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

                                   FORM 10-QSB

(Mark One)

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


                For the quarterly period ended September 30, 1999


                                       OR

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

               For the transition period from ________ to ________


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

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

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

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

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

         As of October 31, 1999, there were 1,361,210 shares of the Registrant's
common stock issued and outstanding.
<PAGE>

                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY

                             Crawfordsville, Indiana

                                   Form 10-QSB

                                      Index



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Condensed Statement of Financial Condition

         As of September 30, 1999 and June 30, 1999

         Consolidated Condensed Statement of Income for the Three

         Months Ended September 30, 1999 and 1998

         Consolidated Condensed Statement of Cash Flows for the

         Three Months Ended September 30, 1999 and 1998

         Consolidated Condensed Statement of Changes in Stockholders'

         Equity for the Three Months Ended September 30, 1999

         Notes to Consolidated Condensed Financial Statements

Item 2.  Management's Discussion and Analysis of Financial Condition

           And Results of Operations

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

Item 2.  Changes in Securities and Use of Proceeds

Item 3.  Defaults in Securities

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

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

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

             Consolidated Condensed Statement of Financial Condition
                                   (Unaudited)

                                                        September 30,           June 30,
                                                            1999                 1999
                                                        -------------      -------------

<S>                                                     <C>                <C>
Assets
  Cash ............................................     $     488,318      $     523,585
  Short-term interest-bearing deposits ............         5,688,020          4,409,228
                                                         -------------      -------------
         Total cash and cash equivalents ..........         6,176,338          4,932,813
  Interest-bearing deposits .......................           219,463            219,463
  Securities available for sale ...................           909,730            880,900
  Loans ...........................................       114,860,441        111,641,224
  Allowance for loan losses .......................          (226,000)          (226,000)
                                                        -------------      -------------
       Net loans ..................................       114,634,441        111,415,224
  Real estate owned and held for development, net .         1,170,355          1,181,720
  Premises and equipment ..........................         2,997,794          2,839,409
  Federal Home Loan Bank stock ....................         1,650,700          1,250,700
  Interest receivable .............................           971,594            893,854
  Other assets ....................................           301,607            345,036
                                                        -------------      -------------

         Total assets .............................     $ 129,032,022      $ 123,959,119
                                                        =============      =============

Liabilities
  Deposits
      Noninterest bearing .........................     $   1,330,836      $   1,349,282
        Interest bearing ..........................        84,436,844         81,118,363
                                                        -------------      -------------
                Total deposits ....................        85,767,680         82,467,645
  Federal Home Loan Bank advances .................        23,577,611         20,632,069
  Interest payable ................................           565,176            566,632
  Deferred tax liability ..........................           360,008            347,089
  Other liabilities ...............................           827,990            548,612
                                                        -------------      -------------

         Total liabilities ........................       111,098,465        104,562,047
                                                        -------------      -------------

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                     <C>                <C>
Stockholders' Equity
    Preferred stock, $.01 par value
        authorized and unissued--2,000,000 shares
  Common stock, $.01 par value--8,000,000 shares
      authorized;  1,361,210 and 1,521,142 issued .            13,612             15,211
  Paid-in capital .................................        11,151,910         12,464,781
  Retained earnings - substantially restricted ....         7,934,269          8,131,251
   Unearned ESOP shares--112,022 and 114,180 ......        (1,120,218)        (1,141,796)
  Unearned compensation ...........................           (83,766)           (92,714)
   Accumulated other comprehensive income .........            37,750             20,339
                                                        -------------      -------------

         Total stockholders' equity ...............        17,933,557         19,397,072
                                                        -------------      -------------


         Total liabilities and stockholders' equity     $ 129,032,022      $ 123,959,119
                                                        =============      =============
</TABLE>

See notes to Consolidated Condensed Financial Statements.

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

                   Consolidated Condensed Statement of Income
                                   (Unaudited)



                                                         Three Months Ended
                                                            September 30,
                                                      1999              1998
                                                   -----------      -----------
<S>                                                <C>              <C>
Interest and Dividend Income
  Loans ......................................     $ 2,237,377      $ 2,100,016
  Investment securities ......................           7,546            3,497
  Deposits with financial institutions .......          97,282          110,558
  Federal Home Loan Bank stock ...............          29,044           18,715
                                                   -----------      -----------
       Total interest and dividend income ....       2,371,249        2,232,786
                                                   -----------      -----------
Interest Expense
  Deposits ...................................       1,050,996        1,099,583
  Federal Home Loan Bank advances ............         320,936          166,173
                                                   -----------      -----------
       Total interest expense ................       1,371,932        1,265,756
                                                   -----------      -----------
Net Interest Income ..........................         999,317          967,030
  Provision for losses on loans ..............                           15,000

Net Interest Income After
  Provision for Losses on Loans ..............         999,317          952,030
                                                   -----------      -----------
Other Income
  Service charges on deposit accounts ........          13,814           10,618
  Net appraisal income (expense) .............           1,011            1,405
  Other income ...............................           7,219            1,751
                                                   -----------      -----------
       Total other income ....................          22,044           13,774
                                                   -----------      -----------
Other Expenses
  Salaries and employee benefits .............         366,322          283,915
  Net occupancy expense ......................          42,688           27,529
  Equipment expense ..........................          60,819           46,557
  Data processing expense ....................          50,735           35,853
  Deposit insurance expense ..................          12,349           12,497
  Real estate operations, net ................          (5,701)          (5,243)
  Advertising expense ........................          25,144           11,292
  Other expenses .............................         155,418          123,876
                                                   -----------      -----------
           Total other expenses ..............         707,774          536,276
                                                   -----------      -----------

Income Before Income Tax .....................         313,587          429,528
  Income tax expense .........................         122,225          174,500
                                                   -----------      -----------

Net Income ...................................     $   191,362      $   255,028
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                <C>              <C>
Net Income Per Share
  Basic ......................................     $      0.14      $      0.17
  Diluted ....................................            0.14             0.17

Dividends Per Share ..........................           0.055            0.055
</TABLE>

See Notes to Consolidated Condensed Financial Statements.


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

                 Consolidated Condensed Statement of Cash Flows
                                   (Unaudited)

                                                                  Three Months Ended
                                                                     September 30,
                                                                1999             1998
                                                             -----------      -----------
<S>                                                          <C>              <C>
Operating Activities

  Net income ...........................................     $   191,362      $   255,028
  Adjustments to reconcile net income to net cash
      provided by operating activities

      Provision for loan losses ........................                           15,000

      Depreciation .....................................          78,590           51,402
      ESOP stock amortization ..........................          20,967           25,149
      Amortization of unearned compensation ............           5,768            2,170
      Change in

          Interest receivable ..........................         (77,740)          (7,476)
          Interest payable .............................          (1,456)          81,467
          Other assets .................................          43,429          (32,002)
           Other liabilities ...........................         289,676          (19,466)
                                                             -----------      -----------

          Net cash provided by operating activities ....         550,596          371,272
                                                             -----------      -----------

Investing Activities

  Proceeds from paydowns of securities

      available for sale ...............................                           10,805
  Purchase of securities available for sale ............                         (437,258)
  Net change in loans ..................................      (3,219,217)      (4,295,017)
  Additions to real estate owned and held for investment         (68,144)         (21,785)
  Proceeds from real estate owned sales ................          70,520          286,722
  Purchases of premises and equipment ..................        (227,986)        (298,854)
  Purchase of FHLB of Indianapolis stock ...............        (400,000)         (41,600)
                                                             -----------      -----------

          Net cash used by investing activities ........      (3,844,827)      (4,796,987)
                                                             -----------      -----------

</TABLE>


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

                 Consolidated Condensed Statement of Cash Flows
                                   (Continued)

                                                                 Three Months Ended
                                                                   September 30,
                                                                1999              1998
                                                            -----------      ------------
<S>                                                         <C>              <C>
Financing Activities

  Net change in
       Noninterest-bearing, interest-bearing demand and
          savings deposits ............................     $ 2,653,592      $    890,453
      Certificates of deposit .........................         646,443        (1,838,689)
  Proceeds from FHLB advances .........................       5,000,000         4,000,000
   Repayment of FHLB advances .........................      (2,054,458)       (1,000,000)
  Stock purchase ......................................      (1,630,436)         (119,824)
  Dividends paid ......................................         (77,385)          (90,917)
                                                            -----------      ------------

          Net cash provided by financing activities ...       4,537,756         1,841,023
                                                            -----------      ------------


Net Change in Cash and Cash Equivalents ...............       1,243,525        (2,584,692)

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

Cash and Cash Equivalents, End of Period ..............     $ 6,176,338      $  8,312,053
                                                            ===========      ============

Additional Cash Flow and Supplementary Information

  Interest Paid .......................................     $ 1,373,388      $  1,184,289
  Income Tax Paid .....................................          30,655           387,733
  Transfer from Loans to Other Real Estate Owned ......                           112,191
   Cash Dividends Payable .............................          68,587            83,548


</TABLE>
See Notes to Consolidated Condensed Financial Statements

                                       6
<PAGE>
<TABLE>
<CAPTION>
                                           MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                                                       Crawfordsville, Indiana

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

                                              Common Stock
                                        ------------------------          Paid-in     Comprehensive      Retained      Unearned
                                         Shares           Amount          Capital         Income         Earnings     ESOP Shares
                                         ------           ------          -------         ------         --------     -----------
<S>                                     <C>            <C>            <C>                             <C>              <C>
Balance July 1, 1999 ............       1,521,142      $  15,211      $ 12,464,781                    $ 8,131,251      $(1,141,796)

Net income for the three months
    ended September 30, 1999 ....                                                      $   191,362        191,362

Other comprehensive income,
    net of tax
    Unrealized gain on securities                                                           17,411

Other comprehensive income ......                                                      $   208,773

Cash dividends ($.055 per share)                                                                          (68,587)

Stock purchase ..................        (159,932)        (1,599)       (1,309,080)                      (319,757)

ESOP shares earned ..............                                             (611)                                         21,578

Amortization of unearned
    compensation expense ........                                           (3,180)
                                        ---------      ---------      ------------                    -----------      -----------

Balance September 30, 1999 ......       1,361,210      $  13,612      $ 11,151,910                    $ 7,934,269      $(1,120,218)
                                        =========      =========      ============                    ===========      ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                            Accumulated
                                                               Other
                                             Unearned      Comprehensive
                                           Compensation        Income         Total
                                           ------------        ------         -----
<S>                                         <C>                <C>         <C>
Balance July 1, 1999 ............           $(92,714)          $20,339     $19,397,072

Net income for the three months
    ended September 30, 1999 ....                                              191,362

Other comprehensive income,
    net of tax
    Unrealized gain on securities                               17,411          17,411

Other comprehensive income ......

Cash dividends ($.055 per share)                                               (68,587)

Stock purchase ..................                                           (1,630,436)

ESOP shares earned ..............                                               20,967

Amortization of unearned
    compensation expense ........              8,948                             5,768
                                           --------            -------     -----------

Balance September 30, 1999 ......           $(83,766)          $37,750     $17,933,557
                                            ========           =======     ===========
</TABLE>

  See Notes to Consolidated Condensed Financial Statement

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

              Notes to Consolidated Condensed Financial Statements

Basis of Presentation

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

The unaudited  interim  consolidated  condensed  financial  statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include  all  information  and  disclosures   required  by  generally   accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management,  the  financial  statements  reflect all  adjustments  necessary  to
present fairly Montgomery's financial position as of September 30, 1999, results
of operations  for the three month periods  ending  September 30, 1999 and 1998,
and cash flows for the three month  periods  ended  September 30, 1999 and 1998.
The results of  operations  for the three month period ended  September 30, 1999
are not  necessarily  indicative  of the  results  of  operations  which  may be
expected for the fiscal year ending June 30, 2000.

Net Income Per Share

Net income per share for the three month  periods  ended  September 30, 1998 and
1997,  are computed by dividing net earnings by the weighted  average  shares of
common stock outstanding during the period.
<TABLE>
<CAPTION>

For the Three Months Ended                    September 30, 1999                      September 30, 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 ......     $191,362     1,369,146     $   0.14      $255,028      1,519,870     $  0.17
                                                                ========                                  =======
Effect of Dilutive Stock Options
   and Grants ..................            0        10,146                          0         14,403
                                     --------     ---------                   ---------     ---------
Diluted Net Income Per Share:
   Net Income Available
   To Common Stockholders ......     $191,362     1,379,292     $   0.14      $255,028      1,534,273     $  0.17
                                     ========     =========     ========      ========      =========     =======
 </TABLE>


                                       8
<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" 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 $129.0 million at
September 30, 1999,  an increase of $5.0  million,  or 4.1 percent from June 30,
1999.  During this three month period  interest-earning  assets  increased  $4.9
million,  or 4.2 percent.  Short-term  interest-earning  deposits increased $1.3
million, or 29.0 percent. Loans increased $3.2 million, or 2.9 percent.  Federal
Home Loan Bank stock  increased  $400,000 or 32.0  percent due to an increase in
Federal Home Loan Bank advances. Deposits increased $3.3 million, or 4.0 percent
and FHLB  advances  increased  $2.9  million,  or 14.3  percent,  causing  a net
increase  in  interest-bearing  liabilities  of 6.1  percent.  The  increase  in
borrowings was primarily used to fund loan growth.

          Capital and Liquidity. At September 30, 1999, stockholders' equity was
$17.9  million or 13.9  percent of total  assets,  compared  with  stockholders'
equity of $19.4 million, or 15.7 percent, at June 30, 1999. With the approval of
OTS on May 5, 1999,  Montgomery  began to repurchase  209,171 of its outstanding
common stock. The repurchase was completed on September 24, 1999 at a total cost
of $2.1 million.  The repurchase of stock during the quarter ended September 30,
1999 reduced capital in the amount of $1.6 million. The Association continues to
exceed all minimum regulatory capital  requirements.  At September 30, 1999, the
Association's  tangible  and core  capital was  $16,674,000,  or 13.1 percent of
tangible  assets,  $14,757,000  in excess of the 1.5  percent  minimum  required
tangible  capital and $11,582,000 in excess of the 4.0 percent minimum  required
core  capital.  Risk-based  capital  equaled  $16,165,000,  or 20.3  percent  of
risk-weighted  assets,  $9,801,000  more than the minimum 8.0 percent risk based
level  required.  The  director of the OTS is required to set minimum  liquidity
levels  between  four and 10 percent of assets.  Current  regulations  require a
minimum  liquidity level of five percent.  The  Association's  average liquidity
ratio for the three months ended September 30, 1999, was 7.6 percent.


                                       9
<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 September 30, 1999 the Association's total
assets were $129.0  million and risk based capital was 20.3  percent;  therefore
the Association would have been exempt from calculating or making any risk-based
capital reduction.  The Association's  management believes interest-rate risk is
an  important  factor  and  makes  all  reports  necessary  to OTS to  calculate
interest-rate  risk on a voluntary basis. At June 30, 1999, the most recent date
for which  information  is available  from the OTS, 2.0% of the present value of
the Association's  assets was approximately  $2.49 million,  which was less than
$4.12  million,  the greatest  decrease in NPV resulting  from a 200 basis point
change in  interest  rates.  As a result,  the  Association,  for OTS  reporting
purposes,  would have been  required to make a deduction  from total  capital in
calculating its risk-based capital  requirement had this rule been in effect and
had the Association  not been exempt from reporting on such date.  Based on June
30,  1999 NPV  information,  the  amount  of the  Association's  deduction  from
capital,  had it been  subject  to  reporting,  would  have  been  approximately
$815,000.

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

        Presented  below,  as of June 30, 1999 and June 30, 1998, is an analysis
of the Association's  estimated interest rate risk as measured by changes in NPV
for instantaneous  and sustained  parallel shifts in interest rates, up and down
300 basis points in 100 point  increments,  compared to limits set by the Board.
Assumptions  used in  calculating  the  amounts  in this  table are  assumptions
utilized by the OTS in assessing  the interest risk of the thrifts it regulates.
Based upon these assumptions at June 30, 1998, and June 30, 1997, the NPV of the
Association was $19.8 million and $18.9 million, respectively. NPV is calculated
by the OTS for the purpose of interest  rate risk  assessment  and should not be
considered as an indicator of value of the Association.


                                       10
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
                             Crawfordsville, Indiana
<TABLE>
<CAPTION>
                                                At June 30, 1999                      At June 30,1998
-------------------- ----------------- ------------------------------------ ------------------------------------
      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            -6,573                -33             -5,717              -30
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
       +200                   -50            -4,122                -21             -3,463              -18
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
       +100                   -30            -1,809                 -9             -1,452               -8
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
          0                     0                 0                  0                  0                0
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
       -100                   -30            +1,166                 +6             +1,020               +5
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
       -200                   -50            +2,187                +11             +1,761               +9
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
       -300                   -60            +3,329                +17             +2,782              +15
-------------------- ----------------- ------------------ ----------------- ----------------- ------------------
</TABLE>

          In the event of a 300 basis point  change in interest  rate based upon
estimates as of June 30, 1999, the Association  would  experience a 17% increase
in NPV in a declining  rate  environment  and a 33%  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).   Based  upon  the  NPV
methodology,  the  increased  level of  interest  rate risk  experienced  by the
Association   in  recent   periods  was  primarily  due  to  the  maturities  of
interest-earning  assets increasing more than the maturities on interest-bearing
liabilities  due to the increase in fixed-rate  residential  mortgage  loans and
non-residential loans.

          Results of  Operations.  Montgomery's  net income for the three months
ended September 30, 1999, was $191,000 compared to $255,000 for the three months
ended September 30, 1998, a decrease of $64,000.  Net interest income  increased
$32,000,   or  3.3   percent,   primarily   due  to  an   increase   in  average
interest-earning   assets   of  $11.5   million,   or  10.3   percent.   Average
interest-earning assets were $122.7 million for the three months ended September
30,  1999   compared   to  $111.2   million   for  the  1998   period.   Average
interest-bearing  liabilities  increased  $13.5  million  from $92.3  million to
$105.8  million  during the  comparable  periods.  Interest rate spread was 2.54
percent for both  three-month  periods.  Net interest margin decreased from 3.48
percent for the three  months ended  September  30, 1998 to 3.26 percent for the
three months ended September 30, 1999.  Non-interest  income was $22,000 for the
1999  three-month  period compared to $14,000 for the 1998 period.  Non-interest

<PAGE>

expense was $708,000 for the three months ended  September  30, 1999 compared to
$536,000  for the  1998  period,  an  increase  of  $172,000,  or 32.0  percent,
primarily  due to  expenses  associated  with the  operation  of the  Lafayette,
Indiana  office  which  opened in April,  1999.  Income  before  income  tax was
$314,000 for the three months ended September 30, 1999, compared to $430,000 for
the three months ended  September  30, 1998, a decrease of $116,000.  Income tax
for the three months ended September 30, 1999, was $122,000 compared to $175,000
for the three months ended September 30, 1998.


                                       11
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY

                             Crawfordsville, Indiana

          Interest  Income.  Montgomery's  total  interest  income for the three
months ended September 30, 1999, was $2.4 million,  an increase of $138,000,  or
6.2 percent,  compared to interest  income for the three months ended  September
30,  1998.  This  increase  was  primarily  caused  by an  increase  in  average
interest-earning assets from $111.2 million for the three months ended September
30, 1998,  to $122.7  million for the three months ended  September 30, 1999, an
increase of $11.5 million, or 10.3 percent.  Average loans increased from $101.7
million  for the 1998  period to $112.6  million for the 1999 period and average
interest-earning  deposits  decreased  from $8.3  million  to $7.7  million  and
average  investment  securities  increased  from  $302,000 to  $897,000  for the
respective  periods.  The  average  yield on  interest-earning  assets  was 7.73
percent for the three months ended September 30, 1999,  compared to 8.03 percent
for the three  months ended  September  30, 1998.  This  decrease was  primarily
caused by a decrease  in the  average  yield on loans from 8.26  percent to 7.94
percent for the current three-month period.

          Interest  Expense.   Interest  expense  for  the  three  months  ended
September  30,  1999,  was $1.4  million  compared to $1.3  million for the 1998
period,  an increase  of  $106,000,  or 8.4  percent.  Average  interest-bearing
liabilities increased $13.5 million, or 14.6 percent, from $92.3 million for the
three months ended  September 30, 1998,  to $105.8  million for the three months
ended  September 30, 1999. The average cost of funds decreased from 5.49 percent
to 5.19  percent for the  comparable  periods  and the average  cost of deposits
decreased  from 5.41 percent to 5.05 percent.  In addition,  the average rate on
FHLB  advances  decreased  from 6.00 percent to 5.68 percent for the  comparable
periods.

          Provision  for Losses on Loans.  There was no provision  for losses on
loans made for the three months ended  September  30, 1999,  compared to $15,000
for the three months ended September 30, 1998.  Provision or adjustment  entries
are made  based on the  Internal  Loan and  Asset  Review  Policy.  A review  is
performed at least quarterly to determine the adequacy of the current balance in
allowance  for  loss  accounts.  Loans  delinquent  ninety  days  or  more  were
$1,033,000  at  September  30,  1999,  compared to  $547,000  at June 30,  1999.
Non-performing  loans to total loans at  September  30,  1999,  was 0.90 percent
compared to 0.49  percent at June 30,  1999.  The  allowance  for loan losses to
non-performing  loans was 21.9  percent at September  30, 1999  compared to 41.3
percent at June 30,  1999.  The  allowance  to total  loans was 0.20  percent at
September 30, 1999,  0.20 percent at June 30, 1999.  Montgomery  is  continually
re-evaluating  the  level of the  allowance  for loan  losses  as the  amount of
non-residential mortgage loans and other new loan products are offered.


                                       12
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY

                             Crawfordsville, Indiana

         Non-Interest  Income.  Montgomery's  other  income for the three months
ended  September 30, 1999,  totalled  $22,000  compared to $14,000 for the three
months ended September 30, 1998, an increase of $8,000, or 60.0 percent.  During
the comparable periods, service charges on deposit accounts increased $3,000 due
to an  increase  in the  number  of demand  deposit  accounts  and other  income
increased $5,000.

         Non-Interest Expense.  Montgomery's other expenses for the three months
ended September 30, 1999, totalled $708,000,  compared to $536,000 for the three
months ended  September  30, 1998,  an increase of  $172,000,  or 32.0  percent.
Salaries and employee benefits increased $82,000 primarily due to an increase in
personnel to staff the Lafayette Office and to accommodate growth. Net occupancy
expense  increased $15,000 and equipment expense increased $14,000 primarily due
to the increase in expenses  associated with operation of the Lafayette  Office.
Data processing  expense increased $15,000 which includes $8,000 related to Year
2000  testing.  The  balance  of the  increase  in data  processing  expense  is
reflective  of  Montgomery's  growth.   Advertising  expense  increased  $14,000
primarily  due to the  advertising  increase  to  promote  the  recently  opened
Lafayette  Office  operation.  Other  expenses  increased  $32,000 for the three
months ended September 30, 1999,  compared to the same 1998 period.  Included in
other expenses is approximately  $5,000 in expense related to customer awareness
of the Y2K  issue  with the  balance  of the  increase  being  primarily  due to
Montgomery's growth.

         Income Tax  Expense.  Income tax  expense  for the three  months  ended
September 30, 1999, was $122,000 compared to $175,000 for the three months ended
September 30, 1998, due to the change in taxable income.

         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.  Applications  found in the  review  that  could be
affected  have been  corrected  by either  replacement  of  hardware or software
updates.  The  Company's  data  processing  is  performed  primarily  by outside
venders.  Testing  has been  completed  to verify  Year 2000  compliance  by the
vendors.  For the remainder of calendar 1999, the Company will test and evaluate
contingency  plans and work closely with critical service providers to make sure
their systems will be ready for the Year 2000 date change.

         As  part of the Y2K  planning  process,  contingency  plans  have  been
established for  mission-critical  systems.  These plans provide for alternative
methods of doing  business,  which  includes  provisions  for manual  processing
procedures,  if needed,  and  addresses  the  procedures  relating  to  possible
liquidity  needs in case of an increase in cash requests from customers  occurs.
These  contingency  plans will  continue  to be  reviewed,  tested,  refined and
validated as Year 2000 approaches.

         Although  management  believes  it has  taken  the  necessary  steps to
address the Y2K compliance  issue, no assurances can be given that some problems
will not  occur or that  the  Company  will  not  incur  significant  additional
expenses in future periods. In the event that the Company is ultimately required
to purchase  replacement  computer systems,  programs or equipment,  or to incur
substantial  expenses to make its current  systems,  programs and  equipment Y2K
compliant,  its financial  position and results of operations could be adversely
impacted.

                                       13
<PAGE>
                 MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY

                             Crawfordsville, Indiana

Part II.  OTHER INFORMATION

Item 1.  Legal Proceedings    None.

Item 2.  Changes in Securities and Use of Proceeds    None.

Item 3.  Defaults Upon Senior Securities    None.

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

Item 5.  Other Information    None.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

               27.  Financial Data Schedule

(b)      Reports on Form 8-K

               None



                                       14
<PAGE>

                    MONTGOMERY SAVINGS, A FEDERAL ASSOCIATION

                             Crawfordsville, Indiana

                                   SIGNATURES

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

                        Montgomery Financial Corporation

Date:  November 12, 1999        By:   /s/ Earl F. Elliott
                                      -------------------
                                      Earl F. Elliott, President and Chief
                                         Executive Officer

Date:  November 12, 1999        By:   /s/ J. Lee Walden
                                      -----------------
                                      J. Lee Walden, Vice President and Chief
                                         Financial Officer