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

                                  FORM 10-KSB

[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

                        Commission File Number:  0-25814

 
                                                            
                              NS&L BANCORP, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               Missouri                                    43-1709446
---------------------------------------------          ---------------------
(State or other jurisdiction of incorporation           (I.R.S. Employer     
or organization)                                        Identification No.)  
                 

111 East Main Street, Neosho, Missouri                        64850
------------------------------------------                --------------
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code:  (417) 451-0429
                                                     --------------

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 $0.01 per share
                    ---------------------------------------
                               (Title of Class)

    Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES  x  NO ___
          ---       

    Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendments to this Form 10-KSB.    X
                                 -----

    The registrant's revenues for the fiscal year ended September 30, 1998 were
$4,444,000.

    As of December 16, 1998, there were issued and outstanding 616,739 shares of
the registrant's Common Stock, which are listed on the Nasdaq SmallCap Market
under the symbol "NSLB."  Based on the average of the bid and asked prices for
the Common Stock on December 16, 1998, the aggregate value of the Common Stock
outstanding held by nonaffiliates of the registrant was $8,036,109 (616,739
shares at $13.03 per share).  For purposes of this calculation, officers and
directors of the registrant are considered nonaffiliates.

                      DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions of Annual Report to Stockholders for the Fiscal Year Ended
     September 30, 1998 (Parts I and II)

2.   Portions of Proxy Statement for the 1999 Annual Meeting of Stockholders.
     (Part III)

Transitional Small Business Disclosure Format (check one)  Yes_____  No  X
                                                                       -----
<PAGE>
 
                                     PART I

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

GENERAL

     NS&L Bancorp, Inc. ("NS&L Bancorp" or the "Corporation"), a Missouri
corporation, was organized on February 27, 1995 for the purpose of becoming the
holding company for Neosho Savings and Loan Association, F.A. ("Neosho Savings"
or the "Association") upon Neosho Savings's conversion from a federal mutual to
a federal stock savings and loan association ("Conversion").  The Conversion was
completed on June 7, 1995.  At September 30, 1998, the Corporation had total
assets of $63.4 million, total deposits of $47.9 million and stockholders'
equity of $10.4 million.  NS&L Bancorp has not engaged in any significant
activity other than holding the stock of Neosho Savings.  Accordingly, the
information set forth in this report, including financial statements and related
data, relates primarily to Neosho Savings and its subsidiary.

     Neosho Savings, founded in 1884, is a federally chartered stock savings and
loan association, located in Neosho, Missouri.  The Association is regulated by
the Office of Thrift Supervision ("OTS"), its primary federal regulator, and the
Federal Deposit Insurance Corporation ("FDIC"), the insurer of its deposits.
The Association's deposits are insured by the Savings Association Insurance Fund
("SAIF").  The Association has been a member of the Federal Home Loan Bank
("FHLB") System since 1956.  The Association is a community oriented financial
institution that is engaged primarily in the business of attracting deposits
from the general public and using these funds to originate one- to four-family
residential mortgage loans within the Association's lending market area.  The
Association also originates mortgage loans for sale in the secondary market
through its wholly-owned subsidiary, Crawford Mortgage, Inc.

MARKET AREA AND COMPETITION

     Neosho, Missouri is located in Newton County approximately 20 miles
southeast of Joplin, Missouri in the Southwest corner of Missouri.  The
Association focuses primarily on serving customers located in Newton County,
Missouri and, to a lesser extent, on customers in surrounding counties in
southwest Missouri (McDonald, Jasper, Barry and Lawrence counties).  According
to the 1990 census, Newton County had a population of approximately 44,500. The
primary industry in Newton County is light manufacturing.  The unemployment rate
in Newton County is estimated to be 4.2% as of November 1998.  Major employers
in the Association's market area include La-Z Boy Midwest, a furniture
manufacturer, Sunbeam Outdoor Products, a manufacturer of outdoor grills and
other products, and Tyson Foods, Inc., a poultry processor.

     The Association operates in a highly competitive market for the attraction
of savings deposits (its primary source of lendable funds) and in the
origination of loans.  Its most direct competition for savings deposits has
historically come from other thrift institutions and from commercial banks
located in its lending market area.  As of September 30, 1998, there was one
other thrift institution and four commercial banks in Neosho.  Particularly in
times of high interest rates, the Association has faced additional significant
competition for investors' funds from short-term money market securities and
other corporate and government securities.  The Association's competition for
loans comes principally from other thrift institutions and commercial banks.
Such competition for deposits and the origination of loans may limit the
Association's growth in the future.  In addition, the limited growth of the
Association's market area may restrict the future growth of the Association.

OPERATING STRATEGY

     The business of the Association consists principally of attracting deposits
from the general public and using such deposits to originate and purchase
mortgage loans secured primarily by one- to four-family residences.  The
Association also invests in U.S. Government and agency securities and mortgage-
backed securities.  The Association plans to continue to fund its assets with
deposits, although FHLB advances will be utilized when appropriate.  

                                       1
<PAGE>
 
The Association's profitability depends primarily on its net interest income,
which is the difference between the income it receives on its loan, investment
and mortgage-backed and related securities portfolios, and its cost of funds,
which consists of interest paid on deposits and FHLB advances. Net interest
income is also affected by the relative amounts of interest-earning assets and
interest-bearing liabilities. When interest-earning assets equal or exceed
interest-bearing liabilities, any positive interest rate spread will generate
net interest income.

     The Association's profitability is also affected by the level of other
income and expenses.  Other income consists of service charges and fees, gains
on sales of loans and loan late charges.  Other expenses consists of
compensation and employee benefits, occupancy expenses, deposit insurance
premiums and other operating costs.  The Association's results of operations are
also significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government legislation and
policies concerning monetary and fiscal affairs, housing and financial
institutions and the attendant actions of the regulatory authorities.

ASSET AND LIABILITY MANAGEMENT

     The Association's principal financial objective is to achieve long-term
profitability while reducing its exposure to fluctuating interest rates.  The
Association has sought to reduce exposure of its earnings to changes in market
interest rates by managing the mismatch between asset and liability maturities
and interest rates.  The principal element in achieving this objective is to
increase the interest-rate sensitivity of the Association's assets by
originating loans with interest rates subject to periodic adjustment to market
conditions.  Accordingly, when possible, the Association has emphasized the
origination of ARM loans for retention in its portfolio.  In addition, the
Association maintains an investment portfolio with laddered maturities in
shorter-term securities.  The Association relies on retail deposits as its
primary source of funds.  Management believes retail deposits, compared to
brokered deposits, reduce the effects of interest rate fluctuations because they
generally represent a more stable source of funds. As part of its interest rate
risk management strategy, the Association promotes transaction accounts and one-
to three-year certificates of deposit.

          The Association uses interest rate sensitivity analysis to measure its
interest rate risk by computing changes in NPV (net portfolio value) of its cash
flows from assets, liabilities and off-balance sheet items in the event of a
range of assumed changes in market interest rates.  NPV represents the market
value of portfolio equity and is equal to the market value of assets minus the
market value of liabilities, with adjustments made for off-balance sheet items.
This analysis assesses the risk of loss in market risk sensitive instruments in
the event of a sudden and sustained 100 to 400 basis point increase or decrease
in market interest rates with no effect given to any steps that management might
take to counter the effect of that interest rate movement. Using data compiled
by the OTS, the Association receives a report which measures interest rate risk
by modeling the change in NPV (net portfolio value) over a variety of interest
rate scenarios. This procedure for measuring interest rate risk was developed by
the OTS to replace the "gap" analysis (the difference between interest-earning
assets and interest-bearing liabilities that mature or reprice within a specific
time period).

                                       2
<PAGE>
 
     The following table is provided by the OTS and illustrates the change in
NPV at September 30, 1998, based on OTS assumptions, that would occur in the
event of an immediate change in interest rates, with no effect given to any
steps that management might take to counter the effect of that interest rate
movement.

<TABLE>
<CAPTION>
                                                                         NPV AS % OF PERCENT OF  
                                                                        PORTFOLIO VALUE OF ASSETS 
BASIS POINTS ("bp")            NET PORTFOLIO VALUE                      -------------------------   
                         -------------------------------                  NPV            
CHANGES IN RATES         $ AMOUNT  $ CHANGE(1)  % CHANGE                RATIO(2)       CHANGE (3) 
----------------         --------  -----------  --------                --------       ----------                        
                             (DOLLARS IN THOUSANDS)
<S>                      <C>       <C>          <C>                    <C>             <C>    
 
       400                $  9,832  $   168        2%                      15.92%         83bp
       300                  10,052      388        4                       16.09           100
       200                  10,145      481        5                       16.05            96
       100                   9,990      326        3                       15.69            60
         0                   9,664                                         15.09
      (100)                  9,270     (394)      (4)                      14.39           (70)
      (200)                  8,993     (671)      (7)                      13.84          (125)
      (300)                  8,718     (946)      (9)                      13.36          (173)
      (400)                  8,488   (1,176)     (12)                      12.77          (232)
</TABLE>
--------------------------------------------------------------------------------
(1) Represents the increase (decrease) of the estimated NPV at the indicated
    change in interest rates compared to the NPV assuming no change in interest
    rates.
(2) Calculated as the estimated NPV divided by the portfolio value of total
    assets ("PV").
(3) Calculated as the increase (decrease) of the NPV ratio assuming the
    indicated change in interest rates over the estimated NPV ratio assuming no
    change in interest rates.

     As with any method of measuring interest rate risk, certain shortcomings
are inherent in the method of analysis presented in the foregoing table.  For
example, although certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to changes in market
interest rates.  Also, the interest rates on certain types of assets and
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other types may lag behind changes in market rates.
Additionally, certain assets, such as ARM loans, have features which restrict
changes in interest rates on a short-term basis and over the life of the asset.
Further, in the event of a change in interest rates, expected rates of
prepayments on loans and early withdrawals from certificates could likely
deviate significantly from those assumed in calculating the table.

LENDING ACTIVITIES

     GENERAL.  The principal lending activity of the Association currently is
the origination of conventional mortgage loans for the purpose of purchasing,
constructing or refinancing owner-occupied, one- to four-family residential
property.  To a significantly lesser extent, the Association also originates
commercial real estate, residential construction and consumer loans.

                                       3
<PAGE>
 
     LOAN PORTFOLIO ANALYSIS.  The following table sets forth the composition of
the Association's loan portfolio (including loans held for sale) by type of loan
as of 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>        <C>    
Mortgage loans:
 One- to four-dwelling units.......  $33,621     86.49%  $31,577     92.41%  $29,625     94.46%
 Commercial and multi-family.......      564      1.45       586      1.72        77      0.25
 Construction......................    2,167      5.58       431      1.26       486      1.55
                                     -------    ------   -------    ------   -------    ------
   Total mortgage loans............   36,352     93.52    32,594     95.39    30,188     96.26
                                     -------    ------   -------    ------   -------    ------
 
Consumer and other loans:
 Loans on deposit accounts.........      471      1.21       408      1.19       471      1.51
 Home equity.......................      809      2.08        19      0.06        --        --
 Education.........................       23      0.06        31      0.09        16      0.05
 Automobile........................    1,206      3.10     1,090      3.19       680      2.17
 Other.............................       12      0.03        27      0.08         4      0.01
                                     -------    ------   -------    ------   -------    ------
   Total consumer and other loans..    2,521      6.48     1,575      4.61     1,171      3.74
                                     -------    ------   -------    ------   -------    ------
   Total loans.....................   38,873    100.00%   34,169    100.00%   31,359    100.00%
                                     -------    ======   -------    ======   -------    ======
Less:
 Undisbursed loans in process......    1,299                 210                 225
 Unearned loan fees................       16                  36                  42
 Allowances for loan losses........       52                  44                  41
                                     -------             -------             -------
   Total loans receivable, net.....  $37,506             $33,879             $31,051
                                     =======             =======             =======
</TABLE>

     RESIDENTIAL REAL ESTATE LENDING.  The primary lending activity of the
Association is the origination of mortgage loans to enable borrowers to purchase
existing homes or to construct new one- to four-family homes. Management
believes that this policy of focusing on one- to four-family residential
mortgage loans located in its lending market area has been successful in
contributing to interest income while keeping delinquencies and losses to a
minimum. At September 30, 1998, $33.6 million, or 86.5% of the Association's
total loan portfolio, consisted of loans secured by one- to four-family
residential real estate.  Included in these loans are home equity loans.  The
Association presently originates for retention in its portfolio both fixed-rate
mortgage loans and ARM loans secured by one- to four-family properties with
terms of 15 to 30 years.  Borrower demand for ARM loans versus fixed-rate
mortgage loans is a function of the level of interest rates, the expectations of
changes in the level of interest rates and the difference between the initial
interest rates and fees charged for each type of loan.  The relative amount of
fixed-rate mortgage loans and ARM loans that can be originated at any time is
largely determined by the demand for each in a competitive environment. At
September 30, 1998, $28.0 million, or 83.3%, of the Association's one- to four-
family residential mortgage loans were subject to periodic interest rate
adjustments and $5.6 million, or 16.7%, were fixed-rate loans.

     The loan fees charged, interest rates and other provisions of the
Association's ARM loans are determined by the Association on the basis of its
own pricing criteria and competitive market conditions.  Since July 1994, the
Association has originated ARM loans whose interest rates and payments generally
are adjusted annually to a rate typically equal to 2.25% above the one-year
constant maturity U.S. Treasury index.  The Association previously originated
ARM loans whose rates are based on the Eighth District Cost of Funds Index.  The
Association currently offers ARM loans with initial rates below those which
would prevail under the foregoing computations, determined by the Association
based on market factors and competitive rates for loans having similar features
offered by other lenders 

                                       4
<PAGE>
 
for such initial periods. At September 30, 1998, the initial interest rate on
the Association's ARM loans ranged from 5.75% to 9.5% per annum. The periodic
interest rate cap (the maximum amount by which the interest rate may be
increased or decreased in a given period) on the Association's ARM loans is
generally 2% per adjustment period and the lifetime interest rate cap is
generally 5.75% over the initial interest rate of the loan. The Association does
not originate negative amortization loans. The terms and conditions of the ARM
loans offered by the Association, including the index for interest rates, may
vary from time to time. The Association believes that the annual adjustment
feature of its ARM loans also provides flexibility to meet competitive
conditions as to initial rate concessions while preserving the Association's
return on equity objectives by limiting the duration of the initial rate
concession.

     The retention of ARM loans in the Association's loan portfolio helps reduce
the Association's exposure to changes in interest rates.  There are, however,
unquantifiable credit risks resulting from the potential of increased costs due
to changed rates to be paid by the customer.  It is possible that, during
periods of rising interest rates, the risk of default on ARM loans may increase
as a result of repricing and the increased costs to the borrower.  The
Association qualifies the borrower based on the borrower's ability to repay the
ARM loan assuming the fully indexed accrual rate on the loan remains constant
during the loan term.  As a result, the potential for delinquencies and defaults
on ARM loans is lessened.  Furthermore, because the ARM loans originated by the
Association generally provide, as a marketing incentive, for initial rates of
interest below the rates which would apply were the adjustment index used for
pricing initially (discounting), these loans are subject to increased risks of
default or delinquency.  Another consideration is that although ARM loans allow
the Association to increase the sensitivity of its asset base to changes in the
interest rates, the extent of this interest sensitivity is limited by the
periodic and lifetime interest rate adjustment limits.  Because of these
considerations, the Association has no assurance that yields on ARM loans will
be sufficient to offset increases in the Association's cost of funds.

     As discussed above, the Association also originates conventional fixed-rate
mortgage loans on one- to four-family residential properties.  All fixed-rate
products are underwritten according to Freddie Mac standards so as to qualify
for sale in the secondary mortgage market, though until recently it has been the
Association's policy to retain its fixed-rate mortgage loans in its loan
portfolio.  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.

     While fixed-rate single-family residential real estate loans are normally
originated with 15- or 20-year terms, and the Association permits its ARM loans
to be assumed by qualified borrowers, such loans typically remain outstanding
for substantially shorter periods.  This is because borrowers often prepay their
loans in full upon sale of the property pledged as security or upon refinancing
the original loan.  In addition, substantially all mortgage loans in the
Association's loan portfolio contain due-on-sale clauses providing that the
Association may declare the unpaid amount due and payable upon the sale of the
property securing the loan.  The Association enforces these due-on-sale clauses
to the extent permitted by law and as business judgment dictates.  Thus, average
loan maturity is a function of, among other factors, the level of purchase and
sale activity in the real estate market, prevailing interest rates and the
interest rates payable on outstanding loans.

     The Association makes both fixed-rate and adjustable-rate home equity
loans.  These loans are secured by a first or second mortgage on residential
property.  Fixed-rate home equity loans have a term of 24 or 36 months while
adjustable-rate home equity loans have a term of 36 to 60 months.

     The Association generally requires title insurance insuring the status of
its lien on all of the real estate secured loans, though in some instances it
will accept an abstract of title accompanied by an attorney's opinion.  The
Association also requires that fire and extended coverage casualty insurance
(and, if appropriate, flood insurance) be maintained in an amount at least equal
to the outstanding loan balance.

     The Association's lending policies generally limit the maximum loan-to-
value ratio on mortgage loans secured by owner-occupied properties to 95% of the
lesser of the appraised value or the purchase price, with the condition that
private mortgage insurance is required on loans with loan-to-value ratios
greater than 80%.  The Association has established a program for first-time home
buyers under which it will make loans with a loan-to-value ratio up to 89.9%.

                                       5
<PAGE>
 
     CONSTRUCTION LENDING.  The Association currently originates residential
construction loans to individuals to construct their own homes and, to a much
lesser extent, to local builders.  At September 30, 1998, construction loans
amounted to $2.2 million, or 5.6%, of the Association's total loan portfolio.
The Association's construction loan portfolio did not include any loans to
builders or any speculative loans at that date, although the Association
occasionally makes such loans.

     The Association's construction loans to individuals are made in connection
with the granting of permanent financing on the property and require monthly
payments of interest only during their term.  Residential construction loans
convert to an adjustable-rate loan at the earlier of the completion of
construction or one year.  Draws are generally made to the borrower after he has
provided the Association with billings showing the costs and work completed and
following an inspection by the Association.

     Construction lending is generally considered to involve a higher level of
risk as compared to one- to four-family residential lending because of the
inherent difficulty in estimating both a property's value at completion of the
project and the estimated cost of the project.  The nature of these loans is
such that they are generally more difficult to evaluate and monitor.  If the
estimate of construction cost proves to be inaccurate, the Association may be
required to advance funds beyond the amount originally committed to permit
completion of the project.  If the estimate of value proves to be inaccurate,
the Association may be confronted at, or prior to the maturity of the loan, with
a project whose value is insufficient to assure full repayment.  Speculative
loans, i.e., loans to builders to construct homes for which no purchaser has
been identified, carry more risk because the payoff for the loan is dependent on
the builder's ability to sell the property prior to the time that the
construction loan is due.

     COMMERCIAL AND MULTI-FAMILY REAL ESTATE LOANS.  The Association has
historically engaged in a limited amount of commercial and multi-family real
estate lending.  At September 30, 1998, commercial and multi-family real estate
loans in the Association's portfolio totalled $564,000.  The Association
originated $360,000 of commercial real estate or multi-family loans during the
year ended September 30, 1998.

     The Association does not actively solicit or originate commercial or multi-
family real estate loans.  Loans secured by commercial or multi-family real
estate generally are larger and involve greater risks than one- to four-family
residential mortgage loans.  Payments on loans secured by such properties are
often dependent on successful operation or management of the properties.
Repayment of such loans may be subject to a greater extent to adverse conditions
in the real estate market or the economy.  The Association seeks to minimize
these risks in a variety of ways, including limiting the size of such loans and
strictly scrutinizing the financial condition of the borrower, the quality of
the collateral and the management of the property securing the loan.  The
Association also obtains loan guarantees from financially capable parties.
Substantially all of the properties securing the Association's commercial and
multi-family real estate loans are inspected by the Association's lending
personnel before the loan is made.  The Association also obtains appraisals on
each property in accordance with applicable regulations.

     CONSUMER AND OTHER LOANS.  Consumer lending has traditionally been a small
part of the Association's business.  Consumer loans generally have shorter-terms
to maturity or repricing and higher interest rates than mortgage loans.  The
Association's consumer and other loans consist primarily of automobile loans,
home equity loans and savings account loans.  At September 30, 1998, the
Association's consumer and other loans totalled approximately $2.5 million, or
6.5% of the Association's total loans.

     Automobile loans are secured by both new and used cars.  Automobile loans
are only made to the borrower-owners on a direct basis.  New cars are financed
for a period of up to 54 months while used cars are financed for 42 months or
less depending on the age of the car.  Collision and comprehensive insurance
coverage is required on all automobile loans and the Association holds the
certificate of title to the car securing the loan.  At September 30, 1998,
automobile loans amounted to $1.2 million, or 3.1% of the Association's total
loans.

     The Association began making equity line of credit ("ELOC") loans during
September 30, 1997, however full implementation of the ELOC loans occurred
during the year ended September 30, 1998.  ELOC loans are for a period 

                                       6
<PAGE>
 
of 12 years, with the first two years being the draw years and the next 10 years
being the repayment years. ELOC loans can be made for up to 95% of the appraised
value of the property securing the loan. Home equity loans amounted to $809,000,
or 2.08% of the Association's total loans at September 30, 1998.

     The Association may make savings account loans with the account pledged as
collateral to secure the loan. Savings account loans are payable in monthly
payments of principal and interest or in a single payment.  At September 30,
1998, total loans on savings accounts amounted to $471,000 or 1.2% of the
Association's total loans.

     Consumer loans entail greater risk than do residential mortgage loans,
particularly in the case of consumer loans which are unsecured or secured by
rapidly depreciating assets such as automobiles.  In such cases, any repossessed
collateral for a defaulted consumer loan may not provide an adequate source of
repayment of the outstanding loan balance as a result of the greater likelihood
of damage, loss or depreciation.  The remaining deficiency often does not
warrant further substantial collection efforts against the borrower beyond
obtaining a deficiency judgment.  In addition, consumer loan collections are
dependent on the borrower's continuing financial stability, and thus are more
likely to be adversely affected by job loss, divorce, illness or personal
bankruptcy.  Furthermore, the application of various Federal and state laws,
including Federal and state bankruptcy and insolvency laws, may limit the amount
which can be recovered on such loans.  Such loans may also give rise to claims
and defenses by a consumer loan borrower against an assignee of such loans such
as the Association, and a borrower may be able to assert against such assignee
claims and defenses that it has against the seller of the underlying collateral.
At September 30, 1998, the Association had no delinquencies in its consumer loan
portfolio.

LOAN MATURITY AND REPRICING

     The following table sets forth certain information at September 30, 1998
regarding the dollar amount of loans maturing in the Association's portfolio
based on their contractual terms to maturity, but does not include scheduled
payments or potential prepayments.  Demand loans, loans having no stated
schedule of repayments and no stated maturity, and overdrafts are reported as
due in one year or less.  Loan balances are before deductions for undisbursed
loan proceeds, unearned discounts, unearned income and allowance for loan
losses.  Amounts include loans for sale.


<TABLE>
<CAPTION>
                                                          AFTER     AFTER    AFTER                     
                                                         ONE YEAR  3 YEARS  5 YEARS            
                                             WITHIN      THROUGH   THROUGH  THROUGH     BEYOND  
                                            ONE YEAR     3 YEARS   5 YEARS  10 YEARS   10 YEARS TOTAL 
                                            ---------    --------  -------  --------   -------- -------
                                                                   (DOLLARS IN THOUSANDS)
Mortgage loans:                       
<S>                                         <C>           <C>      <C>       <C>      <C>       <C>       
 One- to four-dwelling units..............    $  673       $  512   $  817    $2,619   $29,000  $33,621
 Commercial and multi-family                                                                            
    real estate...........................        --           --       81        51       432      564 
 Construction.............................     1,244           --       --        --       923    2,167
                                              ------       ------   ------    ------   -------  -------
  Total mortgage loans....................     1,917          512      898     2,670    30,355   36,352
Consumer and other loans..................       700          603      406        12       800    2,521
                                              ------       ------   ------    ------   -------  -------
  Total loans.............................    $2,617       $1,115   $1,304    $2,682   $31,155  $38,873
                                              ======       ======   ======    ======   =======  =======
</TABLE>

                                       7
<PAGE>
 
     The following table sets forth the dollar amount of all loans due one year
after September 30, 1998, which have fixed interest rates and have floating or
adjustable interest rates.

<TABLE>
<CAPTION>
                                                FLOATING- OR
                                FIXED-           ADJUSTABLE-
                                 RATE               RATES
                                ------          --------------
                                    (DOLLARS IN THOUSANDS)
Mortgage loans:
<S>                             <C>                   <C>    
 One- to four-dwelling units    $5,087                 $27,861
 Commercial and multi-family        81                     483
    real estate
 Construction                      543                     380
                                ------                 -------
  Total mortgage loans           5,711                  28,724
Consumer and other loans         1,021                     800
                                ------                 -------
  Total loans                   $6,732                 $29,524
                                ======                 =======
</TABLE>

     Scheduled contractual principal repayments of loans and mortgage-backed
securities do not reflect the actual life of such assets.  The average life of
loans and mortgage-backed securities is substantially less than their
contractual terms because of prepayments.  In addition, due-on-sale clauses on
loans generally give the Association the right to declare loans immediately due
and payable in the event, among other things, that the borrower sells the real
property subject to the mortgage and the loan is not repaid.  The average life
of mortgage loans tends to increase, however, when current mortgage loan market
rates are substantially higher than rates on existing mortgage loans and,
conversely, decreases when rates on existing mortgage loans are substantially
higher than current mortgage loan market rates.

    LOAN SOLICITATION AND PROCESSING.  Loan applicants come through referrals by
realtors and previous and present customers and through advertising promotions.
Upon receipt of a loan application from a prospective borrower, a credit report
and other data are obtained to verify specific information relating to the loan
applicant's employment, income and credit standing.  An appraisal of the real
estate offered as collateral generally is undertaken by a fee appraiser approved
by the Association and, when required, licensed or certified by the State of
Missouri.

    Loans in the amount of $75,000 or less may be approved by any one member of
the Association's Loan Committee, which consists of the Association's President
and two directors.  Loans of $75,000 to $100,000 must be approved by any one
member of the Loan Committee and reviewed by another member.  Loans in excess of
$100,000 must be approved by two members of the Loan Committee and reviewed by
the Association's Board of Directors.

    Mortgage loans are generally approved or denied within ten days and closed
within 21 days.  Interest rates are subject to change if the approved loan is
not closed within the time of the commitment, which usually is 30 days.

    LOAN ORIGINATIONS, SALES AND PURCHASES.  During the year ended September 30,
1998, the Association's total gross mortgage loan originations were $11.3
million.  While the Association originates both adjustable-rate and fixed-rate
loans, its ability to generate loans is dependent upon relative customer demand
for loans in its market.

    Consistent with its asset/liability management strategy, the Association's
policy had been to retain in its portfolio all of the one- to four-family loans
that it originates.  In August 1997, the Association acquired Crawford Mortgage,
Inc., a mortgage broker based in Joplin, Missouri.  Through Crawford Mortgage,
the Association originates loans to sell in the secondary market.    During the
year ended September 30, 1998 the Association sold $877,000 of loans.

                                       8
<PAGE>
 
    During the year ended September 30, 1996, the Association used proceeds from
the Conversion to purchase mortgage loans secured by one- to four-family
residential properties in southwest Missouri.  The loan purchases were made in
conformance with the Association's underwriting standards. The Association also
purchased loans in the year ended September 30, 1997 with a cash advance from
the FHLB.   No loans were purchased during the year ended September 30, 1998.

    The following table shows total mortgage loans originated, purchased, sold
and repaid during the periods indicated.

<TABLE>
<CAPTION>
                                                           YEARS ENDED SEPTEMBER 30,
                                                           -------------------------
                                                            1998     1997     1996
                                                           -------------------------
                                                                 (IN THOUSANDS)
<S>                                                        <C>      <C>      <C> 
Total mortgage loans at beginning of period...........     $32,594  $30,188  $25,361
Mortgage loans originated:                            
 One- to four-dwelling units(1).......................      10,920    3,393    8,498
 Commercial and multi-family real estate..............         360      592       --
                                                           -------  -------  -------
  Total mortgage loans originated.....................      11,280    3,985    8,498
Mortgage loans purchased..............................          --    1,015    1,178
Mortgage loans sold...................................         877       --       --
Mortgage loan principal repayments....................       6,645    2,594    4,849
Loans transferred to other real estate................          --       --       --
                                                           -------  -------  -------
Net loan activity.....................................       3,758    2,406    4,827
                                                           -------  -------  -------
Total gross mortgage loans at end of period                $36,352  $32,594  $30,188
                                                           =======  =======  =======
</TABLE>
--------------------------------
(1)      Includes construction loans originated during the period.


     LOAN COMMITMENTS.  The Association issues commitments for fixed- and
adjustable-rate one- to four-family residential mortgage loans conditioned upon
the occurrence of certain events.  Such commitments are made in writing on
specified terms and conditions and are honored for up to 30 days from the date
of loan approval.  The Association had outstanding net loan commitments of
approximately $1.4 million at September 30, 1998.  See Note 16 of Notes to
Consolidated Financial Statements contained in the Annual Report.

     LOAN ORIGINATION AND OTHER FEES.  The Association, in most instances,
receives loan origination fees and discount "points."  Loan fees and points are
a percentage of the principal amount of the mortgage loan which are charged to
the borrower for funding the loan.  The amount of points charged by the
Association varies, though the range generally is between 0 and 2 points.
Current accounting standards require fees received (net of certain loan
origination costs) for originating loans to be deferred and amortized into
interest income over the contractual life of the loan.  Net deferred fees
associated with loans that are prepaid are recognized as income at the time of
prepayment.  The Association had $16,000 of net deferred mortgage loan fees at
September 30, 1998.

     NON-PERFORMING ASSETS AND DELINQUENCIES.  When a mortgage loan borrower
fails to make a required payment when due, the Association institutes collection
procedures.  The first notice is mailed to the borrower at the end of the month
in which the payment is due and, if necessary, a second written notice follows
within 30 days thereafter.  Attempts to contact the borrower by telephone
generally begin soon after the first notice is mailed to the borrower.  If a
satisfactory response is not obtained, continuous follow-up contacts are
attempted until the loan has been brought current.  Before the 90th day of
delinquency, attempts to interview the borrower, preferably in person, are made

                                       9
<PAGE>
 
to establish (i) the cause of the delinquency, (ii) whether the cause is
temporary, (iii) the attitude of the borrower toward the debt, and (iv) a
mutually satisfactory arrangement for curing the default.

     In most cases, delinquencies are cured promptly; however, if by the 91st
day of delinquency, or sooner if the borrower is chronically delinquent and all
reasonable means of obtaining payment on time have been exhausted, foreclosure,
according to the terms of the security instrument and applicable law, is
initiated.  Interest income on loans is reduced by the full amount of accrued
and uncollected interest.

     When a consumer loan borrower fails to make a required payment on a
consumer loan by the payment due date, the Association institutes collection
procedures.  The first notice is mailed to the borrower 15 days following the
payment due date.  If payment is not promptly received, a second notice is
mailed to the borrower 20 days following the payment due date and the customer
is contacted by telephone to ascertain the nature of the delinquency.  If the
delinquency remains uncured, the Association mails an additional notice to the
borrower on the 30th day of delinquency and every 30 days thereafter and
continues to contact the borrower by telephone.

     In most cases, delinquencies are cured promptly; however, if, by the 91st
day of delinquency the delinquency has not been cured, the Association begins
action to either obtain a judgment in small claims court or to repossess the
collateral.

     The Association's Board of Directors is informed on a monthly basis as to
the status of all mortgage and consumer loans that are delinquent more than 30
days, the status on all loans currently in foreclosure, and the status of all
foreclosed and repossessed property owned by the Association.

                                       10
<PAGE>
 
     The following table sets forth information with respect to the
Association's non-performing assets and restructured loans within the meaning of
Statement of Financial Accounting Standards No. 15 at the dates indicated. Any
loan four or more payments past due is placed on nonaccrual status.

<TABLE>
<CAPTION>
                                                                                 AT SEPTEMBER 30,
                                                                 ----------------------------------------
                                                                  1998       1997    1996    1995    1994
                                                                 ----------------------------------------
                                                                              (DOLLARS IN THOUSANDS)
Loans accounted for on a nonaccrual basis:                
Real estate:                                              
<S>                                                              <C>       <C>     <C>     <C>     <C>     
   Residential............................................       $  21      $   9   $   3   $  49   $  18
   Commercial and multi-family............................          --         --      --      --      --
 Consumer and other.......................................          --         11      --      --      --
                                                                 -----      -----   -----   -----   -----
    Total.................................................          21         20       3      49      18
                                                                 -----      -----   -----   -----   -----
                                                          
Accruing loans which are contractually                    
   past due 90 days or more:                              
 Real estate:                                             
   Residential............................................          45         66      19      40      43
   Commercial and multi-family............................          --         --      --      --      --
 Consumer and other.......................................          --         --      --      --      --
                                                                 -----      -----   -----   -----   -----
    Total.................................................          45         66      19      40      43
                                                                 -----      -----   -----   -----   -----
                                                          
Total of nonaccrual and 90 days                                                                           
   past due loans.........................................          66         86      22      89      61 
                                                          
Real estate owned(1)......................................          --         --      --      --      --
                                                                 -----      -----   -----   -----   -----
    Total non-performing assets...........................       $  66      $  86   $  22   $  89   $  61
                                                                 =====      =====   =====   =====   =====
Restructured loans........................................          --         --      --      --      --
                                                                 =====      =====   =====   =====   =====
Total loans delinquent 90 days or                         
           more to net loans..............................        0.18%      0.25%   0.07%   0.34%   0.25%
                                                                 =====      =====   =====   =====   =====  
Total loans delinquent 90 days or                                                                          
           more to consolidated total assets..............        0.09%      0.14%   0.04%   0.15%   0.12% 
                                                                 =====      =====   =====   =====   =====  
                                                          
Total non-performing assets to                                                                             
         consolidated total assets........................        0.09%      0.14%   0.04%   0.15%   0.12% 
                                                                 ======      =====   =====   =====   ===== 
</TABLE>
___________________________________
(1) Represents the book value of property acquired through foreclosure, net of
    valuation reserves.


    Interest income that would have been recorded for the year ended September
30, 1998 had nonaccruing loans been current in accordance with their original
terms amounted to approximately $2,000.  The amount of interest included in
interest income on such loans for the year ended September 30, 1998 amounted to
approximately $0.

     REAL ESTATE OWNED.  Real estate acquired by the Association as a result of
foreclosure or by deed-in-lieu of foreclosure is classified as real estate owned
until it is sold.  When property is acquired it is recorded at the lower of its

                                       11
<PAGE>
 
cost, which is the unpaid principal balance of the related loan plus foreclosure
costs, or fair market value. Subsequent to foreclosure, the property is carried
at the lower of the foreclosed amount or fair value.  Upon receipt of a new
appraisal and market analysis, the carrying value is written down through the
establishment of a specific reserve to its fair value.  At September 30, 1998,
the Association had no real estate owned.

     ASSET CLASSIFICATION.  The OTS has adopted various regulations regarding
problem assets of savings institutions.  The regulations require that each
insured institution review and classify its assets on a regular basis.  In
addition, in connection with examinations of insured institutions, OTS 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 must have one or more
defined weaknesses and are characterized by the distinct possibility that the
insured institution will sustain some loss if the deficiencies are not
corrected.  Doubtful assets have the weaknesses of substandard assets with the
additional characteristic 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 possibility 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.  If an asset or portion thereof is
classified loss, the insured institution establishes specific allowances for
loan losses for the full amount of the portion of the asset classified loss.  A
portion of general loan loss allowances established to cover possible losses
related to assets classified substandard or doubtful may be included in
determining an institution's regulatory capital, while specific valuation
allowances for loan losses generally do not qualify as regulatory capital.
Assets that do not currently expose the insured institution to sufficient risk
to warrant classification in one of the aforementioned categories but possess
weaknesses are required to be designated "special mention."  Not all of the
Association's non-performing assets are classified as problem assets.  In
determining whether the Association's non-performing assets expose the
Association to sufficient risk to warrant classification, the Association may
consider various factors, including the borrower's payment history, the
existence of private mortgage insurance, and the loan-to-value ratio.  Upon
consideration of these factors, the Association may determine that the asset in
question does not present a risk of loss that requires it to be classified.

     At September 30, 1998, classified assets totalled $43,000 and included two
substandard loans in the amount of $43,000 and no special mention loans.  The
aggregate amounts of the Association's classified assets at the dates indicated
were as follows:

<TABLE>
<CAPTION>
                               AT SEPTEMBER 30,
                               ===============

                                1998    1997
                               ======  ======
                               (IN THOUSANDS)
<S>                           <C>     <C>
 
Loss.........................   $ --   $  --
Doubtful.....................     --      --
Substandard..................     43      81
Special mention..............     --      --
                               -----   -----
   Total classified assets...  $  43   $  81
                               =====   =====
</TABLE>


     ALLOWANCE FOR LOAN LOSSES.  The Association has established a systematic
methodology for the determination of provisions for loan losses.  The
methodology is set forth in a formal policy and takes into consideration the
need for an overall general valuation allowance as well as specific allowances
that are tied to individual loans.

     In originating loans, the Association recognizes that losses will be
experienced and that the risk of loss will vary with, among other things, the
type of loan being made, the creditworthiness of the borrower over the term of
the loan, general economic conditions and, in the case of a secured loan, the
quality of the security for the loan.  The Association increases its allowance
for loan losses by charging provisions for possible loan losses against the
Association's income.

                                       12
<PAGE>
 
     The general valuation allowance is maintained to cover losses inherent in
the portfolio of performing loans. Management reviews the adequacy of the
allowance at least quarterly based on the Association's past loan loss
experiences, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral, and current economic conditions.

     Specific valuation allowances are established to absorb losses on loans for
which full collectibility may not be reasonably assured.  The amount of the
allowance is based on the estimated value of the collateral securing the loan
and other analyses pertinent to each situation.

     Generally, a provision for losses is charged against income on a quarterly
basis to maintain the allowances. A provision of $8,000 was charged against
income for the year ended September 30, 1998.  At September 30, 1998, the
Association had an allowance for loan losses of $52,000.  Management believes
that the amount maintained in the allowances will be adequate to absorb losses
inherent in the portfolio.

     Although management believes that it uses the best information available to
make such determinations, future adjustments to the allowance for loan losses
may be necessary and results of operations could be significantly and adversely
affected if circumstances differ substantially from the assumptions used in
making the determinations.

     While the Association believes it has established its existing allowance
for loan losses in accordance with generally accepted accounting principles,
there can be no assurance that regulators, in reviewing the Association's loan
portfolio, will not request the Association to increase significantly its
allowance for loan losses.  In addition, because future events affecting
borrowers and collateral cannot be predicted with certainty, there can be no
assurance that the existing allowance for loan losses is adequate or that
substantial increases will not be necessary should the quality of any loans
deteriorate as a result of the factors discussed above.  Any material increase
in the allowance for loan losses may adversely affect the Association's
financial condition and results of operations.

     The following table sets forth an analysis of the Association's allowance
for loan losses for the periods indicated.  Where specific loan loss reserves
have been established, any differences between the loss reserve and the amount
of loss realized has been charged or credited to current income.

<TABLE>
<CAPTION>
                                                    YEARS ENDED SEPTEMBER 30,
                                          -----------------------------------------
                                           1998       1997    1996    1995    1994
                                          ------     ------  ------  ------  ------
                                                       (DOLLARS IN THOUSANDS)
<S>                                       <C>       <C>     <C>     <C>     <C>     
Allowance at beginning of period.......   $  44      $  41   $  38   $  31   $  31
Provision for loan losses..............       8          3       3       7      --
 
Recoveries.............................      --         --      --      --      --
Charge-offs............................      --         --      --      --      --
                                          -----      -----   -----   -----   -----                                                
Net charge-offs........................      --         --      --      --      --
                                          -----      -----   -----   -----   -----
 
Balance at end of period...............   $  52      $  44   $  41   $  38   $  31
                                          =====      =====   =====   =====   =====
 
Ratio of allowance to total loans......    0.14%      0.13%   0.13%   0.15%   0.12%
 
Ratio of net charge-offs to average                                                
   loans outstanding during the period.      --         --      --      --      -- 
</TABLE>

                                       13
<PAGE>
 
     The following table sets forth the breakdown of the allowance for loan
losses by loan category for the periods indicated.

<TABLE>
<CAPTION>
                                                                   AT SEPTEMBER 30,
                                           -----------------------------------------------------------------
                                                   1998                  1997                  1996
                                           --------------------  -------------------   ---------------------
                                                    PERCENT OF            PERCENT OF            PERCENT OF
                                                     LOANS IN              LOANS IN              LOANS IN
                                                       EACH                  EACH                  EACH
                                                   CATEGORY TO           CATEGORY TO            CATEGORY TO
                                           AMOUNT  TOTAL LOANS   AMOUNT  TOTAL LOANS   AMOUNT  TOTAL  LOANS
                                           ------  ------------  ------  ------------  ------  -------------
                                                                 (DOLLARS IN THOUSANDS)
                                       
Mortgage loans:                        
<S>                                        <C>     <C>           <C>     <C>           <C>     <C>           
 One- to four-dwelling units............      $41        86.49%     $34        92.56%     $33         94.46%
 Commercial and multi-family............       --         1.45       --         1.72       --          0.25
 Construction...........................       --         5.58       --         1.01       --          1.55
Consumer and other loans................       11         6.48       10         4.71        8          3.74
                                              ---       ------      ---       ------      ---        ------
  Total allowance for loan losses.......      $52       100.00%     $44       100.00%     $41        100.00%
                                              ===       ======      ===       ======      ===        ======
</TABLE>

INVESTMENT ACTIVITIES

     The Association is permitted under Federal and state law to invest in
various types of liquid assets, including U.S. Treasury obligations, securities
of various Federal agencies and of state and municipal governments, deposits at
the FHLB-Des Moines, certificates of deposit of federally insured institutions,
certain bankers' acceptances and federal funds.  Subject to various
restrictions, the Association may also invest a portion of its assets in
commercial paper, corporate debt securities and ARM funds, the assets of which
conform to the investments that the Association is authorized to make directly.
Savings institutions like the Association are also required to maintain an
investment in FHLB stock and a minimum level of liquid assets which vary from
time to time.  See "Regulation -- Federal Home Loan Bank System."  The
Association may decide to increase its liquidity above the required levels
depending upon the availability of funds and comparative yields on investments
in relation to return on loans.

     The Association is required under federal regulations to maintain a minimum
amount of liquid assets and is also permitted to make certain other securities
investments.  See "Regulation" contained herein, and "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" contained in the Annual Report.  At September 30, 1998, the
Association's regulatory liquidity was 40.1% which is significantly in excess of
the 4% required by OTS regulations.  It is the intention of management to hold
all securities in the Association's investment portfolio in order to enable the
Association to provide liquidity for loan funding upon maturity of such
investment securities and to match more closely the interest-rate sensitivities
of its assets and liabilities.

     The Association's President determines appropriate investments in
accordance with the Board of Directors' approved investment policies and
procedures.  Investments are made following certain considerations, which
include the Association's liquidity position and anticipated cash needs and
sources (which in turn include outstanding commitments, upcoming maturities,
estimated deposits and anticipated loan amortization and repayments).  Further,
the effect that the proposed investment would have on the Association's credit
and interest rate risk, and risk-based capital is given consideration during the
evaluation.  The interest rate, yield, settlement date and maturity are also
reviewed.

     Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," requires that investments be
categorized as "held to maturity," "trading securities" or "available for sale,"
based on management's intent as to the ultimate disposition of each security.
Debt securities may be classified as "held to maturity" and reported in
financial statements at amortized cost only if the reporting entity has the
positive intent and 

                                       14
<PAGE>
 
ability to hold those securities to maturity. Securities that might be sold in
response to changes in market interest rates, changes in the security's
prepayment risk, increases in loan demand, or other similar factors cannot be
classified as "held to maturity." Debt and equity securities held for current
resale are classified as "trading securities." Such securities are reported at
fair value, and unrealized gains and losses on such securities would be included
in earnings. Debt and equity securities not classified as either "held to
maturity" or "trading securities" are classified as "available for sale." Such
securities are reported at fair value, and unrealized gains and losses on such
securities are excluded from earnings and reported as a net amount in a separate
component of equity.

     The Association purchases mortgage-backed securities in the form of Ginnie
Mae, Freddie Mac and Fannie Mae participation certificates in order to
supplement loan production.  Ginnie Mae and Fannie Mae certificates are
guaranteed as to principal and interest by the full faith and credit of the
United States, while Freddie Mac certificates are guaranteed by Freddie Mac.
Mortgage-backed securities generally entitle the Association to receive a pro
rata portion of the cash flows from an identified pool of mortgages.  The cash
flows from such pools are segmented and paid in accordance with a predetermined
priority to various classes of securities issued by the entity.  See Note 5 of
Notes to Consolidated Financial Statements contained in the Annual Report.

     The following table sets forth the composition of Association's mortgage-
backed securities portfolio at carrying value at the dates indicated.  All of
the Association's mortgage-backed securities are classified as held to maturity.

<TABLE>
<CAPTION>
                                                               AT SEPTEMBER 30,
                                        -------------------------------------------------------------
                                               1998                1997                  1996
                                        --------------------------------------------------------------
                                        BOOK    PERCENT OF    BOOK    PERCENT OF    BOOK    PERCENT OF
                                        VALUE    PORTFOLIO    VALUE    PORTFOLIO    VALUE    PORTFOLIO
                                        ------  ----------    -----   ----------    -----   ----------
                                                           (DOLLARS IN THOUSANDS)
Mortgage-backed securities:
 GNMA:
<S>                                    <C>           <C>    <C>            <C>     <C>           <C>          
  Fixed..............................  $   40         1.28%  $   56         1.25%  $   69         1.29%
  Adjustable.........................     690        22.11      993        22.20      823        15.41
 FHLMC:
  Fixed..............................     712        22.81    1,152        25.76    1,450        27.14
  Adjustable.........................      --           --       --           --       --           --
 FNMA:
  Fixed..............................     264         8.46      413         9.23      525         9.83
  Adjustable.........................   1,475        47.26    1,945        43.48    2,574        48.18
 
Unamortized premium (discount), net..     (60)       (1.92)     (86)       (1.92)     (99)       (1.85)
                                       ------       ------   ------       ------   ------       ------
   Total mortgage-backed securities..  $3,121       100.00%  $4,473       100.00%  $5,342       100.00%
                                       ======       ======   ======       ======   ======       ======
</TABLE>

     At September 30, 1998, the Corporation's investment securities portfolio
totalled approximately $10.0 million at carrying value and consisted principally
of U.S. Treasury and agency securities and municipal bonds.  The Corporation's
municipal bond portfolio, which totalled $939,000 at fair value ($919,000 at
amortized cost) at September 30, 1998, was comprised primarily of obligations of
political subdivisions of the State of Missouri that have maturities ranging
from less than one year to five to ten years.

                                       15
<PAGE>
 
     The following table sets forth the composition of Corporation's investment
securities portfolio at carrying value at the dates indicated.

<TABLE>
<CAPTION>
                                                              AT SEPTEMBER 30,
                                   -------------------------------------------------------------------- 
                                             1998                  1997                   1996
                                   ----------------------   --------------------   -------------------- 
                                     CARRYING  PERCENT OF   CARRYING  PERCENT OF   CARRYING  PERCENT OF
                                      VALUE     PORTFOLIO    VALUE     PORTFOLIO    VALUE     PORTFOLIO
                                   ----------  ----------   --------  ----------   --------  ----------
                                                           (DOLLARS IN THOUSANDS)
<S>                                  <C>          <C>       <C>          <C>       <C>           <C>          
Debt securities:
  U.S. Government treasury and                                                                           
     obligations of U.S.
     Government agencies...........    $8,482       85.07%   $12,218       88.92%   $10,669       85.50% 
  State and political subdivision..       919        9.22        834        6.07        959        7.68
                                       ------      ------    -------      ------    -------      ------
   Total debt securities...........     9,401       94.29     13,052       94.99     11,628       93.18
                                       ------      ------    -------      ------    -------      ------
Equity securities:
  FHLB stock.......................       365        3.66        421        3.07        421        3.37
  Common stock.....................       204        2.05        267        1.94        430        3.45
                                       ------      ------    -------      ------    -------      ------
   Total equity securities.........       569        5.71        688        5.01        851        6.82
                                       ------      ------    -------      ------    -------      ------
     Total.........................    $9,970      100.00%   $13,740      100.00%   $12,479      100.00%
                                       ======      ======    =======      ======    =======      ======
</TABLE>


     The following table sets forth the maturities and weighted average yields
of the debt securities in the Corporation's investment securities portfolio at
September 30, 1998.

<TABLE>
<CAPTION>
                                       LESS THAN          ONE TO          OVER FIVE TO              OVER
                                        ONE YEAR         FIVE YEARS         TEN YEARS             TEN YEARS
                                   ---------------   ----------------     -------------      ----------------
                                     AMOUNT  YIELD   AMOUNT     YIELD     AMOUNT  YIELD      AMOUNT     YIELD
                                   --------  -----   ------     -----     ------  -----      ------     -----    
                                                            (DOLLARS IN THOUSANDS)
Debt securities:
<S>                                  <C>     <C>     <C>       <C>        <C>      <C>     <C>         <C>
  U.S. Government treasury and                                                                                
     obligations of U.S.
     Government agencies............  $400   6.13%   $1,750     5.77%      $5,112   6.62%   $1,220      8.03% 
  State and political subdivision...   335   5.54       275     5.62          309   4.45        --
                                       ----          ------                ------           ------
   Total............................   $735          $2,025                $5,421           $1,220
                                       ====          ======                ======           ======
</TABLE>

                                       16
<PAGE>
 
DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS

     GENERAL.  Deposits and loan repayments are the major sources of the
Association's funds for lending and other investment purposes.  Scheduled loan
repayments are a relatively stable source of funds, while deposit inflows and
outflows and loan prepayments are influenced significantly by general interest
rates and money market conditions. Borrowings through the FHLB-Des Moines may be
used on a short-term basis to compensate for reductions in the availability of
funds from other sources.  Presently, the Association has no other borrowing
arrangements.

     DEPOSIT ACCOUNTS.  Substantially all of the Association's depositors are
residents of the State of Missouri. Deposits are attracted from within the
Association's lending market area through the offering of a broad selection of
deposit instruments, including NOW accounts, money market deposit accounts,
regular savings accounts, certificates of deposit and retirement savings plans.
Deposit account terms vary, according to the minimum balance required, the time
periods the funds must remain on deposit and the interest rate, among other
factors.  In determining the terms of its deposit accounts, the Association
considers current market interest rates, profitability to the Association,
matching deposit and loan products and its customer preferences and concerns.
The Association generally reviews its deposit mix and pricing twice weekly.

     The following table indicates the amount of the Association's jumbo
certificates of deposit by time remaining until maturity as of September 30,
1998.  Jumbo certificates of deposit represent minimum deposits of $100,000.

<TABLE>
<CAPTION>
MATURITY PERIOD                     AMOUNTS
---------------                  -------------
                                 (IN THOUSANDS)
 
<S>                              <C>
Three months or less                    $  636
Over three through six months              403
Over six through twelve months             435
Over twelve months                         323
                                        ------
   Total                                $1,797
                                        ======
</TABLE>


     The following table sets forth the balances (inclusive of interest
credited) of deposits in the various types of accounts offered by the
Association at the dates indicated.

<TABLE>
<CAPTION>
                                                               AT SEPTEMBER 30,
                                -------------------------------------------------------------------------------
                                            1998                       1997                        1996
                                --------------------------  -------------------------------  ------------------
                                         PERCENT                        PERCENT                        PERCENT
                                            OF      INCREASE               OF      INCREASE               OF
                                AMOUNT    TOTAL    (DECREASE)  AMOUNT    TOTAL    (DECREASE)  AMOUNT    TOTAL
                                ------   -------   ----------  ------   --------  ---------  ------------------
                                                            (DOLLARS IN THOUSANDS)
 
<S>                             <C>       <C>       <C>        <C>      <C>        <C>       <C>        <C>       
Noninterest-bearing...........  $   579     1.21%     $  181   $   398     0.91%    $   194   $   204     0.42%
Demand and NOW checking.......    7,336    15.30       1,386     5,950    13.56          11     5,939    12.26
Passbook savings accounts.....    5,718    11.93         (14)    5,732    13.06         (75)    5,807    11.99
Money market deposit..........    2,584     5.39        (504)    3,088     7.03         159     2,929     6.05
Fixed-rate certificates
   which mature:
 Within one year..............   22,809    47.57       1,201    21,608    49.23      (5,008)   26,616    54.94
 After one year, but                                                                                           
    within three years........    8,435    17.59       2,005     6,430    14.65         467     5,963    12.31 
 After three years............      483     1.01        (203)      686     1.56        (300)      986     2.03
                                -------   ------      ------   -------   ------     -------   -------   ------
   Total......................  $47,944   100.00%     $4,052   $43,892   100.00%    $(4,552)  $48,444   100.00%
                                =======   ======      ======   =======   ======     =======   =======   ======
</TABLE>
 

                                       17
<PAGE>
 

     The following table sets forth the time deposits in the Association
classified by rates as of the dates indicated.

<TABLE>
<CAPTION>
                                AT SEPTEMBER 30,
                         ----------------------------
                         1998        1997       1996
                         ----------------------------
                                     (DOLLARS IN
                                      THOUSANDS)
                    
<S>                     <C>         <C>      <C>
4.00 - 4.99%......      $ 4,568      $ 5,020  $ 3,516
5.00 - 5.99%......       26,230       21,844   21,079
6.00 - 6.99%......          929        1,860    8,970
                        -------      -------  -------
   Total..........      $31,727      $28,724  $33,565
                        =======      =======  =======
</TABLE>

         The following table sets forth the amount and maturities of time
deposits at September 30, 1998.

<TABLE>
<CAPTION>
                                        AMOUNT DUE
                      --------------------------------------------
                                                                             PERCENT
                                                                             OF TOTAL
                        LESS THAN  1 - 2   2 - 3   3 - 4   AFTER             CERTIFICATE
                        ONE YEAR   YEARS   YEARS   YEARS   4 YEARS  TOTAL    ACCOUNTS
                      -----------  ------  ------  ------  -------  -------  -----------
                                          (IN THOUSANDS)
<S>                     <C>        <C>     <C>     <C>     <C>      <C>          <C> 
4.00 - 4.99%.......       $ 4,568  $   --  $   --  $   --  $    --  $ 4,568        14.40%
5.00 - 5.99%.......        17,535   5,868   2,344     483       --   26,230        82.67
6.00 - 6.99%.......           707     117     105      --       --      929         2.93
                          -------  ------  ------  ------  -------  -------       ------
   Total...........       $22,810  $5,985  $2,449  $  483  $    --  $31,727       100.00%
                          =======  ======  ======  ======  =======  =======       ======
</TABLE>

    The following table sets forth the deposit activities of the Association for
the periods indicated.

<TABLE>
<CAPTION>
                                                    YEARS ENDED SEPTEMBER 30,
                                                -----------------------------
                                                1998        1997         1996
                                                -------  -----------  -------
                                                   (DOLLARS IN THOUSANDS)
<S>                                            <C>        <C>        <C>        
Beginning balance.....................         $43,892     $48,444    $44,088
                                               -------     -------    -------
Net increase (decrease) before                   2,437      (5,959)     2,979
   interest credited..................                    
Interest credited.....................           1,615       1,407      1,377
                                               -------     -------    -------
Net increase (decrease) in deposits...           4,052      (4,552)     4,356
                                               -------     -------    -------
 
Ending balance........................         $47,944     $43,892    $48,444
                                               =======     =======    =======
 
</TABLE>

     BORROWINGS.  Savings deposits are the primary source of funds for the
Association's lending and investment activities and for its general business
purposes.  The Association has the ability to use advances from the FHLB-Des
Moines to supplement its supply of lendable funds and to meet deposit withdrawal
requirements.  The FHLB-Des Moines functions as a central reserve bank providing
credit for savings and loan associations and certain other member 

                                       18
<PAGE>
 
financial institutions. As a member of the FHLB-Des Moines, the Association is
required to own capital stock in the FHLB-Des Moines and is authorized to apply
for advances on the security of such stock and certain of its mortgage loans and
other assets (principally securities which are obligations of, or guaranteed by,
the U.S. Government) provided certain creditworthiness standards have been met.
Advances are made pursuant to several different credit programs. Each credit
program has its own interest rate and range of maturities. Depending on the
program, limitations on the amount of advances are based on the financial
condition of the member institution and the adequacy of collateral pledged to
secure the credit.

     The following table sets forth certain information regarding the
Association's use of FHLB advances during the periods indicated.

<TABLE>
<CAPTION>
                                         YEARS ENDED SEPTEMBER 30,
                                     -------------------------------
                                     1998        1997           1996
                                     -----      ------         -----
                                           (DOLLARS IN THOUSANDS)
<S>                                 <C>           <C>         <C>         
Maximum balance at any month end... $3,986      $3,000       $   --
Average balance....................  1,581       2,917           --
Year end balance...................  3,986       3,000           --
Weighted average interest rate:                              
  At end of year...................   5.81%       5.60%          --%
  During the year..................   5.95        5.63           --%
 
</TABLE>

SUBSIDIARY ACTIVITIES

     In August 1997, the Association acquired Crawford Mortgage, Inc., which is
engaged in the business of mortgage brokerage.

     Federal associations generally may invest up to 3% of their assets in
service corporations, provided that at least one-half of any amount in excess of
1% is used primarily for community, inner-city and community development
projects.  The Association's investment in its service corporation at September
30, 1997 did not exceed the limits applicable to Federal associations.  NS&L
Enterprises, Inc. (the "Service Corporation") is a wholly owned subsidiary of
the Association.  The Service Corporation was established in 1992 for the
purpose of offering credit life insurance and discount brokerage services.  At
September 30, 1998, the Association's investment in the Service Corporation was
$3,000.


                                   REGULATION

GENERAL

     The Association is subject to extensive regulation, examination and
supervision by the OTS as its chartering agency, and the FDIC, as the insurer of
its deposits.  The activities of federal savings institutions are governed by
the Home Owners' Loan Act, as amended ("HOLA") and, in certain respects, the
Federal Deposit Insurance Act ("FDIA") and the regulations issued by the OTS and
the FDIC to implement these statutes.  These laws and regulations delineate the
nature and extent of the activities in which federal savings associations may
engage.  Lending activities and other investments must comply with various
statutory and regulatory capital requirements.  In addition, the Association's
relationship with its depositors and borrowers is also regulated to a great
extent, especially in such matters as the ownership of deposit accounts and the
form and content of the Association's mortgage documents.  The Association must
file reports with the OTS and the FDIC concerning its activities and financial
condition in addition to obtaining regulatory approvals prior to entering into
certain transactions such as mergers with, or acquisitions of, other financial
institutions.  There are periodic examinations by the OTS and the FDIC to review
the Association's compliance with 

                                       19
<PAGE>
 
various regulatory requirements. The regulatory structure also gives the
regulatory authorities extensive discretion in connection with their supervisory
and enforcement activities and examination policies, including policies with
respect to the classification of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such policies, whether by
the OTS, the FDIC or Congress, could have a material adverse impact on the
Corporation, the Association and their operations. The Corporation, as a savings
and loan holding company, is also required to file certain reports with, and
otherwise comply with the rules and regulations of, the OTS and the Securities
and Exchange Commission ("SEC").

FEDERAL REGULATION OF SAVINGS ASSOCIATIONS

     OFFICE OF THRIFT SUPERVISION.  The OTS is an office in the Department of
the Treasury subject to the general oversight of the Secretary of the Treasury.
The OTS generally possesses the supervisory and regulatory duties and
responsibilities formerly vested in the Federal Home Loan Bank Board.  Among
other functions, the OTS issues and enforces regulations affecting federally
insured savings associations and regularly examines these institutions.

     FEDERAL HOME LOAN BANK SYSTEM.  The FHLB System, consisting of 12 FHLBs, is
under the jurisdiction of the Federal Housing Finance Board ("FHFB").  The
designated duties of the FHFB are to:  supervise the FHLBs; ensure that the
FHLBs carry out their housing finance mission; ensure that the FHLBs remain
adequately capitalized and able to raise funds in the capital markets; and
ensure that the FHLBs operate in a safe and sound manner.  The Association, as a
member of the FHLB-Des Moines, is required to acquire and hold shares of capital
stock in the FHLB-Des Moines in an amount equal to the greater of (i) 1.0% of
the aggregate outstanding principal amount of residential mortgage loans, home
purchase contracts and similar obligations at the beginning of each year, or
(ii) 1/20 of its advances (borrowings) from the FHLB-Des Moines.  The
Association is in compliance with this requirement with an investment in FHLB-
Des Moines stock of $365,000 at September 30, 1998.  Among other benefits, the
FHLB-Des Moines provides a central credit facility primarily for member
institutions.  It is funded primarily from proceeds derived from the sale of
consolidated obligations of the FHLB System.  It makes advances to members in
accordance with policies and procedures established by the FHFB and the Board of
Directors of the FHLB-Des Moines.

     FEDERAL DEPOSIT INSURANCE CORPORATION.  The FDIC is an independent federal
agency that insures the deposits, up to prescribed statutory limits, of
depository institutions.  The FDIC maintains two separate insurance funds: the
Bank Insurance Fund ("BIF") and the SAIF.  As insurer of the Association's
deposits, the FDIC has examination, supervisory and enforcement authority over
the Association.

     The Association's deposit accounts are insured by the FDIC under the SAIF
to the maximum extent permitted by law.  The Association pays deposit insurance
premiums to the FDIC based on a risk-based assessment system established by the
FDIC for all SAIF-member institutions.  Under applicable regulations,
institutions are assigned to one of three capital groups that are based solely
on the level of an institution's capital ("well capitalized," "adequately
capitalized" or "undercapitalized"), which are defined in the same manner as the
regulations establishing the prompt corrective action system under the FDIA as
discussed below. The matrix so created results in nine assessment risk
classifications, with rates that until September 30, 1996 ranged from 0.23% for
well capitalized, financially sound institutions with only a few minor
weaknesses to 0.31% for undercapitalized institutions that pose a substantial
risk of loss to the SAIF unless effective corrective action is taken.

     Pursuant to the Deposit Insurance Fund Act ("DIF Act"), which was enacted
on September 30, 1996, the FDIC imposed a special assessment on each depository
institution with SAIF-assessable deposits which resulted in the SAIF achieving
its designated reserve ratio.  In connection therewith, the FDIC reduced the
assessment schedule for SAIF members, effective January 1, 1997, to a range of
0% to 0.27%, with most institutions, including the Association, paying 0%.  This
assessment schedule is the same as that for the BIF, which reached its
designated reserve ratio in 1995.  In addition, since January 1, 1997, SAIF
members are charged an assessment of 0.065% of SAIF-assessable deposits for the
purpose of paying interest on the obligations issued by the Financing
Corporation ("FICO") in the 1980's to help fund the thrift industry cleanup.
BIF-assessable deposits will be charged an assessment to help pay interest on
the FICO bonds at a rate of approximately .013% until the earlier of December
31, 1999 or the date upon which the last savings association ceases to exist,
after which time the assessment will be the same for all insured deposits.

                                       20
<PAGE>
 
     The DIF Act provides for the merger of the BIF and the SAIF into the
Deposit Insurance Fund on January 1, 1999, but only if no insured depository
institution is a savings association on that date.  The DIF Act contemplates the
development of a common charter for all federally chartered depository
institutions and the abolition of separate charters for national banks and
federal savings associations.  It is not known what form the common charter may
take and what effect, if any, the adoption of a new charter would have on the
operation of the Association.

     The FDIC may terminate the deposit insurance of any insured depository
institution if it determines after a hearing that the institution has engaged or
is engaging in unsafe or unsound practices, is in an unsafe or unsound condition
to continue operations, or has violated any applicable law, regulation, order or
any condition imposed by an agreement with the FDIC.  It also may suspend
deposit insurance temporarily during the hearing process for the permanent
termination of insurance, if the institution has no tangible capital.  If
insurance of accounts is terminated, the accounts at the institution at the time
of termination, less subsequent withdrawals, shall continue to be insured for a
period of six months to two years, as determined by the FDIC.  Management is
aware of no existing circumstances that could result in termination of the
deposit insurance of the Association.

     LIQUIDITY REQUIREMENTS.  Under OTS regulations, each savings institution is
required to maintain an average daily balance of liquid assets (cash, certain
time deposits and savings accounts, bankers' acceptances, and specified U.S.
Government, state or federal agency obligations and certain other investments)
equal to a monthly average of not less than a specified percentage (currently
4.0%) of its net withdrawable accounts plus short-term borrowings.

     PROMPT CORRECTIVE ACTION.  Under the FDIA, each federal banking agency is
required to implement a system of prompt corrective action for institutions that
it regulates.  The federal banking agencies have promulgated substantially
similar regulations to implement this system of prompt corrective action.  Under
the regulations, an institution shall be deemed to be (i) "well capitalized" if
it has a total risk-based capital ratio of 10.0% or more, has a Tier I risk-
based capital ratio of 6.0% or more, has a leverage ratio of 5.0% or more and is
not subject to specified requirements to meet and maintain a specific capital
level for any capital measure; (ii) "adequately capitalized" if it has a total
risk-based capital ratio of 8.0% or more, has a Tier I risk-based capital ratio
of 4.0% or more, has a leverage ratio of 4.0% or more (3.0% under certain
circumstances) and does not meet the definition of "well capitalized;" (iii)
"undercapitalized" if it has a total risk-based capital ratio that is less than
8.0%, has a Tier I risk-based capital ratio that is less than 4.0% or a leverage
ratio that is less than 4.0% (3.0% under certain circumstances); (iv)
"significantly undercapitalized" if it has a total risk-based capital ratio that
is less than 6.0%, has a Tier I risk-based capital ratio that is less than 3.0%
or a leverage ratio that is less than 3.0%; and (v) "critically
undercapitalized" if it has a ratio of tangible equity to total assets that is
equal to or less than 2.0%.

     A federal banking agency may, after notice and an opportunity for a
hearing, reclassify a well capitalized institution as adequately capitalized and
may require an adequately capitalized institution or an undercapitalized
institution to comply with supervisory actions as if it were in the next lower
category if the institution is in an unsafe or unsound condition or has received
in its most recent examination, and has not corrected, a less than satisfactory
rating for asset quality, management, earnings or liquidity.  The OTS may not,
however, reclassify a significantly undercapitalized institution as critically
undercapitalized.

     An institution generally must file a written capital restoration plan that
meets specified requirements, as well as a performance guaranty by each company
that controls the institution, with the appropriate federal banking agency
within 45 days of the date that the institution receives notice or is deemed to
have notice that it is undercapitalized, significantly undercapitalized or
critically undercapitalized.  Immediately upon becoming undercapitalized, an
institution shall become subject to various mandatory and discretionary
restrictions on its operations.

     At September 30, 1998, the Association was categorized as "well
capitalized" under the prompt corrective action regulations of the OTS.

     STANDARDS FOR SAFETY AND SOUNDNESS.  The federal banking regulatory
agencies have prescribed, by regulation, standards for all insured depository
institutions relating to: (i) internal controls, information systems and
internal audit systems; (ii) loan documentation; (iii) credit underwriting; (iv)
interest rate risk exposure; (v) asset growth; (vi) asset quality; (vii)
earnings, and (viii) compensation, fees and benefits.  The regulations set forth
the safety and soundness 

                                       21
<PAGE>
 
standards that the federal banking agencies use to identify and address problems
at insured depository institutions before capital becomes impaired. If the OTS
determines that the Association fails to meet any standard prescribed by the
regulations, the agency may require the Association to submit to the agency an
acceptable plan to achieve compliance with the standard. OTS regulations
establish deadlines for the submission and review of such safety and soundness
compliance plans.

     QUALIFIED THRIFT LENDER TEST.  All savings associations are required to
meet a qualified thrift lender ("QTL") test to avoid certain restrictions on
their operations.  A savings institution that fails to become or remain a QTL
shall either become a national bank or be subject to the following restrictions
on its operations:  (i) the association may not make any new investment or
engage in activities that would not be permissible for national banks; (ii) the
association may not establish any new branch office where a national bank
located in the savings institution's home state would not be able to establish a
branch office; (iii) the association shall be ineligible to obtain new advances
from any FHLB; and (iv) the payment of dividends by the association shall be
subject to the statutory and regulatory dividend restrictions applicable to
national banks.  Also, beginning three years after the date on which the savings
institution ceases to be a QTL, the savings institution would be prohibited from
retaining any investment or engaging in any activity not permissible for a
national bank and would be required to repay any outstanding advances to any
FHLB.  In addition, within one year of the date on which a savings association
controlled by a company ceases to be a QTL, the company must register as a bank
holding company and become subject to the rules applicable to such companies.  A
savings institution may requalify as a QTL if it thereafter complies with the
QTL test.

     Currently, the QTL test requires that either an institution qualify as a
domestic building and loan association under the Internal Revenue Code or that
65% of an institution's "portfolio assets" (as defined) consist of certain
housing and consumer-related assets on a monthly average basis in nine out of
every 12 months.  Assets that qualify without limit for inclusion as part of the
65% requirement are loans made to purchase, refinance, construct, improve or
repair domestic residential housing and manufactured housing; home equity loans;
mortgage-backed securities (where the mortgages are secured by domestic
residential housing or manufactured housing); FHLB stock; direct or indirect
obligations of the FDIC; and loans for educational purposes, loans to small
businesses and loans made through credit cards.  In addition, the following
assets, among others, may be included in meeting the test subject to an overall
limit of 20% of the savings institution's portfolio assets:  50% of residential
mortgage loans originated and sold within 90 days of origination; 100% of
consumer loans; and stock issued by Freddie Mac or Fannie Mae.  Portfolio assets
consist of total assets minus the sum of (i) goodwill and other intangible
assets, (ii) property used by the savings institution to conduct its business,
and (iii) liquid assets up to 20% of the institution's total assets.  At
September 30, 1998, the Association was in compliance with the QTL test.

     CAPITAL REQUIREMENTS.  Under OTS regulations a savings association must
satisfy three minimum capital requirements: core capital, tangible capital and
risk-based capital.  Savings associations must meet all of the standards in
order to comply with the capital requirements.  The Corporation is not subject
to any minimum capital requirements.

     OTS capital regulations establish a 3% core capital or leverage ratio
(defined as the ratio of core capital to adjusted total assets).  Core capital
is defined to include common stockholders' equity, noncumulative perpetual
preferred stock and any related surplus, and minority interests in equity
accounts of consolidated subsidiaries, less (i) any intangible assets, except
for certain qualifying intangible assets; (ii) certain mortgage servicing
rights; and (iii) equity and debt investments in subsidiaries that are not
"includable subsidiaries," which is defined as subsidiaries engaged solely in
activities not impermissible for a national bank, engaged in activities
impermissible for a national bank but only as an agent for its customers, or
engaged solely in mortgage-banking activities.  In calculating adjusted total
assets, adjustments are made to total assets to give effect to the exclusion of
certain assets from capital and to account appropriately for the investments in
and assets of both includable and nonincludable subsidiaries.  An institution
that fails to meet the core capital requirement would be required to file with
the OTS a capital plan that details the steps they will take to reach
compliance.  In addition, the OTS's prompt corrective action regulation provides
that a savings institution that has a leverage ratio of less than 4% (3% for
institutions receiving the highest CAMELS examination rating) will be deemed to
be "undercapitalized" and may be subject to certain restrictions.  See 
"--Prompt Corrective Action."

                                       22
<PAGE>
 
     Savings associations also must maintain "tangible capital" not less than
1.5% of the Association's adjusted total assets. "Tangible capital" is defined,
generally, as core capital minus any "intangible assets" other than purchased
mortgage servicing rights.

     Each savings institution must maintain total risk-based capital equal to at
least 8% of risk-weighted assets. Total risk-based capital consists of the sum
of core and supplementary capital, provided that supplementary capital cannot
exceed core capital, as previously defined.  Supplementary capital includes (i)
permanent capital instruments such as cumulative perpetual preferred stock,
perpetual subordinated debt and mandatory convertible subordinated debt, (ii)
maturing capital instruments such as subordinated debt, intermediate-term
preferred stock and mandatory convertible subordinated debt, subject to an
amortization schedule, and (iii) general valuation loan and lease loss
allowances up to 1.25% of risk-weighted assets.

     The risk-based capital regulation assigns each balance sheet asset held by
a savings institution to one of four risk categories based on the amount of
credit risk associated with that particular class of assets.  Assets not
included for purposes of calculating capital are not included in calculating
risk-weighted assets.  The categories range from 0% for cash and securities that
are backed by the full faith and credit of the U.S. Government to 100% for
repossessed assets or assets more than 90 days past due.  Qualifying residential
mortgage loans (including multi-family mortgage loans) are assigned a 50% risk
weight.  Consumer, commercial, home equity and residential construction loans
are assigned a 100% risk weight, as are nonqualifying residential mortgage loans
and that portion of land loans and nonresidential construction loans that do not
exceed an 80% loan-to-value ratio.  The book value of assets in each category is
multiplied by the weighing factor (from 0% to 100%) assigned to that category.
These products are then totalled to arrive at total risk-weighted assets.  Off-
balance sheet items are included in risk-weighted assets by converting them to
an approximate balance sheet "credit equivalent amount" based on a conversion
schedule.  These credit equivalent amounts are then assigned to risk categories
in the same manner as balance sheet assets and included risk-weighted assets.

     The OTS has incorporated an interest rate risk component into its
regulatory capital rule.  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 risk 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.  A savings association with assets of less than
$300 million and risk-based capital ratios in excess of 12% is not subject to
the interest rate risk component, unless the OTS determines otherwise.  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.  Under certain
circumstances, a savings association may request an adjustment to its interest
rate risk component if it believes that the OTS-calculated interest rate risk
component overstates its interest rate risk exposure.  In addition, certain
"well-capitalized" institutions may obtain authorization to use their own
interest rate risk model to calculate their interest rate risk component in lieu
of the OTS-calculated amount.  The OTS has postponed the date that the component
will first be deducted from an institution's total capital.

     LIMITATIONS ON CAPITAL DISTRIBUTIONS.  OTS regulations impose uniform
limitations on the ability of all savings associations to engage in various
distributions of capital such as dividends, stock repurchases and cash-out
mergers.  In addition, OTS regulations require the Association to give the OTS
30 days' advance notice of any proposed declaration of dividends, and the OTS
has the authority under its supervisory powers to prohibit the payment of
dividends.  The regulation utilizes a three-tiered approach which permits
various levels of distributions based primarily upon a savings association's
capital level.

                                       23
<PAGE>
 
     A Tier 1 savings association has capital in excess of its fully phased-in
capital requirement (both before and after the proposed capital distribution).
A Tier 1 savings association may make (without application but upon prior notice
to, and no objection made by, the OTS) capital distributions during a calendar
year up to 100% of its net income to date during the calendar year plus one-half
its surplus capital ratio (i.e., the amount of capital in excess of its fully
                           ----                                              
phased-in requirement) at the beginning of the calendar year or the amount
authorized for a Tier 2 association.  Capital distributions in excess of such
amount require advance notice to the OTS.  A Tier 2 savings association has
capital equal to or in excess of its minimum capital requirement but below its
fully phased-in capital requirement (both before and after the proposed capital
distribution).  Such an association may make (without application) capital
distributions up to an amount equal to 75% of its net income during the previous
four quarters depending on how close the association is to meeting its fully
phased-in capital requirement.  Capital distributions exceeding this amount
require prior OTS approval.  A Tier 3 savings association has capital below the
minimum capital requirement (either before or after the proposed capital
distribution).  A Tier 3 savings association may not make any capital
distributions without prior approval from the OTS.

     The Association currently meets the criteria to be designated a Tier 1
association and, consequently, could at its option (after prior notice to, and
no objection made by, the OTS) distribute up to 100% of its net income during
the calendar year plus 50% of its surplus capital ratio at the beginning of the
calendar year less any distributions previously paid during the year.

     LOANS TO ONE BORROWER.  Under the HOLA, savings institutions are generally
subject to the national bank limit on loans to one borrower.  Generally, this
limit is 15% of the Association's unimpaired capital and surplus, plus an
additional 10% of unimpaired capital and surplus, if such loan is secured by
readily-marketable collateral, which is defined to include certain financial
instruments and bullion.  The OTS by regulation has amended the loans to one
borrower rule to permit savings associations meeting certain requirements,
including capital requirements, to extend loans to one borrower in additional
amounts under circumstances limited essentially to loans to develop or complete
residential housing units.  At September 30, 1998, the Association's limit on
loans to one borrower was $1.3 million. At September 30, 1998, the Association's
largest aggregate amount of loans to one borrower was $534,000.

     ACTIVITIES OF ASSOCIATIONS AND THEIR SUBSIDIARIES.  When a savings
association establishes or acquires a subsidiary or elects to conduct any new
activity through a subsidiary that the association controls, the savings
association must notify the FDIC and the OTS 30 days in advance and provide the
information each agency may, by regulation, require.  Savings associations also
must conduct the activities of subsidiaries in accordance with existing
regulations and orders.

     The OTS may determine that the continuation by a savings association of its
ownership control of, or its relationship to, the subsidiary constitutes a
serious risk to the safety, soundness or stability of the association or is
inconsistent with sound banking practices or with the purposes of the FDIA.
Based upon that determination, the FDIC or the OTS has the authority to order
the savings association to divest itself of control of the subsidiary.  The FDIC
also may determine by regulation or order that any specific activity poses a
serious threat to the SAIF.  If so, it may require that no SAIF member engage in
that activity directly.

     TRANSACTIONS WITH AFFILIATES.  Savings associations must comply with
Sections 23A and 23B of the Federal Reserve Act relative to transactions with
affiliates in the same manner and to the same extent as if the savings
association were a Federal Reserve member bank.   A savings and loan holding
company, its subsidiaries and any other company under common control are
considered affiliates of the subsidiary savings association under the HOLA.
Generally, Sections 23A and 23B:  (i) limit the extent to which the insured
association or its subsidiaries may engage in certain covered transactions with
an affiliate to an amount equal to 10% of such institution's capital and surplus
and place an aggregate limit on all such transactions with affiliates to an
amount equal to 20% of such capital and surplus, and (ii) require that all such
transactions be on terms substantially the same, or at least as favorable to the
institution or subsidiary, as those provided to a non-affiliate.  The term
"covered transaction" includes the making of loans, the purchase of assets, the
issuance of a guarantee and similar types of transactions.  Any loan or
extension of credit by the Association to an affiliate must be secured by
collateral in accordance with Section 23A.

                                       24
<PAGE>
 
     Three additional rules apply to savings associations: (i) a savings
association may not make any loan or other extension of credit to an affiliate
unless that affiliate is engaged only in activities permissible for bank holding
companies; (ii) a savings association may not purchase or invest in securities
issued by an affiliate (other than securities of a subsidiary); and (iii) the
OTS may, for reasons of safety and soundness, impose more stringent restrictions
on savings associations but may not exempt transactions from or otherwise
abridge Section 23A or 23B.  Exemptions from Section 23A or 23B may be granted
only by the Federal Reserve Board, as is currently the case with respect to all
FDIC-insured banks.  The Association has not been significantly affected by the
rules regarding transactions with affiliates.

     The Association's authority to extend credit to executive officers,
directors and 10% shareholders, as well as entities controlled by such persons,
is governed by Sections 22(g) and 22(h) of the Federal Reserve Act, and
Regulation O thereunder.  Among other things, these regulations generally
require that such loans be made on terms and conditions substantially the same
as those offered to unaffiliated individuals and not involve more than the
normal risk of repayment.  Generally, Regulation O also places individual and
aggregate limits on the amount of loans the Association may make to such persons
based, in part, on the Association's capital position, and requires certain
board approval procedures to be followed.  The OTS regulations, with certain
minor variances, apply Regulation O to savings institutions.

     COMMUNITY REINVESTMENT ACT.  Under the federal CRA, all federally-insured
financial institutions have a continuing and affirmative obligation consistent
with safe and sound operations to help meet all the credit needs of its
delineated community.  The CRA does not establish specific lending requirements
or programs nor does it limit an institution's discretion to develop the types
of products and services that it believes are best suited to meet all the credit
needs of its delineated community.  The CRA requires the federal banking
agencies, in connection with regulatory examinations, to assess an institution's
record of meeting the credit needs of its delineated community and to take such
record into account in evaluating regulatory applications to establish a new
branch office that will accept deposits, relocate an existing office, or merge
or consolidate with, or acquire the assets or assume the liabilities of, a
federally regulated financial institution, among others.  The CRA requires
public disclosure of an institution's CRA rating.  The Association received a
"satisfactory" rating as a result of its latest evaluation.

SAVINGS AND LOAN HOLDING COMPANY REGULATIONS

     HOLDING COMPANY ACQUISITIONS.  The HOLA and OTS regulations issued
thereunder generally prohibit a savings and loan holding company, without prior
OTS approval, from acquiring more than 5% of the voting stock of any other
savings association or savings and loan holding company or controlling the
assets thereof.  They also prohibit, among other things, any director or officer
of a savings and loan holding company, or any individual who owns or controls
more than 25% of the voting shares of such holding company, from acquiring
control of any savings association not a subsidiary of such savings and loan
holding company, unless the acquisition is approved by the OTS.

     HOLDING COMPANY ACTIVITIES.  As a unitary savings and loan holding company,
the Corporation generally is not subject to activity restrictions under the
HOLA.  If the Corporation acquires control of another savings association as a
separate subsidiary other than in a supervisory acquisition, it would become a
multiple savings and loan holding company.  There generally are more
restrictions on the activities of a multiple savings and loan holding company
than on those of a unitary savings and loan holding company.  The HOLA provides
that, among other things, no multiple savings and loan holding company or
subsidiary thereof which is not an insured association shall commence or
continue for more than two years after becoming a multiple savings and loan
association holding company or subsidiary thereof, any business activity other
than:  (i) furnishing or performing management services for a subsidiary insured
institution, (ii) conducting an insurance agency or escrow business, (iii)
holding, managing, or liquidating assets owned by or acquired from a subsidiary
insured institution, (iv) holding or managing properties used or occupied by a
subsidiary insured institution, (v) acting as trustee under deeds of trust, (vi)
those activities previously directly authorized by regulation as of March 5,
1987 to be engaged in by multiple holding companies or (vii) those activities
authorized by the Federal Reserve Board as permissible for bank holding
companies, unless the OTS by regulation, prohibits or limits such activities for
savings and loan holding companies.  Those activities described in (vii) above
also must be approved by the OTS prior to being engaged in by a multiple savings
and loan holding company.

                                       25
<PAGE>
 
     QUALIFIED THRIFT LENDER TEST.  The HOLA provides that any savings and loan
holding company that controls a savings association that fails the QTL test, as
explained under "-- Federal Regulation of Savings Associations --Qualified
Thrift Lender Test," must, within one year after the date on which the
association ceases to be a QTL, register as and be deemed a bank holding company
subject to all applicable laws and regulations.


                                    TAXATION

FEDERAL TAXATION

     GENERAL.  The Corporation and the Association report their income on a
fiscal year basis using the cash 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 Corporation.

     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 regarding thrift bad debt rules were
revised.  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).  The Association has
previously recorded a deferred tax liability equal to the bad debt recapture and
as such the new rules will have no effect on the net income or federal income
tax expense.  For taxable years beginning after December 31, 1995, the
Association's bad debt deduction will be determined under the experience 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 institutions average mortgage lending activity for the six
taxable years preceding 1996 adjusted for inflation.  For this purpose, only
home purchase or home improvement 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 Corporation, 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, dividends 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 times the Excess Distribution 

                                       26
<PAGE>
 
would be includable in gross income for federal income tax purposes, assuming a
34% corporate income tax rate (exclusive of state and local taxes). See
"REGULATION" for limits on the payment of dividends by the Association. The
Association does not intend to pay dividends that would 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 Corporation may exclude from 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 unaffiliated corporations
with which the Corporation and the Association will not file a consolidated tax
return, except that if the Corporation 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.  There have not been any IRS audits of the Association's Federal
income tax returns or audits of the Association's state income tax returns
during the past five years.

MISSOURI TAXATION

     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.  This tax is in
lieu of certain other state taxes on thrift institutions, on their property,
capital or income, except taxes on tangible personal property owned by the
Association and held for lease or rental to others and on real estate,
contributions paid pursuant to the Unemployment Compensation Law of Missouri,
social security taxes, sales taxes and use taxes.  In addition, Neosho Savings
is entitled to a credit against this tax for all taxes paid to the State of
Missouri or any political subdivision except taxes on tangible personal property
owned by the Association and held for lease or rental to others and on real
estate, contributions paid pursuant to the Unemployment Compensation Law of
Missouri, social security taxes, sales and use taxes, and taxes imposed by the
Missouri Financial Institutions Tax Law.  Missouri thrift institutions are not
subject to the regular state corporate income tax.
 
     For additional information regarding taxation, see Note 9 of Notes to
Consolidated Financial Statements contained in the Annual Report.

PERSONNEL

     As of September 30, 1998, the Corporation had 22 full-time and 3 part-time
employees.  The employees are not represented by a collective bargaining unit
and the Corporation believes its relationship with its employees to be good.

ITEM 2.  DESCRIPTION OF PROPERTIES
----------------------------------

     The Association has two offices, both of which are owned by the
Association.  The Association's main office is located at 111 East Main Street,
Neosho, Missouri 64850.  The office was opened in 1963 and the square footage is
approximately 6,840 feet.  At September 30, 1998, the net book value of the
property (including land and building) was $557,000.  The Association has one
branch office, which is located at 713 Neosho Boulevard, Neosho, Missouri 64850.
The branch office was opened in 1986 and the square footage is approximately
2,922 feet.  At September 30, 1998, the net book value of the property was
$112,000.  The net book value of the Association's fixtures, furniture and
equipment 

                                       27
<PAGE>
 
at September 30, 1998 was $121,000 Crawford Mortgage has furniture, fixtures and
equipment with a net book value of $37,000 at September 30, 1998. The
Corporation owns a building lot with a book value of $303,000 at September 30,
1998.

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

     Periodically, there have been various claims and lawsuits involving the
Association, such as claims to enforce liens, condemnation proceedings on
properties in which the Association holds security interests, claims involving
the making and servicing of real property loans and other issues incident to the
Association's business.  Neither the Corporation nor the Association is a party
to any pending legal proceedings that it believes would have a material adverse
effect on the financial condition or operations of the Corporation or the
Association.

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

     No matters were submitted to a vote of security holders during the quarter
ended September 30, 1998.

                                    PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
-------   -----------------------------------------------------------------
MATTERS
-------

     The information contained in the section captioned "Common Stock
Information" in the Annual Report is incorporated herein by reference.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
-------   ---------------------------------------------------------

     The information contained in the section captioned "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the Annual
Report is incorporated herein by reference.

ITEM 7.  FINANCIAL STATEMENTS
-----------------------------

     Independent Auditors Report*
     (a)  Consolidated Statements of Financial Condition as of September 30,
          1997 and 1998
     (b)  Consolidated Statements of Income for the Years Ended September 30,
          1996, 1997 and 1998
     (c)  Consolidated Statements of Stockholders' Equity For the Years Ended
          September 30, 1996, 1997 and  1998
     (d)  Consolidated Statements of Cash Flows For the Years Ended September
          30, 1996, 1997 and 1998
     (e)  Notes to Consolidated Financial Statements

     * Contained in the Annual Report filed as an exhibit hereto and
     incorporated herein by reference.  All schedules have been omitted as the
     required information is either inapplicable or contained in the
     Consolidated Financial Statements or related Notes contained in the Annual
     Report.

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-------   ---------------------------------------------------------------
          FINANCIAL DISCLOSURE
          --------------------

     No disagreement with the Corporation's independent accountants on
accounting and financial disclosure has occurred during the two most recent
fiscal years.

                                       28
<PAGE>
 
                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
          PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
          ----------------------------------------------------------

     The information contained under the section captioned "Proposal I --
Election of Directors" in the Proxy Statement is incorporated herein by
reference.

     The following table sets forth certain information with respect to the
executive officers of the Corporation and the Association.  Each of the
executive officers holds the same position with the Corporation and the
Association.
<TABLE>
<CAPTION>
 
                         Age at
                      September 30,
Name                      1998              Position
----                  -------------         --------
<S>                   <C>                 <C>
 
George A. Henry            75               Chairman of the Board
C.R. "Rick" Butler         51               President and Director
Dorothy A. LaDue           59               Senior Vice President and Secretary
Carol A. Guest             52               Treasurer
</TABLE>

    The following is a description of the principal occupation and employment of
the executive officers of the Corporation and the Association during at least
the past five years:

    George A. Henry served as a judge on the Newton County Circuit Court for 14
years until his retirement in 1990.  Judge Henry has served as a director of the
Association since 1964 and was elected Chairman of the Board in 1990.  He
currently serves on the Newton Country Library Board and is a past member of the
Administrative Council of the Neosho United Methodist Church.

    C. R. "Rick" Butler is President of the Corporation and the Association.
Mr. Butler joined the Association in August 1982 as the managing officer and
director.  He currently serves on the Board of Trustees of Crowder College, is a
board member of the Neosho United Fund and the Neosho Area Business Industrial
Development Foundation, and is a member of the Economic Development Committee of
the Neosho Area Chamber of Commerce.  Mr. Butler also serves as a  Director of
District 2 of the Missouri League of Financial Institutions.

    Dorothy A. LaDue is Senior Vice President and Secretary of the Corporation
and the Association.  Mrs. LaDue joined the Association in 1974 and has worked
in all areas of operations.  She is an active member of the Neosho Area Chamber
of Commerce serving on numerous Chamber committees.

    Carol A. Guest is Treasurer of the Corporation and the Association.  Mrs.
Guest, a Certified Public Accountant, joined the Association in 1990 and is the
officer in charge of the Association's accounting department.

ITEM 10.  EXECUTIVE COMPENSATION
--------------------------------

    The information contained under the section captioned "Proposal I --
Election of Directors" in the Proxy Statement is incorporated herein by
reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

    (a) Security Ownership of Certain Beneficial Owners

                                       29
<PAGE>
 
        Information required by this item is incorporated herein by reference to
        the section captioned "Security Ownership of Certain Beneficial Owners
        and Management" of the Proxy Statement.

    (b) Security Ownership of Management

        Information required by this item is incorporated herein by reference to
        the sections captioned and "Security Ownership of Certain Beneficial
        Owners and Management" and "Proposal I - Election of Directors" of the
        Proxy Statement.

    (c) Changes in Control

        The Corporation is not aware of any arrangements, including any pledge
        by any person of securities of the Corporation, the operation of which
        may at a subsequent date result in a change in control of the
        Corporation.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

    The information required by this item is incorporated herein by reference to
the section captioned "Proposal I  -- Election of Directors -- Transactions with
Management."

ITEM 13.  EXHIBITS, LIST AND REPORTS ON FORM 8-K
------------------------------------------------

    (a)   Exhibits
 
          3.1   Articles of Incorporation of NS&L Bancorp, Inc. (incorporated by
                reference to Exhibit 3.1 to the registrant's Registration
                Statement on Form S-1 (33-89836))
 
          3.2   Bylaws of NS&L Bancorp, Inc. (incorporated by reference to
                Exhibit 3.2 to the registrant's Registration Statement on Form 
                S-1 (33-89836))

          10.1  Employment Agreement with C.R. Butler (incorporated by reference
                to the registrant's Annual Report on Form 10-KSB for the year
                ended September 30, 1995)

          10.2  NS&L Bancorp, Inc. 1995 Stock Option Plan (incorporated by
                reference to Exhibit A to the registrant's proxy statement for
                the 1996 Annual Meeting of Stockholders)

          10.3  NS&L Bancorp, Inc. Management Recognition and Development Plan
                (incorporated by reference to Exhibit B to the registrant's
                proxy statement for the 1996 Annual Meeting of Stockholders)
 
          13    Annual Report to Stockholders

          21    Subsidiaries of the Registrant

          23    Consent of Independent Auditors
 
          27    Financial Data Schedule

    (b)   Report on Form 8-K

          No Forms 8-K were filed during the quarter ended September 30, 1998.

                                       30
<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.

                                 NS&L BANCORP, INC.



Date: December 29, 1998          By: /s/ C.R. Butler
                                    -------------------------------------
                                    C.R. Butler
                                    President and Chief Executive Officer
                                    (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/ C.R. Butler                                      December 29, 1998
   ---------------------------------------           
   C.R. Butler                                   
   President and Chief Executive Officer         
   (Principal Executive Officer)                 
                                                 
                                                 
By: /s/ Carol A. Guest                                   December 29, 1998
   ---------------------------------------           
   Carol A. Guest                                
   Treasurer                                     
   (Principal Financial and                      
   Accounting Officer)                           
                                                 
                                                 
By: /s/ George A. Henry                                  December 29, 1998
   ---------------------------------------       
   George A. Henry                               
   Chairman of the Board and Director            
                                                 
                                                 
By: /s/ John C. Genisio                                  December 29, 1998
   ---------------------------------------       
   John C. Genisio                               
   Director                                      
                                                 
                                                 
By: /s/ John D. Mills                                    December 29, 1998
   ---------------------------------------       
   John D. Mills                                 
   Director                                      
                                                 
                                                 
By: /s/ Ralph J. Haas                                    December 29, 1998
   ---------------------------------------           
   Ralph J. Haas                                 
   Director                                      
                                                 
                                                 
By: /s/ Robert J. Johnson                               December 29, 1998
   ---------------------------------------
   Robert J. Johnson
   Director