<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934
          FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998
                                       OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     FOR THE TRANSITION PERIOD FROM  ____________________________________ TO
     ______________________________________

          COMMISSION FILE NUMBER 0-25516

                         CAMERON FINANCIAL CORPORATION
                         -----------------------------
             (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
 
<S>                                                    <C>
            Delaware                                                43-1702410
-----------------------------------------------------             --------------
   (State or other jurisdiction of incorporation       (I.R.S. Employer Identification No.)
          or organization)
 
     1304 North Walnut, Cameron, Missouri                             64429
-----------------------------------------------------             --------------
       (Address of principal executive offices)                     (Zip Code)
 
Registrant's telephone number, including area code:  (816) 632-2154
                                                     --------------
</TABLE>
        Securities Registered Pursuant to Section 12(b) of the Act: None
                                                                    ----
          Securities Registered Pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                     --------------------------------------
                                (Title of class)

     Indicate by check mark whether the registrant (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 shorter period that the
registrant was required to file such reports) and (2) has been subject to such
requirements for the past 90 days.  YES  X .  NO 
                                        ---     ---.

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     The aggregate market value of the voting stock held by non-affiliates of
the registrant, computed by reference to the closing price of such stock on the
Nasdaq National Market as of December 11, 1998, was $33,405,168.  (The exclusion
from such amount of the market value of the shares owned by any person shall not
be deemed an admission by the registrant that such person is an affiliate of the
registrant.)

     As of December 11, 1998, there were issued and outstanding 2,215,732 shares
of the Registrant's Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Parts II and IV of Form 10-K - Portions of the Annual Report to
Stockholders for the fiscal year ended September 30, 1998.

     Part III of Form 10-K - Portions of the Proxy Statement for 1999 Annual
Meeting of Stockholders.
<PAGE>
 
                                     PART I


ITEM 1.   DESCRIPTION OF BUSINESS
          -----------------------

GENERAL

     Cameron Financial Corporation ("Cameron Financial" and, with its
subsidiary, the "Company") was formed at the direction of The Cameron Savings &
Loan Association, F.A. ("Cameron Savings" or the "Association") in December 1994
for the purpose of owning all of the outstanding stock of Cameron Savings issued
upon the conversion of the Association from the mutual to the stock form (the
"Conversion").  On March 31, 1995, Cameron Financial acquired all of the shares
of the Association in connection with the completion of the Conversion.  All
references to the Company, unless otherwise indicated, at or before March 31,
1995 refer to the Association and its subsidiaries on a consolidated basis.  The
Company's Common Stock is quoted on the Nasdaq National Market under the symbol
"CMRN."

     Cameron Savings, which was originally chartered in 1887 as a Missouri-
chartered mutual savings and loan association, is headquartered in Cameron,
Missouri.  The Association amended its mutual charter to become a federal mutual
savings and loan association in 1994.  Its deposits are insured up to the
maximum allowable amount by the Federal Deposit Insurance Corporation ("FDIC").
Cameron Savings serves the financial needs of its customers throughout northwest
Missouri through its main office located at 1304 North Walnut, Cameron,
Missouri, and three branch offices located in Liberty, Maryville and Mound City,
Missouri.  The Association occupied the new main office during June 1997 and the
new branch office in Liberty in August 1998.  At September 30, 1998, the Company
had total assets of $221.5 million, deposits of $136.6 million, and
shareholders' equity of $43.5 million.

     Cameron Savings has been, and intends to continue to be, a community-
oriented financial institution offering financial services to meet the needs of
the market area it serves.  The Association attracts deposits from the general
public and uses such funds to originate loans secured by first mortgages on
owner-occupied one- to four-family residences and construction loans in its
market area.  To a lesser extent, the Association originates land, commercial
real estate, multi-family and consumer loans in its market area.  See "Business
- Originations, Purchases and Sales of Loans." The Association also invests in
investment securities, interest-bearing deposits and other short-term liquid
assets.  See "Business - Investment Activities."

     The executive office of the Association is located at 1304 North Walnut,
Cameron, Missouri. Its telephone number at that address is (816) 632-2154.

MARKET AREA

     The Association's primary market consists of the Northwestern part of
Missouri.  The Association primarily serves Clinton, Caldwell, DeKalb and
Daviess Counties, Missouri through its main office located in Cameron, Missouri.
The Association serves Nodaway County through its branch office in Maryville,
Missouri and Holt County through its branch office in Mound City, 

                                       2
<PAGE>
 
Missouri, and Clay and Platte Counties through its branch office in Liberty,
Missouri. Nearly all of the Association's construction lending is originated by
the Liberty branch office and is secured by properties located in the northern
suburbs of Kansas City.

     Cameron, Missouri is located approximately 50 miles northeast of Kansas
City, Missouri at the intersection of Interstate 35 and U.S. Highway 36.
According to the 1990 census, Clinton, Caldwell, DeKalb and Daviess Counties had
a combined population of approximately 45,000.  The primary industries in
Clinton and surrounding counties are services; governmental; finance, insurance
and real estate; and light manufacturing.  Major employers in the Association's
market area include the State of Missouri Department of Corrections, Cameron
Insurance Companies, Cameron Community Hospital and the Cameron R-1 school
district.  The Association also serves commuting customers to Kansas City.

LENDING ACTIVITIES

     General.  Historically, the Association originated primarily fixed-rate
long-term residential mortgage loans.  Since the early 1980s, however, the
Association has emphasized, subject to market conditions, the origination for
portfolio of adjustable rate mortgage ("ARM") loans and the origination and sale
of fixed-rate loans with terms to maturity of up to 30 years. Management's
strategy has been to attempt to increase the percentage of assets in its
portfolio with more frequent repricing terms or shorter maturities.  As part of
its efforts, the Association has developed a variety of ARM loan products.  In
response to customer demand, however, the Association continues to originate
fixed-rate mortgage loans with terms of 30 years, some of which it sells into
the secondary market.

     The Association's primary focus in lending activities is on the origination
of loans secured by first mortgages on owner-occupied, one- to four-family
residences and loans for the construction of one- to four-family residences.  In
addition, in order to serve the financial needs of the families and the
communities in the Association's primary market area, Cameron Savings also
originates, to a lesser extent, land, commercial real estate, multi-family and
consumer loans.  See "- Originations, Purchases and Sales of Loans."  At
September 30, 1998, the Association's net loan portfolio totaled $184.6 million.

     The Association maintains an established loan approval process.  Loans
under $150,000 secured by real estate are reviewed and approved by any two
members of the loan committee.  Real estate loans between $150,000 and $214,600
that meet specified criteria may be approved by any two members of the loan
committee.  The entire Board of Directors approves all other real estate loans.
Home equity and improvement loans are approved by the loan committee and the
consumer lending department.  Other consumer loans may be approved by any one
person in the consumer lending department except for signature loans over $5,000
which require the approval of two persons on the loan committee.


     The aggregate amount of loans that the Association is permitted to make
under applicable federal regulations to any one borrower, including related
entities, or the aggregate amount that the Association can have invested in any
one real estate project is generally the greater of 15% of 

                                       3
<PAGE>
 
unimpaired capital and surplus or $500,000. See "Regulation - Federal Regulation
of Savings Associations." At September 30, 1998, the maximum amount which the
Association could have lent to any one borrower and the borrower's related
entities was approximately $5.5 million. At September 30, 1998, the Association
had no loans with an aggregate outstanding balance in excess of this amount. The
Association has 21 borrowers or related borrowers with total loans outstanding
in excess of $1.0 million. The largest amount outstanding to any one borrower
and the borrower's related entities was approximately $3.9 million to a
realtor/property manager for rental properties, and was secured by real estate
primarily in Clay and Platte Counties, Missouri and the personal guarantee of
the borrower. At September 30, 1998, these loans were performing in accordance
with their terms. See "Regulation - Federal Regulation of Savings Associations."

                                       4
<PAGE>
 
     Loan Portfolio Composition.  The following table sets forth the composition
of the Association's loan portfolio in dollar amounts and in percentages (before
deductions for loans in process, deferred fees and discounts and allowances for
losses) at the dates indicated.  Substantially all of the loans in process
reflected in the table represent undisbursed residential construction funding.

<TABLE>
<CAPTION>
                                                     At September 30,
                                ----------------------------------------------------------
                                       1998                1997               1996
                                ----------------------------------------------------------
                                 Amount   Percent    Amount   Percent    Amount   Percent
                                --------  --------  --------  --------  --------  --------
                                                  (Dollars in Thousands)
<S>                             <C>       <C>       <C>       <C>       <C>       <C>      
Real Estate Loans:
------------------
 One- to four-family/(1)/       $134,416    65.08%  $123,856    61.96%  $109,292    62.06%
 Multi-family                      2,943     1.42      4,226     2.11      2,908     1.65
 Commercial                        3,243     1.57      3,403     1.70      4,322     2.45
 Land                             11,059     5.35      8,257     4.13      9,605     5.46
 Construction/(2)/                45,654    22.11     51,447    25.74     41,646    23.65
                                --------   ------   --------   ------   --------   ------
     Total real estate loans     197,315    95.53    191,189    95.64    167,773    95.27
                                --------            --------            --------          
 
Other Loans:
------------
 Consumer Loans:
  Deposit account                    621     0.30        398     0.20        533     0.30
  Automobile                       3,094     1.50      3,302     1.65      3,359     1.91
  Home equity                      2,937     1.42      1,904     0.95      2,718     1.54
  Home improvement                 1,181     0.57      1,014     0.51        873     0.50
  Other                            1,408     0.68      2,091     1.05        847     0.48
                                --------   ------   --------   ------   --------   ------
     Total consumer loans          9,241     4.47      8,709     4.36      8,330     4.73
                                --------   ------   --------   ------   --------   ------
     Total loans                 206,556   100.00%   199,898   100.00%   176,103   100.00%
                                           ======              ======              ======
 
Less:
-----
 Loans in process                 19,730              20,679              19,502
 Deferred loan fees, net             700                 805                 804
 Allowance for loan losses         1,521               1,624               1,353
                                --------            --------            --------
 Loans receivable, net          $184,605            $176,790            $154,444
                                ========            ========            ========
</TABLE>
___________________
/(1)/ Includes $526,000 and $466,000 of loans held for sale at September 30,
      1998 and 1997, respectively.
/(2)/ Includes $9.9 million, $6.6 million and $8.3 million of construction-
      permanent loans on one-to four-family properties at September 30, 1998,
      1997 and 1996, respectively, $0.8 million, $0.3 million and $1.4 million
      of construction-permanent loans on multi-family properties at September
      30, 1998, 1997 and 1996, respectively, and $70,000 of construction-
      permanent loans on commercial property at September 30, 1996.

                                       5
<PAGE>
 
     The following table sets forth the composition of the Association's loan
portfolio by fixed- and adjustable-rate at the dates indicated.


<TABLE>
<CAPTION>
                                                         At September 30,
                                    ----------------------------------------------------------
                                           1998               1997                1996
                                    ----------------------------------------------------------
                                     Amount   Percent    Amount   Percent    Amount   Percent
                                    --------  --------  --------  --------  --------  --------
                                                      (Dollars in Thousands)
<S>                                 <C>       <C>       <C>       <C>       <C>       <C>      
Fixed-Rate Loans:
-----------------
 Real estate:
  One- to four-family/(1)/          $ 27,039    13.09%  $ 22,214    11.11%  $ 24,312    13.81%
  Multi-family                           152     0.07        942     0.47        986     0.56
  Commercial                             349     0.17        571     0.29        604     0.34
  Land                                 5,284     2.56      5,180     2.59      6,298     3.58
  Construction                        41,821    20.25     50,106    25.07     35,475    20.14
                                    --------   ------   --------   ------   --------   ------
     Total real estate loans          74,645    36.14     79,013    25.07     67,675    38.43
 Consumer                              5,224     2.53      5,768     2.88      6,033     3.43
                                    --------   ------   --------   ------   --------   ------
     Total fixed-rate loans           79,869    38.67     84,781    42.41     73,708    41.86
                                    --------            --------   ------   --------   ------
 
Adjustable-Rate Loans:
----------------------
 Real estate:
  One- to four-family                107,377    51.98    101,642    50.85     84,980    48.26
  Multi-family                         2,791     1.35      3,284     1.64      1,922     1.09
  Commercial                           2,894     1.40      2,832     1.42      3,718     2.11
  Land                                 5,775     2.80      3,077     1.54      3,307     1.88
  Construction                         3,833     1.86      1,341     0.67      6,171     3.50
                                    --------   ------   --------   ------   --------   ------
     Total real estate loans         122,670    59.39    112,176    56.12    100,098    56.84
Consumer                               4,017     1.94      2,941     1.47      2,297     1.30
                                    --------   ------   --------   ------   --------   ------
     Total adjustable-rate loans     126,687    61.33    115,117    57.59    102,395    58.14
                                    --------   ------   --------   ------   --------   ------
     Total loans                     206,556   100.00%   199,898   100.00%   176,103   100.00%
                                               ======              ======              ======
 
Less:
-----
 Loans in process                     19,730              20,679              19,502
 Deferred loan fees, net                 700                 805                 804
 Allowance for loan losses             1,521               1,624               1,353
                                    --------            --------            --------
    Loans receivable, net           $184,605            $176,790            $154,444
                                    ========            ========            ========
</TABLE>
__________________
/(1)/ Includes ARM loans aggregating $2.8 million, $6.9 million and $7.9 million
      at September 30, 1998, 1997 and 1996, respectively, which have their next
      interest rate adjustment date five years or more from the dates indicated.

                                       6
<PAGE>
 
      The following table sets forth the contractual maturity and weighted
average rates of the Association's loan portfolio at September 30, 1998.  Loans
which have adjustable or renegotiable interest rates are shown as maturing in
the year during which the contract is due.  The schedule does not reflect the
effects of scheduled payments, possible prepayments or enforcement of due-on-
sale clauses.

<TABLE>
<CAPTION>
                                                                Real Estate                                      
                             ----------------------------------------------------------------------------------  
                                                   Multi-family and                                              
                              One- to Four-Family      Commercial             Land             Construction      
                              ------------------  ---------------------  ------------------  ------------------  
                                       Weighted             Weighted              Weighted            Weighted   
                                        Average              Average               Average             Average   
                              Amount     Rate     Amount      Rate       Amount     Rate     Amount     Rate     
                              -------  ---------  -------  ------------  -------  ---------  -------  ---------  
                                                         (Dollars in Thousands)       
<S>                          <C>       <C>        <C>     <C>            <C>      <C>        <C>      <C>        
Due During                                                                                                       
Years Ending                                                                                                     
September 30,                                                                                                    
-------------                                                                                      
1999/(1)/                    $    618      8.52%  $   43          9.12%  $   158      8.32%  $30,799      9.20%  
2000                              170      8.67       31          8.34        81      8.21     4,018      9.11   
2001                              548      8.39       19          9.64       924      9.20       138      9.49   
2002 and 2003                   2,356      8.26      167          9.27     3,132      9.63        --        --   
2004 to 2008                   12,609      8.20    1,240          8.66     2,079      9.62        --        --   
2009 to 2023                   83,429      8.04    4,686          8.73     4,654      8.80     4,545      7.92   
2024 and following             34,686      7.69       --            --        31      8.07     6,154      7.68   
                             --------      ----   ------          ----   -------      ----   -------      ----   
Total                        $134,416      7.97%  $6,186          8.73%  $11,059      9.21%  $45,654      8.86%  
                             ========             ======                 =======             =======             
</TABLE>
<TABLE> 
<CAPTION> 
                                     
                                     
                                    Consumer             Total
                              --------------------  ------------------
                                       Weighted               Weighted
                                        Average                Average
                              Amount     Rate        Amount     Rate
                              ------ -------------   ------   ---------
<S>                           <C>    <C>            <C>       <C>       
                                            (Dollars in Thousands)
Due During                           
Years Ending                         
September 30,                        
-------------
1999/(1)/                     $1,209         9.37%  $ 32,827      9.19%
2000                             575        11.16      4,875      9.32
2001                           1,890         9.92      3,519      9.47
2002 and 2003                  2,106        10.59      7,761      9.47
2004 to 2008                   3,386        10.00     19,314      8.70
2009 to 2023                      75         9.60     97,389      8.11
2024 and following                --           --     40,871      7.69
                              ------        -----   --------      ----
Total                         $9,241        10.10%  $206,556      8.35%
                              ======                ========
</TABLE> 

     The total amount of loans due after September 30, 1999 which have fixed
interest rates is $47.0 million, while the total amount of loans due after such
date which have adjustable interest rates is $126.7 million.

                                       7
<PAGE>
 
     All of the Association's lending is subject to its written underwriting
standards and loan origination procedures.  Decisions on loan applications are
made on the basis of detailed applications and property valuations, if
applicable.

     The Association requires evidence of marketable title and lien position
and/or appropriate title insurance or title opinions and surveys of such
properties.  The Association also requires fire and extended coverage casualty
insurance in amounts at least equal to the lesser of the principal amount of the
loan or the value of improvements on the property, depending on the type of
loan.  As required by federal regulations, the Association also requires flood
insurance to protect the property securing its interest if such property is
located in a designated flood area.

ONE- TO FOUR-FAMILY RESIDENTIAL REAL ESTATE LENDING

     A primary focus of the Association's lending program has long been the
origination of long-term permanent loans secured by mortgages on owner-occupied,
one- to four-family residences. At September 30, 1998, $134.4 million, or 65.1%,
of the Association's loan portfolio consisted of permanent loans on one- to
four-family residences.  Substantially all of the residential loans originated
by Cameron Savings are secured by properties located in the Association's market
area.

     Historically, Cameron Savings originated for retention in its portfolio,
fixed-rate loans secured by one- to four-family residential real estate.  In the
early 1980s, in order to reduce its exposure to changes in interest rates,
Cameron Savings began to emphasize the origination of ARM loans, subject to
market conditions and consumer preference.  The Association originates ARM loans
for its portfolio.  However, as a result of continued consumer demand for long-
term fixed-rate loans, particularly during recent periods of relatively low
interest rates, Cameron Savings has continued to originate fixed-rate loans with
terms to maturity of 15 to 30 years.  During recent years, the Association's
general policy has been to sell into the secondary market, with servicing
released, most fixed-rate loans with terms to maturity of 30 years.  Fixed-rate
loans with terms to maturity of less than 30 years may either be retained in
portfolio or sold in the secondary market depending on the interest rate charged
and the Association's asset/liability management objectives.

     In the loan approval process, Cameron Savings assesses the borrower's
ability to repay the loan, the adequacy of the proposed security, the employment
stability of the borrower and the creditworthiness of the borrower.  Initially,
Cameron Savings' loan underwriters analyze the loan application and the property
involved.  As part of the loan application process, qualified independent and,
to a lesser extent, staff appraisers inspect and appraise the security property.
All appraisals are subsequently reviewed by the loan committee as applicable.

     The Association's loans are underwritten and documented pursuant to the
guidelines of Freddie Mac.  Most of the Association's fixed-rate residential
loans have contractual terms to maturity of ten to 30 years.  The Association's
decision to hold or sell these loans is based on its asset/liability management
policies and goals and the market conditions for mortgages at any period in
time.  Currently, the Association originates and sells substantially all of its
fixed-rate 30-year loans which have the interest rates below a pre-determined
level into the secondary markets, servicing released.  See "Business -
Originations, Purchases and Sales of Loans."  The interest rates on loans sold
are determined pursuant to commitments to purchase from secondary market
sources.

                                       8
<PAGE>
 
     The Association offers ARM loans at rates and on terms determined in
accordance with market and competitive factors.  Substantially all of the ARM
loans originated by the Association meet the underwriting standards regarding
creditworthiness of the secondary market for residential loans, but may not have
other terms that are generally acceptable to the secondary market (i.e.,
periodic interest rate cap or type of property).  The Association's one- to
four-family residential ARM loans generally are fully amortizing loans with
contractual maturities of up to 30 years.

     Cameron Savings presently offers several ARM products which adjust annually
after an initial period ranging from one to seven years subject to a limitation
on the annual increase of 0.5%, 1.0% or 2.0% and an overall life of loan
limitation of 5.0% or 6.0%.  These ARM products utilize the weekly average yield
on one-year U.S. Treasury securities adjusted to a constant maturity of one year
plus a margin of 2.75% or 3.0%.  Borrowers are generally qualified using the
fully indexed rate. ARM products held in the Association's portfolio do not
permit negative amortization of principal and carry no prepayment restrictions.
At September 30, 1998, the Association had $107.4 million of one- to four-family
ARM loans, or 52.0% of total loans.

     It is Cameron Savings' present policy generally to lend up to 97% of the
lesser of the appraised value or purchase price of the property.  Cameron
Savings generally requires private mortgage insurance on residential loans with
a loan-to-value ratio at origination exceeding 80% in order to reduce its
exposure to 80% or less.  The Association occasionally deviates from this policy
for first-time home buyers in which the Association will provide lending
opportunities to individuals who have not been employed long enough to qualify
for private mortgage insurance but who have qualifying incomes and low debt to
income ratios.

     Adjustable-rate loans decrease the risk associated with changes in interest
rates but involve other risks, primarily because as interest rates rise, the
payment by the borrowers may rise to the extent permitted by the terms of the
loan, thereby increasing the potential for default.  Also, adjustable-rate loans
have features which restrict changes in interest rates on a short-term basis and
over the life of the loan.  In particular, the ARM loans originated by the
Association which have annual adjustments of 0.5% would take longer to adjust to
market rates than would many competing loans.  At the same time, the market
value of the underlying property may be adversely affected by higher interest
rates.

     The Association's residential mortgage loans customarily include due-on-
sale clauses giving the Association the right to declare the loan immediately
due and payable in the event that, among other things, the borrower sells or
otherwise disposes of the property subject to the mortgage and the loan is not
repaid.  The Association may enforce due-on-sale clauses in its mortgage
contracts for the purpose of increasing its loan portfolio yield.

                                       9
<PAGE>
 
CONSTRUCTION AND LAND LENDING

     Historically, the Association has invested a significant proportion of its
loan portfolio in construction and land loans.  Prompted by increased
residential development (predominately subdivisions) in the northern suburbs of
Kansas City, on July 1, 1987, the Association opened a loan production office in
Liberty, Missouri, a suburb community located northeast of Kansas City. Cameron
Financial has recently completed the construction of a building in Liberty which
has been leased to the Association and operated as a full service branch. The
Liberty loan production office has been closed. Vice President Stephen E.
Hayward is the Liberty Branch Manager.  Substantially all of the Association's
construction and land loans are secured by residential properties located in the
northern suburbs of Kansas City and are originated, monitored, and serviced by
the Liberty office.  Earl T. Frazier, who joined the Association in 1981,
manages the Liberty loan department in close consultation with the senior
management and Board of Directors.  Prior to joining the Association, Mr.
Frazier was a real estate agent and, prior thereto, a residential home builder.
See "Executive Officers of the Company and the Association who are not
Directors."

     The Association originates five basic types of construction and land loans:

     1. "Speculative" construction loans are made to home builders for the
        construction principally of one- to four-family residences and
        residential development projects and, to a lesser extent, commercial
        buildings and multi-family residences. Speculative construction loans
        generally do not have a sale contract or permanent loan in place for the
        finished home, and the purchasers for the finished homes may be
        identified either during or following the construction period.

     2. "Contract" construction loans are made to builders who have a signed
        contract to build a new home.

     3. "Construction--permanent" loans are made to individuals who have
        contracted with a builder to construct their personal residence.

     4. "Conventional" land loans are made to individuals typically to finance
        agricultural land, building lots, and unimproved land.

     5. "Land acquisition and development" loans ("land A&D loans") are made to
        real estate developers and individuals for the acquisition of land upon
        which the purchaser can then build and for the acquisition of unimproved
        land upon which the purchaser makes improvements necessary to build upon
        or to sell as improved lots.

                                       10
<PAGE>
 
     The table below presents information on the Association's construction and
land loans at September 30, 1998:


<TABLE>
<CAPTION>
                                        Outstanding     Percent of
                                     Loan Balance/(1)/     Total
                                     -----------------  -----------
 
                                         (Dollars in Thousands)
<S>                                  <C>                <C>
Speculative.........................     $30,304             53.44%
Contract............................       4,652              8.20
Construction/permanent..............      10,698             18.86
                                         -------            ------
   Total construction...............      45,654             80.50
                                         -------            ------
Conventional land...................       7,805             13.76
Land A&D............................       3,254              5.74
                                         -------            ------
   Total land.......................      11,059             19.50
                                         -------            ------
      Total construction and land...     $56,713            100.00%
                                         =======            ======
</TABLE>
_______________
/(1)/  Includes loans in process.

     At September 30, 1998, the Association's $45.7 million of construction
loans and $11.1 million of land loans represented 22.1% and 5.4%, respectively,
of total loans receivable.  At the same time, the Association's $30.3 million of
speculative construction loans and $3.3 million of land A&D loans represented
14.7% and 1.6%, respectively, of total loans receivable.  At September 30, 1997,
the Association's speculative construction loans of $40.2 million represented
20.1% of total loans receivable.  The reduction of $9.9 million, or 24.6%, in
speculative construction loans during the 1998 fiscal year reduced the risk
profile of the Association's loan portfolio.  This reduction of risk in the
overall loan portfolio allowed the Association to credit earnings with a $76,000
reduction in the provision for loan losses during the 1998 fiscal year.

     Construction and land A&D lending affords the Association the opportunity
to achieve higher interest rates and fees with shorter terms to maturity than
does its single-family permanent mortgage lending.  Construction and land A&D
lending, however, is generally considered to involve a higher degree of risk
than single-family permanent mortgage lending due to (i) the concentration of
principal among relatively few borrowers and development projects, (ii) the
increased difficulty at the time the loan is made of estimating building costs
and the selling price of the residence to be built, (iii) the increased
difficulty and costs of monitoring the loan, (iv) the higher degree of
sensitivity to increases in market rates of interest, and (v) the increased
difficulty of working out problem loans.  Speculative construction loans have
the added risk associated with identifying an end-purchaser for the finished
home.  The Association has sought to address these risks by developing and
adhering to underwriting policies, disbursement procedures, and monitoring
practices.

     The Association seeks to make construction loans to those builders with
which it has a long-standing history of satisfactory performance.  New builders
typically borrow from the Association in limited amounts and may borrow
additional amounts based on proven experience with the 

                                       11
<PAGE>
 
Association. At September 30, 1998, the Association had 11 borrowers for which
speculative construction and land A&D loans outstanding totaled more than $1
million. Each of the foregoing builders with speculative construction and land
A&D loans totaling more than $1.0 million have been customers of the Association
for more than three years.

     While substantially all of the Association's construction and land A&D
loans are secured by properties located in the northern suburbs of Kansas City,
the Association also seeks to diversify its construction and land A&D lending
risks among several development projects.  At September 30, 1998, the
Association had speculative construction and land A&D loans secured by
properties in 54 developments of which 8 represented an exposure to a single
development of more than $1.0 million.

     One- to Four-Family Construction Loans.  Loans for the construction of one-
to four-family residences are generally made for terms of six to 12 months.  The
Association's loan policy includes maximum loan-to-value ratios of up to 85%
that vary by amount and type (i.e., speculative versus contract) of construction
loan.  The Board of Directors may increase or decrease the maximum loan-to-value
ratio depending on borrower strength, economic conditions and other factors.
Prior to preliminary approval of a construction loan application, Association
personnel inspect the site, review the existing or proposed improvements,
identify the market for the proposed project, analyze the pro forma data and
assumptions on the project, and satisfy themselves with the experience and
expertise of the builder.  After preliminary approval has been given, the
application is processed. Processing includes obtaining credit reports,
financial statements and tax returns on the borrowers and guarantors, an
independent appraisal of the project, and any other expert reports necessary to
evaluate the proposed project.  The Association requires builders to designate
Cameron Savings as the beneficiary of a life insurance policy equal to the
lesser of $50,000 or 50% of the loan balance, though the Board of Directors may
require additional amounts or make other similar arrangements. Although
individual loan officers can make conditional loan commitments, all construction
loans must be approved by the Loan Committee or Board of Directors.

     With few exceptions, the Association requires that construction loan
proceeds be disbursed in increments as construction progresses.  To control the
disbursement process, the Association requires that builders and their
subcontractors and vendors submit invoices to the Association for payment.  In
disbursing construction loan funds, the Association uses proprietary software,
for which the Association charges a per-loan fee, that tracks actual
disbursements compared to estimated costs by category of expense and provides
certain tax reports for the borrower.  The Association uses this information,
along with periodic on-site inspections by Association personnel, to monitor the
progress of the project.  In the event of cost overruns, depending on the
circumstances (i.e., whether due to "add-ons" not included in the original plans
or due to unanticipated changes in building costs) the Association may seek to
require the borrower to deposit funds with the Association for additional
disbursements, increase the loan amount on the basis of an increased appraisal
and disburse additional loan proceeds consistent with the original loan-to-value
ratio, or become more active in the monitoring and progress of the project.

     The Association regularly monitors the accuracy of assumptions made in its
construction loan business over time.  In particular, the Association tracks the
accuracy of its independent appraisers by comparing actual selling prices with
the appraised value estimated in connection with the loan approval.
Additionally, the Association tracks the performance of its builder customers by

                                       12
<PAGE>
 
comparing actual costs with those estimated in the loan application.  The
Association believes that this experience mitigates some of the risks inherent
in its construction lending.

     Commercial and Multi-family Construction Loans.  Occasionally, the
Association originates loans for the construction of commercial buildings and
multi-family residences on terms similar to those on one- to four-family
construction loans.  At September 30, 1998, the Association had one such loan
outstanding totalling $0.8 million.

     Land and Development Loans.  At September 30, 1998, the Association had
total land loans of $11.1 million.  In making land loans, the Association
follows similar underwriting policies as for construction loans and, to the
extent applicable (i.e., if the loan is to develop land for future building
rather than simply to acquire raw land), similar disbursement procedures.  The
Association originates land loans with similar terms and at similar rates as
construction loans, except that the initial term on conventional land loans is
typically five to ten years (not to exceed 20 years) as opposed to the term of
up to 12 months that is typical of construction loans.  Land A&D loans are
interest-only loans, payable semi-annually, with provisions for principal
reductions as lots are sold.

MULTI-FAMILY AND COMMERCIAL REAL ESTATE LENDING

     Cameron Savings also originates loans secured by multi-family and
commercial real estate. At September 30, 1998, $2.9 million, or 1.4%, of the
Association's loan portfolio consisted of multi-family loans and $3.2 million,
or 1.5%, of the Association's loan portfolio consisted of commercial real estate
loans.

     Multi-family and commercial real estate loans originated by the Association
may be either fixed- or adjustable-rate loans with terms to maturity and
amortization schedules of up to 20 years. Rates on such ARM loans generally
adjust annually to specified spreads over the one-year U.S. Treasury securities
index adjusted to a constant maturity of one year, subject to annual and life-
of-loan interest rate caps.  Multi-family and commercial real estate loans are
written in amounts of up to 80% of the lesser of the appraised value of the
property or the sales price.

     The Association's commercial real estate portfolio consists of loans on a
variety of non-residential properties including small shopping centers, nursing
homes, small office buildings and churches. Multi-family loans generally are
secured by seven- to 36-unit apartment buildings. Appraisals on properties which
secure multi-family and commercial real estate loans are performed by an
independent appraiser designated by the Association before the loan is made.
All appraisals on multi-family and commercial real estate loans are reviewed by
the Association's management. In underwriting such loans, the Association
primarily considers the cash flows generated by the real estate to support the
debt service, the financial resources and income level of the borrower and the
Association's experience with the borrower.  In addition, the Association's
underwriting procedures require verification of the borrower's credit history,
an analysis of the borrower's income, financial statements and banking
relationships, a review of the borrower's property management experience and
references, and a review of the property, including cash flow projections and
historical operating results.  The Association seeks to ensure that the property
securing the loans will generate sufficient cash flow to adequately cover
operating expenses and debt service payments.  The Association generally
requires a debt service coverage ratio of 120% or more.

                                       13
<PAGE>
 
     At September 30, 1998, the Association's largest multi-family or commercial
real estate loan was $600,000, secured by a convenience store complex located in
Clinton County, Missouri.

     Multi-family and commercial real estate lending affords the Association an
opportunity to receive interest at rates higher than those generally available
from one- to four-family residential lending.  Nevertheless, loans secured by
such properties are generally larger, more difficult to evaluate and monitor
and, therefore generally, involve a greater degree of risk than one- to four-
family residential mortgage loans.  Because payments on loans secured by
commercial real estate and multi-family properties are often dependent on the
successful operation or management of the properties, repayment of such loans
may be subject to adverse conditions in the real estate market or the economy.
If the cash flow from the project is reduced, the borrower's ability to repay
the loan might be impaired.  The Association has attempted to minimize these
risks by lending primarily to the ultimate user of the property or on existing
income-producing properties.

CONSUMER LENDING

     The Association originates a variety of consumer loans, including home
equity loans, automobile loans, education loans, home improvement loans, loans
secured by deposit accounts, and other types of secured and unsecured loans.  At
September 30, 1998, the Association had $9.2 million, or 4.5% of its loans
receivable, in outstanding consumer loans.  The Association has recently focused
on the expansion of its consumer lending portfolio as a result of the variety of
products that can be offered, the higher yields that can be obtained and the
stronger consumer demand for such products.  In addition, management believes
that offering consumer loan products helps to expand the Association's customer
base and creates stronger ties to its existing customer base.  Consumer loan
balances typically range from $1,000 to $50,000 and are generally repaid over
periods ranging from one to ten years.  Unsecured consumer loans generally do
not exceed $10,000 and typically are repayable in monthly installment payments
within five years.  The Association's consumer loans are primarily secured by
second mortgages on residential real estate, automobiles, recreational vehicles
or boats.  The Association's focus in consumer lending has been the origination
of home equity and improvement loans and auto loans. At September 30, 1998 the
Association had $4.1 million or 44.6% of its consumer loan portfolio in home
equity and home improvement loans and $3.1 million in auto loans, or 33.5% of
the consumer loan portfolio.  Approximately 4.2% of the consumer loans were
unsecured at September 30, 1998.

     Consumer loans generally have shorter terms and higher interest rates than
first lien mortgage loans because they generally involve more credit risk than
mortgage loans as a result of the type and nature of the collateral and, in
certain cases, the absence of collateral.  Consumer loans generally are
dependent on the borrower's continuing financial stability and thus are more
likely to be affected by adverse personal circumstances.  Despite the risks
inherent in consumer lending, the Association's consumer loans delinquent
greater than 90 days as a percentage of total consumer loans was 0.11% at
September 30, 1998.

     The underwriting standards generally employed by the Association for
consumer loans include a determination of the applicant's payment history on
other debts and an assessment of the borrower's ability to meet the payments on
the proposed loan as well as existing obligations.  In addition to the
creditworthiness of the applicant, the underwriting process also includes a
comparison 

                                       14
<PAGE>
 
of the value of the security in relation to the proposed loan amount. Upon
receipt of a completed consumer loan application from the prospective borrower,
a credit report is obtained, income and other information is verified and, if
necessary, additional financial information is requested.

     The Association's underwriting procedures for home equity loans include a
comprehensive review of the loan application, which require a clean credit
rating and verification of stated income and other financial information.  The
combined loan-to-value ratio, including prior mortgage liens, also is a
determining factor in the underwriting process.  Generally, the combined loan-
to-value ratio, including prior mortgage liens, may not exceed 80% of the
underlying security property.

LOAN FEES

     In addition to earning interest on loans, the Association also receives
income from loan origination fees and fees related to late payments, loan
modifications, and miscellaneous activities related to loans.  Income from these
activities varies from period to period with the volume and type of loans
originated.

     The Association generally receives loan origination and/or commitment fees
when originating loans.  Fees are generally up to 1-1/2% of the principal amount
of residential mortgage loans.  In accordance with SFAS No. 91, the Association
defers loan origination and commitment fees and certain direct loan origination
costs, with the net amount amortized as an adjustment of the loan's yield.  The
Association amortizes these amounts, using the level-yield method, over the
contractual life of these loans.  Net deferred amounts are recorded in income
when the underlying loans are sold or paid in full.  See Note 2 of Notes to
Consolidated Financial Statements.

ORIGINATIONS, PURCHASES AND SALES OF LOANS

     The Association originates real estate loans through marketing efforts, the
Association's customer base and walk-in customers.  Mortgage loan originations
come from direct solicitation by the Association's loan officers and branch
managers, and from real estate brokers, builders, depositors and walk-in
customers.  Loan applications are taken and processed by loan representatives,
while underwriting and document preparation functions are performed at the
Cameron Savings home office and Liberty loan production office.  When all
necessary documents are obtained, the loan, depending on its size and type, may
be approved by any three members of the loan committee or the Board of
Directors.

     While the Association originates both adjustable-rate and fixed-rate loans,
its ability to originate loans is dependent upon the relative customer demand
for loans in its market.  In fiscal 1998, the Association originated $110.6
million of loans, compared to $100.6 million and $99.6 million in fiscal 1997
and 1996, respectively.  During recent years, the Association's construction
loan originations have been strong, totaling $55.4 million, $63.5 million, and
$57.0 million, or 50.1%, 63.1%, and 57.2%, of total loan originations in fiscal
1998, 1997 and 1996, respectively.

     Cameron Savings generally sells its 30-year fixed-rate one- to four-family
residential mortgage loans, without recourse, to secondary market purchasers.
Sales of whole loans generally are beneficial to the Association since these
sales may generate income at the time of sale, provide 

                                       15
<PAGE>
 
funds for additional lending and other investments and increase liquidity. When
loans are sold, the Association typically does not retain the responsibility for
servicing the loans. At origination, all of the Association's mortgage loans are
immediately classified as either held for investment or held for sale. During
fiscal 1998, conventional mortgage loans originated and sold into the secondary
market totaled $7.9 million.

     While the Association has purchased whole loans or loan participations from
time to time, such purchases have been infrequent.  In 1998, the Association
purchased two loans totaling $66,000 from individuals.  Any such purchases are
made consistent with the Association's underwriting standards.  Most of the
Association's purchased loans are secured by property located in Missouri.

     In addition, the Association may purchase mortgage-backed securities to
complement its mortgage lending activities.  However, during fiscal 1998, 1997
and 1996 the Association did not purchase any mortgage-backed securities.

     Loan commitments are issued as soon as possible upon completion of the
underwriting process, and mortgage loans are closed as soon as all title
clearance and other required procedures have been completed.  At September 30,
1998, there were outstanding first mortgage loan commitments totaling $7.2
million.  At that date, the Association also had $45.7 million of construction
loans of which approximately $19.7 million had not yet been disbursed.

                                       16
<PAGE>
 
     The following table shows the loan origination, purchase, sale and
repayment activities of the Association for the periods indicated.


<TABLE>
<CAPTION>
                                                         Year Ended September 30,  
                                                       -----------------------------
                                                         1998      1997       1996 
                                                       --------  ---------  --------
                                                          (Dollars In Thousands)   
<S>                                                    <C>       <C>        <C>    
Originations by type:                                                              
---------------------                                                              
 Adjustable rate:                                                                  
  Real estate - one- to four-family.................   $ 24,148  $ 24,074   $21,063
    multi-family....................................         38       660     1,679
    commercial......................................      1,593        40     1,085
     land...........................................      2,421     1,088     2,079
     construction...................................     10,683     9,565     9,901
  Non-real estate - consumer                              2,690     1,612     1,278
                                                       --------  --------   -------
         Total adjustable-rate......................     41,573    37,039    37,085
                                                       --------  --------   -------
 Fixed rate:                                                                       
  Real estate - one- to four-family.................     17,583     4,226     4,262
                - commercial........................        121        48       100
                - land..............................      3,886     1,407     5,348
                - construction......................     44,681    53,980    47,089
  Non-real estate - consumer........................      2,654     3,905     5,735
                                                       --------  --------   -------
         Total fixed-rate...........................     68,925    63,566    62,534
                                                       --------  --------   -------
         Total loan originations....................    110,498   100,605    99,619
                                                       --------  --------   -------
                                                                                   
Purchases:                                                                         
----------                                                                         
  Real estate - one- to four-family.................         52        --       882
              - land................................         14        --        --
                                                       --------  --------   -------
         Total loan purchases.......................         66        --       882
  Mortgage-backed securities........................         --        --        --
                                                       --------  --------   -------
         Total purchases............................         66        --       882
                                                       --------  --------   -------
                                                                                   
Sales and Repayments:                                                              
---------------------                                                              
  Real estate - one- to four-family.................      7,916     2,731     1,531
                                                       --------  --------   -------
         Total loan sales...........................      7,916     2,731     1,531
  Principal repayments..............................     95,989    74,079    67,496
                                                       --------  --------   -------
         Total sales and repayments.................    103,905    76,810    69,027
Decrease (Increase) in other items:                                                
  Loans in process..................................        949    (1,177)   (6,249)
  Deferred fees and discounts.......................        105        (1)     (162)
  Allowance for loan losses.........................        102      (271)     (359)
                                                       --------  --------   -------
                                                                                   
         Net increase...............................   $  7,815  $ 22,346   $24,704
                                                       ========  ========   ======= 
</TABLE>


ASSET QUALITY

     Delinquency Procedures.  When a borrower fails to make a required payment
on a first mortgage loan, the Association attempts to cause the delinquency to
be cured by contacting the borrower by mail or telephone when the loan is 20
days delinquent.  A second late notice is sent after the loan is 30 days
delinquent in addition to verbal contact with the borrower.

                                       17
<PAGE>
 
     In the event the loan payment is past due for 90 days or more, the
Association performs an in-depth review of the loan's status, the condition of
the property and circumstances of the borrower. Based upon the results of the
review, the Association may negotiate and accept a repayment program with the
borrower or, when deemed necessary, initiate foreclosure proceedings.  If
foreclosed on, real property is sold at a public sale and the Association may
bid on the property to protect its interest. A decision as to whether and when
to initiate foreclosure proceedings is made by the loan service officer with the
approval of the President and is based on such factors as the amount of the
outstanding loan in relation to the original indebtedness, the extent of
delinquency and the borrower's ability and willingness to cooperate in curing
the delinquencies.

     The following table sets forth the Association's loan delinquencies by
type, by amount and by percentage of type at September 30, 1998.


<TABLE>
<CAPTION>
                                                Loans Delinquent For
                             ----------------------------------------------------------
                                 60-89 Days          90 Days and Over                Total Delinquent Loans 
                             ------------------------------------------------------------------------------------- 
                                              Percent                       Percent                       Percent
                                              of Loan                       of Loan                       of Loan
                             Number  Amount  Category   Number  Amount     Category      Number  Amount  Category
                             ------  ------  ---------  ------  ------  ---------------  ------  ------  ---------
<S>                          <C>     <C>     <C>        <C>     <C>     <C>              <C>     <C>     <C>        
 m                                                         (Dollars in Thousands)
Real Estate:
  One- to four-family            32  $1,370      1.02%      36  $ 1591            1.18%      68  $2,961      2.20%
  Commercial-multifamily         --      --        --        2      41            1.26        2      41      1.26
  Land                            1       9      .008       --      --              --        1       9      .008
  Construction                    3     347      0.76       11   1,494            3.27       14   1,841      4.03
Consumer                          2      45      0.49        4      10            0.11        6      55      0.60
                                 --  ------      ----       --  ------            ----       --  ------      ----
 
     Total                       38  $1,771      0.86%      53  $3,136            1.52%      91  $4,907      2.38%
                                 ==  ======      ====       ==  ======            ====       ==  ======      ====
</TABLE>


     Non-Performing Assets.  Real estate acquired in settlement of loans is
classified as real estate owned until it is sold.  When property is acquired, it
is initially recorded at the lower of estimated fair value, less estimated costs
to sell, or cost.  If, subsequent to foreclosure, the fair value of the real
estate acquired through foreclosure is determined to have declined based upon
periodic evaluations by management, valuation allowances are established through
a charge to income.  Costs relating to the development or improvement of real
estate owned are capitalized to the extent of fair market value.

     The following table sets forth the amounts and categories of the
Association's non-performing assets.  Loans are placed on non-accrual status
when the collection of principal and/or interest is not probable; however, in no
event is interest accrued on loans for which interest is more than 90 days
delinquent.  Foreclosed assets include assets acquired in settlement of loans.

                                       18
<PAGE>
 
<TABLE>
<CAPTION>
                                                                                     September 30,        
                                                                              --------------------------- 
                                                                                1998      1997     1996   
                                                                              --------  --------  ------- 
<S>                                                                           <C>       <C>       <C>     
                                                                                (Dollars in Thousands)    
                                                                                                          
Non-accruing loans:                                                                                       
  One- to four-family.................................................        $   721   $   262   $  638
  Multi-family........................................................             --        --       --
  Commercial..........................................................             34        --       --
  Land................................................................             --        --       --
  Construction........................................................          1,044       110      131
  Consumer............................................................             --        --       --
                                                                              -------   -------   ------
     Total non-accruing loans.........................................          1,799       372      769
                                                                              -------   -------   ------

Accruing loans delinquent 90 days or more:/(2)/
  One- to four-family..................................................           870       708      653
  Multi-family.........................................................             7        --       --
  Commercial...........................................................            --        --       --
  Land.................................................................            --        --       --
  Construction.........................................................           450        --       --
  Consumer.............................................................            10        88       56
                                                                              -------   -------   ------
    Total accruing loans delinquent more than 90 days..................         1,337       796      709
                                                                              -------   -------   ------ 

    Total non-performing loans.........................................         3,136     1,168    1,478
                                                                              -------   -------   ------

Foreclosed assets:
  One- to four-family..................................................            --        --       70
  Multi-family.........................................................            --        --       --
  Commercial...........................................................            --        --       --
  Land.................................................................            --        --       --
  Construction.........................................................            --        --       --
  Consumer.............................................................            19        12       --
                                                                              -------   -------   ------
     Total.............................................................            19        12       70
                                                                              -------   -------   ------

Total non-performing assets............................................       $ 3,155   $ 1,180   $1,548
                                                                              =======   =======   ======
Total classified assets/(1)/...........................................       $11,803   $10,754   $7,729
Total non-performing loans as a percentage
 of total loans receivable.............................................          1.52%     0.58%    0.84%
Total non-performing assets as a percentage
 of total assets.......................................................          1.42%     0.56%    0.83%
Total classified assets/(1)/ as a percentage of total assets...........          5.32%     5.06%    4.15%
Interest income that would have been recorded on
 non-performing loans if current /(3)/.................................       $    62   $    21   $   40
Interest income on non-performing loans included in
 net income /(4)/......................................................       $    92   $    13   $   40
</TABLE>

_________________________
/(1)/ Includes assets designated special mention.
/(2)/ These loans are delinquent 90 days or more as to principal but not as to
      interest.  This can occur when the Association receives a partial payment
      from a borrower which is first applied to interest due.
/(3)/ This represents the additional interest income that would have been
      collected had the loans been current.
/(4)/ This represents the interest income actually collected on the loans.

     The Association's non-performing assets include four construction loans to
a builder in the aggregate amount of $516,000 that were non-performing as of
September 30, 1998.  The Association does not believe it will incur a
significant loss on these loans.

                                       19
<PAGE>
 
     Other Loans of Concern.  In addition to the non-performing loans and
foreclosed assets set forth in the preceding table, as of September 30, 1998,
there was also an aggregate of $8.6 million in net book value of loans
classified by the Association with respect to which known information about the
possible credit problems of the borrowers or the cash flows of the secured
properties have caused management to have some doubts as to the ability of the
borrowers to comply with present loan repayment terms and which may result in
the future inclusion of such items in the non-performing asset categories.  At
September 30, 1998, other loans of concern consisted primarily of speculative
construction and one- to four-family residential loans, and there was one other
loan of concern in excess of $250,000.  A loan of $542,000 made during fiscal
year 1997 secured by the borrower's primary residence and 10 rental properties
was 30 days past due at September 30, 1998. The loan to value ratio on the loan
was 60%. Management has considered the Association's non-performing and "of
concern" assets in establishing its allowance for loan losses.

     Classification of Assets.   Federal regulations require that each savings
institution classify its own assets on a regular basis.  In addition, in
connection with examinations of savings institutions, the Office of Thrift
Supervision ("OTS") and FDIC examiners have authority to identify problem assets
and, if appropriate, require them to be classified.  There are three
classifications for problem assets:  Substandard, Doubtful and Loss.
Substandard assets have one or more defined weaknesses and are characterized by
the distinct possibility that the savings institution will sustain some loss if
the deficiencies are not corrected.  Doubtful assets have the weaknesses of
Substandard assets, with the additional characteristics that the weaknesses make
collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable, and there is a high probability of loss.  An
asset classified Loss is considered uncollectible and of such little value that
continuance as an asset of the institution is not warranted.  Assets classified
as Substandard or Doubtful require the institution to establish prudent general
allowances for loan losses.  If an asset or portion thereof is classified as
Loss, the institution must either establish specific allowances for loan losses
in the amount of 100% of the portion of the asset classified Loss, or charge-off
such amount.  If an institution does not agree with an examiner's classification
of an asset, it may appeal this determination to the District Director of the
OTS.  Assets which do not currently expose the savings institution to sufficient
risk to warrant classification in one of the aforementioned categories but
possess weaknesses deserving management's close attention, are required to be
designated Special Mention.

     On the basis of management's review of its assets, at September 30, 1998,
on a net basis, the Association had classified $3.5 million as Substandard,
$5,000 as Doubtful, $0 as Loss and $8.3 million as Special Mention.

     Classified assets at September 30, 1998 were $11.8 million, compared to
$10.8 million at September 30, 1997 and $7.8 million at September 30, 1996.  The
majority of the increase in fiscal 1998 was in the "substandard" category.
During the 1998 fiscal year, delinquencies in both the speculative construction
and the one- to four-family portfolios increased.  At September 30, 1998, eleven
speculative construction loans had become 90 days delinquent compared to one at
September 30, 1997.  Since September 30, 1998, two of the eleven have been paid
off, three have signed sales contracts and three are current on interest
payments.  Some interest payments have been made on the remaining three loans.
The majority of the increase in fiscal 1997 was in the "special mention"
category.  In an attempt to insure that internal controls monitor all situations
of possible concern, the 

                                       20
<PAGE>
 
Association's classification policy was changed in fiscal 1997 to classify all
speculative construction loans not repaid within the original one year term as
special mention. These loans may not be paid off during the initial one year due
to delays in starting construction, weather delays during construction, the
inability of the new buyer to close the purchase within the original term, or
the property remaining unsold near the original maturity date. Prior to
maturity, the original loan is modified to reflect a new maturity date one year
later than the original maturity date. Such loans are not classified as
nonperforming since they are performing in accordance with current loan
requirements. Speculative construction loans classified as "special mention" at
September 30, 1998 were $5.8 million compared to $5.9 million at September 30,
1997 and $4.2 million at September 30, 1996.

     Allowance for Loan Losses.  The allowance for estimated loan losses is
established through a provision for losses based on management's evaluation of
the risk inherent in its loan portfolio and changes in the nature and volume of
its loan activity.  Such evaluation, which includes a review of all loans of
which full collectibility may not be reasonably assured, considers the estimated
net realizable value of the underlying collateral, economic conditions,
historical loan loss experience and other factors that warrant recognition in
providing for an adequate allowance for loan losses.

     Real estate properties acquired through foreclosure are recorded at the
lower of estimated fair value, less estimated costs to sell, or cost.  If fair
value at the date of foreclosure is lower than the balance of the related loan,
the difference will be charged-off to the allowance for loan losses at the time
of transfer.  Valuations are periodically updated by management and if the value
declines, a specific provision for losses on such property is established by a
charge to operations.

     While management believes that it uses the best information available to
determine the allowance for loan losses, unforeseen market conditions could
result in adjustments to the allowance for loan losses, and net earnings could
be significantly affected, if circumstances differ substantially from the
assumptions used in making the final determination.

     Future additions to the Association's allowance will be the result of
periodic loan, property and collateral reviews and thus cannot be predicted in
advance.  In addition, federal regulatory agencies, as an integral part of the
examination process, periodically review the Association's allowance for loan
losses.  Such agencies may require the Association to recognize additions to the
allowance level based upon their judgment of the information available to them
at the time of their examination.  At September 30, 1998, the Association had a
total allowance for loan losses of $1.5 million representing 48.5% of total non-
performing loans.

                                       21
<PAGE>
 
     The following table sets forth an analysis of the Association's allowance
for loan losses.

<TABLE>
<CAPTION>
                                                                   Year Ended September 30,   
                                                                  --------------------------- 
                                                                    1998      1997     1996   
                                                                  --------  --------  ------- 
                                                                    (Dollars in Thousands)    
<S>                                                               <C>       <C>       <C>     
                                                                                              
Balance at beginning of year...........................            $1,624   $ 1,353   $  994

Charge-offs:
  One- to four-family..................................               (20)       --       --
  Multi-family.........................................                --        --       --
  Commercial...........................................                --        --       --
  Land.................................................                --        --       --
  Construction.........................................                --        --       --
  Consumer.............................................                (7)      (14)      (9)
                                                                   ------   -------   ------
          Total charge-offs............................               (27)      (14)      (9)
                                                                   ------   -------   ------

Recoveries:
  One- to four-family..................................                --        --       --
  Multi-family.........................................                --        --       --
  Commercial...........................................                --        --       --
  Land.................................................                --        --       --
  Construction.........................................                --        --       --
  Consumer.............................................                --        --       --
                                                                   ------   -------   ------
     Total recoveries..................................                --        --       --

Net charge-offs........................................               (27)      (14)      (9)
Additions charged to operations........................               (76)      285      368
                                                                   ------   -------   ------
Balance at end of year.................................            $1,521   $ 1,624   $1,353
                                                                   ======   =======   ======

Ratio of net charge-offs during the year to                         0.015%    0.008%   0.006%
 average loans outstanding during the year............             ======   =======   ======


Ratio of allowance for loan losses to non-                          48.50%   139.04%   91.54%
 performing loans at end of year......................             ======   =======   ======

Ratio of allowance for loan losses to total loans                    0.74%     0.81%    0.77%
 receivable at end of year............................             ======   =======   ======
</TABLE>

                                       22
<PAGE>
 
     The distribution of the Association's allowance for loan losses at the
dates indicated is summarized in the following table.  The portion of the
allowance allocated to each loan category does not necessarily represent the
total available for losses within that category since the total allowance is
applicable to the entire loan portfolio.

<TABLE>
<CAPTION>
                                                              At September 30,
                       ----------------------------------------------------------------------------------------------
                                    1998                           1997                            1996
                       ----------------------------------------------------------------------------------------------
                                             Percent                         Percent                         Percent
                                            of Loans                        of Loans    Amount              of Loans
                                    Loan     in Each                Loan     in Each      of        Loan     in Each
                       Amount of  Amounts   Category   Amount of  Amounts   Category     Loan     Amounts   Category
                       Loan Loss     by     to Total   Loan Loss     by     to Total     Loss        by     to Total
                       Allowance  Category    Loans    Allowance  Category    Loans    Allowance  Category    Loans
                       ---------  --------  ---------  ---------  --------  ---------  ---------  --------  ---------
                                                          (Dollars In Thousands)  
<S>                    <C>        <C>       <C>        <C>        <C>       <C>        <C>        <C>       <C>       
 
One- to four-family       $  357  $134,416     65.08%     $  345  $123,856     61.96%     $  299  $109,292     62.06%
Multi-family                  15     2,943      1.42          21     4,226      2.11          22     2,908      1.65
Commercial                    31     3,243      1.57          26     3,403      1.70          33     4,322      2.45
Land                         261    11,059      5.35         209     8,257      4.13         235     9,605      5.46
Construction                 673    45,654     22.11         818    51,447     25.74         577    41,646     23.65
Consumer                     184     9,241      4.47         205     8,709      4.36         187     8,330      4.73
                          ------  --------    ------      ------  --------    ------      ------  --------    ------
     Total                $1,521  $206,556    100.00%     $1,624  $199,898    100.00%     $1,353  $176,103    100.00%
                          ======  ========    ======      ======  ========    ======      ======  ========    ======
</TABLE>


INVESTMENT ACTIVITIES

     General.  Cameron Savings must maintain minimum levels of investments that
qualify as liquid assets under OTS regulations.  Liquidity may increase or
decrease depending upon the availability of funds and comparative yields on
investments in relation to the return on loans. Historically, the Association
has maintained liquid assets at levels above the minimum requirements imposed by
the OTS regulations and at levels believed adequate to meet the requirements of
normal operations, including potential deposit outflows.  Cash flow projections
are regularly reviewed and updated to assure that adequate liquidity is
maintained.  At September 30, 1998, and 1997, the Association's regulatory
liquidity ratio (liquid assets as a percentage of net withdrawable savings
deposits and current borrowings) was 15.0%, and 8.97%, respectively.

     The Association has the authority to invest in various types of liquid
assets, including United States Treasury obligations, securities of various
federal and state agencies, certain certificates of deposit of insured banks and
savings institutions, certain bankers' acceptances, repurchase agreements and
federal funds.  Subject to various restrictions, the Association may also invest
its assets in commercial paper, investment grade corporate debt securities and
mutual funds whose assets conform to the investments that a savings institution
is otherwise authorized to make directly.

     Generally, the investment policy of the Association is to invest funds
among various categories of investments and maturities based upon the
Association's asset/liability management policies, investment quality and
marketability, liquidity needs and performance objectives.

     Investment Securities.  At September 30, 1998, the Company's certificates
of deposit in other financial institutions totaled $4.4 million, or 2.0%, of
total assets and investment securities 

                                       23
<PAGE>
 
totaled $16.3 million, or 7.3% of total assets. As of such date, the Company
also had a $2.0 million investment in Federal Home Loan Bank ("FHLB") stock,
satisfying its requirement for membership in the FHLB of Des Moines. It is the
Company's general policy to purchase securities which are U.S. Government
securities or federal or state agency obligations or other issues that are rated
investment grade or have credit enhancements, except for certain municipal bonds
purchased by the Association.

     The following table sets forth the composition of the Company's investment
portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                                 At September 30,                      
                                                            ---------------------------------------------------------- 
                                                                    1998               1997                1996        
                                                            ----------------------------------------------------------  
                                                              Book      % of      Book      % of      Book      % of   
                                                              Value     Total     Value     Total     Value     Total  
                                                            ---------  -------  ---------  -------  ---------  ------- 
                                                                             (Dollars in Thousands)                    
<S>                                                         <C>        <C>      <C>        <C>      <C>        <C>      
Investment securities:                                                                                                 
  U.S. Government securities...........................       $ 1,994    7.66%    $ 3,965   15.17%    $ 7,428   29.26%
  Federal agency obligations...........................        13,495   51.84       8,999   34.42       9,254   36.44
  Municipal bonds......................................           813    3.12         908    3.47       1,615    6.36
                                                              -------  ------     -------  ------     -------  ------
     Subtotal..........................................        16,302   62.62      13,872   53.06      18,297   72.06
FHLB stock.............................................         2,013    7.73       1,762    6.74       1,259    4.96
                                                              -------  ------     -------  ------     -------  ------
     Total investment securities                              $18,315   70.35     $15,634   59.80     $19,556   77.02
      and FHLB stock...................................       =======  ======     =======  ======     =======  ====== 
                                                                                                                      
Average remaining life of investment securities,
  excluding FHLB stock and equity securities...........     3.0 years           1.9 years           2.5 years

Other interest-earning assets:
  Cash equivalents.....................................       $ 3,319   12.75     $ 2,909   11.13%    $ 3,333   13.13%
  Certificates of deposit in other financial                    4,400   16.90       7,600   29.07       2,500    9.85
   institutions........................................       -------  ------     -------  ------     -------  ------

     Total investment portfolio........................       $26,304  100.00%    $26,143  100.00%    $25,389  100.00%
                                                              =======  ======     =======  ======     =======  ======   
</TABLE>

                                       24
<PAGE>
 
     The composition and maturities of the investment securities portfolio,
excluding FHLB stock and equity securities, are indicated in the following
table.

<TABLE>
<CAPTION>
                                                                         At September 30, 1998                               
                                            -------------------------------------------------------------------------------- 
                                             Less Than     1 to 5       5 to 10       Over                                    
                                              1 Year        Years        Years      10 Years    Total Investment Securities   
                                            -----------  -----------  -----------  -----------  ----------------------------  
                                            Book Value   Book Value   Book Value   Book Value     Book Value     Fair Value  
                                            -----------  -----------  -----------  -----------  --------------  ------------ 
                                                                         (Dollars in Thousands)                              
<S>                                         <C>          <C>          <C>          <C>          <C>             <C>          
U.S. Government securities................      $1,994           --       $    0           --         $ 1,994        $ 2,020
Federal agency obligations................       3,000        8,995        1,500           --          13,495         13,604
Municipal bonds...........................         101          452          260           --             813            843
                                                ------       ------       ------   ----------         -------        -------

Total investment securities...............      $5,095       $9,447       $1,760           --         $16,302        $16,467
                                                ======       ======       ======   ==========         =======        =======

Weighted average yield....................        6.02%        6.07%        5.91%          --%           6.03%
</TABLE>


     Mortgage-Backed Securities.  From time to time, the Association purchases
mortgage-backed securities to supplement residential loan production.  The type
of securities purchased is based upon the Association's asset/liability
management strategy and balance sheet objectives.  The balance of all mortgage-
backed securities at September 30, 1998 was $7,000.  The Company has not and
does not intend to invest in high-risk mortgage derivative securities.  The
Company may determine to increase its investment in mortgage-backed securities
in order to supplement loan origination activity.

     While mortgage-backed securities carry a reduced credit risk as compared to
whole loans, such securities remain subject to the risk that a fluctuating
interest rate environment, along with other factors such as the geographic
distribution of the underlying mortgage loans, may alter the prepayment rate of
such mortgage loans and so affect both the prepayment speed, and value, of such
securities.

     Effective February 10, 1992, the OTS adopted the Federal Financial
Institutions Examination Council "Statement of Policy on Securities Activities"
through its Thrift Bulletin 52 (the "Bulletin"). The Bulletin requires
depository institutions to establish prudent policies and strategies for
securities transactions, describes securities trading and sales practices that
are unsuitable when conducted in an investment portfolio and sets forth certain
factors that must be considered when evaluating whether the reporting of an
institution's investments is consistent with its intent and ability to holder
such investments.  The Bulletin also establishes a framework for identifying
when certain mortgage derivative products are high-risk mortgage securities that
must be reported in a "trading" or "held for sale" account.  Purchases of high-
risk mortgage securities prior to the effective date of the Bulletin generally
will be reviewed in accordance with previously-existing OTS supervisory
policies. The Association believes that it currently holds and reports its
securities and loans in a manner consistent with the Bulletin.  The Association
also holds no assets which management believes qualify as high-risk mortgage
securities, as defined in the Bulletin.

                                       25
<PAGE>
 
SOURCES OF FUNDS

     General.  Deposit accounts have traditionally been the principal source of
the Association's funds for use in lending and for other general business
purposes.  In addition to deposits, the Association derives funds from loan
repayments, cash flows generated from operations and FHLB advances.  Scheduled
loan payments are a relatively stable source of funds, while deposit inflows and
outflows and the related cost of such funds have varied. The Association
borrowed $15.0 million from the FHLB of Des Moines and repaid $13.0 million of
maturing advances during fiscal 1998 to supplement funding for loan
originations.
 
     Deposits.  The Association offers a variety of accounts, including money
market accounts, passbook savings accounts, interest and non-interest-bearing
NOW accounts and certificates of deposit accounts.  Account terms vary, with
principal differences being the minimum balance required, the time period funds
must remain on deposit, fixed versus variable interest rates and the interest
rate.  Maturity terms, service fees and withdrawal penalties are established by
the Association on a periodic basis.  Determinations of savings rates are
predicated on funding and liquidity requirements, U.S. Treasury rates,
competition and established Association goals.  As part of its asset/liability
management efforts, the Association has emphasized long-term certificates of
deposit with terms of up to ten years.  At September 30, 1998, the Association
had $21.5 million of certificates of deposit with remaining maturities in excess
of five years.

     The Association's deposits are obtained primarily from the areas in which
its branch offices are located, and the Association relies primarily on customer
service, marketing programs and long-standing relationships with customers to
attract and retain these deposits.  Various types of advertising and promotion
to attract and retain deposit accounts also are used.  The Association does not
currently solicit or currently accept brokered deposits.  The Association has
been competitive in the types of accounts and interest rates it has offered on
its deposit products.  The Association intends to continue its efforts to
attract deposits as a primary source of funds for supporting its lending and
investing activities.  The Association advertises via radio, direct mail and in
local newspapers.

     The flow of deposits is influenced significantly by general economic
conditions, changes in money market and prevailing interest rates and
competition.  The variety of deposit accounts offered by the Association has
allowed it to be competitive in obtaining funds and to respond with flexibility
to changes in consumer demands.  The Association has become more susceptible to
short-term fluctuations in deposit flows, as customers have become more interest
rate conscious.  The Association manages the pricing of its deposits in keeping
with its asset/liability management, liquidity and growth objectives.  Based on
its experience, the Association believes that its savings and interest and non-
interest-bearing checking accounts are relatively stable sources of deposits.
However, the ability of the Association to attract and maintain certificates of
deposit, and the rates paid on these deposits, has been and will continue to be
significantly affected by market conditions.

     In setting rates, Cameron Savings regularly evaluates (i) its internal cost
of funds, (ii) the rates offered by competing institutions, (iii) its investment
and lending opportunities and (iv) its liquidity position.  In order to decrease
the volatility of its deposits, Cameron Savings imposes penalties on early
withdrawal on its certificates of deposit.

                                       26
<PAGE>
 
     The following table sets forth the savings flows at the Association during
the years indicated.

<TABLE>
<CAPTION>
                                      Year Ended September 30,     
                                   ------------------------------- 
                                     1998       1997       1996    
                                   ---------  ---------  --------- 
<S>                                <C>        <C>        <C>       
                                       (Dollars in Thousands)      
                                                                   
Opening balance.............       $128,771   $123,108   $121,280
Deposits....................        126,953    116,808    100,960
Withdrawals.................        124,073    115,789    103,883
Interest credited...........          4,971      4,644      4,751
                                   --------   --------   --------

Ending balance..............       $136,622   $128,771   $123,108
                                   ========   ========   ========

Net increase................       $  7,851   $  5,663   $  1.828
                                   ========   ========   ========

Percent increase............            6.1%       4.6%       1.5%
                                   ========   ========   ========
</TABLE>

                                       27
<PAGE>
 
     The following table sets forth the dollar amount of savings deposits in the
various types of deposit programs offered by the Association at the dates
indicated.

<TABLE>
<CAPTION>
                                                                           At September 30,                        
                                                     ------------------------------------------------------------- 
                                                            1998                 1997                 1996         
                                                     ------------------------------------------------------------- 
                                                                Percent              Percent              Percent  
                                                      Amount   of Total    Amount   of Total    Amount   of Total  
                                                     --------  ---------  --------  ---------  --------  --------- 
                                                                        (Dollars in Thousands)                     
<S>                                                  <C>       <C>        <C>       <C>        <C>       <C>        
Transactions and Savings Deposits:                                                                                 
----------------------------------
Passbook accounts 3.25..........................     $ 10,777       7.9%  $ 12,022       9.3%  $ 11,179       9.1%
NOW accounts 0.00 - 3.00........................        7,583       5.5      4,362       3.4      5,294       4.3
Money market accounts 3.00 - 4.89%..............        8,971       6.6      5,871       4.6      7,494       6.1
                                                     --------     -----   --------     -----   --------     -----

Total non-certificates..........................       27,331      20.0     22,255      17.3     23,967      19.5
                                                     --------     -----   --------     -----   --------     -----

Certificates:
-------------
 2.00 -  3.99%..................................            5        --          4        --          4        --
 4.00 -  5.99%..................................       68,744      50.3     59,510      46.2     63,866      52.0
 6.00 -  7.99%..................................       38,530      28.2     44,962      34.9     33,182      27.0
 8.00 -  9.99%..................................        2,012       1.5      2,040       1.6      2,089       2.0
                                                     --------     -----   --------     -----   --------     -----

Total certificates..............................      109,291      80.0    106,516      83.0     99,141      80.5
                                                     --------     -----   --------     -----   --------     -----
Total deposits..................................     $136,622     100.0%  $128,771     100.0%  $123,108     100.0%
                                                     ========     =====   ========     =====   ========     =====   
</TABLE>

                                       28
<PAGE>
 
     The following table shows rate and maturity information for the
Association's certificates of deposit at September 30, 1998.

<TABLE>
<CAPTION>
  
<S>                             <C>      <C>       <C>       <C>       <C>      <C>          <C>        <C>        
Certificate accounts              2.00-     4.00-     5.00-     6.00-    7.00-     8.00%                Percent    
maturing in                       3.99%     4.99%     5.99%     6.99%    7.99%  or greater      Total   of Total   
quarter ending:                 ------   -------   -------   -------   ------   ----------   --------   --------   
--------------------                                                                                               
                                                                 (Dollars in Thousands)                            
<S>                             <C>      <C>       <C>       <C>       <C>       <C>         <C>        <C>        
December 31, 1998.........      $    5   $   153   $14,571   $   960   $  248      $    --   $ 15,937      14.58%
March 31, 1999............          --        --    17,984       327       30           78     18,419      16.85
June 30, 1999.............          --    10,854     1,122        --       --       11,976      10.96
September 30, 1999........          --     9,744     1,129        20      271       11,164      10.22
December 31, 1999.........          --     3,010       744         2      246        4,002       3.66
March 31, 2000............          --        --     3,232       244      447          393      4,316       3.95
June 30, 2000.............          --        --     1,289       256      798          239      2,582       2.36
September 30, 2000........          --        --     1,791       543        1          216      2,551       2.33
December 31, 2000.........          --        --     1,027       654        8          152      1,841       1.69
March 31, 2001............          --        --     1,842       371       19          149      2,381       2.18
June 30, 2001.............          --        --       414       338      159           46        957       0.88
September 30, 2001........          --        --       280       899      137           --      1,316       1.20
Thereafter................          --        --     2,553    25,614    3,460          222     31,849      29.14%
                                ------   -------   -------   -------   ------      -------   --------     ------

   Total..................      $    5   $   153   $68,591   $33,201   $5,329      $ 2,012   $109,291     100.00%
                                ======   =======   =======   =======   ======      =======   ========     ======

   Percent of total.......        0.00%     0.14%    62.76%    30.38%    4.88%        1.84%    100.00%
</TABLE>


     The following table indicates the amount of the Association's certificates
of deposit and other deposits by time remaining until maturity at September 30,
1998.


<TABLE>
<CAPTION>
                                                             Maturity
                                               -------------------------------------
                                                          Over     Over                      
                                               3 Months  3 to 6   6 to 12    Over     
                                               or Less   Months   Months   12 months   Total 
                                               --------  -------  -------  ---------   -----
<S>                                            <C>       <C>      <C>      <C>        <C>
                                                      (Dollars In thousands)
 
Certificates of deposit less than $100,000...   $14,144  $15,704  $20,123    $45,155  $ 95,126
 
Certificates of deposit of $100,000 or more..       534    1,686    2,818      6,621    11,659
 
Public funds /(1)/...........................     1,259    1,029      199         19     2,506
                                                -------  -------  -------    -------  --------
 
Total certificates of deposit................   $15,937  $18,419  $23,140    $51,795  $109,291
                                                =======  =======  =======    =======  ========
</TABLE>
_______________
/(1)/ Deposits from governmental and other public entities, including deposits
      greater than $100,000.


     Borrowings.  The Association has the ability to use advances from FHLB of
Des Moines to supplement its deposits when the rates are favorable.  As a member
of the FHLB of Des Moines, the 

                                       29
<PAGE>
 
Association is required to own capital stock and is authorized to apply for
advances. Each FHLB credit program has its own interest rate, which may be fixed
or variable, and includes a range of maturities. The FHLB of Des Moines may
prescribe the acceptable uses to which these advances may be put, as well as
limitations on the size of the advances and repayment provisions.

     The Association borrowed $15.0 million under FHLB advances during 1998 to
fund loan originations and meet short term cash needs. The Association repaid
$13.0 million of maturing advances during 1998.  Outstanding balances at
September 30, 1998 were $37.3 million.

     The following tables set forth the maximum month-end balance and average
balance of FHLB advances for the periods indicated, as well as the amount of
such advances and the weighted average interest rate at the dates indicated.
<TABLE>
<CAPTION>
 
 
                                    Years Ended September 30,
                                   ---------------------------
                                     1998               1997
                                   --------           --------
                                        (In Thousands)
<S>                                <C>                 <C>
 
Maximum Balance
---------------
 FHLB advances                     $40,250             $35,250
 
Average Balance
---------------
 FHLB advances                     $37,250             $26,173


 
                                    Years Ended September 30,
                                   ---------------------------
                                    1998                 1997
                                   -------             -------
   (Dollars In Thousands)
 
FHLB advances                      $37,250             $35,250
                                   =======             =======
 
Weighted average interest rate        5.88%               6.02%

</TABLE>

     During the last several years, loan originations have exceeded savings
inflows, loan repayments and cash provided by operations. Prior to fiscal year
1996, the excess resulted in reductions in the investment securities portfolio
and the Association's total liquidity. See "Regulation-Liquidity". To maintain
liquidity above the required minimum, it is anticipated that FHLB advances will
continue to supplement projected savings inflows and loan repayments to fund
continued loan demand.

SUBSIDIARIES

     Federal associations generally may invest up to 2% of their assets in
service corporations, plus an additional 1% of assets for community purposes.
In addition, federal associations may invest up to 50% of their total capital in
conforming loans to their service corporations in which they own more than 10%
of the capital stock.  In addition, federal associations are permitted to invest
an unlimited amount in operating subsidiaries engaged solely in activities which
a federal association may engage in directly.

                                       30
<PAGE>
 
     At September 30, 1998, Cameron Savings had one service corporation.  The
Service Corporation was established in 1975 for the purpose of offering credit
life, disability and accident insurance to its customers.  At September 30,
1998, the Association's investment in the Service Corporation was $329,000.

                                   REGULATION

GENERAL

     Cameron Savings is a federally chartered savings and loan association, the
deposits of which are federally insured and backed by the full faith and credit
of the United States Government. Accordingly, Cameron Savings is subject to
broad federal regulation and oversight extending to all its operations.  Cameron
Savings is a member of the FHLB of Des Moines and is subject to certain limited
regulation by the Board of Governors of the Federal Reserve System ("Federal
Reserve Board").  As the savings and loan holding company of the Association,
the Company also is subject to federal regulation and oversight.  The purpose of
the regulation of the Company and other holding companies is to protect
subsidiary savings associations.  Cameron Savings is a member of the Savings
Association Insurance Fund ("SAIF") and the deposits of Cameron Savings are
insured by the FDIC.  As a result, the FDIC has certain regulatory and
examination authority over Cameron Savings.

     Certain of these regulatory requirements and restrictions are discussed
below or elsewhere in this document.

FEDERAL REGULATION OF SAVINGS ASSOCIATIONS

     The OTS has extensive authority over the operations of savings
associations.  As part of this authority, Cameron Savings is required to file
periodic reports with the OTS and is subject to periodic examinations by the OTS
and the FDIC.  The last regular OTS examination of Cameron Savings and Cameron
Financial Corp. was as of February 23, 1998. When these examinations are
conducted by the OTS and the FDIC, the examiners may require Cameron Savings to
provide for higher general or specific loan loss reserves.  All savings
associations are subject to a semi-annual assessment, based upon the savings
association's total assets, to fund the operations of the OTS.  The
Association's OTS assessment for the fiscal year ended September 30, 1998, was
$61,000.

     The OTS also has extensive enforcement authority over all savings
institutions and their holding companies, including associations and the
Company.  This enforcement authority includes, among other things, the ability
to assess civil money penalties, to issue cease-and-desist or removal orders and
to initiate injunctive actions.  In general, these enforcement actions may be
initiated for violations of laws and regulations and unsafe or unsound
practices.  Other actions or inactions may provide the basis for enforcement
action, including misleading or untimely reports filed with the OTS.  Except
under certain circumstances, public disclosure of final enforcement actions by
the OTS is required.

     In addition, the investment, lending and branching authority of Cameron
Savings is prescribed by federal laws and it is prohibited from engaging in any
activities not permitted by such 

                                       31
<PAGE>
 
laws. For instance, no savings institution may invest in non-investment grade
corporate debt securities. In addition, the permissible level of investment by
federal associations in loans secured by non-residential real property may not
exceed 400% of total capital, except with approval of the OTS. Federal savings
associations are also generally authorized to branch nationwide. The Association
is in compliance with the noted restrictions.

     The Association's general permissible lending limit for loans-to-one-
borrower is equal to the greater of $500,000 or 15% of unimpaired capital and
surplus (except for loans fully secured by certain readily marketable
collateral, in which case this limit is increased to 25% of unimpaired capital
and surplus).  At September 30, 1998, Cameron Savings' lending limit under this
restriction was $5.5 million.  The Association is in compliance with the loans-
to-one-borrower limit.

     The OTS, as well as the other federal banking agencies, has adopted
guidelines establishing safety and soundness standards on such matters as loan
underwriting and documentation, internal controls and audit systems, interest
rate risk exposure and compensation and other employee benefits.  Any
institution which fails to comply with these standards must submit a compliance
plan. A failure to submit a plan or to comply with an approved plan will subject
the institution to further enforcement action.  The OTS and the other federal
banking agencies have also adopted additional guidelines on asset quality and
earnings standards, which are designed to enhance early identification and
resolution of problems and problem assets.

INSURANCE OF DEPOSITS

     DEPOSIT INSURANCE. The FDIC is an independent federal agency that insures
deposits of banks and thrift institutions up to certain specified limits and
regulates such institutions for safety and soundness.  The FDIC administers two
separate insurance funds, the Bank Insurance Fund ("BIF") for commercial banks
and state savings banks, and the SAIF for savings associations such as the
Association and banks that have acquired deposits from savings associations. The
FDIC is required to maintain designated levels of reserves in each fund.

     ASSESSMENTS. The FDIC is authorized to establish separate annual assessment
rates for deposit insurance for members of the BIF and members of the SAIF. The
FDIC may increase assessment rates for either fund if necessary to restore the
fund's ratio of reserves to insured deposits to the target level within a
reasonable time, and may decrease these rates if the target level has been met.
The FDIC has established a risk-based assessment system for both SAIF and BIF
members. Under this system, assessments vary depending on the risk the
institution poses to its deposit insurance fund. An institution's risk level is
determined based on its capital levels, and the FDIC's level of supervisory
concern about the institution.

     In 1996, federal legislation was enacted to recapitalize the SAIF and
eliminate the significant premium disparity between the BIF and the SAIF. Under
that law, the Association and other institutions with SAIF-insured deposits were
charged a one-time special assessment equal to $0.657 per $100 of assessable
deposits at March 31,1995. The Association recognized this special assessment as
a charge to noninterest expense of $800,000 (or $509,000 when adjusted for
taxes) during the year ended September 30, 1996. The assessment was fully
deductible for both federal and state income tax purposes.  Assessment rates for
regular ongoing, deposit insurance premiums 

                                       32
<PAGE>
 
currently range from 0.0% of deposits for an institution in the highest category
(i.e., well-capitalized and financially sound, with no more than a few minor
weaknesses) to 0.27% of deposits for an institution in the lowest category
(i.e., undercapitalized and substantial supervisory consent). The Association's
assessment rate for deposit insurance was 0.23% of deposits for 1996, and it was
reduced to 0.0% of deposits beginning on January 1, 1997. The FDIC is authorized
to raise the assessment rates as necessary to maintain the required reserve
ratio of 1.25%, and both the BIF and the SAIF currently satisfy the reserve
ratio requirement. The annual rate of assessments on SAIF-assessable deposits
for the payments on the FICO bonds was 0.0648% for the semi-annual period
beginning on January 1, 1997; 0.0630% for the semi-annual period beginning on
July 1, 1997; and 0.0622% currently. The 1996 law also provides for the merger
of the SAIF and the BIF by 1999, but not until such time as bank and thrift
charters are combined. Until the charters are combined, savings associations
with SAIF deposits may not transfer deposits to the BIF without paying various
exit and entrance fees, and SAIF institutions will continue to pay higher FICO
assessments. Such exit and entrance fees need not be paid if a SAIF institution
converts to a bank charter or merges with a bank, as long as the resulting bank
continues to pay applicable insurance assessments to the SAIF, and as long as
certain other conditions are met.

     While the legislation has reduced the disparity between premiums paid on
BIF deposits and SAIF deposits, and has relieved the thrift industry of a
portion of the contingent liability represented by the FICO bonds, the premium
disparity between SAIF-insured institutions, such as the Association, and BIF-
insured institutions will continue until at least January 1, 1999.  Under the
legislation, the Association anticipates that its ongoing annual SAIF premiums
will be approximately $85,000.

CAPITAL REQUIREMENTS.

     The OTS capital regulations require savings institutions to meet three
capital standards: a 1.5% tangible capital standard, a 3.0% leverage (core
capital) standard, and an 8.0% risk-based capital standard.  Core capital is
defined as common stockholders' equity (including retained earnings), certain
noncumulative perpetual preferred stock and related surplus, minority interests
in equity accounts of consolidated subsidiaries less intangibles other than
certain mortgage servicing rights ("MSRs") and purchased credit card
relationships.  The OTS regulations require that, in meeting the tangible, core
and risk-based capital standards, institutions generally must deduct investments
in and loans to subsidiaries engaged in activities not permissible for a
national bank. In addition, the OTS prompt corrective action regulation provides
that a savings institution that has a leverage capital ratio of less than 4.0%
(3.0% for institutions receiving the highest CAMELS examination rating) will be
deemed to be "undercapitalized" and may be subject to certain restrictions.

     The risk-based capital standard for savings institutions requires the
maintenance of total capital (which is defined as core capital and supplementary
capital) to risk-weighted assets of 8.0%. In determining the amount of risk-
weighted assets, assets and certain off-balance sheet assets items are
multiplied by a risk-weight of 0% to 100%, as assigned by the OTS capital
regulation based on the risks OTS believes are inherent in the type of asset.
The components of core capital are equivalent to those discussed earlier under
the 3.0% leverage standard.  The components of supplementary capital currently
include cumulative preferred stock, long-term perpetual preferred 

                                       33
<PAGE>
 
stock, mandatory convertible securities, subordinated debt and intermediate
preferred stock and, within specified limits, the allowance for loan losses.
Overall, the amount of supplementary capital included as part of total capital
cannot exceed 100% of core capital.

     The OTS has incorporated an interest rate risk component into its
regulatory capital rule.  The final interest rate risk rule also adjusts the
risk-weighting for certain mortgage derivative securities. Under the rule,
savings associations with "above normal" interest rate risk exposure would be
subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements. A savings association's interest rate risk is
measured by the decline in the net portfolio value of its assets (i.e., the
difference between incoming and outgoing discounted cash flows from assets,
liabilities and off-balance sheet contracts) that would result from a
hypothetical 200-basis point increase or decrease in market interest rates
divided by the estimated economic value of the association's assets, as
calculated in accordance with guidelines set forth by the OTS.  A savings
association whose measured interest rate risk exposure exceeds 2% must deduct an
interest rate component in calculating its total capital under the risk-based
capital rule.  The interest rate risk component is an amount equal to one-half
of the difference between the institution's measured interest rate risk and 2%,
multiplied by the estimated economic value of the association's assets. That
dollar amount is deducted from an association's total capital in calculating
compliance with its risk-based capital requirement.  Under the rule, there is a
two quarter lag between the reporting date of an institution's financial data
and the effective date for the new capital requirement based on that data.  The
rule also provides that the Director of the OTS may waive or defer an
association's interest rate risk component on a case-by-case basis.  The OTS has
postponed the effective date of the capital component in order to provide it
with an opportunity to review the interest rate risk approaches taken by the
other federal banking agencies.

     At September 30, 1998, the Association had tangible capital of $34.8
million, or 16.2% of adjusted total assets, which is approximately $31.6 million
above the minimum requirement of 1.5% of adjusted total assets in effect on that
date.  At that date, Cameron Savings had core capital equal to $34.8 million, or
16.2% of adjusted total assets, which is $26.2 million above the minimum
leverage ratio requirement of 4% as in effect on that date.  At that date,
Cameron Savings had total risk-based capital of $36.3 million (including $34.8
million in core capital and $1.5 million in qualifying supplementary capital)
and risk-weighted assets of $146.3 million (including $9.4 million in converted
off-balance sheet assets); or total capital of 24.8% of risk-weighted assets.
This amount was $24.6 million above the 8% requirement in effect on that date.

THRIFT CHARTER

     Congress has been considering legislation in various forms that would
require federal thrifts, such as the Bank, to convert their charters to national
or state bank charters.  Legislation enacted in 1996 required the Treasury
Department to prepare for Congress a comprehensive study on development of a
common charter for federal savings associations and commercial banks; and
provided for the merger of the BIF and the SAIF into a single deposit insurance
fund on January 1, 1999 provided the thrift charter was eliminated.  The
Association cannot determine whether, or in what form, such legislation may
eventually be enacted and there can be no assurance that any legislation that is
enacted would not adversely affect the Association and the Company.

                                       34
<PAGE>
 
PROMPT CORRECTIVE REGULATORY ACTION

     Under the OTS Prompt Corrective Action regulations, the OTS is required to
take certain supervisory actions against undercapitalized institutions, the
severity of which depends upon the institution's degree of capitalization.
Generally, a savings institution that has total risk-based capital of less than
8.0% or a leverage ratio or a Tier 1 core capital ratio that is less than 4.0%
is considered to be undercapitalized.  A savings institution that has total
risk-based capital of less than 6.0%, a Tier 1 core risk-based capital ratio of
less than 3.0% or a leverage ratio that is less than 3.0% is considered to be
"significantly undercapitalized," and a savings institution that has a tangible
capital to assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized."  Subject to a narrow exception, the banking regulator is
required to appoint a receiver or conservator for an institution that is
"critically undercapitalized."  The regulation also provides that a capital
restoration plan must be filed with the OTS within 45 days of the date an
institution receives notice that it is "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized."  In addition, numerous
mandatory supervisory actions become immediately applicable to the institution,
including, but not limited to, restrictions on growth, investment activities,
capital distributions, and affiliate transactions.  The OTS may also take any
one of a number of discretionary supervisory actions, including the issuance of
a capital directive and the replacement of senior executive officers and
directors.

     At September 30, 1998, the Association was categorized as "well
capitalized," meaning that the Association's total risk-based capital ratio
exceeded 10.0%, Tier I risk-based capital ratio exceeded 6.0%,  leverage capital
ratio exceeded 5.0%, and the Association was not subject to a regulatory order,
agreement or directive to meet and maintain a specific capital level for any
capital measure.

DIVIDEND LIMITATIONS

     An OTS regulation imposes limitations upon all "capital distributions" by
savings associations, including cash dividends, payments by an association to
repurchase or otherwise acquire its shares, payments to shareholders of another
institution in a cash-out merger and other distributions charged against
capital. The regulation establishes a three-tiered system of regulation, with
the greatest flexibility given to well-capitalized associations. A savings
association which has total capital (immediately prior to and after giving
effect to the capital distribution) that is at least equal to its fully phased-
in capital requirements would be a Tier 1 institution ("Tier 1 Institution"). An
association that has total capital at least equal to its minimum capital
requirements, but less than its capital requirements, would be a Tier 2
institution ("Tier 2 Institution"). An institution having total capital that is
less than its minimum capital requirements would be a Tier 3 institution ("Tier
3 Institution"). However, an institution which otherwise qualifies as a Tier 1
Institution may be designated by the OTS as a Tier 2 or Tier 3 Institution if
the OTS determines that the institution is "in need of more than normal
supervision." The Association is currently a Tier 1 Institution.

     A Tier 1 Institution may, after prior notice but without the approval of
the OTS, make capital distributions during a calendar year up to the greater of
(a) 100% of its net income to date during the calendar year plus the amount that
would reduce by one-half its "surplus capital ratio" at the beginning of the
calendar year (the smallest excess over its capital requirements), or (b) 75% of
its 

                                       35
<PAGE>
 
net income over the most recent four-quarter period. Any additional amount of
capital distributions would require prior regulatory approval.

     The OTS has proposed revisions to these regulations which would permit
savings associations to declare dividends in amounts which would assure that
they remain adequately capitalized following the dividend declaration. Savings
associations in a holding company system which are rated Camel 1 or 2 and which
are not in troubled condition would need to file a prior notice with the OTS
concerning such dividend declaration.

LIQUIDITY

     All savings associations, including Cameron Savings, are required to
maintain an average daily balance of liquid assets equal to a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less.  For a discussion of what the Bank
includes in liquid assets, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."  This liquid asset ratio requirement may vary from time to time
(between 4% and 10%) depending upon economic conditions and savings flows of all
savings associations.  At the present time, the minimum liquid asset ratio is
4%.

     Penalties may be imposed upon associations for violations of liquid asset
ratio requirement. At September 30, 1998, Cameron Savings was in compliance with
an overall liquid asset ratio of 15.0%.

ACCOUNTING

     An OTS policy statement applicable to all savings associations clarifies
and re-emphasizes that the investment activities of a savings association must
be in compliance with approved and documented investment policies and strategies
and must be accounted for in accordance with GAAP. Under the policy statement,
management must support its classification of and accounting for loans and
securities (i.e., whether held for investment, sale or trading) with appropriate
documentation. Cameron Savings is in compliance with these amended rules.

     The OTS has adopted an amendment to its accounting regulations, which may
be made more stringent than GAAP by the OTS, to require that transactions be
reported in a manner that best reflects their underlying economic substance and
inherent risk and that financial reports must incorporate any other accounting
regulations or orders prescribed by the OTS.

QUALIFIED THRIFT LENDER TEST.

     In general, savings associations are required to maintain at least 65% of
their portfolio assets in certain qualified thrift investments (which consist
primarily of loans and other investments related to residential real estate and
certain other assets).  A savings association that fails the qualified thrift
lender test is subject to substantial restrictions on activities and to other
significant penalties.

                                       36
<PAGE>
 
     Recent legislation also expands the QTL test to provide savings
associations with greater authority to lend and diversify their portfolios.  In
particular, credit card and education loans may now be made by savings
associations without regard to any percentage-of-assets limit, and commercial
loans may be made in an amount up to 10% of total assets, plus an additional 10%
for small business loans.  Loans for personal, family and household purposes
(other than credit card, small business and educational loans) are now included
without limit with other assets that, in the aggregate, may account for up to
20% of total assets.  The Association exceeded the applicable requirements at
September 30, 1998.

     A savings association that fails to meet the QTL test must either convert
to a bank (but its deposit insurance assessments and payments will be those of
and paid to the SAIF) or be subject to the following penalties: (i) it may not
enter into any new activity except for those permissible for a national bank and
for a savings association; (ii) its branching activities will be limited to
those of a national bank; (iii) it will not be eligible for any new FHLB
advances; and (iv) it will be bound by regulations applicable to national banks
regarding the payment of dividends. Three years after failing the QTL test, the
association must (i) dispose of any investment or activity not permissible for a
national bank and a savings association, and (ii) repay all outstanding FHLB
advances. If such a savings association is controlled by a savings and loan
holding company, then such holding company must, within a prescribed time
period, become registered as a bank holding company and become subject to all
rules and regulations applicable to bank holding companies (including
restrictions as to the scope of permissible business activities).

COMMUNITY REINVESTMENT ACT

     Under the Community Reinvestment Act ("CRA"), every FDIC insured
institution has a continuing and affirmative obligation consistent with safe and
sound banking practices to help meet the credit needs of its entire community,
including low and moderate income neighborhoods.  The CRA does not establish
specific lending requirements or programs for financial institutions nor does it
limit an institution's discretion to develop the types of products and services
that it believes are best suited to its particular community, consistent with
the CRA.  The CRA requires the OTS, in connection with the examination of
Cameron Savings, to assess the institution's record of meeting the credit needs
of its community and to take such record into account in its evaluation of
certain applications, such as a merger or the establishment of a branch, by
Cameron Savings.  An unsatisfactory rating may be used as the basis for the
denial of an application by the OTS.

     The federal banking agencies, including the OTS, have recently revised the
CRA regulations and the methodology for determining an institution's compliance
with the CRA.  Due to the heightened attention being given to the CRA in the
past few years, the Association may be required to devote additional funds for
investment and lending in its local community.  The Association was examined for
CRA compliance in January 1995 and received a rating of satisfactory.

                                       37
<PAGE>
 
TRANSACTIONS WITH AFFILIATES

     Generally, transactions between a savings association or its subsidiaries
and its affiliates are required to be on terms as favorable to the association
as transactions with non-affiliates.  In addition, certain of these
transactions, such as loans to an affiliate, are restricted to a percentage of
the association's capital.  Affiliates of the Association include the Holding
Company and any company which is under common control with the Association.  In
addition, a savings association may not lend to any affiliate engaged in
activities not permissible for a bank holding company or acquire the securities
of most affiliates.  The Association's subsidiaries are not deemed affiliates,
however; the OTS has the discretion to treat subsidiaries of savings
associations as affiliates on a case by case basis.

     Certain transactions with directors, officers or controlling persons are
also subject to conflict of interest regulations enforced by the OTS.  These
conflict of interest regulations and other statutes also impose restrictions on
loans to such persons and their related interests.  Among other things, such
loans must be made on terms substantially the same as for loans to unaffiliated
individuals. However, recent regulations now permit executive officers and
directors to receive the same terms through benefit or compensation plans that
are widely available to other employees, as long as the director or executive
officer is not given preferential treatment compared to the other participating
employees.

HOLDING COMPANY REGULATION

     The Company is a unitary savings and loan holding company subject to
regulatory oversight by the OTS.  As such, the Company is required to register
and file reports with the OTS and is subject to regulation and examination by
the OTS.  In addition, the OTS has enforcement authority over holding companies
and their non-savings association subsidiaries which also permits the OTS to
restrict or prohibit activities that are determined to be a serious risk to the
subsidiary savings association.

     As a unitary savings and loan holding company, the Company generally is not
subject to activity restrictions.  If the Company acquires control of another
savings association as a separate subsidiary, it would become a multiple savings
and loan holding company, and the activities of the Company and any of its
subsidiaries (other than the Association or any other SAIF-insured savings
association) would become subject to such restrictions unless such other
associations each qualify as a QTL and were acquired in a supervisory
acquisition.

     If Cameron Savings fails the QTL test, the Company must obtain the approval
of the OTS prior to continuing after such failure, directly or through its other
subsidiaries, any business activity other than those approved for multiple
savings and loan holding companies or their subsidiaries.  In addition, within
one year of such failure the Company must register as, and will become subject
to, the restrictions applicable to bank holding companies.  The activities
authorized for a bank holding company are more limited than are the activities
authorized for a unitary or multiple savings and loan holding company.  
See "--Qualified Thrift Lender Test."

                                       38
<PAGE>
 
     The Company must obtain approval from the OTS before acquiring control of
any other SAIF-insured association.  Such acquisitions are generally prohibited
if they result in a multiple savings and loan holding company controlling
savings associations in more than one state.  However, such interstate
acquisitions are permitted based on specific state authorization or in a
supervisory acquisition of a failing savings association.

FEDERAL SECURITIES LAW

     The stock of the Company is registered with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").  The Company is subject to the information, proxy solicitation,
insider trading restrictions and other requirements of the SEC under the
Exchange Act.

     Company stock held by persons who are affiliates (generally officers,
directors and principal stockholders) of the Company may not be resold without
registration or unless sold in accordance with certain resale restrictions.  If
the Company meets specified current public information requirements, each
affiliate of the Company is able to sell in the public market, without
registration, a limited number of shares in any three-month period.

FEDERAL RESERVE SYSTEM

     The Federal Reserve Board requires all depository institutions to maintain
non-interest bearing reserves at specified levels against their transaction
accounts (primarily checking, NOW and Super NOW checking accounts).  At
September 30, 1998, Cameron Savings was in compliance with these reserve
requirements.  The balances maintained to meet the reserve requirements imposed
by the Federal Reserve Board may be used to satisfy liquidity requirements that
may be imposed by the OTS.  See "--Liquidity."

     Savings associations are authorized to borrow from the Federal Reserve Bank
"discount window," but Federal Reserve Board regulations require associations to
exhaust other reasonable alternative sources of funds, including FHLB
borrowings, before borrowing from the Federal Reserve Bank.

FEDERAL HOME LOAN BANK SYSTEM

     Cameron Savings is a member of the FHLB of Des Moines, which is one of 12
regional FHLBs, that administers the home financing credit function of savings
associations.  Each FHLB serves as a reserve or central bank for its members
within its assigned region.  It is funded primarily from proceeds derived from
the sale of consolidated obligations of the FHLB System.  It makes loans to
members (i.e., advances) in accordance with policies and procedures, established
by the board of directors of the FHLB, which are subject to the oversight of the
Federal Housing Finance Board.  All advances from the FHLB are required to be
fully secured by sufficient collateral as determined by the FHLB.  In addition,
all long-term advances are required to provide funds for residential home
financing.

                                       39
<PAGE>
 
     As a member, Cameron Savings is required to purchase and maintain stock in
the FHLB of Des Moines.  At September 30, 1998, Cameron Savings had $2.0 million
in FHLB stock, which was in compliance with this requirement.  In past years,
Cameron Savings has received substantial dividends on its FHLB stock.  Over the
past five fiscal years such dividends have averaged 7.33% and were 6.75% for
fiscal year 1998.

     Under federal law the FHLBs are required to provide funds for the
resolution of troubled savings associations and to contribute to low- and
moderately priced housing programs through direct loans or interest subsidies on
advances targeted for community investment and low- and moderate-income housing
projects.  These contributions have affected adversely the level of FHLB
dividends paid and could continue to do so in the future.  These contributions
could also have an adverse effect on the value of FHLB stock in the future.  A
reduction in value of Cameron Savings' FHLB stock may result in a corresponding
reduction in Cameron Savings' capital.

     For the year ended September 30, 1998, dividends paid by the FHLB of Des
Moines to the Association totaled $130,000, compared to $101,000 received in
fiscal year 1997.

FEDERAL TAXATION

     GENERAL.  The Company and the Association report their income on a fiscal
year basis using the accrual method of accounting and are subject to federal
income taxation in the same manner as other corporations with some exceptions,
including particularly the Association's reserve for bad debts discussed below.
The following discussion of tax matters is intended only as a summary and does
not purport to be a comprehensive description of the tax rules applicable to the
Association or the Company.

     BAD DEBT RESERVE.  Historically, savings institutions such as the
Association which met certain definitional tests primarily related to their
assets and the nature of their business ("qualifying thrift") were permitted to
establish a reserve for bad debts and to make annual additions thereto, which
may have been deducted in arriving at their taxable income.  The Association's
deductions with respect to "qualifying real property loans," which are generally
loans secured by certain interest in real property, were computed using an
amount based on the Association's actual loss experience, or a percentage equal
to 8% of the Association's taxable income, computed with certain modifications
and reduced by the amount of any permitted additions to the non-qualifying
reserve. Due to the Association's loss experience, the Association generally
recognized a bad debt deduction equal to 8% of taxable income.

     In August 1996, the provisions repealing the current thrift bad debt rules
were passed by Congress as part of "The Small Business Job Protection Act of
1996."  The new rules eliminate the 8% of taxable income method for deducting
additions to the tax bad debt reserves for all thrifts for tax years beginning
after December 31, 1995.  These rules also require that all institutions
recapture all or a portion of their bad debt reserves added since the base year
(last taxable year beginning before January 1, 1988).  As of September 30, 1998,
the Association's bad debt reserve subject to recapture over a six year period
totaled approximately $288,000.  The Association has established a deferred tax
liability of approximately $98,000 for this recapture.  For taxable years
beginning after December 31, 1995, the Association's bad debt deduction will be
determined under the experience 

                                       40
<PAGE>
 
method using a formula based on actual bad debt experience over a period of
years or, if the Association is a "large" association (assets in excess of $500
million) on the basis of net charge-offs during the taxable year. The new rules
allow an institution to suspend bad debt reserve recapture for the 1996 and 1997
tax years if the institution's lending activity for those years is equal to or
greater than the institution's average mortgage lending activity for the six
taxable years preceding 1996 adjusted for inflation. For this purpose, only home
purchase or home improvements loans are included and the institution can elect
to have the tax years with the highest and lowest lending activity removed from
the average calculation. If an institution is permitted to postpone the reserve
recapture, it must begin its six year recapture no later than the 1998 tax year.
The unrecaptured base year reserves will not be subject to recapture as long as
the institution continues to carry on the business of banking. In addition, the
balance of the pre-1988 bad debt reserves continue to be subject to provisions
of present law referred to below that require recapture in the case of certain
excess distributions to shareholders.

     DISTRIBUTIONS.  To the extent that the Association makes "nondividend
distributions" to the Company, such distributions will be considered to result
in distributions from the balance of its bad debt reserve as of December 31,
1987 (or a lesser amount if the Association's loan portfolio decreased since
December 31, 1987) and then from the supplemental reserve for losses on loans
("Excess Distributions"), and an amount based on the Excess Distributions will
be included in the Association's taxable income.  Nondividend distributions
include distributions in excess of the Association's current and accumulated
earnings and profits, distributions in redemption of stock and distributions in
partial or complete liquidation.  However, dividend paid out of the
Association's current or accumulated earnings and profits, as calculated for
federal income tax purposes, will not be considered to result in a distribution
from the Association's bad debt reserve.  The amount of additional taxable
income created from an Excess Distribution is an amount that, when reduced by
the tax attributable to the income, is equal to the amount of the distribution.
Thus, if the Association makes a "nondividend distribution," then approximately
one and one-half the times the Excess Distribution would be includable in gross
income for federal income tax purposes, assuming a 34% corporate income tax rate
(exclusive of state and local taxes).  The Association does not presently intend
to pay dividends that wold result in a recapture of any portion of its tax bad
debt reserve.

     CORPORATE ALTERNATIVE MINIMUM TAX.  The Code imposes a tax on alternative
minimum taxable income ("AMTI") at a rate of 20%.  The excess of the tax bad
debt reserve deduction using the percentage of taxable income method over the
deduction that would have been allowable under the experience method is treated
as a preference item for purposes of computing the AMTI.  In addition, only 90%
of AMTI can be offset by net operating loss carryovers.  AMTI is increased by an
amount equal to 75% of the amount by which the Association's adjusted current
earnings exceeds its AMTI (determined without regard to this preference and
prior to reduction for net operating losses).  For taxable years beginning after
December 31, 1986, and before January 1, 1996, an environmental tax of 0.12% of
the excess of AMTI (with certain modification) over $2.0 million is imposed on
corporations, including the Association, whether or not an Alternative Minimum
Tax is paid.

     DIVIDENDS-RECEIVED DEDUCTION.  The Company may exclude form its income 100%
of dividends received from the Association as a member of the same affiliated
group of corporations. The corporate dividends-received deduction is generally
70% in the case of dividends received from 

                                       41
<PAGE>
 
unaffiliated corporations with which the Company and the Association will not
file a consolidated tax return, except that if the Company or the Association
owns more than 20% of the stock of a corporation distributing a dividend, then
80% of any dividends received may be deducted.

     AUDITS.  The Association's federal income tax returns have not been audited
within the past five years.

     MISSOURI TAXATION.  The State of Missouri has a corporate income tax;
however, savings and loan institutions are exempt from such tax.  Missouri-based
thrift institutions, such as the Association, are subject to a special financial
institutions tax, based on net income without regard to net operating loss
carryforwards, at the rate of 7% of net income as defined in the Missouri
statutes.  This tax is a prospective tax for the privilege of the Association
exercising its corporate franchise within the state, based on its net income for
the preceding year.  The tax is in lieu of all other state taxes on thrifts,
except taxes on real estate, tangible personal property owned by the taxpayer
and held for lease or rental to others, certain payroll taxes, and sales and use
taxes.

     DELAWARE TAXATION.  As a Delaware holding company, the Company is exempted
from Delaware corporate income tax but is required to file an annual report with
and pay an annual fee to the State of Delaware.  The Company is also subject to
an annual franchise tax imposed by the State of Delaware.

COMPETITION

     Savings institutions generally face strong competition both in originating
real estate loans and in attracting deposits.  Competition in originating loans
comes primarily from other savings institutions, commercial banks and mortgage
bankers who also make loans secured by real estate located in the Association's
market area.  The Association competes for loans principally on the basis of the
interest rates and loan fees it charges, the types of loans it originates and
the quality of services it provides to borrowers.

     The Association faces substantial competition in attracting deposits from
other savings institutions, commercial banks, securities firms, money market and
mutual funds, credit unions and other investment vehicles.  The ability of the
Association to attract and retain deposits depends on its ability to provide an
investment opportunity that satisfies the requirements of investors as to rate
of return, liquidity, risk, convenient locations and other factors.  The
Association competes for these deposits by offering a variety of deposit
accounts at competitive rates, convenient business hours and a customer-oriented
staff.

EMPLOYEES

     At September 30, 1998, the Association and its subsidiary had a total of 64
full-time employees and 7 part-time employees.  None of the Association's
employees is represented by any collective bargaining group.  Management
considers its employee relations to be good.

                                       42
<PAGE>
 
EXECUTIVE OFFICERS OF THE COMPANY AND THE ASSOCIATION WHO ARE NOT DIRECTORS

     RONALD W. HILL.  Mr. Hill, age 49, is the Vice President and Treasurer of
Cameron Savings, responsible for the supervision of the accounting department,
reporting to the regulatory authorities, and managing the Association's
liquidity position.  Mr. Hill joined the Association in 1981 as Controller and
was promoted to his current position in 1988.

     STEPHEN HAYWARD.  Mr. Hayward, age 36, is currently the Director of Lending
of the Association.  As such, he is responsible for the supervision of all
lending operations of the Association, including loan applications and loan
closings.  Mr. Hayward joined the Association in 1991 as Internal Auditor and
Compliance Officer.  Prior to joining the Association, Mr. Hayward was a Manager
with the accounting firm of KPMG Peat Marwick LLP in Kansas City, Missouri. Mr.
Hayward is also Branch Manager of the office in Liberty, Missouri.

     EARL FRAZIER.  Mr. Frazier, age 63, is currently the manager of the loan
production office in Liberty, Missouri.  In that capacity, Mr. Frazier is
responsible for overseeing the lending operations, including the origination of
construction and land loans.  Mr. Frazier joined the Association in 1981 as a
loan officer.  Prior to joining the Association, Mr. Frazier was a real estate
agent and, prior thereto, a residential home builder.  Mr. Frazier recently
notified the Association that he will retire effective January 31, 1999.

ITEM 2.   DESCRIPTION OF PROPERTY
          -----------------------

     The Association operates from four full-service facilities.  The
Association's new home office building on North Walnut Street in Cameron opened
for business on June 23, 1997.  Construction and furnishings costs totaled
approximately $4.96 million.

                                       43
<PAGE>
 
     The new branch office in Liberty opened for business on August 17, 1998.
Construction and furnishings costs totaled approximately $2.2 million.  The
following table sets forth certain information with respect to the offices of
the Association and its subsidiary at September 30, 1998.

<TABLE>
<CAPTION>
 
 
                                                      Approximate  Net Book Value as
                              Date                      Square     of September 30,
Location                    Acquired      Title         Footage          1998
--------                    --------  --------------  -----------  -----------------
 
<S>                         <C>       <C>             <C>          <C>
Main Office                     1993      Owned            25,942         $4,647,000
-----------
1304 North Walnut Street
Cameron, MO
 
Branch Offices
--------------
115 East Fourth Street          1994     Leased             1,311             N/A
Maryville, MO                           (expires 2003)
 
702 State Street                1992     Leased               900             N/A
Mound City, MO                          (expires
                                       2000)/(1)/
 
1580 A Highway                  1997      Owned             7,700         $1,993,000
Liberty, MO
 
Additional Property
-------------------
309 North Main Street           1977      Owned             4,040         $   56,000
Cameron, MO (2)
</TABLE>

________________
/(1)/ Subject to option to extend for three years.
(2) This property is currently vacant and this property is for sale.

  The Association's accounting and record-keeping activities are maintained on-
line with an independent service bureau.

ITEM 3.   LEGAL PROCEEDINGS
          -----------------

  The Company is involved as plaintiff or defendant in various legal actions
arising in the normal course of business.  While the ultimate outcome of these
proceedings cannot be predicted with certainty, it is the opinion of management,
after consultation with counsel representing the Company in the proceedings,
that the resolution of these proceedings should not have a material effect on
the Company's financial statements.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          ---------------------------------------------------

  No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended September 30,
1998.

                                       44
<PAGE>
 
                                    PART II
                                    -------

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
          --------------------------------------------------------------------
          MATTERS
          -------

  Page 42 of the attached 1998 Annual Report to Shareholders is herein
incorporated by reference.

ITEM 6.   SELECTED FINANCIAL DATA
          -----------------------

  Pages 3 to 4 of the attached 1998 Annual Report to Shareholders are herein
incorporated by reference.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          ---------------------------------------------------------------
          RESULTS OF OPERATIONS
          ----------------------

  Pages 5 through 17 of the attached 1998 Annual Report to Shareholders are
herein incorporated by reference.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
          -------------------------------------------

  Pages 18 through 41 of the attached 1998 Annual Report to Shareholders are
herein incorporated by reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          ---------------------------------------------------------------
          FINANCIAL  DISCLOSURE
          ---------- ----------

  There has been no Current Report on Form 8-K filed within 24 months prior to
the date of the most recent financial statements reporting a change of
accountants and/or reporting disagreements on any matter of accounting principle
or financial statement disclosure.

                                    PART III
                                    --------

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
          --------------------------------------------------

  Information concerning Directors of the Registrant is incorporated herein by
reference from the Corporation's definitive Proxy Statement for the Annual
Meeting of Shareholders scheduled to be held on January 25, 1999, except for
information contained under the heading "Report of the Compensation Committee"
and "Comparative Stock Performance Graph", a copy of which will be filed not
later than 120 days after the close of the fiscal year.

ITEM 11.  EXECUTIVE COMPENSATION
          ----------------------

  Information concerning executive compensation is incorporated herein by
reference from the Corporation's definitive Proxy Statement for the Annual
Meeting of Shareholders scheduled to be held on January 25, 1999, except for
information contained under the heading "Report of the 

                                       45
<PAGE>
 
Compensation Committee" and "Comparative Stock Performance Graph", a copy of
which will be filed not later than 120 days after the close of the fiscal year.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          --------------------------------------------------------------

  Information concerning security ownership of certain beneficial owners and
management is incorporated herein by reference from the Corporation's definitive
Proxy Statement for the Annual Meeting of Shareholders scheduled to be held on
January 25, 1999, except for information contained under the heading "Report of
the Compensation Committee" and "Comparative Stock Performance Graph", a copy of
which will be filed not later than 120 days after the close of the fiscal year.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
          ----------------------------------------------

  Information concerning certain relationships and transactions is incorporated
herein by reference from the Corporation's definitive Proxy Statement for the
Annual Meeting of Shareholders scheduled to be held on January 25, 1999, except
for information contained under the heading "Report of the Compensation
Committee" and "Comparative Stock Performance Graph", a copy of which will be
filed not later than 120 days after the close of the fiscal year.

                                       46
<PAGE>
 
                                    PART IV
                                    -------

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
          -----------------------------------------------------------------

  (a) (1)  Financial Statements:
  ----------------------------- 

  The following information appearing in the Registrant's Annual Report to
Shareholders for the year ended September 30, 1998, is incorporated by reference
in this Form 10-K Annual Report as Exhibit 13.

<TABLE>
<CAPTION>
                                                                                    Pages in
                                                                                     Annual
Annual Report Section                                                                Report
---------------------                                                               --------
 
<S>                                                                                 <C>
Report of Independent Auditors........................................................    18
 
Consolidated Balance Sheets at September 30, 1998 and 1997............................    19
 
Consolidated Statements of Earnings for the Years ended September 30, 1998, 1997    
 and 1996.............................................................................    20
 
Consolidated Statements of Stockholders' Equity for the Years ended                       
  September 30, 1998, 1997 and 1996...................................................    21
 
Consolidated Statements of Cash Flows for the Years ended September 30, 1998,          
  1997 and 1996....................................................................... 22-23
 
Notes to Consolidated Financial Statements............................................ 24-41
</TABLE>

    (a) (2)  Financial Statement Schedules:
    -------------------------------------- 

    All financial statement schedules have been omitted as the information is
not required under the related instructions or is inapplicable.

                                       47
<PAGE>
 
    (a) (3)  Exhibits:
    ----------------- 
 
                                                        Reference to
 Regulation                                            Prior Filing or
 S-K Exhibit                                           Exhibit Number
   Number                     Document                 Attached Hereto
-------------  --------------------------------------  --------------- 
      2        Plan of acquisition, reorganization,         None
               arrangement, liquidation or succession
 
     3.1       Certificate of Incorporation                   *
 
     3.2       Bylaws                                        ***
 
      4        Instruments defining the rights of             *
               security holders, including indentures
 
      9        Voting trust agreement                       None
 
    10.1       Severance Agreements of David G. Just          *
               and Ronald Hill
 
    10.2       Employee Stock Ownership Plan                  *
 
    10.3       1995 Stock Option and Incentive Plan          **
 
    10.4       Recognition and Retention Plan                **
 
    10.5       Deferred Fee Agreement                         *
 
    10.6       Director Emeritus Agreement                    *
 
    10.7       Severance Agreement of Stephen D.             10.7
               Hayward
 
     11        Statement re: computation of per             None
               share earnings
 
     12        Statement re: computation or ratios      Not required
 
     13        Annual Report to Security Holders             13
 
     16        Letter re: change in certifying              None
               accountant

                                       48
<PAGE>

 
                                                        Reference to
 Regulation                                            Prior Filing or
 S-K Exhibit                                           Exhibit Number
   Number                     Document                 Attached Hereto
-------------  --------------------------------------  ---------------
 
     18        Letter re: change in accounting              None
               principles
 
     21        Subsidiaries of Registrant                    21
 
     22        Published report regarding matters           None
               submitted to vote of security holders
 
     23        Consent of experts and counsel                23
 
     24        Power of Attorney                        Not Required
 
     27        Financial Data Schedule                       27
 
     28        Information from reports furnished to        None
               State insurance regulatory authorities
 
     99        Additional exhibits                          None

___________________

     /*/ Filed on December 23, 1994, as exhibits to the Registrant's Form S-1
registration statement (Registration No. 33-87900), pursuant to the Securities
Act of 1933.  All of such previously filed documents are hereby incorporated
herein by reference in accordance with Item 601 of Regulation S-K.

     /**/ Filed December 27, 1995, as exhibits to the Registrant's Form 10-K
Annual Report for the fiscal year ended September 30, 1995.  All of such
previously filed documents are hereby incorporated herein by reference in
accordance with Item 601 of Regulation S-K.

     *** Filed December 29, 1997, as exhibits to the Registrant's Form 10-K
Annual Report for the fiscal year ended September 30, 1997. Such previously
filed document is hereby incorporated herein by reference in accordance with
Item 601 of Regulation S-K.
 
  (b)  Reports on Form 8-K:
  ------------------------ 

  No current reports on Form 8-K were filed by the Company during the three
months ended September 30, 1998.

                                       49
<PAGE>
 
                                  SIGNATURES
                                  ----------


  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                        CAMERON FINANCIAL CORPORATION


      
Date: December 29, 1998                     By: /s/ David G. Just
     _______________________________            _______________________________
                                                David G. Just
                                                (Duly Authorized Representative)


  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


By: /s/ David G. Just                    By:/s/ Dennis E. Marshall
   ---------------------------------        ---------------------------------
   David G. Just, President                 Dennis E. Marshall
   Chief Executive Officer and Director     Director
 
Date: December 29, 1998                  Date: December 29, 1998
     -------------------------------          -------------------------------
 
 
By: /s/ Kennith R. Baker                 By: /s/ William J. Heavner
   ---------------------------------        ---------------------------------
   Kennith R. Baker, Secretary and          William J. Heavner, Director
    Director
 
 
Date: December 29, 1998                  Date: December 29, 1998
     -------------------------------          ------------------------------- 
 
 
By: /s/ Harold D. Lee                    By: /s/ William F. Barker
   ---------------------------------        ---------------------------------
   Harold D. Lee, Director                  William F. Barker, Director
 

Date: December 29, 1998                  Date: December 29, 1998
     --------------------------------         ------------------------------- 

<PAGE>
 
 
By: /s/ Jon N. Crouch                    By: /s/ Ronald W. Hill
   ----------------------------------       --------------------------------
   Jon N. Crouch, Director                  Ronald W. Hill, Vice President,
                                            Treasurer, and Chief Financial
                                            Officer (Principal Financial and
                                            Accounting Officer

Date: December 29, 1998                   Date: December 29, 1998
     ---------------------------------         ------------------------------