SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 ---------------

                                   FORM 10-QSB

(Mark One)

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

     For the quarterly period ended   March 31, 1999

                                       OR

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

            For the transition period from ________ to ________


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

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


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

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

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

         As of April 30, 1999,  there were 1,570,381  shares of the Registrant's
common stock issued and outstanding.

                                       1
<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


                                   Form 10-QSB

                                      Index
                                                                        Page No.

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Condensed Statement of Financial Condition
         As of March 31, 1999 and June 30, 1998                                3
                                                                            
         Consolidated Condensed Statement of Income for the Three           
         And Nine Months Ended March 31, 1999 and 1998                         4
                                                                            
         Consolidated Condensed Statement of Cash Flows for the             
         Nine Months Ended March 31, 1999 and 1998                             5
                                                                            
         Consolidated Condensed Statement of Changes in Stockholders'       
         Equity for the Nine Months Ended March 31, 1999                       7
                                                                            
         Notes to Consolidated Condensed Financial Statements                  8
                                                                            
Item 2.  Management's Discussion and Analysis of Financial Condition        
           And Results of Operations                                          10
                                                                            
                                                                            
PART II.  OTHER INFORMATION                                                 
                                                                            
Item 1.  Legal Proceedings                                                    16
                                                                            
Item 2.  Changes in Securities                                                16
                                                                            
Item 3.  Defaults in Securities                                               16
                                                                            
Item 4.  Submission of Matters to a Vote of Security Holders                  16
                                                                            
Item 5.  Other Information                                                    16
                                                                            
Item 6.  Exhibits and Reports on Form 8-K                                     16
                                                                            
Signatures                                                                    17
                                                                            
                                        2

<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

             Consolidated Condensed Statement of Financial Condition
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                  March 31,          June 30,
                                                                    1999               1998
                                                              -------------      -------------
<S>                                                           <C>                <C>          
Assets
  Cash                                                        $     403,394      $     326,922
  Short-term interest-bearing deposits                            9,387,971         10,569,823
                                                              -------------      -------------
         Total cash and cash equivalents                          9,791,365         10,896,745
  Interest-bearing deposits                                         215,000            215,000
  Securities available for sale                                     670,356            311,967
  Loans                                                         107,562,240        100,395,554
  Allowance for loan losses                                        (226,000)          (186,000)
                                                              -------------      -------------
       Net loans                                                107,336,240        100,209,554
Real estate owned and held for
  development, net                                                1,399,128          1,468,199
  Premises and equipment                                          2,772,395          2,001,544
  Federal Home Loan Bank Stock                                    1,250,700            921,500
  Interest receivable                                               840,260            843,799
  Other assets                                                      431,493            294,324
                                                              -------------      -------------
         Total assets                                         $ 124,706,937      $ 117,162,632
                                                              =============      =============
Liabilities
  Deposits
      Noninterest bearing                                     $   2,008,636      $   1,864,658
      Interest bearing                                           81,361,409         82,117,324
                                                              -------------      -------------
         Total deposits                                          83,370,045         83,981,982
  Federal Home Loan Bank advances                                20,013,302         11,260,715
  Interest payable                                                  511,971            538,451
  Deferred tax liability                                            347,089            371,197
  Other liabilities                                                 751,991            945,136
                                                              -------------      -------------
         Total liabilities                                      104,994,398         97,097,481
                                                              -------------      -------------
Stockholders' Equity
   Preferred stock, $.01 par value
       authorized and unissued - 2,000,000 shares
  Common stock, $.01 par value - 8,000,000 shares
      authorized;  1,570,381 and 1,653,032 issued                    15,704             16,530
  Paid-in capital                                                12,876,416         13,571,387
  Retained earnings - substantially restricted                    8,068,534          7,782,192
   Unearned ESOP shares - 116,405 and 123,080                    (1,164,048)        (1,230,802)
   Unearned compensation                                           (101,662)          (128,507)
   Accumulated other comprehensive income                            17,595             54,351
                                                              -------------      -------------
         Total stockholders' equity                              19,712,539         20,065,151
                                                              -------------      -------------

         Total liabilities and stockholders' equity           $ 124,706,937      $ 117,162,632
                                                              =============      =============
</TABLE>
See notes to Consolidated Condensed Financial Statements 

                                       3
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                   Consolidated Condensed Statement of Income
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                     Three Months Ended               Nine Months Ended
                                                         March 31,                         March 31,
                                              -----------------------------     ----------------------------
                                                   1999             1998             1999           1998
                                              ------------     ------------     ------------    ------------
<S>                                           <C>              <C>              <C>              <C>        
Interest and Dividend Income
  Loans                                       $ 2,147,964      $ 2,028,082      $ 6,419,724      $ 5,823,466
  Investment securities                             7,114            1,885           16,362            3,019
  Deposits with financial institutions            121,015           72,354          316,933          261,646
  Dividend Income                                  24,672           18,177           64,320           55,921
                                              ------------     ------------     ------------    ------------
       Total interest and dividend income       2,300,765        2,120,498        6,817,339        6,144,052
                                              ------------     ------------     ------------    ------------

Interest Expense
  Deposits                                      1,015,877        1,008,740        3,179,019        2,958,806
 Federal Home Loan Bank advances                  281,431          131,567          678,093          402,575
                                              ------------     ------------     ------------    ------------
  Total interest expense                        1,297,308        1,140,307        3,857,112        3,361,381
                                              ------------     ------------     ------------    ------------

Net Interest Income                             1,003,457          980,191        2,960,227        2,782,671
  Provision for losses on loans                    15,000           40,000            3,000
                                              ------------     ------------     ------------    ------------

Net Interest Income After
  Provision for Losses on Loans                   988,457          980,191        2,920,227        2,779,671
                                              ------------     ------------     ------------    ------------

Other Income
  Service charges on deposit accounts              11,814            8,836           35,613           24,787
  Net appraisal income (expense)                    1,032           (2,203)          (3,503)          (3,146)
  Other income                                      1,976              966            5,365            3,347
                                              ------------     ------------     ------------    ------------
       Total other income                          14,822            7,599           37,475           24,988
                                              ------------     ------------     ------------    ------------

Other Expenses
  Salaries and employee benefits                  334,954          308,048          978,267          901,540
  Net occupancy expense                            31,506           29,215           84,953           80,589
  Equipment expense                                43,147           46,975          135,662          119,794
  Data processing expense                          48,401           32,550          126,451           89,901
  Deposit insurance expense                        13,113           12,021           38,305           35,227
  Real estate operations, net                      (4,302)          (5,690)         (20,499)         (18,094)
  Advertising expense                              11,201            9,628           34,714           28,497
  Other expenses                                  128,805          119,853          392,603          370,846
                                              ------------     ------------     ------------    ------------
           Total other expenses                   606,825          552,600        1,770,456        1,608,300
                                              ------------     ------------     ------------    ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                     Three Months Ended               Nine Months Ended
                                                         March 31,                         March 31,
                                              -----------------------------     ----------------------------
                                                   1999             1998             1999           1998
                                              ------------     ------------     ------------    ------------
<S>                                           <C>              <C>              <C>              <C>        
Income Before Income Tax                          396,454          435,190        1,187,246        1,196,359
  Income tax expense                              145,610          178,582          445,500          514,407
                                              ------------     ------------     ------------    ------------

Net Income                                    $   250,844      $   256,608      $   741,746      $   681,952
                                              ===========      ===========      ===========      ===========
Net Income Per Share:
      Basic                                   $      0.17      $      0.17      $      0.50      $       0.45
      Diluted                                 $      0.17      $      0.17      $      0.50      $       0.44

Dividends Per Share                           $     0.055      $     0.055      $     0.165      $      0.165
</TABLE>
See Notes to Consolidated Condensed Financial Statements.

                                       4
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                 Consolidated Condensed Statement of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   Nine Months Ended
                                                                       March 31,
                                                             -----------      ------------
                                                                1999             1998
                                                             -----------      ------------
Operating Activities
<S>                                                          <C>              <C>
Net income                                                   $   741,746      $    681,952
Adjustments to reconcile net income to net cash
    provided by operating activities
    Provision for loan losses                                     40,000             3,000
    Depreciation                                                 177,191           153,539
    ESOP stock amortization                                       70,659            78,125
    Amortization of unearned compensation                          6,511
    Change In
        Interest receivable                                        3,539          (110,431)
        Interest payable                                         (26,480)           40,310
        Other assets                                            (137,169)          (58,287)
        Other liabilities                                       (181,829)          400,743
                                                             -----------      ------------

           Net cash provided by operating activities             694,168         1,188,951
                                                             -----------      ------------
Investing Activities

   Purchase of interest-bearing deposits                         (95,000)
  Proceeds from paydowns of
      securities available for sale                               21,967            20,527
   Purchase of securities available for sale                    (441,220)         (200,000)
  Net change in loans                                         (7,278,877)      (11,719,727)
  Additions to real estate owned and held for investment        (164,257)          (90,556)
  Proceeds from real estate owned sales                          319,222            52,795
  Purchases of premises and equipment                           (921,745)         (253,474)
   Purchase of FHLB of Indianapolis Stock                       (329,200)       
                                                                              ------------

             Net cash used by investing activities            (8,794,110)      (12,285,435)
                                                             -----------      ------------
</TABLE>
                                       5
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

                 Consolidated Condensed Statement of Cash Flows
                                   (Continued)
<TABLE>
<CAPTION>
                                                                   Nine Months Ended
                                                                       March 31,
                                                            ------------------------------
                                                                1999              1998
                                                            ------------      ------------
Financing Activities
<S>                                                         <C>               <C>         

  Net Change In
       Noninterest-bearing, interest-bearing demand and
          savings deposits                                  $  3,141,514      $  1,383,820
      Certificates of deposit                                 (3,753,451)        5,578,681
  Proceeds from FHLB advances                                 11,000,000         2,807,056
  Repayment of FHLB advances                                  (2,247,413)       (5,167,658)
 Stock Purchase                                                 (890,960)
  Dividends paid                                                (255,128)         (181,834)
                                                            ------------      ------------

             Net cash provided by financing activities         6,994,562         4,420,065
                                                            ------------      ------------


Net Change in Cash and Cash Equivalents                       (1,105,380)       (6,676,419)

Cash and Cash Equivalents, Beginning of Period                10,896,745        11,594,772
                                                            ------------      ------------

Cash and Cash Equivalents, End of Period                    $  9,791,365      $  4,918,353


Additional Cash Flow and Supplementary Information

  Interest paid                                             $  3,883,592      $  3,321,071
  Income tax paid                                                935,789           230,527
Transfer from loans to other real
estate owned                                                     112,191           121,917
   Cash dividends payable                                         79,601            90,917

</TABLE>

See Notes to Consolidated Condensed Financial Statements

                                       6
<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

       Consolidated Condensed Statement of Changes in Stockholders' Equity
                                   (Unaudited)

<TABLE>
<CAPTION>
                                          Common Stock                                                            
                                      -----------------------        Paid-in      Comprehensive     Retained      
                                      Shares           Amount        Capital         Income         Earnings      
------------------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>                                <C>         
Balance July 1, 1998                 1,653,032      $  16,530      $ 13,571,387                       $ 7,782,192 

Net income for the nine months
    ended March 31, 1999                                                             $   741,746          741,746 

Comprehensive income,
    net of tax
    Unrealized loss on securities                                                        (36,756)                 
                                                                                     -----------                  

Comprehensive income                                                                 $   704,990
                                                                                     ===========
Cash dividends ($.165 per share)                                                                         (243,812)

Stock purchase                         (82,651)          (826)         (678,542)                         (211,592)

ESOP shares earned                                                        3,905                                   

Amortization of unearned
    compensation expense                                                (20,334)                                  

------------------------------------------------------------------------------------------------------------------
Balance March 31, 1999               1,570,381      $  15,704      $ 12,876,416                       $ 8,068,534 
------------------------------------------------------------------------------------------------------------------
(continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                        Other
                                        Unearned        Unearned    Comprehensive
                                      ESOP Shares     Compensation      Income         Total
-------------------------------------------------------------------------------------------------------
<S>                                      <C>              <C>            <C>         <C>        
Balance July 1, 1998                     $(1,230,802)     $(128,507)     $54,351     $20,065,151

Net income for the nine months
    ended March 31, 1999                     741,746

Comprehensive income,
    net of tax
    Unrealized loss on securities                                        (36,756)        (36,756)
 
Comprehensive income                 
                                     
Cash dividends ($.165 per share)                                                        (243,812)

Stock purchase                                                                          (890,960)

ESOP shares earned                            66,754                                      70,659

Amortization of unearned
    compensation expense                      26,845                                       6,511

-------------------------------------------------------------------------------------------------------
Balance March 31, 1999                   $(1,164,048)     $(101,662)     $17,595     $19,712,539
-------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Condensed Financial Statements

                                       7
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Basis of Presentation

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

The unaudited  interim  consolidated  condensed  financial  statements have been
prepared in accordance with the instructions to Form 10-QSB and,  therefore,  do
not include all  information  and  disclosures  required by  generally  accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management,  the  financial  statements  reflect all  adjustments  necessary  to
present fairly Montgomery's  financial position as of March 31, 1999, results of
operations  for the three and nine month periods ending March 31, 1999 and 1998,
and cash flows for the nine month  periods  ended March 31,  1999 and 1998.  The
results of operations  for the three and nine month periods ended March 31, 1999
are not  necessarily  indicative  of the  results  of  operations  which  may be
expected for the fiscal year ending June 30 1999.

Net Income Per Share

Net income per share for the three and nine month  periods  ended March 31, 1999
and 1998 are computed by dividing net earnings by the weighted average shares of
common stock outstanding during the period.
<TABLE>
<CAPTION>
For the Three Months Ended                        March 31, 1999                        March 31, 1998
                                                  --------------                        --------------

                                                    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            $250,844     1,445,724     $   0.17      $256,608     1,524,221     $   0.17
                                                                ========                                 ========
Effect of Dilutive Stock Options                                             
   and Grants                               0        10,662                          0        26,421
                                     --------     ---------                   --------     ---------               
Diluted Net Income Per Share:                                                
   Net Income Available                                                      
   To Common Stockholders            $250,844     1,456,386     $   0.17      $256,608     1,550,642     $   0.17
                                     ========     =========     ========      ========     =========     ========
</TABLE>
                                       8
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

<TABLE>
<CAPTION>
For the Three Months Ended                        March 31, 1999                          March 31, 1998
                                                  --------------                          --------------

                                                    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            $741,746     1,485,529     $   0.50    $681,952     1,521,493       $  0.45
                                                                ========                                 =======
                                                                                                         
Effect of Dilutive Stock Options                                                                         
   and Grants                               0        12,654                        0        25,634       
                                     --------     ---------                 --------     ---------               
Diluted Net Income Per Share:                                                                            
   Net Income Available                                                                                  
   To Common Stockholders            $741,746     1,498,183     $   0.50    $681,952     1,547,127       $  0.44
                                     ========     =========     ========    ========     =========       =======
</TABLE>
                                       9
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana


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

          Forward-Looking  Statements.  When  used in this  Form  10-Q or future
filings by Montgomery  with the Office of Thrift  Supervision,  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"  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 $124.7 million at
March 31, 1999, an increase of $7.5 million,  or 6.4 percent from June 30, 1998.
During the nine month period  ending March 31,  1999,  interest-earning  assets,
including Federal Home Loan Bank stock,  increased $6.7 million, or 5.9 percent.
Short-term  interest-earning  deposits decreased $1.2 million,  or 11.2 percent.
Loans increased $7.2 million, or 7.1 percent.  Investment  securities  increased
$358,000 to $670,000  during the nine months ended March 31, 1999.  Premises and
equipment   increased   $771,000   primarily  due  to  the   investment  in  the
Association's  new Lafayette,  Indiana  office to be opened in April 1999.  This
will be  Montgomery's  fifth  office in a four county area.  Deposits  decreased
$612,000, or 0.7 percent and borrowings increased $8.8 million, or 77.7 percent,
causing a net  increase in  interest-bearing  liabilities  of 8.5  percent.  The
increase in borrowings  was used to replace the decrease in deposits and to fund
loan growth.

         Capital and  Liquidity.  At March 31,  1999,  stockholders'  equity was
$19,713,000 or 15.8 percent of total assets,  compared with stockholders' equity
of $20,065,000,  or 17.1 percent, at June 30, 1998. With the approval of the OTS
on September 24, 1998, Montgomery began to repurchase 82,651, or 5.0 percent, of
it outstanding common stock. The repurchase was completed on February 4, 1999 at
a total cost of  $891,000.  The  Association  continues  to exceed  all  minimum
capital  requirements.  At March 31, 1999, the  Association's  tangible and core
capital was  $16,275,000,  or 13.2 percent of tangible  assets,  $14,428,000  in
excess of the 1.5 percent minimum  required  tangible capital and $11,348,000 in
excess of the 4.0 percent  minimum  required  core capital.  Risk-based  capital
equaled $15,531,000,  or 20.3 percent of risk-weighted  assets,  $9,508,000 more
than the  minimum 8.0  percent  risk-based  level  required.  Tier 1  risk-based
capital ratio equaled 21.6 percent at March 31, 1999. 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  five  percent.
Montgomery's  average  liquidity ratio for the nine months ended March 31, 1998,
was 8.9 percent.
                                       10
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

         Asset/Liability  Management.  The  Association,  like  other  financial
institutions,  is  subject  to  interest  rate  risk  to the  extent  that  its'
interest-bearing   liabilities   reprice   on  a   different   basis  than  its'
interest-bearing  assets. OTS regulations  provide a Net Portfolio Value ("NPV")
approach to the quantification of interest rate risk. In essence,  this approach
calculates the  difference  between the present value of  liabilities,  expected
cash flows from assets and cash flows from off balance  sheet  contracts.  Under
OTS regulations,  an  institution's  "normal" level of interest rate risk in the
event of an immediate and sustained 200 basis point 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.  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.  Regulations do exempt
all institutions  under $300 million in assets with risk-based  capital above 12
percent  from  reporting  information  to  calculate  exposure  and  making  any
deduction from risk-based  capital.  At March 31, 1999 the  Association's  total
assets were $123.6 million and risk based capital was 21.6 percent; therefor the
Association  would have been exempt from  calculating  or making any  risk-based
capital reduction.  The Association's  management believes interest-rate risk is
an  important  factor  and  makes  all  reports  necessary  to OTS to  calculate
interest-rate  risk on a voluntary  basis. At December 31, 1998, the most recent
date for which information was available from the OTS, 2.0% of the present value
of the Association's assets was approximately $2.47 million, which was less than
$2.64  million,  the greatest  decrease in NPV resulting  from a 200 basis point
change in  interest  rates.  As a result,  the  Association,  for OTS  reporting
purposes,  would have been  required to make a deduction  from total  capital in
calculating its risk-based capital  requirement had this rule been in effect and
had the  Association  not been  exempt  from  reporting  on such date.  Based on
December 31, 1998 NPV  information,  the amount of the  Association's  deduction
from capital,  had it been subject to reporting,  would have been  approximately
$85,000.
          It has been and continues to be a priority of the Association's  Board
of Directors and  management to manage  interest rate risk and thereby limit any
negative  effect  of  changes  in  interest  rates  on  Montgomery's   NPV.  The
Association's Interest Rate Risk Policy,  established by the Board of Directors,
promulgates  acceptable  limits on the  amount  of  change in NPV given  certain
changes in interest  rates.  Specific  strategies  have included  shortening the
amortized  maturity of fixed-rate  loans and increasing the volume of adjustable
rate loans to reduce the average maturity of the Association's  interest-earning
assets.  FHLB advances are used in an effort to match the effective  maturity of
the Association's interest-bearing liabilities to its interest-earning assets.
          Presented below, as of December 31, 1998, and December 31, 1997, is an
analysis  of the  Association's  estimated  interest  rate risk as  measured  by
changes in NPV for  instantaneous  and  sustained  parallel  shifts in  interest
rates, up and down 300 basis points in 100 point increments,  compared to limits
set by the Board.  Assumptions used in calculating the amounts in this table are
assumptions utilized by the OTS in assessing the interest risk of the thrifts it
regulates.  Based upon these  assumptions  at December 31, 1998 and December 31,
1997,  the  NPV  of  the   Association  was  $19.2  million  and  $18.3  million
respectively. NPV is calculated by the OTS for the purpose of interest rate risk
assessment  and  should  not be  considered  as an  indicator  of  value  of the
Association.
                                       11
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana
<TABLE>
<CAPTION>
                                             At December 31, 1998                At December 31, 1997
                                             --------------------                --------------------
     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>
       +300                 -60           -4,644               -24            -6,010               -33
       +200                 -50           -2,637               -14            -3,703               -20
       +100                 -30           -1,026                -5            -1,621                -9
          0                   0                0                 0                 0                 0
        100                  30             +633                +3              +934                +5
        200                  50           +1,286                +7             +1,315               +7
        300                  60           +2,157               +11             +1,867              +10
                                                                                                  
</TABLE>
         In the event of a 300 basis point  change in  interest  rate based upon
estimates as of December 31,  1998,  the  Association  would  experience  an 11%
increase in NPV in a declining rate  environment  and a 24% decrease in NPV in a
rising environment. During periods of rising rates, the value of monetary assets
and liabilities decline. Conversely,  during periods of falling rates, the value
of monetary assets and liabilities  increase.  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).

          Results of  Operations.  Montgomery's  net income for the three months
ended March 31,  1999,  was  $251,000  compared to $257,000 for the three months
ended March 31, 1998, a decrease of $6,000, or 2.3 percent.  Net interest income
increased  $180,000,  or 8.5  percent,  primarily  due to an increase in average
interest-earning   assets   of  $15.8   million,   or  15.4   percent.   Average
interest-earning assets were $118.6 million for the three months ended March 31,
1999  compared  to  $102.8  million  for the 1998  three-month  period.  Average
interest-bearing  liabilities  increased  $17.0 million,  or 20.2 percent,  from
$84.3  million to $101.3  million  during the  comparable  three-month  periods.
Interest  rate spread  decreased  from 2.84  percent for the three  months ended
March 31, 1998,  to 2.64 percent for the three months ended March 31, 1999.  Net
interest  margin  decreased to 3.38 percent for the three months ended March 31,
1999 from 3.81 percent for the three  months ended March 31, 1998.  Non-interest
income was $15,000 for the 1999  three-month  period  compared to $8,000 for the
1998 period.  Non-interest expense was $607,000 for the three months ended March
31, 1999 compared to $553,000 for the 1998  three-month  period,  an increase of
$54,000,  or 9.8  percent.  This  increase was  primarily  due to an increase in
employee  benefits due to an increase in the number of employees in  preparation
of the opening of a Lafayette, Indiana office.

                                       12
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

         For the nine  months  ended  March 31,  1999,  net income was  $742,000
compared to $682,000 for the nine months  ended March 31,  1998,  an increase of
$60,000, or 8.8 percent. Net interest income increased from $2.8 million for the
1998  period to $3.0  million  for the 1999  nine-month  period,  an increase of
$178,000, or 6.4 percent.  Average interest-earning assets increased from $102.8
million for the nine months ended March 31, 1998 to $114.5  million for the 1998
nine-month  period while average  interest bearing  liabilities  increased $18.4
during the comparable  periods.  Non-interest  income increased $12,000, or 50.0
percent,  from  $25,000 for the 1998  nine-month  period to $37,000 for the 1999
comparable period.  Non-interest expense increased $162,000, or 10.1 percent. An
increase in  personnel  and an increase in  operational  costs due to growth and
expansion  primarily  caused this increase.  Income tax expense was $446,000 for
the nine months ended March 31,  1999,  compared to $514,000 for the nine months
ended March 31, 1998.

          Interest  Income.  Montgomery's  total  interest  income for the three
months ended March 31, 1999, was $2.3 million,  an increase of $180,000,  or 8.5
percent,  compared to interest income for the three months ended March 31, 1998.
This  increase was primarily  caused by an increase in average  interest-earning
assets from $102.8  million for the three months ended March 31, 1998, to $118.6
million for the three months ended March 31, 1999, an increase of $15.8 million,
or 15.4 percent  principally  due to loan growth.  Average loans  increased from
$96.7  million for the 1998  three-month  period to $105.9  million for the 1999
three month period and average  interest-earning  deposits  increased  from $4.9
million to $10.8  million  for the  respective  periods.  The  average  yield on
interest-earning  assets was 7.76  percent for the three  months ended March 31,
1999, compared to 8.25 percent for the three months ended March 31, 1998.
          Interest  income for the nine months  ended March 31,  1999,  was $6.8
million, an increase of $673,000,  or 11.0 percent, from interest income for the
same period in 1998. Average  interest-earning  assets for the nine months ended
March 31, 1999, was $114.5  million  compared to $99.8 million for the 1998 nine
month period, an increase of $14.7 million, or 14.7 percent,  principally due to
loan growth.  The average yield for the 1999 period was 7.94 percent compared to
8.25 percent for the 1998 period.

          Interest  Expense.  Interest  expense for the three months ended March
31, 1999, was $1.3 million,  which was an increase of $157,000, or 13.8 percent,
from the three months ended March 31, 1998. Average interest-bearing liabilities
increased  $17.0  million,  or 20.2  percent,  from $84.3  million for the three
months ended March 31, 1998, to $101.3  million for the three months ended March
31, 1999. The average cost of funds  decreased from 5.41 percent to 5.12 percent
for the  comparable  periods.  The average cost of deposits  decreased from 5.31
percent to 5.00 percent for the comparable three-month periods. The average cost
of  borrowings  decreased  from 6.31 percent to 5.62 percent for the  comparable
periods.
         Interest  expense for the nine months  ended March 31,  1999,  was $3.9
million,  an increase of $496,000,  or 14.7 percent,  from the nine months ended
March 31,  1998.  The average cost of funds for the 1999 period was 5.34 percent
compared  to  5.51  percent  for  the  1998  period.  Average   interest-bearing
liabilities  increased  from $81.4  million for the nine months  ended March 31,
1998 to $96.3 million for the 1999 nine-month period.

                                       13
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

         Provision  for Losses on Loans.  The  provision for losses on loans was
$15,000 for the three months ended March 31, 1999  compared to no provision  for
the three months  ended March 31,  1998.  During the nine months ended March 31,
1999, a $40,000  provision was made compared to a $3,000 provision being made in
the comparable 1998 nine-month period.  Provision or adjustment entries are made
based on the  Internal  Loan and Asset Review  Policy.  A review is performed at
least  quarterly  to  determine  the  adequacy  of the  current  balance  in the
allowance for losses on loans.  Both the $40,000 and $3,000 provisions were made
primarily due to increased  loan growth.  Loans  delinquent  ninety days or more
were  $643,000  at March  31,  1999,  compared  to  $724,000  at June 30,  1998.
Non-performing loans to total loans at March 31, 1999 were 0.60 percent compared
to 0.72 percent at June 30, 1998.  The allowance to total loans was 0.21 percent
at March 31, 1999 and 0.19 percent at June 30, 1998.  Montgomery is  continually
re-evaluating  the  level of the  allowance  for loan  losses  as the  amount of
non-residential mortgage loans and other new loan products are offered.

          Non-Interest  Income.  Montgomery's  other income for the three months
ended March 31, 1999,  totalled  $15,000 compared to $8,000 for the three months
ended March 31, 1998, an increase of $7,000, or 95.1 percent.  This increase was
primarily  due to an  increase  in service  charges on deposit  accounts  in the
amount of $3,000 and a increase in net appraisal income of $3,000.
         Other income for the nine months ended March 31, 1999, was $37,000,  an
increase  of  $12,000,  or 50.0  percent,  from the  comparable  1998 nine month
period.  During the nine months ended March 31, 1999, service charges on deposit
accounts increased $11,000.

         Non-Interest Expense.  Montgomery's other expenses for the three months
ended March 31, 1999, totalled $607,000, an increase of $54,000, or 9.8 percent,
from the three  months ended March 31,  1998.  Salaries  and  employee  benefits
increased  $27,000.  The  increase  was  primarily  due to an increase in branch
office  personnel to  accommodate  growth and to prepare for staffing of a fifth
office in Lafayette, Indiana to be opened in April 1999. Data processing expense
increased  $16,000,  which  includes  $8,000  in  expense  related  to Year 2000
testing.  Other  miscellaneous  expenses  increased  $9,000 for the three months
ending March 31, 1999 compared the 1998 three-month  period.  The balance of the
increase  in data  processing  expense  and the  increase  in other  expense are
generally reflective of Montgomery's growth.
         Non-interest expense for the nine months ended March 31, 1999, was $1.8
million compared to $1.6 million, an increase of $162,000, or 10.1 percent, from
the nine months ended March 31, 1998.  Salary and  employee  benefits  increased
$77,000, or 8.5 percent, primarily due to an increase in branch office personnel
to accommodate  growth.  Occupancy expense  increased $4,000,  equipment expense
increased  $16,000  and data  processing  expense  increased  $37,000.  With the
exception of $22,000 included in data processing  expense for Year 2000 testing,
the  balance  of  the  increases  were  primarily  due to  Montgomery's  growth.
Advertising  expense  increased $6,000 from the 1998 period.  Other expenses for
the nine months ended March 31, 1999, were $393,000 compared to $371,000 for the
nine months ended March 31, 1998, an increase of $22,000, or 5.9 percent.  These
increases are generally reflective of Montgomery's growth.
  
                                       14
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

       Impact of the Year 2000.  Montgomery has conducted a comprehensive review
of its computer systems to identify  applications  that could be affected by the
"Year 2000"  issue,  and has  developed  an  implementation  plan to address the
issue. The Year 2000 issue is the result of the computer  programs being written
using two  digits  rather  than  four to  define  the  applicable  year.  Any of
Montgomery's  programs  that have  time-sensitive  software may recognize a date
using "00" as the year 1900  rather than the year 2000.  This could  result in a
system  failure or  miscalculations.  Montgomery is utilizing  both internal and
external  resources to identify,  correct or reprogram  and test the systems for
the Year 2000 compliance. Montgomery's data processing is performed primarily by
an outside vender.  Montgomery began the testing phase during the third calendar
quarter of 1998. Core application testing has been completed.
       Montgomery  has already  contacted each vendor to request time tables for
year  2000  compliance  and  expected  costs,  if any,  to be  passed  along  to
Montgomery.  To date,  Montgomery  anticipates that its primary service provider
will complete all reprogramming  efforts by June 30, 1999;  however,  Montgomery
will  pursue  other  options if it appears  that any  vendors  will be unable to
comply.  In addition to possible  expenses  related to Montgomery's  systems and
those of its  service  providers,  Montgomery  could  incur  losses if Year 2000
problems affect any of its depositors or borrowers.  Such problems could include
delayed loan payments due to Year 2000 problems affecting any of its significant
borrowers  or  impairing  the payroll  systems of large  employers in its market
area.  Because  Montgomery's  loan portfolio is diversified  and its market area
does not depend significantly upon one employer or industry, Montgomery does not
expect any such Year 2000 related difficulties that may affect its depositors or
borrowers to significantly affect its net earnings or cash flows.
         The Board of  Directors  reviews,  on at least a quarterly  basis,  the
progress in  addressing  Year 2000 issues.  Montgomery  has estimated a cost and
established  a budget of $75,000  for  testing  and  upgrading  its  systems and
software for Year 2000  compliance.  As of March 31, 1999  Montgomery  has spent
approximately  $50,000 in connection with Year 2000  compliance.  Of the $50,000
approximately  $27,000  has  been  capitalized  as  non-compliant  systems  were
replaced  and  upgraded.  Management  does  not  expect  these  costs  to have a
significant impact on its financial position or results of operations,  however,
there can be no assurance that the vendors  systems will be Year 2000 compliant,
consequently  Montgomery  could  incur  incremental  costs to convert to another
vendor or move data processing in house in future periods.

                                       15
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana

Part II.  OTHER INFORMATION


Item 1.  Legal Proceedings    None.

Item 2.  Changes in Securities    None.

Item 3.  Defaults Upon Senior Securities    None.

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

Item 5.  Other Information    None.

Item 6.  Exhibits and Reports on Form 8-K

     (a)   Exhibits

               None

     (b)   Reports on Form 8-K

               None

                                       16
<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:  April 30, 1999                 By:  /s/ Earl F. Elliott
                                         ---------------------
                                         Earl F. Elliott, President and Chief
                                               Executive Officer
                                     
                                     
                                     
                                     
                                     
Date:  April 30, 1999                 By:  /s/ J. Lee Walden
                                         -------------------
                                         J. Lee Walden, Vice President and Chief
                                               Financial Officer