Home Loan Bank advances                                         18,536,171              28,241,258
  Interest payable                                                           735,592                 534,341
  Other liabilities                                                        1,011,520                 859,417
                                                                     ---------------        ----------------

         Total liabilities                                               119,497,262             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;  1,220,190 and 1,244,790 issued                             12,202                  12,488
  Paid-in capital                                                          9,971,036              10,176,190
  Retained earnings - substantially restricted                             8,160,471               8,102,308
  Unearned ESOP shares                                                    (1,013,670)             (1,055,482)
  Unearned compensation                                                     (177,778)               (199,633)
  Accumulated other comprehensive income (loss)                                  783                 (55,120)
                                                                     ---------------        ----------------

         Total stockholders' equity                                       16,953,044              16,980,711
                                                                     ---------------        ----------------

         Total liabilities and stockholders' equity                  $   136,450,306        $    138,122,258
                                                                     ===============        ================

See notes to Consolidated Condensed Financial Statements.
</TABLE>


<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                   Consolidated Condensed Statement of Income
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                   Three Months Ended                 Six Months Ended
                                                      December 31,                       December 31,
                                           ----------------------------       ----------------------------
                                              2000              1999             2000             1999
                                           ----------        ----------       ----------        ----------

Interest and Dividend Income
<S>                                        <C>               <C>              <C>               <C>
  Loans                                    $2,459,073        $2,291,716       $4,819,885        $4,529,093
  Investment securities                         3,978             4,491            9,496            12,037
  Deposits with financial institutions        125,112           134,978          322,478           232,259
  Dividend Income                              40,452            36,635           80,905            65,680
                                           ----------        ----------       ----------        ----------
       Total interest and dividend income   2,628,615         2,467,820        5,232,764         4,839,069
                                           ----------        ----------       ----------        ----------

Interest Expense
  Deposits                                  1,386,919         1,097,181        2,714,196         2,148,177
  Federal Home Loan Bank advances             312,063           370,080          720,481           691,016
                                           ----------        ----------       ----------        ----------
       Total interest expense               1,698,982         1,467,261        3,434,677         2,839,193
                                           ----------        ----------       ----------        ----------

Net Interest Income
  Provision for losses on loans               929,633         1,000,559        1,798,087         1,999,876
                                           ----------        ----------       ----------        ----------
Net Interest Income After
  Provision for Losses on Loans               929,633         1,000,559        1,798,087         1,999,876
                                           ----------        ----------       ----------        ----------

Other Income
  Service charges on deposit accounts          30,350            14,863           46,260            28,678
  Gain on sale of investment securities        35,330            55,644           34,795            55,644
  Real estate operations, net                   4,682            13,093           10,885            18,794
  Other income                                 18,568            11,408           32,526            19,637
                                           ----------        ----------       ----------        ----------
       Total other income                      88,930            95,008          124,466           122,753
                                           ----------        ----------       ----------        ----------

Other Expenses
  Salaries and employee benefits              477,382           423,416          896,568           789,739
  Net occupancy expense                        49,158            38,224           96,068            80,911
  Equipment expense                            55,869            57,487          111,535           118,306
  Data processing expense                      43,437            38,055           87,349            88,790
  Deposit insurance expense                     4,642            12,424            9,292            24,773
  Advertising expense                          12,279            20,847           32,452            45,991
  Other expenses                              164,426           161,433          316,160           316,851
                                           ----------        ----------       ----------        ----------
           Total other expenses               807,193           751,886        1,549,424         1,465,361
                                           ----------        ----------       ----------        ----------

Income Before Income Tax                      211,370           343,681          373,129           657,268
  Income tax expense                           92,615           148,235          147,500           270,460
                                           ----------        ----------       ----------        ----------

Net Income                                 $  118,755        $  195,446       $  225,629        $  386,808
                                           ==========        ==========       ==========        ==========
Net Income Per Share:
      Basic                                $     0.11        $     0.16       $     0.20        $     0.30
      Diluted                              $     0.11        $     0.16       $     0.20        $     0.29

Dividends Per Share                        $    0.055        $    0.055       $    0.110        $    0.110
</TABLE>


See Notes to Consolidated Condensed Financial Statements.


<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                 Consolidated Condensed Statement of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                  Six Months Ended
                                                                                     December 31,
                                                                         ---------------------------------
                                                                             2000                 1999
                                                                         -----------           -----------
Operating Activities
  <S>                                                                    <C>                   <C>
  Net income                                                             $   225,629           $   386,808
  Adjustments to reconcile net income to net cash
      provided by operating activities
      Depreciation                                                           157,222               156,030
      (Gain) loss on sale of securities available for sale                   (34,795)              (55,644)
      ESOP stock amortization                                                 39,377                39,390
      Amortization of unearned compensation                                   20,177                10,636
      Change In
          Interest receivable                                                 42,188              (108,457)
          Interest payable                                                   201,251                24,056
          Other assets                                                       (99,007)                3,456
          Other liabilities                                                  114,980               156,819
                                                                         -----------           -----------

             Net cash provided by operating activities                       667,022               613,094
                                                                         -----------           -----------




Investing Activities

  Net change in interest bearing deposits                                     19,873
  Proceeds from sale of securities
      available for sale                                                     232,182               358,644
   Purchase of securities available for sale                                 (50,000)
  Net change in loans                                                     (1,337,794)           (5,709,063)
  Additions to real estate owned and held for investment                     (56,874)              (76,021)
  Proceeds from Real Estate Owned Sales                                       94,742               187,853
  Purchases of premises and equipment                                       (189,772)             (469,152)
  Purchase of FHLB of Indianapolis stock                                                          (642,600)
                                                                         -----------           -----------
             Net cash used by investing activities                        (1,287,643)           (6,350,339)
                                                                         -----------           -----------
</TABLE>

<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                 Consolidated Condensed Statement of Cash Flows
                                   (Continued)
<TABLE>
<CAPTION>

                                                                                Six Months Ended
                                                                                  December 31,
                                                                         ---------------------------------
                                                                             2000                  1999
                                                                         -----------           -----------
Financing Activities

  Net Change In
      Noninterest-bearing, interest-bearing demand and
<S>                                                                      <C>                   <C>
          savings deposits                                               $ 3,014,480           $ 4,433,645
      Certificates of deposit                                              4,692,968              (240,771)
  Proceeds from FHLB advances
      and other borrowings                                                   906,493            13,500,000
  Repayment of FHLB advances
      and other borrowings                                               (10,611,580)           (3,740,811)
  Stock purchase                                                            (243,980)           (1,630,436)
  Dividends paid                                                            (125,317)             (145,972)
                                                                         -----------           -----------
             Net cash provided by financing activities                    (2,365,936)           12,175,655
                                                                         -----------           -----------

Net Change in Cash and Cash Equivalents                                   (2,986,557)            6,438,410

Cash and Cash Equivalents, Beginning of Period                            10,526,266             4,932,813
                                                                         -----------           -----------
Cash and Cash Equivalents, End of Period                                 $ 7,539,709           $11,371,223
                                                                         ===========           ===========


Additional Cash Flow and Supplementary Information

  Interest Paid                                                          $ 3,233,426           $ 2,815,137
  Income Tax Paid                                                            165,000               277,824
  Transfer from Loans to Other Real Estate Owned                             316,941
  Cash Dividends Payable                                                      66,837                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
                                             Paid-in   Comprehensive  Retained    Unearned     Unearned     Comprehensive
                         Shares     Amount   Capital      Income      Earnings   ESOP Shares  Compensation  Income (Loss)   Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>         <C>       <C>          <C>       <C>          <C>           <C>           <C>        <C>
Balance July 1, 2000   1,244,790   $12,448   $10,176,190            $8,102,308   $(1,055,482)  $(199,633)    $(55,120)  $16,980,711

Net income for the
  six months ended
  December 31, 2000                                       $225,629     225,629                                              225,629
                                                          --------
Other comprehensive
  income, net of tax
Unrealized holding
  gains arising during
  the period, net of tax
  expense of $50,449                                        76,916
Less: Reclassification
  adjustment for gain
  included in net income,
  net of tax expense
  of $13,782                                                21,013
                                                          --------
Unrealized gain
  on securities                                             55,903                                             55,903        55,903
                                                          --------

Other comprehensive
  income                                                  $281,532
                                                          ========
Cash dividends
  ($.110 per share)                                                   (124,773)                                            (124,773)

Stock purchase           (24,600)     (246)     (201,041)              (42,693)                                            (243,980)

ESOP shares earned                                (2,435)                             41,812                                 39,377

Amortization of unearned
  compensation expense                            (1,678)                                         21,855                     20,177

------------------------------------------------------------------------------------------------------------------------------------
Balance
December 31, 2000      1,220,190   $12,202   $ 9,971,036            $8,160,471   $(1,013,670)  $(177,778)    $    783   $16,953,044
====================================================================================================================================
</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 December 31, 2000, results
of operations for the three and six-month  periods ending  December 31, 2000 and
1999, and cash flows for the six-month periods ended December 31, 2000 and 1999.
The results of operations for the three and six-month periods ended December 31,
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 and six-month periods ended December 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                        December 31, 2000                                 December 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             $ 118,755       1,108,575      $    0.11          $  195,446      1,237,994      $    0.16
                                                                     =========                                         =========
Effect of Dilutive Stock Options
   and Grants                                 0          10,050                                  0          6,588
                                      ---------       ---------                         ----------      ---------
Diluted Net Income Per Share:
   Net Income Available
   To Common Stockholders             $ 118,755       1,118,625      $    0.11          $  195,446      1,244,582      $    0.16
                                      =========       =========      =========          ==========      =========      =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

For the Six Months Ended                          December 31, 2000                                 December 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             $ 225,629       1,108,052      $    0.20          $  386,808      1,303,570      $    0.30
                                                                     =========                                         =========
Effect of Dilutive Stock Options
   and Grants                                 0           9,863                                  0          8,367
                                      ---------       ---------                         ----------      ---------
Diluted Net Income Per Share:
   Net Income Available
   To Common Stockholders             $ 225,629       1,117,915      $    0.20          $  386,808      1,311,937      $    0.29
                                      =========       =========      =========          ==========      =========      =========
</TABLE>


<TABLE>
<CAPTION>
Other Comprehensive Income
                                                                              2000
                                                       -----------------------------------------------
                                                       Before-Tax              Tax          Net-of-Tax
Three months ended December 31,                          Amount          Benefit(Expense)     Amount
                                                       ----------        ----------------   ----------
<S>                                                     <C>                  <C>              <C>
Unrealized losses on securities
     Unrealized holding gains arising
         during the year                                $ 23,842             $(9,444)         $14,398
     Less: reclassifications adjustment for gains
         realized in net income                           35,330             (13,994)          21,336
                                                        ---------            --------         --------

Net unrealized losses                                   $(11,488)            $ 4,550          $(6,938)
                                                        =========            ========         ========

                                                                              1999
                                                       -----------------------------------------------
                                                       Before-Tax              Tax          Net-of-Tax
Three months ended December 31,                          Amount          Benefit(Expense)     Amount
                                                       ----------        ----------------   ----------
Unrealized losses on securities
     Unrealized holding losses arising
         during the year                                $(43,260)            $17,135         $(26,125)
     Less: reclassifications adjustment for gains
         realized in net income                           55,644             (22,041)          33,603
                                                        ---------            --------        ---------

Net unrealized losses                                   $(98,904)            $39,176         $(59,728)
                                                        =========            =======         =========


                                                                              2000
                                                       -----------------------------------------------
                                                       Before-Tax              Tax          Net-of-Tax
Six months ended December 31,                            Amount          Benefit(Expense)     Amount
                                                       ----------        ----------------   ----------
Unrealized gains on securities
     Unrealized holding gains arising
         during the year                                $127,365            $ 50,449          $76,916
     Less: reclassifications adjustment for gains
         realized in net income                           34,795             (13,782)          21,013
                                                        ---------           ---------         --------

Net unrealized gains                                    $ 92,570            $(36,667)         $55,903
                                                        =========           =========         =======

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                                                                              1999
                                                       -----------------------------------------------
                                                       Before-Tax              Tax          Net-of-Tax
Six months ended December 31,                            Amount          Benefit(Expense)     Amount
                                                       ----------        ----------------   ----------
<S>                                                     <C>                  <C>              <C>
Unrealized losses on securities
     Unrealized holding losses arising
         during the year                                $(14,430)            $ 5,716         $ (8,714)
     Less: reclassifications adjustment for gains
         realized in net income                           55,644             (22,041)          33,603
                                                        ---------            --------         --------

Net unrealized losses                                   $(70,074)            $27,757         $(42,317)
                                                        =========            =======         =========

</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 $136.5 million at
December  31,  2000,  a decrease of $1.6  million,  or 1.2 percent from June 30,
2000. During this six month period  interest-earning  assets,  including Federal
Home Loan  Bank  stock,  decreased  $2.1  million,  or 1.6  percent.  Short-term
interest-earning deposits decreased $3.1 million, or 29.5 percent. This decrease
was  primarily  due to the use of excess  liquidity to reduce  Federal Home Loan
Bank advances.  Loans increased $1.0 million, or 0.9 percent.  Foreclosed assets
and real  estate  held for  development  increased  $260,000,  or 20.0  percent.
Deposits increased $7.7 million,  or 8.4 percent primarily due to an increase of
$2.5  million in  noninterest  bearing  deposits and an increase in public funds
deposits.  The increase in deposits was  primarily  used to reduce  Federal Home
Loan Bank advances.  Federal Home Loan Bank advances decreased $9.7 million,  or
34.4 percent,  causing a net decrease in  interest-bearing  liabilities  of $4.5
million, or 3.8 percent.

          Capital  and   Liquidity.   At   December   31,   2000,   Montgomery's
stockholders'  equity was $17.0  million,  or 12.4  percent of total  assets,  a
decrease of $28,000 from June 30, 2000.  Montgomery  began to repurchase  62,240
shares of its  outstanding  common stock on December 5, 2000. As of December 31,
2000 Montgomery had repurchased  24,600 shares at a total cost of $244,000.  The
Association  continues to exceed all minimum capital  requirements.  At December
31, 2000, the Association's tangible and core capital was $15.3 million, or 11.3
percent of tangible  assets,  $13.3 million in excess of the 1.5 percent minimum
required  tangible capital and $9.9 million in excess of the 4.0 percent minimum
required core capital. Risk-based capital equaled $14.8 million, or 17.0 percent
of  risk-weighted  assets,  $7.9  million 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 six months ended December 31, 2000, was 7.5 percent.
<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

          Asset/Liability  Management.  The  Association,  like other  financial
institutions,  is  subject  to  interest  rate  risk  to  the  extent  that  its
interest-bearing   liabilities   reprice   on  a   different   basis   than  its
interest-bearing  assets.  The OTS  issued a  regulation  which  provides  a Net
Portfolio Value ("NPV") approach to the quantification of interest rate risk. In
essence,  this approach  calculates the difference  between the present value of
liabilities,  expected  cash flows from  assets and cash flows from off  balance
sheet contracts.  Under this OTS regulation,  an institution's "normal" level of
interest  rate risk in the event of an  assumed  change in  interest  rates is a
decrease in the  institution's  NPV in an amount not  exceeding 2 percent of the
present value of its assets.  Under the  regulation,  thrift  institutions  with
greater than "normal"  interest  rate exposure must take a deduction  from their
total capital available to meet their risk-based capital requirement. The amount
of that  deduction is one-half of the difference  between (a) the  institution's
actual  calculated  exposure to the 200 basis point  interest  rate  increase or
decrease (whichever results in the greater pro forma decrease in NPV) or (b) its
"normal"  level of  exposure  which is 2  percent  of the  present  value of its
assets. The regulation does exempt all institutions under $300 million in assets
with risk-based  capital above 12 percent from reporting  information to the OTS
to calculate  exposure and making any  deduction  from  risk-based  capital.  At
December 31, 2000, the  Association's  total assets were $136.5 million and risk
based capital was 17.0 percent; therefore the Association would have been exempt
from  calculating  or making  any  risk-based  capital  reduction.  Montgomery's
management,  however,  believes  interest-rate  risk is an important  factor and
makes all reports  necessary  to the OTS to  calculate  interest-rate  risk on a
voluntary  basis.  At  September  30,  2000,  the most  recent  date  for  which
information  is  available  from the OTS, 2 percent of the present  value of the
Association's assets was approximately $2.83 million,  which was less than $4.16
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 September 30,
2000 NPV information,  the amount of the  Association's  deduction from capital,
had it been subject to reporting, would have been approximately $665,000.

          It has been and continues to be a priority of the Association's  Board
of Directors and management to manage  interest-rate  risk and thereby limit any
negative  effect  of  changes  in  interest  rates  on  Montgomery's   NPV.  The
Association's Interest Rate Risk Policy,  established by the Board of Directors,
promulgates  acceptable  limits on the  amount  of  change in NPV given  certain
changes in interest  rates.  Specific  strategies  have included  shortening the
amortized  maturity of fixed-rate  loans and increasing the volume of adjustable
rate loans to reduce the average maturity of the Association's  interest-earning
assets.  FHLB advances are used in an effort to match the effective  maturity of
the Association's interest-bearing liabilities to its interest-earning assets.

          Presented  below, as of September 30, 2000, and September 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
assumptions utilized by the OTS in assessing the interest risk of the thrifts it
regulates.  Based upon these assumptions at September 30, 2000 and September 30,
1999,  the  NPV  of  the   Association  was  $18.9  million  and  $19.9  million
respectively. NPV is calculated by the OTS for the purpose of interest-rate risk
assessment  and  should  not be  considered  as an  indicator  of  value  of the
Association.
<PAGE>
<TABLE>
<CAPTION>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


                                              At September 30, 2000                At September 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            -6,403                -34             -7,061              -35
       +200                  -50            -4,160                -22             -4,503              -23
       +100                  -30            -1,955                -10             -2,029              -10
          0                    0                 0                  0                  0                0
       -100                  -30            +1,272                 +7             +1,242               +6
       -200                  -50            +2,108                +11             +1,221              +11
       -300                  -60            +3,006                +16             +3,281              +16

</TABLE>

          In the event of a 300 basis point  change in interest  rate based upon
estimates  as of  September  30, 2000 the  Association  would  experience  a 16%
increase in NPV in a declining rate  environment  and a 34% 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 December 31, 2000, was $119,000  compared to $195,000 for the three months
ended December 31, 1999, a decrease of $76,000.  Net interest  income  decreased
$71,000, or 7.1 percent. Average interest-earning assets increased $2.8 million,
or 2.2 percent,  from $128.2  million for the three  months  ended  December 31,
1999,   to   $131.0   million   for  the  2000   three-month   period.   Average
interest-bearing  liabilities  increased  $3.8  million  from $112.7  million to
$116.5 million during the comparable  three-month  period.  Interest rate spread
decreased  from 2.49 percent for the three months  ended  December 31, 1999,  to
2.19 percent for the three months ended December 31, 2000.  Net interest  margin
decreased to 2.84 percent for the three months ended December 31, 2000 from 3.12
percent for the three months ended  December 31, 1999.  Non-interest  income was
$89,000 for the 2000 three-month period compared to $95,000 for the 1999 period.
Non-interest  expense was $807,000 for the three months ended  December 31, 2000
compared to $752,000 for the 1999 three-month period, an increase of $55,000, or
7.3 percent.  Income  before  income tax was $211,000 for the three months ended
December  31,  2000  compared  to $344,000  for the 1999  period,  a decrease of
$133,000.  Income  tax  expense  decreased  from  $148,000  to  $93,000  for the
comparable periods.
<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

          For the six months ended  December  31, 2000,  net income was $226,000
compared to $387,000 for the six months  ended  December 31, 1999, a decrease of
$161,000.  Net interest  income  decreased  from $2.0 million for the six months
ended  December 31, 1999 to  $1,798,000  for the six months  ended  December 31,
2000, a decrease of $202,000, or 10.1 percent.  Average  interest-earning assets
increased $7.8 million from $125.5 million for the six months ended December 31,
1999,  to  $133.3   million  for  the  2000   six-month   period  while  average
interest-bearing  liabilities  increased  $9.5  million  during  the  comparable
periods. Non-interest income increased $2,000 and non-interest expense increased
$84,000.  Income tax expense was $148,000 for the six months ended  December 31,
2000, compared to $270,000 for the six months ended December 31, 1999.

          Interest  Income.  Montgomery's  total  interest  income for the three
months ended  December 31, 2000, was $2.6 million,  an increase of $161,000,  or
6.5 percent, compared to interest income for the three months ended December 31,
1999.   This   increase  was   primarily   caused  by  an  increase  in  average
interest-earning  assets from $128.2 million for the three months ended December
31, 1999,  to $130.7  million for the three months ended  December 31, 2000,  an
increase of $2.5 million, or 2.0 percent principally due to loan growth. Average
loans  increased from $115.9 million for the 1999  three-month  period to $120.3
million for the 2000 three-month  period and average  interest-earning  deposits
decreased  from $9.8 million to $8.2  million for the  respective  periods.  The
average yield on  interest-earning  assets was 8.03 percent for the three months
ended  December  31,  2000,  compared to 7.70 percent for the three months ended
December 31, 1999.

          Interest  income for the six months ended  December 31, 2000, was $5.2
million, an increase of $394,000,  or 8.1 percent,  from interest income for the
same period in 1999.  Average  interest-earning  assets for the six months ended
December 31, 2000,  was $133.3  million  compared to $125.5 million for the 1999
six-month period, an increase of $7.8 million,  or 6.2 percent,  principally due
to loan growth.  The average yield for the 2000 period was 7.85 percent compared
to 7.71 percent for the 1999 period.

          Interest Expense. Interest expense for the three months ended December
31, 2000, was $1.7 million,  which was an increase of $232,000, or 15.8 percent,
from  the  three  months  ended  December  31,  1999.  Average  interest-bearing
liabilities  increased $3.8 million, or 3.4 percent, from $112.7 million for the
three months ended  December  31, 1999,  to $116.5  million for the three months
ended  December 31, 2000.  Average  interest-bearing  deposits  increased  $10.2
million  and  average  borrowings  decreased  $6.5  million  for the  comparable
periods.  The average cost of funds  increased from 5.21 percent to 5.84 percent
for the  comparable  periods.  The average cost of deposits  increased from 5.10
percent to 5.76 percent for the comparable three-month periods. The average cost
of  borrowings  increased  from 5.57 percent to 6.21 percent for the  comparable
periods.

          Interest  expense for the six months ended December 31, 2000, was $3.4
million,  an increase of $595,000,  or 21.0  percent,  from the six months ended
December  31,  1999.  The  average  cost of funds for the 2000  period  was 5.79
percent compared to 5.20 percent for the 1999 period.  Average  interest-bearing
liabilities  increased from $112.7 million for the six months ended December 31,
1999 to $118.7 million for the 2000 six-month period.
<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

          Provision  for Losses on Loans.  There was no provision  for losses on
loans made for either of the three or six-month comparable periods. Provision or
adjustment  entries are made based on the Internal Loan and Asset Review Policy.
A review is  performed  at least  quarterly  to  determine  the  adequacy of the
current balance in the allowance for losses on loans.  Loans  delinquent  ninety
days or more were $1,442,000 at December 31, 2000,  compared to $990,000 at June
30,  2000.  Non-performing  loans to total loans at December  31, 2000 were 1.20
percent  compared to 0.83 percent at June 30, 2000.  The allowance for losses to
non-performing  loans was 15.7  percent at December  31,  2000  compared to 22.8
percent at June 30,  2000.  The  allowance  to total  loans was 0.19  percent at
December  31,  2000 and at June 30,  2000.  After  review of the  current  loans
delinquent  ninety days or more at December 31,  2000,  it was  determined  this
level of delinquency was abnormal and a reduction in the total  delinquency will
be made. Montgomery is continually  re-evaluating the level of the allowance for
loan losses as the amount of  non-residential  mortgage loans and other new loan
products are offered.

          Non-Interest  Income.  Montgomery's  other income for the three months
ended December 31, 2000 totaled $89,000 compared to $95,000 for the three months
ended  December  31,  1999,  a decrease  of $6,000.  Service  charges on deposit
accounts  increased $15,000 primarily due to implementation of new fee schedules
for demand deposit  accounts.  Gain on the sale of available for sale securities
decreased  from  $56,000  in the 1999  three-month  period  to  $35,000  for the
comparable 2000 period.  Real estate  operations net income decreased $8,000 for
the comparable periods and other income increased $7,000.

         Other income for the six months ended  December 31, 2000, was $124,000,
an increase of $2,000 from the comparable 1999 six-month period.  During the six
months ended December 31, 2000,  service charges on deposit  accounts  increased
$17,000 and gain on the sale of securities available for sale decreased $21,000.
Income from real estate  operation  decreased  $8,000 and other income increased
$13,000 from the 1999 six-month period.

         Non-Interest Expense.  Montgomery's other expenses for the three months
ended  December  31, 2000  totaled  $807,000,  an  increase  of $55,000,  or 7.4
percent,  from the three months ended  December 31, 1999.  Salaries and employee
benefits  increased  $54,000  primarily  due  to an  increase  in  personnel  to
accommodate  growth.  Net  occupancy  expense  increased  $11,000 and  equipment
expense  decreased  $2,000.  Data processing  expense increased $5,000 and other
expenses  increased  $3,000  primarily due to Montgomery's  growth.  Advertising
expense  decreased  $9,000  primarily due to increased  advertising  in the 1999
period to promote the newly opened Lafayette office operation.

         Non-interest  expense for the six months ended  December 31, 2000,  was
$1.5 million, an increase of $84,000, or 5.7 percent,  from the six months ended
December  31,  1999.  Salary  and  employee  benefits  increased  $107,000.  Net
occupancy expense increased $15,000, equipment expense decreased $7,000 and data
processing  expense  decreased  $1,000.  Advertising  expense  decreased $14,000
primarily due to the increased advertising during the 1999 period to promote the
Lafayette office.
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

         Income Tax  Expense.  Income tax  expense  for the three  months  ended
December  31, 2000 was $93,000  compared to $148,000  for the three months ended
December  31, 1999 due to the change in taxable  income.

         Income tax expense for the comparable  six-month periods decreased from
$270,000  for the 1999 period to $148,000  for the 2000 period  again due to the
change in net taxable income.
<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


The  Annual  Meeting  of  Shareholders  of  Montgomery   Financial   Corporation
("Montgomery")  was held at the principal  office of  Montgomery,  119 East Main
Street,  Crawfordsville,  Indiana 47933,  on Tuesday,  October 17, 2000, at 2:00
p.m.,  Crawfordsville  time for purposes of electing three Directors,  to ratify
the appointment of Olive LLP, as Montgomery's  independent auditors for the 2000
fiscal year and transacting  such other business as may properly come before the
Annual  Meeting.  Proxy  Statements  were  furnished to such holders on or about
September  15, 2000. A total of 1,244,790  shares of common stock of  Montgomery
were  outstanding  on August 31,  2000,  and a total of  1,074,470  shares  were
represented at the meeting. The 1,074,470 shares were all voted by proxy.

Earl F.  Elliott,  Mark E. Foster and Robert C. Wright  were  nominated  to hold
office as  directors  until the year 2003 Annual  Meeting of  Shareholders.  Mr.
Elliott has been a director  since 1973,  Mr.  Foster since 1990 and Mr.  Wright
since 1996. No other  nominations were made at the meeting.  Earl F. Elliott was
elected as a director receiving 1,026,512 votes for, with 47,958 votes withheld.
Mark E. Foster was elected as a director  receiving  1,026,512  votes for,  with
47,958  votes  withheld.  Robert C. Wright was  elected as a director  receiving
1,026,412  votes for, with 48,058 votes  withheld.  With the election of Messrs.
Elliott,  Foster and Wright,  the terms of the Directors as of October 17, 2000,
expire as  follows:  2001 - Joseph M.  Malott and J. Lee  Walden;  2002 - C. Rex
Henthorn and John E. Woodward; 2003 - Earl F. Elliott, Mark E. Foster and Robert
C. Wright.

Olive LLP  ("Olive"),  served as  independent  auditors for Montgomery in fiscal
2000.  The Board of Directors  approved the  appointment of Olive as independent
auditors for fiscal  2001,  subject to  ratification  by the  shareholders.  The
appointment  of the  independent  auditors is ratified if more votes are cast in
favor of the appointment than against the appointment. The ratification of Olive
was  approved  by  1,056,669  votes in favor,  4,508  votes  against  and 13,293
abstentions.

Item 5.  Other Information    None.

Item 6.  Exhibits and Reports on Form 8-K

    (a)  Exhibits

          None

    (b)  Reports on Form 8-K

         Montgomery  filed  one report  on Form 8-K  during  the  quarter  ended
         December 31, 2000. This Form 8-K, filed on November 30, 2000,  reported
         two press releases dated November 9, 2000 and November 29, 2000.
<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:  February 14, 2001            By: /s/ J. Lee Walden
                                       ----------------------------------
                                       J. Lee Walden, President and Chief
                                           Executive Officer



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