FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

[X]      Annual  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
         Exchange Act of 1934

For the fiscal year ended December 31, 1996

                                       or

[ ]      Transition  Report  Pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934

For the transition period from _____________ to _______________

Commission File Number              0-25910

                           LOGANSPORT FINANCIAL CORP.
             (Exact name of registrant as specified in its charter)

                 INDIANA                                   35-1945736
      (State or other Jurisdiction                     (I.R.S. Employer
    of Incorporation or Organization)                Identification Number)

 723 East Broadway, Logansport, Indiana                      46947
(Address of Principal Executive Offices)                  (Zip Code)

Registrant's telephone number including area code:
                                 (219) 722-3855

Securities Registered Pursuant to Section 12(b) of the Act:
                                      NONE

Securities Registered Pursuant to Section 12(g) of the Act:
                         Common Stock, without par value
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.       YES            NO

Indicate by check mark if disclosure of delinquent  filers pursuant to Item 405,
Regulation S-K (ss. 229.405 of this chapter) is not contained  herein,  and will
not be contained,  to the best of Registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.

The aggregate market value of the issuer's voting stock held by  non-affiliates,
as of March 1, 1997, was $14,420,497.

The  number of shares of the  Registrant's  Common  Stock,  without  par  value,
outstanding as of March 1, 1997, was 1,256,375 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to  Shareholders  for the year ended  December 31,
1996, are  incorporated  into Part II.  Portions of the Proxy  Statement for the
1997 Annual Meeting of Shareholders are incorporated in Part I and Part III.

                            Exhibit Index on Page 33
                               Page 1 of 34 Pages

<PAGE>
                           LOGANSPORT FINANCIAL CORP.

                                    Form 10-K

                                      INDEX

                                                                            Page

PART I
Item  1.          Business..................................................  1
Item  2.          Properties................................................ 28
Item  3.          Legal Proceedings......................................... 28
Item  4.          Submission of Matters to a Vote of Security Holders....... 29
Item  4.5.        Executive Officers of Registrant.......................... 29

PART II
Item  5.          Market for Registrant's Common Equity and Related
                    Stockholder Matters..................................... 29
Item  6.          Selected Financial Data................................... 30
Item  7.          Management's Discussion and Analysis of Financial
                    Condition and Results of Operations..................... 30
Item  8.          Financial Statements and Supplementary Data............... 30
Item  9.          Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure..................... 30

PART III
Item 10.          Directors and Executive Officers of Registrant............ 30
Item 11.          Executive Compensation.................................... 31
Item 12.          Security Ownership of Certain Beneficial Owners
                    and Management.......................................... 31
Item 13.          Certain Relationships and Related Transactions............ 31
PART IV
Item 14.          Exhibits, Financial Statement Schedules, and Reports
                    on Form 8-K............................................. 31
                  Signatures................................................ 32


<PAGE>

                                     PART I

Item 1.       Business.

General

         Logansport  Financial Corp. (the "Holding  Company" and,  together with
the Bank (as defined below), the "Company") is an Indiana corporation  organized
in February,  1995, to become a unitary  savings and loan holding  company.  The
Holding  Company  became a unitary  savings and loan  holding  company  upon the
conversion of Logansport  Savings Bank,  FSB (the "Bank") from a federal  mutual
savings bank to a federal  stock  savings bank on June 13, 1995.  The  principal
asset of the  Holding  Company  consists  of 100% of the issued and  outstanding
shares of common stock,  $.01 par value per share,  of the Bank.  The Bank began
operations in Logansport,  Indiana under the name  Logansport  Building and Loan
Association  in 1925. In 1962,  the Bank changed its name to Logansport  Savings
and Loan  Association,  and in 1992, the Bank  converted to a federally  charted
savings bank known as Logansport Savings Bank, FSB. The Bank serves the needs of
residents of primarily Cass County, Indiana.

         The  Bank  is  the  oldest  financial   institution   headquartered  in
Logansport,  Indiana.  Management  believes  the  Bank  has  developed  a  solid
reputation  among its loyal  customer base because of its commitment to personal
service and its strong support of the local community.  The Bank offers a number
of consumer and  commercial  financial  services.  These services  include:  (i)
residential  real estate loans;  (ii) home equity loans;  (iii) home improvement
loans;  (iv)  construction  loans; (v) share loans;  (vi) commercial real estate
loans; (vii) multi-family loans;  (viii) consumer loans; (ix) NOW accounts;  (x)
passbook  savings  accounts;  (xi)  certificates of deposit;  (xii) consumer and
commercial demand deposit accounts;  and (xiii) individual  retirement accounts.
The  Holding  Company  and the Bank  conduct  business  out of their main office
located  in  Logansport,  Indiana.  The  Bank  is and  historically  has  been a
significant  real estate  mortgage lender in Cass County,  Indiana,  originating
approximately  17.6% of the mortgage loan volume recorded in Cass County by Cass
County institutions during the year ended December 31, 1996.

         The Bank  historically has  concentrated its lending  activities on the
origination  of  loans  secured  by  first  mortgage  liens  for  the  purchase,
construction  or refinancing of one- to four-family  residential  real property.
One- to four-family residential mortgage loans continue to be the major focus of
the Bank's loan  origination  activities,  representing  72.1% of the  Company's
total loan  portfolio at December 31,  1996.  The Bank also offers  multi-family
mortgage loans,  commercial real estate loans,  construction loans, and consumer
loans.  Mortgage loans secured by  multi-family  properties and commercial  real
estate totaled approximately 4.1% and 4.7%, respectively, of the Company's total
loan portfolio at December 31, 1996.  Residential,  multi-family  and commercial
real estate  construction loans constituted  approximately 1.8% of the Company's
total loan portfolio at December 31, 1996. Installment,  share, home equity, and
home  improvement  loans  constituted  approximately  8.1%, .5%, 1.0%, and 7.7%,
respectively, of the Company's total loan portfolio at December 31, 1996.


                                      -1-
<PAGE>

Lending Activities

         Loan Portfolio  Data. The following table sets forth the composition of
the  Company's  loan  portfolio by loan type and  security  type as of the dates
indicated,   including  a   reconciliation   of  gross  loans  receivable  after
consideration of the allowance for loan losses and loans in process.

<TABLE>
<CAPTION>
                                                                          At December 31,
                                       1996                 1995               1994                1993                1992
                                  ---------------     ---------------    ----------------     ---------------     ----------------
                                          Percent             Percent             Percent              Percent             Percent
                                  Amount of Total     Amount of Total    Amount  of Total     Amount  of Total    Amount  of Total
                                  ------ --------     ------ --------    ------  --------     ------  --------    ------  --------
                                                                      (Dollars in thousands)                      
TYPE OF LOAN                                                                                                     
Mortgage loans:                                                                                                  
<S>                               <C>      <C>       <C>      <C>        <C>      <C>        <C>       <C>        <C>      <C>   
   Residential.................   $41,109  72.05%    $36,608  73.15%     $33,402  74.92%     $28,942   74.39%     $27,153  77.23%
   Commercial real estate......     2,701   4.73       1,620   3.24        2,718   6.10        2,667    6.85        2,204   6.27
   Multi-family................     2,370   4.15       1,915   3.83          722   1.62          549    1.41          120    .34
Construction:                                                                                                    
   Residential ................       574   1.01         575   1.15          330    .74        1,170    3.00          209    .59
   Commercial                                                                                                    
     real estate...............       194    .34         198    .39          ---     ---         ---      ---         350   1.00
   Multi-family................       248    .43         250    .50          680   1.52          427    1.10          250    .71
Commercial paper ..............       ---     ---        878   1.75          500   1.12          ---      ---         ---     ---
Consumer loans:                                                                                                  
   Installment (2).............     4,615   8.09       3,729   7.45        2,778   6.23        2,072    5.33        2,181   6.20
   Share ......................       286    .50         219    .44          244    .55          183     .47          174    .49
   Home equity.................       595   1.04         398    .79          300    .67          393    1.01          333    .95
   Home improvement............     4,368   7.66       3,656   7.31        2,911   6.53        2,505    6.44        2,186   6.22
                                  ------- ------     ------- ------      ------- ------      -------  ------      ------- ------ 
     Gross loans receivable....    57,060 100.00%    $50,046 100.00%     $44,585 100.00%     $38,908  100.00%     $35,160 100.00%
                                  ======= ======     ======= ======      ======= ======      =======  ======      ======= ====== 
TYPE OF SECURITY
   Residential (1).............   $46,689  81.83%    $41,407  82.74%     $36,943  82.86%     $33,010   84.84%     $29,881  84.99%
   Commercial real estate......     2,895   5.07       1,818   3.63        2,718   6.10        2,667    6.86        2,554   7.26
   Multi-family................     2,618   4.59       2,165   4.33        1,402   3.14          976    2.51          370   1.05
   Deposits....................       286    .50         219    .44          244    .55          183     .47          174    .49
   Auto........................     2,042   3.58       1,288   2.57        1,005   2.26          799    2.05          806   2.29
   Consumer residential (2)....     1,074   1.88       1,232   2.46          846   1.90          447    1.15          434   1.23
   Other security..............     1,456   2.55       1,039   2.08          917   2.05          683    1.75          848   2.42
   Unsecured (3)...............       ---     ---        878   1.75          510   1.14          143     .37           93    .27
                                  ------- ------     ------- ------      ------- ------      -------  ------      ------- ------ 
     Gross loans receivable....    57,060 100.00%     50,046 100.00       44,585 100.00       38,908  100.00       35,160 100.00
Deduct:                                                                                                          
Allowance for loan losses......       236    .41         223    .45          206    .46          201     .52           86    .24
Loans in process...............        22    .04         116    .23          359    .81          856    2.20          273    .78
                                  ------- ------     ------- ------      ------- ------      -------  ------      ------- ------ 
   Net loans receivable........   $56,802  99.55%    $49,707  99.32%     $44,020  98.73%     $37,851   97.28%     $34,801  98.98%
                                  ======= ======     ======= ======      ======= ======      =======  ======      ======= ====== 
Mortgage Loans:                                                                                                  
   Adjustable-rate.............    38,729  82.06     $34,715  84.33%     $31,057  82.05%     $27,760   82.24%     $24,076  79.50%
   Fixed-rate..................     8,467  17.94       6,451  15.67        6,795  17.95        5,995   17.76        6,210  20.50
                                  ------- ------     ------- ------      ------- ------      -------  ------      ------- ------ 
     Total.....................   $47,196 100.00%    $41,166 100.00%     $37,852 100.00%     $33,755  100.00%     $30,286 100.00%
                                  ======= ======     ======= ======      ======= ======      =======  ======      ======= ====== 
</TABLE>
(1)  Includes home equity, residential construction and home improvement loans.

(2)  Includes  "one-pay"  notes due in less than one year secured by residential
     real estate.

(3)  Includes commercial paper and bankers' acceptances.

                                      -2-
<PAGE>

         The  following  table sets forth  certain  information  at December 31,
1996,  regarding  the dollar  amount of loans  maturing  in the  Company's  loan
portfolio  based on the date that  final  payment  is due under the terms of the
loan.  Demand  loans  having  no stated  schedule  of  repayments  and no stated
maturity and overdrafts  are reported as due in one year or less.  This schedule
does  not  reflect  the  effects  of  possible  prepayments  or  enforcement  of
due-on-sale clauses. Management expects prepayments will cause actual maturities
to be shorter.

<TABLE>
<CAPTION>
                                     Balance                      Due during years ending December 31,
                                   Outstanding                                    2000       2002       2007       2012
                                 at December 31,                                   to         to         to         and
                                      1996        1997      1998       1999       2001       2006       2011     following
                                      ------------------------------------------------------------------------------------
                                                                        (In thousands)
Mortgage loans:
<S>                                  <C>        <C>         <C>    <C>         <C>         <C>       <C>        <C>    
   Residential ....................  $41,683    $   559     $  38  $     66    $   812     $5,848    $13,003    $21,357
   Multi-family....................    2,618        ---       ---       ---        ---        727      1,648        243
   Commercial real estate..........    2,895        ---         2         5         53        932      1,467        436
Commercial paper...................      ---        ---       ---       ---        ---        ---        ---        ---
Consumer loans:
   Home improvement................    4,368        134       163       249      1,184      1,679        638        321
   Home equity.....................      595        ---       ---       ---        ---        ---        595        ---
   Installment.....................    4,615      1,782       302       759      1,306        239        227        ---
   Share...........................      286        286       ---       ---        ---        ---        ---        ---
                                     -------     ------      ----    ------     ------     ------    -------    -------
     Total.........................  $57,060     $2,761      $505    $1,079     $3,355     $9,425    $17,578    $22,357
                                     =======     ======      ====    ======     ======     ======    =======    =======
</TABLE>


         The  following  table sets forth,  as of December 31, 1996,  the dollar
amount  of all loans due after one year  which  have  fixed  interest  rates and
floating or adjustable rates.

<TABLE>
<CAPTION>
                                                       Due After December 31, 1997
                                     Fixed Rates             Variable Rates             Total
                                     -----------             --------------             -----
                                                             (In thousands)

Mortgage loans:
<S>                                  <C>                        <C>                    <C>    
   Residential ....................  $  6,748                   $34,376                $41,124
   Multi-family....................       ---                     2,618                  2,618
   Commercial real estate..........     1,183                     1,712                  2,895
Consumer loans:
   Home improvement................     4,234                       ---                  4,234
   Home equity.....................       ---                       595                    595
   Installment.....................     2,833                       ---                  2,833
                                      -------                   -------                -------
     Total.........................   $14,998                   $39,301                $54,299
                                      =======                   =======                =======
</TABLE>

         Residential  Loans.  Residential  loans  consist  primarily  of one- to
four-family  loans.  Approximately  $41.1  million,  or 72.1%  of the  Company's
portfolio  of loans at  December  31,  1996,  consisted  of one- to  four-family
residential  mortgage loans, of which  approximately 82.1% had adjustable rates.
Pursuant to federal  regulations,  such loans must require at least  semi-annual
payments and be for a term of not more than 40 years,  and, if the interest rate
is  adjustable,  they must be  correlated  with changes in a readily  verifiable
index.

         The  Bank  currently   offers   adjustable-rate   one-  to  four-family
residential mortgage loans ("ARMs") which adjust annually and are indexed to the
one-year U.S. Treasury securities yields adjusted to a constant maturity.  These
ARMs have a current  margin  above such index of 2.75%,  or 3.00% if interest is
amortized and payments are due  bi-weekly,  and interest rate minimums  equal to
the  rate  at the  time of  origination.  Many  of the  residential  ARMs in the
Company's  portfolio at December 31, 1996 provided for a maximum rate adjustment
per year of 1%,  although  the Bank  began  originating  residential  ARMs which
provide  for a  maximum  rate  adjustment  of 2% per  year in 1995.  The  Bank's
residential  ARMs provide for a maximum rate  adjustment  of 5% over the life of
the loan. These ARMs generally bear terms of between 15 and 25 years.

         The Bank also currently  offers  fixed-rate loans which provide for the
payment of  principal  and  interest  over a period  not to exceed 15 years.  At
December 31, 1996, 17.9% of the Company's  residential  mortgage loans had fixed
rates of interest.

                                      -3-
<PAGE>

         The Bank does not currently originate residential mortgage loans if the
ratio of the loan amount to the lesser of current cost or appraised value of the
property (i.e.,  the  "loan-to-value  ratio") exceeds 90% and does not currently
require private  mortgage  insurance on its residential  single-family  mortgage
loans.

         Substantially  all of the  residential  mortgage  loans  that  the Bank
originates  include  "due-on-sale"  clauses,  which  give the Bank the  right to
declare a loan  immediately  due and  payable  in the event  that,  among  other
things, the borrower sells or otherwise disposes of the real property subject to
the mortgage and the loan is not repaid.

         The Bank's  residential  mortgage loans are not originated on terms and
conditions and using  documentation that conform with the standard  underwriting
criteria required to sell such loans on the secondary market. The Bank generally
retains its loans in its portfolio and does not  anticipate the need to sell its
non-conforming loans. See "-- Origination, Purchase and Sale of Loans."

         At December 31, 1996,  residential loans amounting to $399,000, or .70%
of total loans, were included in non-performing  assets.  See "-- Non-Performing
and Problem Assets."

         Commercial Real Estate Loans.  At December 31, 1996,  $2.7 million,  or
4.7% of the Company's total loan portfolio,  consisted of commercial real estate
loans. Of these loans,  $254,000 constituted  participations in loans secured by
commercial real estate which were purchased from other  financial  institutions.
The  commercial  real estate  loans  included  in the  Company's  portfolio  are
primarily secured by non-residential real estate such as small office buildings,
nursing homes and churches. The Bank currently originates commercial real estate
loans as adjustable-rate  loans indexed to the one-year U.S. Treasury securities
yields adjusted to a constant  maturity with a margin of 4.75% above such index.
Many of the commercial real estate loans in the Company's  portfolio at December
31, 1996  provided for a maximum rate  adjustment  per year of 1%,  although the
Bank began  originating  commercial real estate ARMs which provide for a maximum
rate adjustment of 2% per year in 1995. In addition, the maximum rate adjustment
over the life of the loan is 5%, and these  loans  have a maximum  loan-to-value
ratio of 80%. The Bank underwrites  these loans on a case-by-case  basis and, in
addition to its normal underwriting  criteria, the Bank evaluates the borrower's
ability to service the debt from the net operating  income of the  property.  No
single  commercial real estate loan at December 31, 1996 exceeded  $330,000.  No
commercial  real estate  loans were  included in  non-performing  assets at that
date.

         Loans secured by commercial real estate  generally are larger than one-
to  four-family  residential  loans  and  involve  a  greater  degree  of  risk.
Commercial  real  estate  loans  often  involve  large loan  balances  to single
borrowers  or groups of related  borrowers.  Payments on these loans depend to a
large degree on results of operations  and  management of the properties and may
be affected to a greater extent by adverse  conditions in the real estate market
or the economy in general.  Accordingly, the nature of the loans makes them more
difficult for management to monitor and evaluate.

         Multi-Family  Loans.   Approximately  $2.4  million,  or  4.1%  of  the
Company's  portfolio of loans at December 31,  1996,  consisted of  multi-family
loans.  These  loans are  generally  purchased  participations  and  secured  by
apartment complexes and other multi-family  residential properties.  At December
31, 1996, none of the multi-family loans included in the Company's portfolio was
included in non-performing assets.

         Construction  Loans. The Bank offers construction loans with respect to
owner-occupied  residential  real estate and, in limited  cases,  to builders or
developers constructing such properties on a speculative investment basis (i.e.,
before the  builder/developer  obtains a commitment from a buyer).  The Bank may
also purchase participations.

         At December 31, 1996,  $1.0 million,  or 1.8%,  of the Company's  total
loan  portfolio  consisted of  construction  loans.  Included in such loans were
participations  in multi-family  and commercial real estate  construction  loans
amounting  to $442,000 at December 31, 1996.  The largest  construction  loan on
December  31, 1996,  was  approximately  $250,000.  No  construction  loans were
included in non-performing assets on that date.

                                      -4-
<PAGE>
         Construction  loans  originated  by the  Bank  are  written  such  that
interest  only is payable  during the  construction  phase,  which is  typically
limited to six (6) months,  and following the  construction  phase,  a permanent
loan  is  made.   Inspections  are  made  prior  to  any  disbursement  under  a
construction loan.

         Consumer Loans. Federal laws and regulations permit federally chartered
savings  associations  to  make  secured  and  unsecured  consumer  loans  in an
aggregate amount up to 35% of the  association's  total assets.  In addition,  a
federally  chartered  savings  association  has lending  authority above the 35%
limit for certain consumer loans, such as property improvement loans and deposit
account  secured  loans.  However,  the  Qualified  Thrift  Lender  test  places
additional  limitations  on a savings  association's  ability  to make  consumer
loans. See "Regulation -- Qualified Thrift Lender."

         The Company's  consumer  loans,  consisting  primarily of  installment,
share,  home improvement,  and home equity loans,  aggregated $9.9 million as of
December 31, 1996,  or 17.3% of the  Company's  total loan  portfolio.  The Bank
consistently originates consumer loans to meet the needs of its customers and to
assist in  meeting  its  asset/liability  management  goals.  All of the  Bank's
consumer loans originated by the Bank,  except home equity loans, are fixed-rate
loans, and substantially all are secured loans.

         Installment  loans,  totaling $4.6  million,  or 8.1% of total loans at
December  31,  1996,  are  fixed-rate  loans  generally  secured by  collateral,
including  automobiles,  and  are  made  for  maximum  terms  of up to 10  years
(depending  on the  collateral).  The  Bank's  installment  loans  also  include
"one-pay" notes, some of which are secured by residential real estate and all of
which  amortize at rates  similar to those for home  improvement  loans and have
maximum terms of 6 months to one year.

         Share loans,  totaling $286,000,  or .5% of total loans at December 31,
1996, are made up to 80% of the original account balance and accrue at a rate of
2-3% over the underlying certificate of deposit rate. Interest on share loans is
paid  quarterly.  Home  improvement  loans totaled $4.4 million,  or 7.7% of the
Company's  total loan  portfolio  at  December  31,  1996,  and are  close-ended
fixed-rate  loans  made  for  maximum  terms up to 15  years.  The  Bank's  home
improvement  loans are generally made only to those  borrowers for whom the Bank
holds the primary mortgage on the property, if any.

         The Bank also offers  open-ended  lines of credit  secured by a lien on
the equity in the borrower's home in amounts up to 90% of the appraised value of
the real estate (taking into account any other  mortgages on the property).  The
Bank's home equity loans are adjustable-rate  loans with interest rates equal to
the national  prime rate plus 2%, and payments equal to the greater of 2% of the
outstanding loan balance or $50. The Bank's home equity loans are generally made
only to those  borrowers  for whom the Bank holds the  primary  mortgage  on the
property, if any, and generally have a maximum term of 15 years. At December 31,
1996, the Bank had approved  $1,033,000 of home equity loans,  of which $595,000
were outstanding.

         The  Bank  also  offers  credit  cards to its  customers,  but does not
underwrite  the credit  cards or have any other  credit risk with respect to the
cards. The Company earns a fee upon the origination of the credit card accounts.
To date,  the income earned by the Company from offering  these credit cards has
not been significant.

         As a general rule,  consumer  loans involve a higher level of risk than
one- to  four-family  residential  mortgage  loans  because  consumer  loans are
generally  made based upon the  borrower's  ability to repay the loan,  which is
subject to change, rather than the value of the underlying  collateral,  if any.
However,  the relatively higher yields and shorter terms to maturity of consumer
loans are believed to be helpful in reducing  interest-rate  risk.  The Bank has
thus far been  successful  in managing  consumer  loan risk.  As of December 31,
1996, consumer loans totaling $7,000 were included in non-performing assets.

         Letters  of  Credit  Securing  Tax-Exempt  Bonds.  The  Bank  currently
maintains  three  letters of credit,  each in the amount of $253,000,  to secure
payments  required under  tax-exempt  bonds issued to raise funds for low-income
housing projects in Franklin,  Kokomo and Michigan City, Indiana.  The issuer of
the  tax-exempt  bonds is permitted to draw against these letters of credit only
in the event it defaults in making  payments  required under the bonds,  and any
such draws made  against the letters of credit would be secured by a mortgage on
the subject  housing  project.  No draws  against any letters of credit had been
made as of December 31, 1996.

                                      -5-
<PAGE>

         Origination,  Purchase and Sale of Loans. In an effort to control costs
incurred by its mortgage customers,  the Bank currently  originates its mortgage
loans  pursuant to its own  underwriting  standards  which are not in conformity
with the  standard  criteria  of the  Federal  Home  Loan  Mortgage  Corporation
("FHLMC") or Federal National Mortgage  Association  ("FNMA").  If it desired to
sell its mortgage  loans,  the Bank might  therefore  experience some difficulty
selling such loans quickly in the secondary  market.  The Bank has no intention,
however,  of attempting to sell such loans.  The Bank's ARMs vary from secondary
market criteria because,  among other things,  the Bank does not require current
property  surveys in most cases,  does not require escrow accounts for taxes and
insurance and does not permit the  conversion of those loans to fixed rate loans
in the first three years of their term.

         The Bank  confines its loan  origination  activities  primarily to Cass
County.  At December 31, 1996, no loans were secured by property located outside
of Indiana.  The Bank's loan originations are generated from referrals from real
estate dealers and existing customers, and newspaper and periodical advertising.
All loan applications are processed and underwritten at the Bank's main office.

         Under  Financial  Institutions  Reform,  Recovery,  and Enforcement Act
("FIRREA"),  a savings association generally may not make any loan to a borrower
or its  related  entities  if  the  total  of  all  such  loans  by the  savings
association  exceeds 15% of its capital (plus up to an additional 10% of capital
in the case of loans fully  collateralized  by readily  marketable  collateral);
provided,  however,  that  loans up to  $500,000  regardless  of the  percentage
limitations  may be made  and  certain  housing  development  loans of up to $30
million or 30% of capital,  whichever is less, are permitted. The maximum amount
which the Bank could have  loaned to one  borrower  and the  borrower's  related
entities  under the 15% of capital  limitation  was $2.5 million at December 31,
1996. The Company's  portfolio of loans currently  contains no loans that exceed
the 15% of capital limitation.

         The Bank's loan approval  process is intended to assess the  borrower's
ability to repay the loan,  the  viability  of the loan and the  adequacy of the
value of the  property  that will  secure  the loan.  To assess  the  borrower's
ability  to repay,  the Bank  studies  the  employment  and credit  history  and
information  on  the  historical  and  projected  income  and  expenses  of  its
mortgagors.  Secured  loans up to $75,000  may be  approved  by the Senior  Loan
Officer,  and secured  loans up to $150,000 may be approved by the  President or
the  Executive  Committee.  Loans up to  $250,000  may be  approved  by the Loan
Committee.  All loans for more than  $250,000 must be approved in advance by the
Board of Directors.

         The Bank  generally  requires  appraisals on all property  securing its
loans and  requires  title  insurance  or an  abstract  and a valid  lien on its
mortgaged real estate.  Appraisals for  residential  real property are generally
performed  by  an  in-house  appraiser  who  is  a  state-licensed   residential
appraiser.  From  time to time,  the Bank also uses the  services  of  certified
residential  appraisers  who are not in-house,  including for loans in excess of
$250,000.  The Bank requires fire and extended coverage  insurance in amounts at
least  equal  to the  principal  amount  of the  loan.  It also  requires  flood
insurance to protect the property  securing its interest if the property is in a
flood plane.

         The Bank's  underwriting  standards for consumer  loans are intended to
protect against some of the risks inherent in making  consumer  loans.  Borrower
character, paying habits and financial strengths are important considerations.

         The Bank historically has not participated in the secondary market as a
seller of its mortgage loans, but does occasionally  purchase  participations in
commercial real estate and multi-family loans from other financial institutions.

                                      -6-
<PAGE>

         The  following  table shows loan  origination,  purchase and  repayment
activity for the Bank during the periods indicated.

<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                        ----------------------------------------------------------
                                                           1996                  1995                       1994
                                                          ------                -------                    -------
                                                                             (In thousands)
<S>                                                      <C>                    <C>                        <C>    
Gross loans receivable
   at beginning of period........................        $50,046                $44,585                    $38,908
Originations:
   Mortgage loans:
     Residential.................................         11,277                  8,323                      9,139
     Commercial real estate and
       multi-family..............................          1,885                    318                        105
                                                          ------                -------                    -------
     Total mortgage loans........................         13,162                  8,641                      9,244
   Consumer loans:
     Installment.................................          3,757                  3,129                      2,840
     Share.......................................            259                     88                        190
     Home improvement............................          1,774                  1,435                      1,663
     Home equity.................................            319                    104                         80
                                                          ------                -------                    -------
       Total consumer loans......................          6,109                  4,756                      4,773
                                                          ------                -------                    -------
            Total originations...................         19,271                 13,397                     14,017
   Purchases:
     Commercial real estate and multi-family.....          1,046                  1,010                        256
     Commercial paper............................            ---                  3,842                        988
                                                          ------                -------                    -------
       Total originations and purchases..........         20,317                 18,249                     15,261
   Repayments:
     Commercial paper............................            878                  3,464                        488
     Other loans and deductions..................         12,425                  9,324                      9,096
                                                          ------                -------                    -------
   Gross loans receivable at end of period.......         57,060                $50,046                    $44,585
                                                          ======                =======                    =======
</TABLE>

         Origination   and  Other  Fees.  The  Company   realizes   income  from
origination  fees, late charges,  checking account service charges,  credit card
fees, and fees for other miscellaneous services. The Bank currently charges $200
plus closing costs on its adjustable-rate  mortgage loans. Points may be charged
on  fixed-rate  loans.  Late  charges are  generally  assessed if payment is not
received  within a specified  number of days after it is due.  The grace  period
depends on the individual loan documents.

Non-Performing and Problem Assets

         Mortgage  loans are  reviewed  by the Bank on a  regular  basis and are
placed on a  non-accrual  status when the loans  become  contractually  past due
ninety days or more. At the end of each month, delinquency notices are sent with
respect to all mortgage loans for which payments have not been received. Contact
by phone or in person is made, if feasible, with respect to all such loans. When
loans are sixty days in default,  an additional  delinquency  notice is sent and
personal contact is made with the borrower to establish an acceptable  repayment
schedule.  When  loans are  ninety  days in  default,  contact  is made with the
borrower by the Senior Loan  Officer who  attempts to  establish  an  acceptable
repayment schedule. Management is authorized to commence foreclosure proceedings
for any loan upon making a determination  that it is prudent to do so. All loans
for which foreclosure  proceedings have been commenced are placed on non-accrual
status.

         Consumer  loans are reviewed by the Bank on a daily basis.  Notices are
sent to borrowers  when any consumer  loan is 5, 10 and 15 days past due.  After
consumer  loans are 15 days  delinquent,  a late fee in the amount of 10% of the
payment is imposed until the loan is brought current.

         Non-Performing  Assets. At December 31, 1996, $406,000,  or .52% of the
Company's total assets, were  non-performing  assets (loans delinquent more than
90  days,   non-accruing  loans,  real  estate  owned  ("REO"),   troubled  debt
restructurings and non-accruing investments),  compared to $624,000, or 1.3%, of
the  Company's  total  assets at  December  31,  1992.  At  December  31,  1996,
residential loans,  multi-family loans,  commercial real estate loans,  consumer
loans and REO  accounted  for  98.3%,  0%,  0%,  1.7% and 0%,  respectively,  of
non-performing  assets.  There were no non-accruing  investments at December 31,
1996.

                                      -7-
<PAGE>

         The table below sets forth the amounts and  categories of the Company's
non-performing  assets (non-accruing  investments,  non-accruing loans, and real
estate owned).  It is the policy of the Company that all earned but  uncollected
interest on all loans be reviewed  monthly to determine  if any portion  thereof
should  be  classified  as  uncollectible  for any loan past due in excess of 90
days.

<TABLE>
<CAPTION>
                                                                                 At December 31,
                                                            1996         1995         1994         1993          1992
                                                            ---------------------------------------------------------
                                                                               (Dollars in thousands)
<S>                                                         <C>          <C>          <C>           <C>          <C>
Non-accruing investments (1).........................     $  ---       $  ---        $ 150         $ 181        $ 180
Non-accruing loans (2)...............................        406          311          337           597          424
Real estate owned, net...............................        ---          ---          ---           ---           20
                                                            ----         ----        -----         -----        -----
   Total non-performing assets.......................       $406         $311        $ 487         $ 778        $ 624
                                                            ====         ====        =====         =====        =====
Non-performing loans to total loans, net (3).........        .71%          .63%         .76%        1.57%        1.22%
Non-performing assets to total assets................        .52           .42          .82         1.38         1.27
---------------
</TABLE>
(1)  Non-accruing investments consist of certain corporate obligations at market
     value for 1994 since included in securities  available for sale and at book
     value prior to 1994 since included in securities held to maturity. The book
     value at December  31,  1994  corporate  obligations  was  $90,000.  Income
     collected and recorded on these securities during 1996 was $4,700.

(2)  The Company generally places loans on a non-accruing  status when the loans
     become  contractually  past  due 90 days or more.  At  December  31,  1996,
     $399,000  of  non-accruing  loans were  residential  loans and $7,000  were
     consumer loans. For the year ended December 31, 1996, the income that would
     have been recorded had the non-accruing  loans not been in a non-performing
     status totaled $33,000 compared to actual income recorded of $11,000.

(3)  Total loans less loans in process.

         Classified  Assets.  Federal  regulations  and the Bank's Internal Loan
Review policy provide for the  classification  of loans and other assets such as
debt and  equity  securities  considered  by the OTS to be of lesser  quality as
"substandard," "doubtful" or "loss" assets. An asset is considered "substandard"
if it is inadequately  protected by the current net worth and paying capacity of
the obligor or of the collateral pledged, if any.  "Substandard"  assets include
those  characterized  by the "distinct  possibility"  that the association  will
sustain "some loss" if the deficiencies are not corrected.  Assets classified as
"doubtful"   have  all  of  the   weaknesses   inherent   in  those   classified
"substandard,"  with the added  characteristic  that the weaknesses present make
"collection or liquidation in full," on the basis of currently  existing  facts,
conditions,  and values, "highly questionable and improbable." Assets classified
as "loss" are those  considered  "uncollectible"  and of such little  value that
their continuance as assets without the establishment of a specific loss reserve
is not warranted.  Assets which 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" by management.

         An insured  institution is required to establish general allowances for
loan  losses in an amount  deemed  prudent by  management  for loans  classified
substandard or doubtful,  as well as for other problem loans. General allowances
represent loss allowances  which have been established to recognize the inherent
risk associated with lending activities,  but which, unlike specific allowances,
have  not  been  allocated  to  particular  problem  assets.   When  an  insured
institution  classifies  problem  assets as  "loss,"  it is  required  either to
establish  a specific  allowance  for losses  equal to 100% of the amount of the
asset so classified or to charge off such amount. An institution's determination
as to  the  classification  of its  assets  and  the  amount  of  its  valuation
allowances is subject to review by the OTS which can order the  establishment of
additional general or specific loss allowances.

                                      -8-
<PAGE>

         At December 31, 1996, the aggregate amount of the Company's  classified
assets,  and of the  Company's  general and  specific  loss  allowances  were as
follows:

                                                            At December 31, 1996
                                                               (In thousands)
Substandard loans.........................................          $406
Doubtful loans............................................           ---
Loss loans................................................           ---
                                                                    ----
   Total classified loans.................................          $406
                                                                    ====
General loss allowances...................................          $236
Specific loss allowances..................................           ---
                                                                    ----
   Total allowances.......................................          $236
                                                                    ====

         The Company  regularly  reviews its loan portfolio to determine whether
any loans require classification in accordance with applicable regulations.

Allowance for Loan Losses

         The allowance  for loan losses is maintained  through the provision for
loan losses,  which is charged to  earnings.  The  provision  for loan losses is
determined in  conjunction  with  management's  review and evaluation of current
economic conditions (including those of the Bank's lending area), changes in the
character and size of the loan portfolio,  loan delinquencies (current status as
well as past and  anticipated  trends) and adequacy of collateral  securing loan
delinquencies,  historical and estimated net  charge-offs,  and other  pertinent
information  derived  from a  review  of the  loan  portfolio.  In  management's
opinion,  the  Company's  allowance  for  loan  losses  is  adequate  to  absorb
anticipated future losses from loans at December 31, 1996. However, there can be
no assurance that regulators, when reviewing the Company's loan portfolio in the
future,  will not require  increases in its  allowances  for loan losses or that
changes in economic  conditions  will not adversely  affect the  Company's  loan
portfolio.

         Summary of Loan Loss  Experience.  The following table analyzes changes
in the allowance for loan losses during the past five (5) one-year periods ended
December 31, 1996.

<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                                     1996          1995         1994         1993         1992
                                                     -----         ----        -----        -----       ------
                                                                       (Dollars in thousands)
<S>                                                  <C>          <C>          <C>         <C>          <C>   
Balance of allowance at beginning
   of period................................         $ 223        $ 206        $ 201       $   86       $   11
Recoveries..................................             1          ---          ---          ---          ---
Less charge offs:
   Residential real estate loans............           ---          ---          ---          ---          ---
   Consumer loans...........................           ---            3            1           46           23
                                                      ----         ----        -----        -----       ------
Net charge-offs.............................           ---            3            1           46           23
Provisions for losses on loans..............            12           20            6          161           98
                                                      ----         ----        -----        -----       ------
Balance of allowance at end of period.......          $236         $223        $ 206        $ 201       $   86
                                                      ====         ====        =====        =====       ======
   Net charge-offs to total average
     loans receivable for period............           ---           (*)          (*)         .13%         .07%
   Allowance at end of period to
     net loans receivable at end
     of period (1)..........................           .41          .45          .47          .53          .25
   Allowance to total non-performing
     loans at end of period.................         58.12        71.61        61.13        33.67        20.28
-------------------
</TABLE>
(1)  Total loans less loans in process.
(*)  Less than .01%.

                                      -9-
<PAGE>

         Allocation of Allowance for Loan Losses.  The following  table presents
an analysis of the allocation of the Company's  allowance for loan losses at the
dates indicated.

<TABLE>
<CAPTION>
                                                              At December 31,
                                    1996             1995               1994             1993               1992
                              ----------------  ---------------   ---------------   ---------------  ---------------
                                       Percent          Percent           Percent           Percent          Percent
                                      of loans         of loans          of loans          of loans         of loans
                                       in each          in each           in each           in each          in each
                                      category         category          category          category         category
                                      of total         of total          of total          of total         of total
                              Amount    loans   Amount   loans    Amount   loans    Amount   loans   Amount   loans
                              ------    -----   ------   -----    ------   -----    ------   -----   ------   -----
                                                                   (In thousands)
<S>                             <C>    <C>       <C>     <C>       <C>    <C>       <C>     <C>        <C>   <C>   
Balance at end of period
   applicable to:
Residential..................   $158   72.05%    $122    73.15%    $103   74.92%    $108    74.39%     $52   77.23%
Commercial real estate.......      6    4.73        6     3.24        6    6.10        7     6.85      ---    6.27
Multi-family.................      1    4.15        1     3.83        2    1.62        1     1.41      ---     .34
Construction loans...........    ---    1.78      ---     2.04      ---    2.26      ---     4.10      ---    2.30
Commercial paper and
   bankers' acceptances......    ---      ---     ---     1.75      ---    1.12      ---    ---        ---    ---
Consumer loans...............     71   17.29       86    15.99       80   13.98       72    13.25       34   13.86
Unallocated..................    ---     ---        8      ---       15     ---       13      ---      ---     ---
                                ----  ------     ----   ------     ----  ------     ----   ------      ---  ------ 
   Total.....................   $236  100.00%    $223   100.00%    $206  100.00%    $201   100.00%     $86  100.00%
                                ====  ======     ====   ======     ====  ======     ====   ======      ===  ====== 
</TABLE>


Investments and Mortgage- and Other Asset-Backed Securities

         Federally  chartered savings  associations have the authority to invest
in  various  types  of  liquid  assets,  including  U.S.  Treasury  obligations,
securities  of various  federal  agencies,  certain  certificates  of deposit of
insured banks and savings institutions,  repurchase agreements and federal funds
sold. Subject to various restrictions,  federally chartered savings associations
may also  invest a portion of their  assets in  corporate  debt  securities  and
asset-backed securities. The investment policy of the Bank, which is established
and implemented by the Bank's  Investment  Committee,  is designed  primarily to
maximize  the yield on the  investment  portfolio  subject to minimal  liquidity
risk, default risk, interest rate risk, and prudent asset/liability management.

         The Company's  investments  consist of U.S. government and other agency
securities,  mortgage- and other  asset-backed  securities,  state and municipal
bonds,  corporate  obligations,  marketable equity  securities,  certificates of
deposit,  and FHLB stock. At December 31, 1996,  approximately $14.8 million, or
19.0% of the Company's total assets, consisted of such investments.

         At December  31, 1996,  the Company had $6.7  million of mortgage-  and
other  asset-backed  securities  outstanding,  all of which were  classified  as
available for sale.  Other-asset  backed securities include securities backed by
automobile  receivables.  These  fixed-rate  mortgage-  and  other  asset-backed
securities may be used as collateral for borrowings and through repayments, as a
source of liquidity.  Mortgage- and other  asset-backed  securities offer yields
above those available for investments of comparable credit quality and duration.
Mortgage-backed securities are qualifying thrift investments under the Qualified
Thrift Lender test. See "Regulation--Qualified Thrift Lender."

                                      -10-
<PAGE>

         The following  table sets forth the carrying  value and market value of
the Company's investments and mortgage- and other asset-backed securities at the
dates indicated.

<TABLE>
<CAPTION>
                                                                         At December 31,
                                          --------------------------------------------------------------------------
                                                  1996                        1995                     1994
                                          --------------------      --------------------      ----------------------
                                          Carrying      Market      Carrying      Market      Carrying        Market
                                            Value        Value        Value        Value        Value          Value
                                            -----        -----        -----        -----        -----          -----
                                                                         (In thousands)
Securities available for sale (1):
<S>                                      <C>          <C>          <C>          <C>          <C>           <C>     
   Federal agencies...................   $  5,245     $  4,880     $  7,424     $  7,175     $  4,666      $  4,255
   State and municipal................      2,194        2,242        2,229        2,294          236           216
   Mortgage- and other asset-backed
     securities.......................      6,768        6,674        7,422        7,468        1,229         1,203
   Corporate obligations..............        350          348        1,655        1,696          387           426
   Marketable equity securities.......          6          159            6          120            6            73
                                          -------      -------      -------      -------      -------       -------
     Total securities
     available for sale...............     14,563       14,303       18,736       18,753        5,295         4,970
                                          -------      -------      -------      -------      -------       -------
Securities held to maturity:
   Federal agencies...................        ---          ---          ---          ---        2,228         2,167
   State and municipal................        ---          ---          ---          ---        1,695         1,649
   Corporate obligations..............        ---          ---          ---          ---        1,116         1,085
     Total securities
     held to maturity.................        ---          ---          ---          ---        5,039         4,901
                                          -------      -------      -------      -------      -------       -------
Certificate of deposit (2)............        100          100          100          100          ---           ---
FHLB stock (2)........................        387          387          348          348          307           307
                                          -------      -------      -------      -------      -------       -------
     Total investments................    $15,050      $14,790      $19,184      $19,201      $10,641       $10,178
                                          =======      =======      =======      =======      =======       =======
</TABLE>
----------------
(1)      Upon  adoption  of SFAS  No.  115 as of  January  1,  1994,  securities
         available  for sale  are  recorded  at  market  value in the  financial
         statements.  Prior to the  adoption  of SFAS No.  115,  the  marketable
         equity  securities  currently  classified  as  available  for sale were
         carried  at the lower of cost or  market.  See  Notes to the  Company's
         Financial Statements.

(2)      Market value approximates carrying values.

         Included in the  Company's  investment  portfolio  at December 31, 1996
were approximately $3.1 million  (amortized cost) in derivative  securities,  of
which  approximately  $2.7 million were structured notes issued by the FHLBs. An
additional  $.4 million  are  structured  notes  issued by  government  agencies
including  the  FNMA  and  FHLMC.  The  fair  value  of  these  investments  was
approximately  $2.7 million at December 31, 1996. These structured notes,  which
are  not  obligations  of,  or  guaranteed  by,  the  United  States,  represent
obligations to repay  principal with interest that is either fixed or fluctuates
in accordance with an interest formula tied to various indices.  The interest on
the Company's  structured  notes generally  adjusts  quarterly or  semi-annually
based on certain indices such as the LIBOR and the CMT.

         Approximately  $2.8 million  (amortized cost) of these structured notes
with approximate fair value of $2.4 million had fluctuating  interest rates that
adjust in the opposite  direction of changes in the index to which it is tied or
that adjust on the basis of a formula tied to two different indices, such as the
CMT and an  inverse  LIBOR  rate.  All of  these  inversely  or  dually  indexed
securities were classified as available for sale at December 31, 1996.

         The average yield at December 31, 1996, of these derivative securities,
was 3.77%. In a rising  interest rate  environment,  it is anticipated  that the
yield on and market  value of these  securities  will  decline,  and may decline
substantially.

                                      -11-
<PAGE>
         The following  table sets forth  investment  securities,  mortgage- and
other  asset-backed  securities  and FHLB stock which mature  during each of the
periods  indicated and the weighted  average yields for each range of maturities
at December 31, 1996.

<TABLE>
<CAPTION>
                                                      Amount at December 31, 1996, which matures in
                                          One                 One to                Five to                  Over
                                     Year or Less           Five Years             Ten Years              Ten Years
                                  -------------------  ------------------     ------------------    -------------------
                                             Weighted            Weighted               Weighted               Weighted
                                  Carrying    Average  Carrying   Average     Carrying   Average    Carrying    Average
                                    Value      Yield     Value     Yield        Value     Yield       Value      Yield
                                    -----      -----     -----     -----        -----     -----       -----      -----
                                                                 (Dollars in thousands)
<S>                               <C>         <C>       <C>       <C>          <C>       <C>       <C>         <C>
Securities available for sale (1)(3) :
   Federal agencies.............. $   950     5.12%     $1,748    3.82%        $2,347    5.97%     $   200     7.29%
   State and municipal (2).......     513     9.02         353    8.28            964    7.46          364     8.86
   Mortgage- and other
      asset-backed securities....   1,556     5.40       2,299    6.48          1,331    7.29        1,582     7.66
   Corporate obligations.........     ---       ---        250    6.03            100    7.25          ---       ---
   Marketable equity securities..     ---       ---        ---      ---           ---      ---           6    34.47
                                   ------     ----      ------    ----         ------    ----       ------     ---- 
     Total securities
        available for sale.......   3,019     5.93       4,650    5.59          4,742    6.67        2,152     7.90
                                   ------     ----      ------    ----         ------    ----       ------     ---- 
Securities held to maturity (3):
   Certificate of deposit........                                                                      100     7.05
FHLB stock.......................                                                                      387     7.71
                                   ------     ----      ------    ----         ------    ----       ------     ---- 
     Total securities
       held to maturity..........                                                                      487     7.57
                                   ------     ----      ------    ----         ------    ----       ------     ---- 
     Total investments...........  $3,019     5.93%     $4,650    5.59%        $4,742    6.67%      $2,639     7.84%
                                   ======     ====      ======    ====         ======    ====       ======     ==== 
</TABLE>
-------------- 
(1)      Securities  available  for sale are set  forth  at  amortized  cost for
         purposes of this table.

(2)      Fully taxable equivalent basis

(3)      No effect is given for possible prepayments.

         In 1988 and 1989, the Bank purchased three investments in revenue bonds
with an aggregate  par value of $370,000 for an  approximate  purchase  price of
$359,000.  The  proceeds of the bonds were to be invested in low income  housing
projects. Pending investment in the housing projects, the proceeds were invested
in municipal guaranteed investment contracts backed by the former Executive Life
Insurance  Company  ("ELIC").  ELIC  was  placed  into  conservatorship  by  the
California  Commissioner  of  Insurance  on  April  11,  1991.  Liquidation  and
rehabilitation  of ELIC has proceeded in an orderly manner which has resulted in
substantial payment of these bonds to date. As of December 31, 1996, the Company
had received  principal  and interest  payments of $342,000 on these bonds,  had
recognized  losses to date of $78,000 and had ceased  carrying  the bonds on its
books.  The Company  anticipates  receiving  further  payments  on these  bonds,
although the timing of such payments is not known.

Sources of Funds

         General.  Deposits have traditionally been the Bank's primary source of
funds for use in lending and investment activities. In addition to deposits, the
Company derives funds from scheduled loan payments,  loan prepayments,  retained
earnings and income on earning assets.  While scheduled loan payments and income
on earning assets are relatively  stable sources of funds,  deposit  inflows and
outflows can vary widely and are influenced by prevailing interest rates, market
conditions and levels of  competition.  Borrowings from the FHLB of Indianapolis
may be used in the  short-term  to  compensate  for  reductions  in  deposits or
deposit  inflows at less than  projected  levels.  The Bank rarely  borrows on a
longer-term basis, for example,  to support expanded  activities or to assist in
its asset/liability management.

                                      -12-
<PAGE>
         Deposits. Deposits are attracted,  principally from within Cass County,
through the offering of a broad selection of deposit  instruments  including NOW
and other transaction accounts,  fixed-rate certificates of deposit,  individual
retirement accounts, and savings accounts. The Bank does not actively solicit or
advertise for deposits outside of Cass County.  Substantially  all of the Bank's
depositors are residents of that county.  Deposit  account terms vary,  with the
principal differences being the minimum balance required, the amount of time the
funds remain on deposit and the interest  rate.  The Bank does not pay a fee for
any deposits it receives.

         At December  31,  1992,  the Bank's  deposits  totaled  $43.3  million.
Deposits totaled $57.4 million at December 31, 1996.

         Interest  rates  paid,  maturity  terms,  service  fees and  withdrawal
penalties are  established  by the Bank on a periodic  basis.  Determination  of
rates and terms are predicated on funds acquisition and liquidity  requirements,
rates paid by  competitors,  growth  goals,  and federal  regulations.  The Bank
relies,  in part,  on customer  service  and  long-standing  relationships  with
customers  to attract  and  retain its  deposits,  but also  closely  prices its
deposits in relation to rates offered by its competitors.

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

         An analysis of the Bank's deposit accounts by type, maturity,  and rate
at December 31, 1996, is as follows:

<TABLE>
<CAPTION>
                                                           Minimum         Balance at                          Weighted
                                                           Opening        December 31,         % of             Average
Type of Account                                            Balance            1996           Deposits            Rate
---------------                                            ----------------------------------------------------------
                                                                              (Dollars in thousands)
Withdrawable:
<S>                                                     <C>                <C>                 <C>               <C>  
   Passbook savings accounts.........................   $       10         $  3,119            5.43%             3.00%
   Regular money market accounts.....................        2,500            1,158            2.02              3.24
   Hi yield money market accounts....................       10,000           14,488           25.24              4.70
   Super NOW accounts................................        2,500              686            1.20              2.47
   NOW and
other transaction accounts...........................          200            3,331            5.80              2.07
   Other transaction accounts........................          100              631            1.10              0
                                                                             ------           -----     
Total withdrawable...................................                        23,413           40.79              3.83
                                                                             ------           -----     
Certificates (original terms):
   91 days...........................................        1,000              319             .56              4.41
   6 months..........................................        1,000            4,564            7.95              5.11
   12 months.........................................        1,000            4,962            8.65              5.27
   18 months.........................................          500              944            1.64              5.53
   24 months.........................................          500           11,460           19.97              5.55
   30 months.........................................          500            3,330            5.80              5.48
   60 months.........................................        1,000            3,757            6.54              5.55
IRA's
   18 months.........................................          100            4,647            8.10              5.61
                                                                             ------           -----     
Total certificates...................................                        33,983           59.21              5.44
                                                                             ------           -----     
Total deposits ......................................                       $57,396          100.00%             4.78%
                                                                            =======          ======              ==== 
</TABLE>

                                      -13-
<PAGE>

         The following table sets forth by various  interest rate categories the
composition of time deposits of the Bank at the dates indicated:


                                            At December 31,
                            ---------------------------------------------
                               1996              1995              1994
                              -------           -------           -------
                                            (In thousands)

4.00% and under..........   $     199         $     125          $  7,228
4.01 - 6.00 %............      32,499            27,648            21,301
6.01 - 8.00%.............       1,285             3,202             2,773
8.01 - 10.00%............         ---               ---               ---
                              -------           -------           -------
Total  ..................     $33,983           $30,975           $31,302
                              =======           =======           =======

         The following table  represents,  by various  interest rate categories,
the amounts of time deposits  maturing  during each of the three years following
December  31,  1996,  and  the  total  amount   maturing   thereafter.   Matured
certificates  which have not been  renewed as of December  31,  1996,  have been
allocated based upon certain rollover assumptions:

                                              Amounts At
                                    December 31, 1996, Maturing in
                      ---------------------------------------------------------
                       One Year        Two            Three        Greater Than
                        or Less       Years           Years         Three Years
                      ---------------------------------------------------------
                                            (In thousands)
4.00% and under...... $     199     $     ---      $     ---      $     ---
4.01 - 6.00 %........    18,664        11,606          1,083          1,146
6.01-8.00%...........     1,076           100            ---            109
                        -------       -------         ------         ------
Total  ..............   $19,939       $11,706         $1,083         $1,255
                        =======       =======         ======         ======


         The following table indicates the amount of the Bank's  certificates of
deposit of $100,000 or more by time remaining  until maturity as of December 31,
1996.

          Maturity                                               (In thousands)
   Three months or less.......................................      $   209
   Greater than three months
        through six months....................................        1,751
   Greater than six months
        through twelve months.................................        1,344
   Over twelve months.........................................        1,054
                                                                      -----
        Total.................................................       $4,358
                                                                     ======



                                      -14-
<PAGE>

         The  following  table sets  forth the  dollar  amount of savings in the
various types of deposits  programs  offered by the Bank at the dates indicated,
and the amount of  increase  or  decrease  in such  deposits  as compared to the
previous period.

<TABLE>
<CAPTION>

                                                                        Deposit Activity
                                        -----------------------------------------------------------------------------
                                                                     Increase                               Increase
                                                                    (Decrease)                             (Decrease)
                                         Balance at                    from      Balance at                   from
                                        December 31,       % of    December 31, December 31,     % of     December 31,
                                            1996         Deposits      1995         1995       Deposits       1994
                                        ------------     --------- ------------ -------------  ---------  ------------
                                                                     (Dollars in thousands)
Withdrawable:
<S>                                     <C>                <C>          <C>     <C>               <C>      <C>
   Passbook savings accounts............$   3,119          5.43%        (77)    $  3,196          6.09%    $    (50)
   Regular money market accounts........    1,158          2.02        (179)       1,337          2.55           13
   Hi yield money market accounts.......   14,488         25.24       1,796       12,692         24.19        1,101
   Super NOW accounts...................      686          1.20         124          562          1.07         (213)
   NOW accounts.........................    3,331          5.80         101        3,230          6.16          732
   Other transaction accounts...........      631          1.10         162          469           .90            3
                                          -------        ------       -----      -------        ------       ------
Total withdrawable......................   23,413         40.79       1,927       21,486         40.96        1,586
                                          -------        ------       -----      -------        ------       ------
Certificates (original terms):
   91 days..............................      319           .56        (621)         940          1.79         (126)
   6 months.............................    4,564          7.95       1,056        3,508          6.69         (312)
   12 months............................    4,962          8.65        (310)       5,272         10.05        2,657
   18 months............................      944          1.64        (149)       1,093          2.08          461
   24 months............................   11,460         19.97       4,236        7,224         13.77       (1,131)
   30 months............................    3,330          5.80      (1,231)       4,561          8.69       (1,807)
   60 months............................    3,757          6.54        (401)       4,158          7.93          (19)
IRA's
   18 months............................    4,647          8.10         428        4,219          8.04          (50)
                                          -------        ------       -----      -------        ------       ------
Total certificates......................   33,983         59.21       3,008       30,975         59.04         (327)
                                          -------        ------       -----      -------        ------       ------
Total deposits..........................  $57,396        100.00%      4,935      $52,461        100.00%      $1,259
                                          =======        ======       =====      =======        ======       ======
</TABLE>


                                                    Deposit Activity
                                           Balance at
                                          December 31,                 % of
                                              1994                   Deposits
                                                 (Dollars in thousands)

Withdrawable:
   Passbook savings accounts..........    $  3,246                      6.34%
   Regular money market accounts......       1,324                      2.59
   Hi yield money market accounts.....      11,591                     22.64
   Super NOW accounts.................         775                      1.51
   NOW accounts.......................       2,498                      4.88
   Other transaction..................         466                       .91
                                            ------                     -----
Total withdrawable....................      19,900                     38.87
                                            ------                     -----
Certificates (original terms):
   91 days............................       1,066                      2.08
   6 months...........................       3,820                      7.46
   12 months..........................       2,615                      5.11
   18 months..........................         632                      1.23
   24 months..........................       8,355                     16.32
   30 months..........................       6,368                     12.44
   60 months..........................       4,177                      8.16
IRA's
   18 months..........................       4,269                      8.33
                                            ------                     -----
Total certificates....................      31,302                     61.13
                                            ------                     -----
Total deposits .......................     $51,202                    100.00%
                                           =======                    ====== 

                                      -15-
<PAGE>
         Borrowings.  The Bank focuses on generating high quality loans and then
seeks the best source of funding from deposits, investments or borrowings. There
are  regulatory  restrictions  on advances from the FHLBs.  See  "Regulation  --
Federal Home Loan Bank System" and "-- Qualified Thrift Lender." At December 31,
1996, the Company had $2.0 million in borrowings  from the FHLB of  Indianapolis
which mature within one year and had a weighted  average interest rate of 5.38%.
The Company does not anticipate any difficulty in obtaining advances appropriate
to meet its requirements in the future. The Company also had a $1.4 million note
payable to  another  bank due on March 5,  1997.  It was  secured by 100% of the
Bank's  common  stock,  and the  interest  was at the prime rate.  This note was
repaid on January 16, 1997.

Employees

         As of December  31, 1996,  the Bank  employed 10 persons on a full-time
basis and 3 persons  on a  part-time  basis.  None of the Bank's  employees  are
represented by a collective bargaining group.  Management considers its employee
relations to be excellent.

         The Bank's employee  benefits for full-time  employees  include,  among
other things, a Financial  Institutions  Retirement Fund ("FIRF" or the "Pension
Plan") defined benefit  pension plan and major medical and long-term  disability
insurance.

         Employee  benefits are considered by management to be competitive  with
those offered by other financial  institutions and major employers in the Bank's
market area. See "Executive Compensation and Related Transactions."

Competition

         The Bank operates in North Central  Indiana and makes almost all of its
loans to and  accepts  most of its  deposits  from  residents  of Cass County in
Indiana.

         The Bank is subject to competition from various financial institutions,
including  state and national  banks,  state and federal  savings  institutions,
credit unions,  certain  non-banking  consumer  lenders,  and other companies or
firms,  including  brokerage houses and mortgage  brokers,  that provide similar
services in Cass County.  The Bank must also compete with money market funds and
with insurance companies with respect to its individual retirement accounts.

         Under  current  law,  bank  holding   companies  may  acquire   savings
associations.  Savings associations may also acquire banks under federal law. To
date,  several bank holding  company  acquisitions  of savings  associations  in
Indiana have been  completed.  Affiliations  between  banks and healthy  savings
associations  based in Indiana may also  increase the  competition  faced by the
Company.

         In  addition,   The  Riegle-Neal   Interstate   Banking  and  Branching
Efficiency Act of 1994 (the "Riegle-Neal Act") permits bank holding companies to
acquire banks in other states and,  with state  consent to certain  limitations,
allows banks to acquire  out-of-state  branches either through merger or de novo
expansion.  The State of Indiana recently passed a law  establishing  interstate
branching  provisions for Indiana state  chartered  banks  consistent with those
established by the Riegle-Neal Act (the "Indiana  Branching  Law").  The Indiana
Branching Law authorizes Indiana banks to branch interstate by merger or de novo
expansion and authorizes  out-of-state  banks meeting  certain  requirements  to
branch into Indiana by merger or de novo  expansion.  The Indiana  Branching Law
became  effective March 15, 1996,  provided that interstate  mergers and de novo
branches  are not  permitted to out of state banks unless the laws of their home
states  permit  Indiana  banks to  merge  or  establish  de novo  branches  on a
reciprocal basis. This new legislation may also result in increased  competition
for the Company.

         Because of recent changes in federal law,  interstate  acquisitions  of
banks are less restricted than they were under prior law.  Savings  associations
have certain powers to acquire savings  associations  based in other states, and
Indiana  law  expressly  permits  reciprocal   acquisition  of  Indiana  savings
associations.  In addition, Federal savings associations are permitted to branch
on an  interstate  basis.  See  "Regulation--Acquisitions  or  Dispositions  and
Branching."

         The primary  factors in competing  for deposits are interest  rates and
convenience  of  office  locations.  The Bank  competes  for  loan  originations
primarily  through the efficiency and quality of services it provides  borrowers
and through interest rates and loan fees it charges. Competition is affected by,
among other things,  the general  availability  of lendable  funds,  general and
local economic conditions, current interest rate levels, and other factors which
are not readily predictable.

                                      -16-
<PAGE>

                                   REGULATION

General

         The Bank,  as a federally  chartered  savings  bank, is a member of the
Federal  Home Loan Bank System  ("FHLB  System") and its deposits are insured by
the FDIC and it is a member  of the  Savings  Association  Insurance  Fund  (the
"SAIF")  which is  administered  by the FDIC.  The Bank is subject to  extensive
regulation  by  the  OTS.  Federal  associations  may  not  enter  into  certain
transactions  unless  certain  regulatory  tests  are met or they  obtain  prior
governmental  approval and the associations must file reports with the OTS about
their  activities and their financial  condition.  Periodic  examinations of the
bank are conducted by the OTS which has, in conjunction with the FDIC in certain
situations,  examination and enforcement powers. This supervision and regulation
are intended  primarily for the  protection of  depositors  and federal  deposit
insurance funds. The Bank is also subject to certain reserve  requirements under
regulations of the Board of Governors of the Federal Reserve System ("FRB").

         An OTS  regulation  establishes  a schedule for the  assessment of fees
upon all savings  associations to fund the operations of the OTS. The regulation
also  establishes a schedule of fees for the various types of  applications  and
filings made by savings associations with the OTS. The general assessment, to be
paid on a  semiannual  basis,  is based  upon the  savings  association's  total
assets, including consolidated  subsidiaries,  as reported in a recent quarterly
thrift financial report. Currently, the assessment rates range from .0172761% of
assets for  associations  with  assets of $67 million or less to  .0045864%  for
associations  with  assets in  excess  of $35  billion.  The  Bank's  semiannual
assessment for the first six months of 1997 under this assessment scheme,  based
upon consolidated assets at December 31, 1996, is approximately $13,000.

         The Bank is also  subject to federal  and state  regulation  as to such
matters as loans to officers,  directors,  or principal  shareholders,  required
reserves,  limitations as to the nature and amount of its loans and investments,
regulatory  approval of any merger or consolidation,  issuance or retirements of
its own securities, and limitations upon other aspects of banking operations. In
addition,  the  activities and operations of the Bank are subject to a number of
additional  detailed,  complex and sometimes  overlapping federal and state laws
and regulations.  These include state usury and consumer credit laws, state laws
relating to fiduciaries,  the Federal Truth-In-Lending Act and Regulation Z, the
Federal Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting
Act, the Community Reinvestment Act,  anti-redlining  legislation and anti-trust
laws.

         The  United  States  Congress  is  considering  legislation  that would
require all federal savings associations, such as the Bank, to either convert to
a national bank or a state-chartered  financial  institution by a specified date
to be determined. In addition, under the legislation, the Holding Company likely
would not be regulated as a savings and loan  holding  company,  but rather as a
bank  holding  company.  The OTS  would  also  be  abolished  and its  functions
transferred among the other federal banking  regulators.  Certain aspects of the
legislation  remain to be resolved and therefore no assurance can be given as to
whether  or in what form the  legislation  will be  enacted or its effect on the
Holding Company and the Bank.

Federal Home Loan Bank System

         The Bank is a member of the FHLB System,  which consists of 12 regional
banks.  The Federal  Housing  Finance Board  ("FHFB"),  an  independent  agency,
controls the FHLB System  including  the FHLB of  Indianapolis.  The FHLB System
provides  a central  credit  facility  primarily  for  member  savings  and loan
associations and savings banks and other member financial institutions. The Bank
is required to hold shares of capital  stock in the FHLB of  Indianapolis  in an
amount at least equal to the greater of 1% of the aggregate  principal amount of
its unpaid  residential  mortgage  loans,  home  purchase  contracts and similar
obligations at the end of each calendar year, .3% of its assets or 1/20 (or such
greater  fraction  established  by  the  FHLB)  of  outstanding  FHLB  advances,
commitments,  lines of credit and letters of credit.  The Bank is  currently  in
compliance with this requirement. At December 31, 1996, the Company's investment
in stock of the FHLB of Indianapolis was $386,500.

         In past years,  the Bank  received  substantial  dividends  on its FHLB
stock. All 12 FHLBs are required to provide funds for the resolution of troubled
savings associations and to establish affordable housing programs through direct
loans or  interest  subsidies  on  advances to members to be used for lending at
subsidized interest rates for low- and moderate-income,  owner-occupied  housing

                                      -17-
<PAGE>
projects, affordable rental housing, and certain other community projects. These
contributions  and obligations  could adversely affect the FHLBs' ability to pay
dividends  and the  value of FHLB  stock  in the  future.  For the  year  ending
December 31,  1996,  dividends  paid to the Company by the FHLB of  Indianapolis
totaled $29,000, for an annual rate of 7.71%.

         The FHLB of Indianapolis serves as a reserve or central bank for member
institutions  within its assigned  region.  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 of Indianapolis.

         All FHLB advances  must be fully  secured by  sufficient  collateral as
determined  by the FHLB.  Current law  prescribes  eligible  collateral as first
mortgage loans less than 90 days delinquent or securities  evidencing  interests
therein,  securities (including  mortgage-backed  securities) issued, insured or
guaranteed by the federal  government or any agency thereof,  FHLB deposits and,
to a limited  extent,  real estate with readily  ascertainable  value in which a
perfected  security  interest may be obtained.  Other forms of collateral may be
accepted as over  collateralization  or, under certain  circumstances,  to renew
advances  outstanding.  All long-term advances are required to provide funds for
residential  home financing and the FHLB has established  standards of community
service that members must meet to maintain access to long-term advances.

         Interest rates charged for advances vary  depending upon maturity,  the
cost of funds to the FHLB of  Indianapolis  and the  purpose  of the  borrowing.
Under  current law,  savings  associations  which cease to be  Qualified  Thrift
Lenders are ineligible to receive advances from their FHLB.

Liquidity

         For each  calendar  month,  the Bank is required to maintain an average
daily  balance  of  liquid  assets  (cash,   certain  time  deposits,   bankers'
acceptances,  specified  United  States  Government,  state  or  federal  agency
obligations,   shares  of  certain  mutual  funds  and  certain  corporate  debt
securities  and  commercial  paper) equal to an amount not less than a specified
percentage of its net withdrawable  deposit accounts plus short-term  borrowings
during the preceding  calendar month. This liquidity  requirement may be changed
from  time to  time  by the OTS to any  amount  within  the  range  of 4% to 10%
depending upon economic conditions and the savings flows of member institutions,
and  is  currently  5%.  OTS  regulations   also  require  each  member  savings
institution to maintain an average daily balance of short-term  liquid assets at
a  specified  percentage  (currently  1%) of the  total of its net  withdrawable
deposit accounts and short-term  borrowings during the preceding calendar month.
Monetary   penalties  may  be  imposed  for  failure  to  meet  these  liquidity
requirements.  The daily average  liquidity of the Bank for December,  1996, was
14.2% which exceeded the then applicable 5% liquidity  requirement.  Its average
short-term  liquidity  ratio for December,  1996, was 8.02%.  The Bank has never
been  subject  to  monetary   penalties   for  failure  to  meet  its  liquidity
requirements.

Insurance of Deposits

         The FDIC is an independent federal agency that insures the deposits, up
to prescribed  statutory  limits, of banks and thrifts and safeguards the safety
and soundness of the banking and thrift  industries.  The FDIC  administers  two
separate  insurance  funds, the BIF for commercial banks and state savings banks
and the SAIF for savings associations and banks that have acquired deposits from
savings  associations.  The FDIC is required to  maintain  designated  levels of
reserves in each fund. Currently, thrifts may convert from one insurance fund to
the other upon payment of certain exit and entrance fees.  Such fees need not be
paid if a SAIF member  converts to a bank charter or merges with a bank, as long
as the resulting bank continues to pay the applicable  insurance  assessments to
the SAIF during such period and as long as certain other conditions are met.

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

                                      -18-
<PAGE>

         For the  first six  months of 1995,  the  assessment  schedule  for BIF
members and SAIF members  ranged from .23% to .31% of  deposits.  As is the case
with the SAIF, the FDIC is authorized to adjust the insurance  premium rates for
banks that are insured by the BIF of the FDIC in order to  maintain  the reserve
ratio of the BIF at  1.25%  of  BIF-insured  deposits.  As a  result  of the BIF
reaching  its  statutory  reserve  ratio,  the FDIC in 1995  revised the premium
schedule  for BIF  insured  institutions  to  provide a range of .04% to .31% of
deposits.  The revisions  became effective in the third quarter of 1995. At that
time, healthy  BIF-insured banks paid premiums of approximately $.04 per $100 in
deposits  compared  to $.23 per $100 in  deposits  paid by healthy  SAIF-insured
institutions.  The BIF rates were further  revised,  effective  January 1996, to
provide  a range of 0% to  .27%,  eliminating  insurance  premiums  for  healthy
BIF-insured banks. The SAIF rates,  however,  were not adjusted. At the time the
FDIC revised the BIF premium schedule,  it noted that, absent legislative action
(as discussed  below),  the SAIF would not attain its  designated  reserve ratio
until the year 2002.  As a result,  SAIF-insured  members  would  continue to be
generally  subject  to  higher  deposit  insurance   premiums  than  BIF-insured
institutions  until,  all things  being  equal,  the SAIF  attained its required
reserve ratio of 1.25% of BIF-insured deposits.

         In order to eliminate this disparity and any  competitive  disadvantage
between  BIF and SAIF  member  institutions  with  respect to deposit  insurance
premiums,  legislation to  recapitalize  the SAIF was enacted in September 1996.
The legislation provided for a one time assessment to be imposed on all deposits
assessed at the SAIF rates, as of March 31, 1995, in order to  recapitalize  the
SAIF.  It also  provided  for the  merger of the BIF and the SAIF on  January 1,
1999, if no savings  associations  then exist.  The special  assessment rate was
established  by the FDIC at .657% of deposits,  and the resulting  assessment of
$335,000  on the  Bank was  paid in  November,  1996.  This  special  assessment
significantly  increased  noninterest expense and adversely affected the Holding
Company's  results of operations for the three months ended  September 30, 1996.
As a result of the special  assessment,  the Bank's deposit  insurance  premiums
were reduced to .065 basis points based upon its current risk classification and
the new assessment  schedule for SAIF-insured  institutions.  These premiums are
subject to change in future periods.

         Prior  to the  enactment  of the  legislation,  a  portion  of the SAIF
assessment imposed on savings  associations was used to repay obligations issued
by a federally chartered corporation to provide financing ("FICO") for resolving
the  thrift  crisis in the  1980's.  Although  the FDIC has  equalized  the SAIF
assessment schedule with the BIF assessment schedule,  SAIF-insured institutions
remain subject to a FICO assessment as a result of this  continuing  obligation.
Although  the  legislation   also  now  requires   assessments  to  be  made  on
BIF-assessable  deposits  for this  purpose,  effective  January 1,  1997,  that
assessment  will be  limited  to 20% of the  rate  imposed  on  SAIF  assessable
deposits until the earlier of September 30, 1999, or when no savings association
continues  to  exist,   thereby   imposing  a  greater  burden  on  SAIF  member
institutions such as the Bank.  Thereafter,  however,  assessments on BIF-member
institutions  are  expected  to  be  made  on  the  same  basis  as  SAIF-member
institutions.

Regulatory Capital

         Currently,  savings  associations are subject to three separate minimum
capital-to-assets  requirements:  (i) a leverage limit,  (ii) a tangible capital
requirement,  and (iii) a risk-based  capital  requirement.  The leverage  limit
requires that savings  associations  maintain  "core  capital" of at least 3% of
total assets. Core capital is generally defined as common  stockholders'  equity
(including retained income), noncumulative perpetual preferred stock and related
surplus,   certain  minority  equity   interests  in  subsidiaries,   qualifying
supervisory  goodwill  (on a declining  basis until  1995),  purchased  mortgage
servicing  rights (which may be included in an amount up to 50% of core capital,
but which are to be reported on an association's  balance sheet at the lesser of
90% of their fair market value, 90% of their original purchase price, or 100% of
their unamortized book value),  and purchased credit card  relationships  (which
may be  included  in an amount  up to 25% of core  capital)  less  nonqualifying
intangibles.  Under the tangible capital requirement, a savings association must
maintain  tangible  capital  (core  capital less all  intangible  assets  except
purchased  mortgage  servicing  rights  which may be included  after  making the
above-noted  adjustment in an amount up to 100% of tangible capital) of at least
1.5% of total  assets.  Under the  risk-based  capital  requirements,  a minimum
amount of capital must be maintained by a savings association to account for the
relative  risks  inherent  in the type and amount of assets  held by the savings
association.  The risk-based capital requirement  requires a savings association
to maintain capital  (defined  generally for these purposes as core capital plus

                                      -19-
<PAGE>
general valuation  allowances and permanent or maturing capital instruments such
as preferred  stock and  subordinated  debt less assets required to be deducted)
equal to 8.0% of  risk-weighted  assets.  Assets are ranked as to risk in one of
four categories (0-100%) with a credit risk-free asset such as cash requiring no
risk-based  capital  and an  asset  with a  significant  credit  risk  such as a
non-accrual loan being assigned a factor of 100%. At December 31, 1996, the Bank
was in compliance with all capital requirements.

         The OTS has  delayed  implementation  of a rule  which  sets  forth the
methodology  for  calculating an interest rate risk component to be incorporated
into the OTS regulatory capital rule. Under the rule, only savings  associations
with "above normal"  interest rate risk  (institutions  whose  portfolio  equity
would decline in value by more than 2% of assets in the event of a  hypothetical
200-basis point move in interest rates) will be required to maintain  additional
capital  for  interest  rate risk under the  risk-based  capital  framework.  An
institution  with an "above  normal"  level of  exposure  will have to  maintain
additional  capital  equal to  one-half  the  difference  between  its  measured
interest rate risk (the most adverse change in the market value of its portfolio
resulting from a 200-basis point move in interest rates divided by the estimated
market  value of its  assets)  and 2%,  multiplied  by the  market  value of its
assets.  That  dollar  amount of  capital  is in  addition  to an  institution's
existing risk-based capital  requirement.  Although the OTS has decided to delay
implementation  of this rule, it will  continue to closely  monitor the level of
interest rate risk at individual institutions and it retains the authority, on a
case-by-case  basis, to impose  additional  capital  requirements for individual
institutions with significant interest rate risk.

         The following is a summary of the Bank's regulatory capital and capital
requirements at December 31, 1996:

                                   Tangible          Core          Risk-based
                                   capital          capital         capital
                                   ---------       ----------      ----------
                                              (Dollars in thousands)
  Regulatory capital                $17,018        $17,018           $17,254
  Minimum capital requirement         1,166          2,332             3,356
                                    -------        -------           -------
  Excess capital                    $15,852        $14,686           $13,898
                                    =======        =======           =======
  Regulatory capital ratio             21.9%          21.9%             41.1%
                                                                  
  Fully phased-in requirement           1.5%           3.0%              8.0%
                                    =======        =======           =======
                                                              
         If an association is not in compliance  with its capital  requirements,
the OTS is required to prohibit  asset growth and to impose a capital  directive
that may restrict,  among other  things,  the payment of dividends and officers'
compensation.  In  addition  to the  specific  sanctions  provided in FIRREA for
failing  to meet  captial  requirements,  the OTS and  the  FDIC  generally  are
authorized to take enforcement  actions against a savings association that fails
to meet its capital  requirements,  which  actions may include  restrictions  on
operations  and banking  activities,  the imposition of a capital  directive,  a
cease and desist order,  civil money  penalties or harsher  measures such as the
appointment  of a  receiver  or  conservator  or a forced  merger  into  another
institution.

Prompt Corrective Action

         The  Federal  Deposit  Insurance  Corporation  Improvement  Act of 1991
("FedICIA") requires, among other things, federal bank regulatory authorities to
take "prompt  corrective  action" with respect to institutions  that do not meet
minimum capital  requirements.  For these  purposes,  FedICIA  establishes  five
capital  tiers:  well  capitalized,  adequately  capitalized,  undercapitalized,
significantly undercapitalized, and critically undercapitalized. At December 31,
1996, the Bank was categorized as "well capitalized."

         An  institution  is deemed to be "well  capitalized"  if it has a total
risk-based capital ratio of 10% or greater, a Tier I risk-based capital ratio of
6% or greater,  and a leverage  ratio of 5% or greater,  and is not subject to a
regulatory order, agreement or directive to meet and maintain a specific capital
level for any  capital  measure.  An  institution  is  deemed to be  "adequately
capitalized" if it has a total risk-based capital ratio of 8% or greater, a Tier
I  risk-based  capital of 4% or greater,  and  generally a leverage  ratio of 4%
greater.  An  institution is deemed to be  "undercapitalized"  if it has a total
risk-based  capital ratio of less than 8%, a Tier I risk-based  capital ratio of
less  than  4%,  or  generally  a  leverage  ratio  of  less  than  4%;  and (d)
"significantly  undercapitalized"  if it has a total risk-based capital ratio of


                                      -20-
<PAGE>

less than 6%, a Tier I risk-based  capital  ratio of less than 3%, or a leverage
ratio  of  less  than  3%.   An   institution   is  deemed  to  be   "critically
undercapitalized"  if it has a ratio  of  tangible  equity  (as  defined  in the
regulations) to total assets that is equal to or less than 2%.

         "Undercapitalized"  institutions are subject to growth  limitations and
are  required to submit a capital  restoration  plan.  If an  "undercapitalized"
institution  fails to submit,  or fails to implement in a material  respect,  an
acceptable  plan,  it is treated as if it is  "significantly  undercapitalized."
"Significantly  undercapitalized"  institutions  are subject to one or more of a
number of requirements and restrictions,  including an order by the FDIC to sell
sufficient voting stock to become adequately capitalized, requirements to reduce
total  assets and cease  receipt  of  deposits  from  correspondent  banks,  and
restrictions    on    compensation    of   executive    officers.    "Critically
undercapitalized"  institutions  may  not,  beginning  60  days  after  becoming
"critically  undercapitalized,"  make any  payment of  principal  or interest on
certain subordinated debt or extend credit for a highly leveraged transaction or
enter into any transaction outside the ordinary course of business. In addition,
"critically  undercapitalized"  institutions  are  subject to  appointment  of a
receiver or conservator.

Capital Distributions Regulation

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

         A Tier 1 Institution could, after prior notice but without the approval
of the OTS,  make  capital  distributions  during a  calendar  year equal to the
greater of (a) 100% of its net income to date during the  calendar  year plus an
amount that would  reduce by one-half its  "surplus  capital  ratio" (the excess
over its capital requirements) at the beginning of the calendar year, or (b) 75%
of its net income for the most recent four quarter period. Any additional amount
of capital distributions would require prior regulatory approval.

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

Safety and Soundness Standards

         On February 2, 1995, the federal banking  agencies adopted final safety
and soundness standards for all insured depository institutions.  The standards,
which were issued in the form of guidelines rather than  regulations,  relate to
internal   controls,   information   systems,   internal  audit  systems,   loan
underwriting  and  documentation,  compensation  and interest rate exposure.  In
general,  the standards are designed to assist the federal  banking  agencies in
identifying and addressing  problems at insured depository  institutions  before
capital becomes impaired.  If an institution fails to meet these standards,  the
appropriate  federal  banking  agency may  require the  institution  to submit a
compliance  plan.  Failure to submit a compliance plan may result in enforcement
proceedings. Additional standards on earnings and classified assets are expected
to be issued in the near future.

                                      -21-
<PAGE>
Real Estate Lending Standards

         OTS regulations require savings  associations to establish and maintain
written  internal  real estate  lending  policies.  Each  association's  lending
policies  must  be  consistent  with  safe  and  sound  banking   practices  and
appropriate  to the size of the  association  and the  nature  and  scope of its
operations.   The  policies  must  establish   loan  portfolio   diversification
standards;  establish prudent underwriting  standards,  including  loan-to-value
limits, that are clear and measurable;  establish loan administration procedures
for the  association's  real  estate  portfolio;  and  establish  documentation,
approval,   and  reporting   requirements   to  monitor   compliance   with  the
association's real estate lending policies.

         The association's written real estate lending policies must be reviewed
and approved by the association's Board of Directors at least annually. Further,
each association is expected to monitor  conditions in its real estate market to
ensure that its lending  policies  continue to be appropriate for current market
conditions.

Federal Reserve System

         Under  FRB  regulations,  the Bank is  required  to  maintain  reserves
against its  transaction  accounts  (primarily  checking and NOW  accounts)  and
non-personal  money  market  deposit  accounts.  The  effect  of  these  reserve
requirements is to increase the Bank's cost of funds.  The Bank is in compliance
with its  reserve  requirements.  A  federal  savings  association,  like  other
depository  institutions  maintaining  reservable accounts,  may borrow from the
Federal Reserve Bank "discount  window," but the FRB's  regulations  require the
savings association to exhaust other reasonable  alternative sources,  including
borrowing from its regional  FHLB,  before  borrowing  from the Federal  Reserve
Bank. Current law imposes certain limitations on the ability of undercapitalized
depository institutions to borrow from Federal Reserve Banks.

Transactions with Affiliates

         The Bank and the Holding Company are subject to Sections 22(h), 23A and
23B of the Federal Reserve Act, which restrict  financial  transactions  between
banks and affiliated companies. The statute limits credit transactions between a
bank  and its  executive  officers  and its  affiliates,  prescribes  terms  and
conditions for bank affiliate transactions deemed to be consistent with safe and
sound  banking  practices,  and  restricts  the  types  of  collateral  security
permitted in connection with a bank's extension of credit to an affiliate.

Holding Company Regulation

         The Holding Company is regulated as a "non-diversified savings and loan
holding  company"  within the meaning of the Home  Owners'  Loan Act, as amended
("HOLA")  and subject to  regulatory  oversight  of the  Director of the OTS. As
such, the Holding  Company is registered with the OTS and thereby subject to OTS
regulations,   examinations,   supervision  and  reporting  requirements.  As  a
subsidiary of a savings and loan holding company, the Bank is subject to certain
restrictions  in its dealings with the Holding  Company and with other companies
affiliated with the Holding Company.

         HOLA  generally  prohibits a savings and loan  company,  without  prior
approval of the  Director of the OTS,  from (i)  acquiring  control of any other
savings  association  or savings and loan  holding  company or  controlling  the
assets  thereof or (ii) acquiring or retaining more than 5 percent of the voting
shares  of a savings  association  or  holding  company  thereof  which is not a
subsidiary. Additionally, under certain circumstances a savings and loan holding
company is permitted  to acquire,  with the approval of the Director of the OTS,
up to 15% of previously unissued voting shares of an  under-capitalized  savings
association for cash without that savings association being deemed controlled by
the holding company.  Except with the prior approval of the Director of the OTS,
no director or officer of a savings and loan holding company or person owning or
controlling  by proxy or otherwise more than 25% of such  company's  stock,  may
also  acquire  control  of any  savings  institution,  other  than a  subsidiary
institution, or any other savings and loan holding company.

         The Holding  Company's Board of Directors  presently intends to operate
the Holding  Company as a unitary  savings and loan holding  company.  There are
generally no restrictions on the  permissible  business  activities of a unitary

                                      -22-
<PAGE>
savings and loan holding company. However, if the Director of the OTS determines
that there is reasonable cause to believe that the continuation by a savings and
loan holding company of an activity  constitutes a serious risk to the financial
safety,  soundness,  or stability of its  subsidiary  savings  association,  the
Director of the OTS may impose such  restrictions as deemed necessary to address
such risk and limiting (i) payment of dividends by the savings association, (ii)
transactions  between the savings association and its affiliates,  and (iii) any
activities of the savings  association that might create a serious risk that the
liabilities  of the  holding  company and its  affiliates  may be imposed on the
savings association.

         Notwithstanding  the above rules as to permissible  business activities
of unitary  savings  and loan  holding  companies,  if the  savings  association
subsidiary of such a holding  company fails to meet the Qualified  Thrift Lender
("QTL") test,  then such unitary  holding  company  would become  subject to the
activities  restrictions  applicable to multiple holding companies.  (Additional
restrictions on securing  advances from the FHLB also apply).  See "-- Qualified
Thrift Lender." At December 31, 1996, the Bank's asset composition was in excess
of that required to qualify the Bank as a Qualified Thrift Lender.

         If the  Holding  Company  were to acquire  control  of another  savings
institution  other than through a merger or other business  combination with the
Bank, the Holding  Company would  thereupon  become a multiple  savings and loan
holding  company.  Except where such acquisition is pursuant to the authority to
approve  emergency  thrift   acquisitions  and  where  each  subsidiary  savings
association meets the QTL test, the activities of the Holding Company and any of
its subsidiaries (other than the Bank or other subsidiary savings  associations)
would thereafter be subject to further  restrictions.  HOLA provides that, among
other things, no multiple savings and loan holding company or subsidiary thereof
which is not a savings  association  shall  commence or  continue  for a limited
period of time after  becoming a multiple  savings and loan  holding  company or
subsidiary  thereof,   any  business  activity  other  than  (i)  furnishing  or
performing  management  services  for a  subsidiary  savings  association,  (ii)
conducting an insurance agency or escrow business,  (iii) holding,  managing, or
liquidating assets owned by or acquired from a subsidiary  savings  institution,
(iv) holding or managing  properties  used or occupied by a  subsidiary  savings
institution,  (v) acting as trustee under deeds of trust,  (vi) those activities
previously  directly  authorized by the FSLIC by regulation as of March 5, 1987,
to be  engaged  in by  multiple  holding  companies  or (vii)  those  activities
authorized  by the FRB as  permissible  for bank holding  companies,  unless the
Director  of the OTS by  regulation  prohibits  or limits  such  activities  for
savings and loan holding  companies.  Those activities  described in (vii) above
must also be approved by the Director of the OTS prior to being  engaged in by a
multiple holding company.

         The Director of the OTS may also approve acquisitions  resulting in the
formation of a multiple  savings and loan holding company which controls savings
associations  in more than one state,  if the multiple  savings and loan holding
company involved controls a savings  association which operated a home or branch
office in the state of the association to be acquired as of March 5, 1987, or if
the  laws of the  state in which  the  institution  to be  acquired  is  located
specifically permit institutions to be acquired by state-chartered  institutions
or savings and loan holding  companies  located in the state where the acquiring
entity is located (or by a holding  company that controls  such  state-chartered
savings institutions).  Also, the Director of the OTS may approve an acquisition
resulting in a multiple  savings and loan holding  company  controlling  savings
associations  in more than one  state in the case of  certain  emergency  thrift
acquisitions.

         Indiana  law  permits  federal and state  savings  association  holding
companies with their home offices  located outside of Indiana to acquire savings
associations  whose home offices are located in Indiana and savings  association
holding  companies with their principal  place of business in Indiana  ("Indiana
Savings  Association Holding Companies") upon receipt of approval by the Indiana
Department of Financial  Institutions.  Moreover,  Indiana  Savings  Association
Holding  Companies  may acquire  savings  associations  with their home  offices
located outside of Indiana and savings associations holding companies with their
principal place of business  located outside of Indiana upon receipt of approval
by the Indiana Department of Financial Institutions.

         No subsidiary savings association of a savings and loan holding company
may declare or pay a dividend on its permanent or  nonwithdrawable  stock unless
it  first  gives  the  Director  of the  OTS 30  days  advance  notice  of  such
declaration and payment.  Any dividend  declared during such period,  or without
the giving of such notice, shall be invalid.

                                      -23-
<PAGE>
Federal Securities Law

         The shares of Common Stock of the Holding  Company are registered  with
the SEC under the Securities  Exchange Act of 1934 (the "1934 Act"). The Holding
Company is subject  to the  information,  proxy  solicitation,  insider  trading
restrictions  and  other  requirements  of the 1934 Act and the rules of the SEC
under the 1934 Act and the rules of the SEC thereunder.

         Shares  of Common  Stock  held by  persons  who are  affiliates  of the
Holding Company may not be resold without registration unless sold in accordance
with the  resale  restrictions  of Rule 144 under the 1933 Act.  If the  Holding
Company meets the current public  information  requirements under Rule 144, each
affiliate of the Holding Company who complies with the other  conditions of Rule
144 (including  conditions  that require the  affiliate's  sale to be aggregated
with those of certain other  persons) will be able to sell in the public market,
without  registration,  a number of shares  not to  exceed,  in any  three-month
period,  the greater of (i) 1% of the outstanding  shares of the Holding Company
or (ii) the average weekly volume of trading in such shares during the preceding
four calendar weeks.

Qualified Thrift Lender

         Under  current OTS  regulations,  the QTL test  requires that a savings
association  have at least 65% of its  portfolio  assets  invested in "qualified
thrift  investments"  on a monthly  average  basis in 9 out of every 12  months.
Qualified  thrift  investments  under the QTL test consist  primarily of housing
related loans and investments.

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

         A savings  association  failing to meet the QTL test may requalify as a
QTL if it thereafter meets the QTL test. In the event of such requalification it
shall not be subject to the penalties  described  above.  A savings  association
which  subsequently  again  fails to  qualify  under the QTL test  shall  become
subject to all of the described  penalties  without  application  of any waiting
period.

         At December 31, 1996, 85.98% of the Bank's portfolio assets (as defined
on that date) were invested in qualified thrift  investments (as defined on that
date), and therefore the Bank's asset composition was in excess of that required
to qualify the Bank as a QTL. The Bank does not expect to  significantly  change
its lending or  investment  activities  in the near future.  The Bank expects to
continue to qualify as a QTL, although there can be no such assurance.

Acquisitions or Dispositions and Branching

         Bank holding companies,  upon receipt of appropriate approvals from the
FRB and the Director of the OTS, may acquire control of any savings  association
or holding  company  thereof  wherever  located.  Similarly,  a savings and loan
holding  company may now acquire  control of a bank.  Moreover,  federal savings
associations may acquire or be acquired by any insured  depository  institution.
Pursuant to rules  promulgated by the FRB, a savings  association  acquired by a
bank holding  company (i) may, so long as the savings  association  continues to
meet the QTL test,  continue to branch to the same extent as  permitted to other
non-affiliated  savings associations  similarly chartered in the state, and (ii)
cannot  continue any  non-banking  activities  not  authorized  for bank holding
companies.  Saving  associations  acquired  by a bank  holding  company  may, if
located in a state  where the bank  holding  company is  legally  authorized  to
acquire a bank,  be  converted  to the  status of a bank but  deposit  insurance
assessments  and payments  continue to be paid by the association to the SAIF. A


                                      -24-
<PAGE>
savings  association  so converted to a bank  becomes  subject to the  branching
restrictions  applicable to banks. Also any insured  depository  institution may
merge  with,  acquire  the  assets of, or assume  the  liabilities  of any other
insured depository  institution with the appropriate regularity approvals if (i)
continued  payments of deposit  insurance  are made on the  acquired  depository
institution's deposits (including an assumed rate of growth in such deposits) to
SAIF (if the acquired  institution was a SAIF member) or to BIF (if the acquired
institution  was a BIF  member),  and (ii)  the  acquiring  institution  and any
holding company in control thereof meet all applicable  capital  requirements at
the time of the transaction.

         Subject to certain  exceptions,  commonly  controlled banks and savings
associations  must reimburse the FDIC for any losses suffered in connection with
a failed  bank or  savings  association  affiliate.  Institutions  are  commonly
controlled  if one is owned by another or if both are owned by the same  holding
company.  Such claims by the FDIC under this provision are subordinate to claims
of depositors,  secured creditors,  and holders of subordinated debt, other than
affiliates.

         The OTS has adopted  regulations which permit  nationwide  branching to
the extent permitted by federal statute. Federal statutes permit federal savings
associations to branch outside of their home state if the association  meets the
domestic  building  and loan  test in  ss.7701(a)(19)  of the Code or the  asset
composition  test of ss.7701(c) of the Code.  Branching that would result in the
formation of a multiple  savings and loan holding  company  controlling  savings
associations  in more  than one  state is  permitted  if the law of the state in
which the savings association to be acquired is located specifically  authorizes
acquisitions   of  its   state-chartered   associations   by  state-   chartered
associations  or their  holding  companies  in the  state  where  the  acquiring
association or holding company is located.

         Moreover,  Indiana  banks and savings  associations  are  permitted  to
acquire other Indiana banks and savings  associations and to establish  branches
throughout Indiana.

         In  addition,   The  Riegle-Neal   Interstate   Banking  and  Branching
Efficiency Act of 1994 (the "Riegle-Neal Act") permits bank holding companies to
acquire  banks in other  states and,  with state  consent and subject to certain
limitations, allows banks to acquire out-of-state branches either through merger
or de novo expansion.  The State of Indiana  recently passed a law  establishing
interstate  branching  provisions for Indiana  state-chartered  banks consistent
with those established by the Riegle-Neal Act (the "Indiana Branching Law"). The
Indiana Branching Law authorizes Indiana banks to branch interstate by merger or
de novo expansion.  The Indiana  Branching Law became  effective March 15, 1996,
provided  that  interstate  mergers and de novo  branches  are not  permitted to
out-of-state  banks unless the laws of their home states permit Indiana banks to
merge or establish de novo branches on a reciprocal basis.

Limitations on Repurchase of Common Stock of Holding Company

         OTS  regulations   currently   provide  that  the  Holding  Company  is
prohibited  from  repurchasing  any  of  its  shares  within  one  year  of  the
Conversion,  which  occured on June 13, 1995.  So long as the Bank  continues to
meet certain  capitalization  requirements,  the Holding  Company may repurchase
shares in an  open-market  repurchase  program  (which  cannot  exceed 5% of its
outstanding  shares in a twelve-month  period) during the second and third years
following its Conversion by giving  appropriate prior notice to the OTS. The OTS
has the  authority  to waive these  restrictions  under  certain  circumstances.
Unless  repurchases are permitted under the foregoing  regulations,  the Holding
Company may not,  for a period of three  years from the date of the  Conversion,
repurchase  any of its capital stock from any person,  except in the event of an
offer to  purchase  by the  Holding  Company on a pro rata basis from all of its
shareholders  which is approved  in advance by the OTS or except in  exceptional
circumstances established to the satisfaction of the OTS.

         Under  Indiana  law,  the  Holding   Company  will  be  precluded  from
repurchasing  its equity  securities if, after giving effect to such repurchase,
the Holding  Company  would be unable to pay its debts as they become due or the
Holding  Company's  assets would be less than its liabilities and obligations to
preferential shareholders.

Community Reinvestment Act Matters

         Federal law requires that ratings of depository  institutions under the
Community Reinvestment Act of 1977 ("CRA") be disclosed. The disclosure includes
both a four-unit descriptive rating -- outstanding, satisfactory, unsatisfactory
and  needs  improvement  --  and a  written  evaluation  of  each  institution's

                                      -25-
<PAGE>
performance.   Each  FHLB  is  required  to  establish  standards  of  community
investment  or service that its members must  maintain for  continued  access to
long-term  advances from the FHLBs.  The standards  take into account a member's
performance  under the Community  Reinvestment  Act and its record of lending to
first-time  home  buyers.  The FHLBs have  established  an  "Affordable  Housing
Program" to  subsidize  the  interest  rate of  advances to member  associations
engaged in lending for long-term,  low- and moderate-income,  owner-occupied and
affordable rental housing at subsidized rates. The Bank is participating in this
program.  The examiners have determined that the Bank has a satisfactory  record
of meeting community credit needs.

                                    TAXATION
Federal Taxation

         Historically,  savings  associations,  such  as  the  Bank,  have  been
permitted to compute bad debt deductions using either the bank experience method
or the percentage of taxable income method.  However,  for years beginning after
December  31,  1995,  the Bank will no longer be able to use the  percentage  of
taxable  income method of computing its  allocable tax bad debt  deduction.  The
Bank will be required to compute its allocable  deduction  using the  experience
method.  As a result of the repeal of the  percentage of taxable  income method,
reserves  taken  after  1987  using the  percentage  of  taxable  income  method
generally  must be included  in future  taxable  income over a six-year  period,
although  a  two-year  delay  may  be  permitted  for  institutions   meeting  a
residential  mortgage loan origination test. In addition,  the pre-1988 reserve,
in which no deferred  taxes have been  recorded,  will not have to be recaptured
into income unless (i) the Bank no longer qualifies as a bank under the Code, or
(ii) excess dividends are paid out by the Bank.

         Depending  on the  composition  of its items of income and  expense,  a
savings  institution  may be subject to the  alternative  minimum tax. A savings
institution must pay an alternative  minimum tax equal to the amount (if any) by
which 20% of  alternative  minimum  taxable  income  ("AMTI"),  as reduced by an
exemption  varying with AMTI,  exceeds the regular tax due. AMTI equals  regular
taxable  income   increased  or  decreased  by  certain  tax   preferences   and
adjustments,  including depreciation  deductions in excess of that allowable for
alternative  minimum tax purposes,  tax-exempt interest on most private activity
bonds  issued  after  August 7, 1986  (reduced by any related  interest  expense
disallowed  for  regular  tax  purposes),  the  amount  of the bad debt  reserve
deduction  claimed in excess of the deduction based on the experience method and
75% of the excess of adjusted current earnings over AMTI (before this adjustment
and before any alternative tax net operating loss).  AMTI may be reduced only up
to 90% by net operating loss carryovers,  but alternative  minimum tax paid that
is  attributable  to most  preferences  (although  not to  post-August  7,  1986
tax-exempt interest) can be credited against regular tax due in later years.

State Taxation

         The Bank is subject to Indiana's  Financial  Institutions  Tax ("FIT"),
which is imposed at a flat rate of 8.5% on "adjusted  gross  income."  "Adjusted
gross  income,"  for purposes of FIT,  begins with taxable  income as defined by
Section 63 of the Code and,  thus,  incorporates  federal  tax law to the extent
that it affects the  computation of taxable  income.  Federal  taxable income is
then adjusted by several Indiana modifications, the most notable of which is the
required  addback of interest that is tax-free for federal  income tax purposes.
Other  applicable state taxes include  generally  applicable sales and use taxes
plus real and personal property taxes.

Current Accounting Issues

         Mortgage  Servicing  Rights.  During  1995,  the  Financial  Accounting
Standards Board ("FASB") issued SFAS No. 122,  Accounting for Mortgage Servicing
Rights.  SFAS No. 122 pertains to mortgage  banking  enterprises  and  financial
institutions  that  conduct  operations  that are  substantially  similar to the
primary operations of mortgage banking enterprises.  SFAS No. 122 eliminates the
accounting  distinction  between  mortgage  servicing  rights that are  acquired
through  loan  origination   activities  and  those  acquired  through  purchase

                                      -26-
<PAGE>
transactions.  Under SFAS No. 122,  if a mortgage  banking  enterprise  sells or
securitizes loans and retains the mortgage servicing rights, the enterprise must
allocate the total cost of the mortgage loans to the mortgage  servicing  rights
and the loans  (without the rights) based on their relative fair values if it is
practicable to estimate those fair values. If it is not practicable,  the entire
cost should be allocated  to the mortgage  loans and no cost should be allocated
to the mortgage service rights.  An entity would measure  impairment of mortgage
servicing  rights and loans  based on the excess of the  carrying  amount of the
mortgage servicing rights portfolio over the fair value of that portfolio.

         SFAS No. 122 is to be applied  prospectively  in fiscal years beginning
after December 15, 1995, to transactions  in which an entity  acquires  mortgage
servicing  rights and to  impairment  evaluations  of all  capitalized  mortgage
servicing  rights.  The  adoption  of SFAS No.  122 had no impact in 1996 on the
Company's financial condition and results of operations.

         Stock-Based Compensation.  The FASB has issued No. SFAS 123, Accounting
for Stock-based Compensation. SFAS No. 123 establishes a fair value based method
of accounting  for  stock-based  compensation  plans.  The FASB  encourages  all
entities to adopt this method for  accounting for all  arrangements  under which
employees  receive shares of stock or other equity  instruments of the employer,
or the employer incurs liabilities to employees in amounts based on the price of
its stock.

         Due the extremely  controversial  nature of this project,  SFAS No. 123
permits a company  to  continue  the  accounting  for  stock-based  compensation
prescribed in Accounting  Principles Board Opinion No. 25,  Accounting for Stock
Issued to Employees.  If a company elects that option,  pro forma disclosures of
net income (and EPS, if  presented)  are required in the notes to the  financial
statements  as if the  provisions  of SFAS  No.  123 had  been  used to  measure
stock-based  compensation.  The disclosure  requirements  of Opinion No. 25 have
been superseded by the disclosure requirements of this Statement. Once an entity
adopts the fair value based method for accounting for these  transactions,  that
election cannot be reversed.

         Equity  instruments  granted or  otherwise  transferred  directly to an
employee by a principal  stockholder are stock-based employee compensation to be
accounted  for in accordance  with either  Opinion 25 or SFAS No. 123 unless the
transfer  clearly  is for a purpose  other  than  compensation.  The  accounting
requirements of SFAS No. 123 became effective for  transactions  entered into in
fiscal years beginning after December 15, 1995, and the disclosure  requirements
became  effective  for financial  statements  for fiscal years  beginning  after
December 15, 1995.  Pro forma  disclosures  required for entities  that elect to
continue to measure  compensation cost using Opinion 25 must include the effects
of all awards granted in fiscal years beginning after December 15, 1994.  During
the initial  phase-in  period,  the effects of applying  this  Statement are not
likely to be  representative  of the effects on  reported  net income for future
years because  options vest over several years and additional  awards  generally
are made each year.

         The Company  adopted  SFAS No. 123 for 1996,  and elected to report the
pro forma  disclosures  of net  income  and  earnings  per share in the notes to
financial statements.

         Transfers  and  Servicing of Financial  Assets and  Extinguishments  of
Liabilities.  SFAS No. 125,  Accounting for Transfers and Servicing of Financial
Assets and  Extinguishments  of  Liabilities,  breaks  new  ground in  resolving
long-standing  questions about whether  transactions  should be accounted for as
secured borrowings or as sales. The Statement provides consistent  standards for
distinguishing  transfers of financial assets that are sales from transfers that
are considered secured borrowings.

         A  transfer  of  financial  assets in which the  transferor  surrenders
control  over  those  assets  is  accounted  for as a sale  to the  extent  that
consideration  other than  beneficial  interests  in the  transferred  assets is
received in exchange.  The transferor has surrendered  control over  transferred
assets only if all of the following conditions are met:

         o        The   transferred   assets   have  been   isolated   from  the
                  transferor--put   presumptively   beyond   the  reach  of  the
                  transferor  and its  creditors,  even in  bankruptcy  or other
                  receivership.

         o        Each  transferee  obtains the  right--free of conditions  that
                  constrain it from taking advantage of that right--to pledge or
                  exchange  the  transferred  assets,  or  the  transferee  is a
                  qualifying   special-purpose   entity   and  the   holders  of
                  beneficial  interest in that entity  have the  right--free  of
                  conditions  that constrain them from taking  advantage of that
                  right--to pledge or exchange those interests.

         o        The transferor  does not maintain  effective  control over the
                  transferred assets through an agreement that both entitles and
                  obligates  the  transferor to repurchase or redeem them before
                  their  maturity,  or an agreement that entitles the transferor
                  to  repurchase  or redeem  transferred  assets are not readily
                  obtainable.

                                      -27-
<PAGE>
         This Statement provides detailed  measurement  standards for assets and
liabilities  included in these  transactions.  It also  includes  implementation
guidance for assessing  isolation of  transferred  assets and for accounting for
transfers of partial interest,  servicing of financial  assets,  securitization,
transfers  or sales  type and direct  financing  lease  receivables,  securities
lending transactions, repurchase agreements, "wash sales," loan syndications and
participation,   risk   participation   in   banker's   acceptances,   factoring
arrangements,  transfers of  receivables  with  recourse and  extinguishment  of
liabilities.

         The Statement  supersedes  FASB  Statements No. 76,  Extinguishment  of
Debt,  and No. 77,  Reporting by Transferors  for Transfers of Receivables  with
Recourse, and No. 122, Accounting for Mortgage Servicing Rights, and amends FASB
Statement  No.  115,  Accounting  for  Certain  Investments  in Debt and  Equity
Securities,  in addition to clarifying or amending a number of other  statements
and technical bulletins.

         Except as amended by Statement No. 127, this Statement is effective for
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring after December 31, 1996 and is to be applied prospectively. Earlier or
retroactive application is not permitted.

         The FASB was made aware that the volume of certain transactions and the
related  changes  to  information  systems  and  accounting  processes  that are
necessary to comply with the  requirements  of  Statement  No. 125 would make it
extremely difficult,  if not impossible,  for some affected enterprises to apply
the  transfer  and   collateral   provisions  of  Statement  No.  125  to  those
transactions  as soon as January 1, 1997. As a result,  Statement No. 127 defers
for one year the effective date (a) of paragraph 15 of Statement No. 125 and (b)
for  repurchase   agreement,   dollar-roll,   securities  lending,  and  similar
transactions, of paragraphs 9-12 and 237(b) of Statement No. 125.

         Statement  No.  127  provides  additional  guidance  on  the  types  of
transactions  for  which  the  effective  date of  Statement  No.  125 has  been
deferred.  It also  requires  that if it is not possible to determine  whether a
transfer occurring during calendar-year 1997 is part of a repurchase  agreement,
dollar-roll, securities lending, or similar transaction, then paragraphs 9-12 of
Statement No. 125 should be applied to that transfer.

         All  provisions  of  Statement  No. 125 should  continue  to be applied
prospectively, and earlier or retroactive application is not permitted.

Item 2.       Properties.

         At  December  31,  1996,  the Bank and the  Holding  Company  conducted
business from a single office at 723 East  Broadway,  Logansport,  Indiana.  The
following  table  provides  certain  information  with respect to the  Company's
office as of December 31, 1996:

<TABLE>
<CAPTION>
                                                                         Total Deposits   Net Book Value
                                                                               at          of Property,
                                        Owned or            Year          December 31,      Furniture &       Approximate
     Description and Address             Leased            Opened             1996           Fixtures       Square Footage
     ---------------------------------------------------------------------------------------------------------------------
                                                                     (Dollars in thousands)
<S>                                      <C>               <C>              <C>               <C>               <C>  
     723 East Broadway                    Owned             1962             $57,396           $476              4,200
     Logansport, Indiana  46947
</TABLE>
The  Company  owns  computer  and data  processing  equipment  which is used for
transaction  processing and  accounting.  The net book value of electronic  data
processing equipment owned by the Company was $17,250 at December 31, 1996.

         The Bank also has  contracted  for the data  processing  and  reporting
services of the Intrieve Data Center in Cincinnati, Ohio. The cost of these data
processing services is approximately $8,500 per month.

Item 3.       Legal Proceedings.

         Neither  the  Holding  Company  nor the Bank is a party to any  pending
legal proceedings, other than routine litigation incidental to its business.

                                      -28-
<PAGE>
Item 4.       Submission of Matters to a Vote of Security Holders.

         No matter was submitted to a vote of the Holding Company's shareholders
during the quarter ended December 31, 1996.

Item 4.5.     Executive Officers of the Registrant.

         Presented below is certain information regarding the executive officers
of the Holding Company:

         Name                             Position

         Thomas G. Williams               President and Chief Executive Officer
         Charles J. Evans                 Vice President
         Dottye Robeson                   Secretary/Treasurer

         Thomas G.  Williams  (age 64) has served as President of the Bank since
1971 and as President and Chief  Executive  Officer of the Holding Company since
its organization.

         Charles J. Evans (age 51) has served as Vice  President and Senior Loan
Officer of the Bank  since 1980 and as Vice  President  of the  Holding  Company
since its organization.

         Dottye  Robeson (age 47) has served as Chief  Financial  Officer of the
Bank since 1994 and as  Secretary/Treasurer  of the  Holding  Company  since its
organization. From 1990 to 1994, she served as Cashier, Vice President and Chief
Financial Officer of Bright National Bank in Flora,  Indiana.  From 1984 to 1990
she was  employed by Smith,  Thompson & Wihebrink  (Logansport).  She has been a
certified public accountant since 1987.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Shareholder Matters.

         Logansport  Savings Bank, FSB converted from a mutual savings bank to a
stock form federal savings bank effective June 13, 1995 (the  "Conversion")  and
simultaneously  formed a savings and loan holding company,  Logansport Financial
Corp. The Holding Company's common stock, without par value ("Common Stock"), is
quoted on the National  Association of Securities  Dealers  Automated  Quotation
System  ("NASDAQ"),  Small Cap Market,  under the symbol  "LOGN." The  following
table sets forth the high and low bid  prices  and  dividends  paid per share of
Common  Stock  for the  quarters  indicated.  Such  over-the-counter  quotations
reflect  inter-dealer prices,  without retail mark-up,  mark-down or commission,
and may not necessarily represent actual transactions.

    Quarter Ended                High Bid       Low Bid      Dividends Declared
    ---------------------------------------------------------------------------
    September 30, 1995             12 1/2        11 1/4                $.10
    December 31,1995               13 1/4        12                     .10
    March 31, 1996                 13 1/4        12 3/8                 .10
    June 30, 1996                  13 3/4        12 3/8                 .10
    September 30, 1996             14 3/4        12 1/2                 .10
    December 31, 1996              14 3/4        11 1/4                3.10

         As of February 14, 1997,  there were 893  recordholders  of the Holding
Company's  Common Stock.  The Holding Company has established a policy of paying
regular periodic cash dividends,  and the Board of Directors intends to continue
this  policy,  subject to the Holding  Company's  operating  results,  financial
condition,  capital,  income tax considerations,  regulatory  restrictions,  and
other relevant factors.

         Since the Holding  Company  has no  independent  operations  other than
investment-related  activities or other  subsidiaries  to generate  income,  its
ability  to  accumulate  earnings  for  the  payment  of cash  dividends  to its
shareholders  will be  directly  dependent  upon the  ability of the Bank to pay
dividends to the Holding Company.

         Under OTS regulations,  a converted savings institution may not declare
or pay a cash  dividend if the effect would be to reduce its net worth below the

                                      -29-
<PAGE>
amount required for the liquidation account created at the time it converted. In
addition,  under OTS regulations,  the extent to which a savings institution may
make  a  "capital  distribution,"  which  includes,  among  other  things,  cash
dividends, will depend upon in which one of three categories,  based upon levels
of capital, that savings institution is classified.  The Bank is now and expects
to continue to be a "tier one  institution"  and therefore  would be able to pay
cash dividends to the Holding Company during any calendar year up to 100% of its
net income  during that  calendar  year plus the amount that would reduce by one
half its "surplus  capital ratio" (the excess over its fully  phased-in  capital
requirements)  at the beginning of the calendar year. See "Regulation -- Capital
Distributions  Regulation."  Prior notice of any dividend to be paid by the Bank
to the Holding Company will have to be given to the OTS.

         Income of the Bank  appropriated  to bad debt reserves and deducted for
federal  income tax purposes is not available  for payment of cash  dividends or
other distributions to the Holding Company without the payment of federal income
taxes by the Bank on the amount of such income deemed  removed from the reserves
at the then-current  income tax rate. At December 31, 1996,  approximately  $1.5
million of the Bank's retained income  represented bad debt deductions for which
no federal income tax provision had been made.
See "Taxation--Federal Taxation."

         Unlike the Bank,  generally  there is no regulatory  restriction on the
payment of  dividends  by the  Holding  Company.  Indiana  law,  however,  would
prohibit the Holding  Company from paying a dividend if, after giving  effect to
the payment of that dividend,  the Holding  Company would not be able to pay its
debts  as they  become  due in the  usual  course  of  business  or the  Holding
Company's total assets would be less than the sum of its total  liabilities plus
preferential rights of holders of preferred stock, if any.

Item 6.       Selected Financial Data.

         The  information  required by this item is incorporated by reference to
the  material  under  the  heading  "Selected  Consolidated  Financial  Data  of
Logansport  Financial Corp. and  Subsidiary" on page 3 of the Holding  Company's
1996 Shareholder Annual Report (the "Shareholder Annual Report").

Item 7.       Management's Discussion and Analysis of Financial
              Condition and Results of Operation.

         The  information  required by this item is incorporated by reference to
pages 4 through 14 of the Shareholder Annual Report.

Item 8.       Financial Statements and Supplementary Data.

         The  Holding  Company's  Consolidated  Financial  Statements  and Notes
thereto  contained on pages 15 through 34 in the  Shareholder  Annual Report are
incorporated  herein by reference.  The Company's unaudited quarterly results of
operations   contained  on  page  35  in  the  Shareholder   Annual  Report  are
incorporated herein by reference.

Item 9.       Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure.

         There were no such  changes  and  disagreements  during the  applicable
period.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

         The  information  required by this item with  respect to  directors  is
incorporated  by reference to pages 2 through 8 of the Holding  Company's  Proxy
Statement for its 1997 Annual Shareholder  Meeting (the "1997 Proxy Statement").
Information  concerning the Holding Company's  executive officers is included in
Item 4.5 in Part I of this report.

                                      -30-
<PAGE>
Item 11. Executive Compensation.

         The  information  required  by this  item  with  respect  to  executive
compensation  is  incorporated  by  reference  to  pages  5 to 8 of the  Holding
Company's 1997 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

         The  information  required by this item is incorporated by reference to
page 3 of the 1997 Proxy Statement.

Item 13.      Certain Relationships and Related Transactions.

         The  information  required by this item is incorporated by reference to
page 8 of the 1997 Proxy Statement.

                                     PART IV

Item 14.      Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

         (a)  List the following documents filed as part of the report:

                                                                  Annual Report 
              Financial Statements                                   Page No.
              Independent Auditor's Report                              15
              Consolidated Statement of 
                  Financial Condition at 
                  December 31, 1996, and 1995                           16
              Consolidated Statement of Income for 
                  the Years Ended
                  December 31, 1996, 1995, and 1994                     17
              Consolidated Statement of Change 
                  in Shareholders' Equity
                  for the Years Ended December 31, 1996, 
                  1995 and 1994                                         18
              Consolidated Statement of 
                  Cash Flows for the Years Ended
                  December 31, 1996, 1995, and 1994                     19
              Notes to Consolidated Financial Statements                20

         (b)      Reports on Form 8-K.

                  The  Holding  Company  filed one report on Form 8-K on October
                  22, 1996,  reporting the Holding  Company's  stock  repurchase
                  program.

         (c)      The  exhibits  filed  herewith or  incorporated  by  reference
                  herein  are set  forth  on the  Exhibit  Index  on  page  E-1.
                  Included in those  exhibits are Executive  Compensation  Plans
                  and  Arrangements  which  are  identified  as  Exhibits  10(1)
                  through 10(12).

         (d)      All schedules are omitted as the required  information  either
                  is not applicable or is included in the Consolidated Financial
                  Statements or related notes.

                                      -31-
<PAGE>
                                   SIGNATURES



     Pursuant  to the  requirement  of  Section  13 or 15(d)  of the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on behalf of the undersigned, thereto duly authorized.



                                         LOGANSPORT FINANCIAL CORP.



Date: March 15, 1997                     By:  /s/ Thomas G. Williams
                                              ----------------------------------
                                              Thomas G. Williams, President and
                                                  Chief Executive Officer


     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 15th day of March, 1997.



/s/ Thomas G. Williams
----------------------------------
Thomas G. Williams
President, Chief Executive Officer and Director
(Principal Executive Officer)


/s/ Dottye Robeson
----------------------------------
Dottye Robeson,
Secretary/Treasurer (Principal Financial and
Accounting Officer)


/s/ Norbert E. Adrian
----------------------------------
Norbert E. Adrian, Director


/s/ Charles J. Evans
----------------------------------
Charles J. Evans, Vice President and Director


/s/ Donald G. Pollitt
----------------------------------
Donald G. Pollitt, Director


/s/ Susanne S. Ridlen
----------------------------------
Susanne S. Ridlen, Director


/s/ William Tincher, Jr.
----------------------------------
William Tincher, Jr., Director


/s/ David Wihebrink
----------------------------------
David Wihebrink, Director


                                      -32-
<PAGE>

                             EXHIBIT INDEX



Exhibit                                                                   Page

         3(1)     The Articles of  Incorporation of the Registrant are
                  incorporated  by  reference  to Exhibit  3(1) to the
                  Registration Statement on Form S-1 (Registration No.
                  33-89788).

         3(2)     The  Code  of   By-Laws   of  the   Registrant   are
                  incorporated  by  reference  to Exhibit  3(2) to the
                  Registration Statement on Form S-1 (Registration No.
                  33-89788).

         10(1)    The  Registrant's  Stock Option Plan is incorporated
                  by reference to Exhibit A to the Registrant's  Proxy
                  Statement for its Annual Shareholder Meeting held on
                  April 9, 1996.

         10(2)    Logansport   Savings  Bank,  FSB   Recognition   and
                  Retention   Plan  and  Trust  is   incorporated   by
                  reference  to  Exhibit B to the  Registrant's  Proxy
                  Statement for its Annual Shareholder Meeting held on
                  April 9, 1996.

         10(3)    Logansport   Savings   Bank,   FSB  Employee   Stock
                  Ownership Plan and Trust  Agreement is  incorporated
                  by  reference to Exhibit  10(4) to the  Registration
                  Statement on Form S-1 (Registration No. 33-89788).

         10(4)    Employment   Agreement  between  Logansport  Savings
                  Bank, FSB and Thomas G. Williams is  incorporated by
                  reference  to  Exhibit  10(5)  to  the  Registration
                  Statement on Form S-1 (Registration No. 33-89788).

         10(5)    Employment   Agreement  between  Logansport  Savings
                  Bank,  FSB and Charles J. Evans is  incorporated  by
                  reference  to  Exhibit  10(6)  to  the  Registration
                  Statement on Form S-1 (Registration No. 33-89788).

         10(6)    Director  Deferred  Compensation  Agreement  between
                  Logansport Savings Bank, FSB and Thomas G. Williams,
                  effective  4/1/92 is  incorporated  by  reference to
                  Exhibit 10(7) to the Registration  Statement on Form
                  S-1 (Registration No. 33-89788).

         10(7)    Director  Deferred  Compensation  Agreement  between
                  Logansport   Savings  Bank,  FSB  and  Don  Pollitt,
                  effective  4/1/92 is  incorporated  by  reference to
                  Exhibit 10(8) to the Registration  Statement on Form
                  S-1 (Registration No. 33-89788).

         10(8)    Director  Deferred  Compensation  Agreement  between
                  Logansport  Savings  Bank,  FSB and Norbert  Adrian,
                  effective  4/1/92 is  incorporated  by  reference to
                  Exhibit 10(9) to the Registration  Statement on Form
                  S-1 (Registration No. 33-89788).

                                      -33-
<PAGE>

         10(9)    Director  Deferred  Compensation  Agreement  between
                  Logansport  Savings  Bank,  FSB and Susanne  Ridlen,
                  effective  4/1/92 is  incorporated  by  reference to
                  Exhibit 10(10) to the Registration Statement on Form
                  S-1 (Registration No. 33-89788).

         10(10)   Director  Deferred  Compensation  Agreement  between
                  Logansport  Savings Bank,  FSB and David  Wihebrink,
                  effective  4/1/92 is  incorporated  by  reference to
                  Exhibit 10(11) to the Registration Statement on Form
                  S-1 (Registration No. 33-89788).

         10(11)   Executive  Supplemental  Retirement Income Agreement
                  between  Logansport  Savings Bank, FSB and Thomas G.
                  Williams,  executed May 7, 1992 is  incorporated  by
                  reference  to  Exhibit  10(12)  to the  Registration
                  Statement on Form S-1 (Registration No. 33-89788).

         10(12)   Executive  Supplemental  Retirement Income Agreement
                  between  Logansport Savings Bank, FSB and Charles J.
                  Evans,  executed  May 7,  1992  is  incorporated  by
                  reference  to  Exhibit  10(13)  to the  Registration
                  Statement on Form S-1 (Registration No. 33-89788).

         11       Statement of Computation of Per Share Earnings          ______

         13       1996 Shareholder Annual Report                          ______

         21       Subsidiaries  of the Registrant are  incorporated by
                  reference   to  Exhibit   21  to  the   Registration
                  Statement on Form S-1 (Registration No. 33-89788).

         23       Independent Auditor's Consent                           ______

         27       Financial Data Schedule                                 
                                                                          ______



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