EXHIBIT 13
<PAGE>

                                  [** LOGO **]

                              Guthrie Savings, Inc.

                              Annual Report - 1998



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                              Guthrie Savings, Inc.
                              ANNUAL REPORT - 1998


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Table of Contents

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Letter  to Stockholders...............................................    1

Corporate Profile and Stock Price Information.........................    2

Five-Year Financial Summary...........................................    3

Management's Discussion and Analysis..................................    5

Independent Auditor's Report..........................................  F-1

Consolidated Financial Statements.....................................  F-2

Notes to Consolidated Financial Statements............................  F-7

Corporate Information.................................................   18





<PAGE>



To Our Stockholders:

It is with  great  pleasure  that we bring to you the  annual  report of Guthrie
Savings, Inc. for the year ended March 31, 1998.

Net income for the year ended  March 31,  1998 was  $535,595  or $1.36 per share
representing  an  increase  of 40.8% over the year  ended  March 31,  1997.  The
previous year included the one-time special assessment of SAIF insurance.

The Board of Directors  declared two $0.50 per share cash dividends  during this
year.  One in September 1997 for  stockholders  of record on October 1, 1997 and
the other in January 1998 for  stockholders  of record on February 3, 1998.  The
special cash dividends were paid as a result of continued  profitability  of the
Company and its wholly owned subsidiary, Guthrie Federal Savings Bank.

We have  experienced  an  increase  in loan  activity  this year which  includes
mortgages, construction loans and consumer lending.

Guthrie  Federal has also recently  entered into an agreement  with Transfund to
offer debit cards in an ongoing effort to serve our customers' needs.

My final  comment has to do with the Year 2000 and to let you know that  Guthrie
Federal management is making the transition into the next millennium a priority.
As Guthrie  Federal moves forward,  we can assure our  employees,  customers and
stockholders that we have been working  diligently to make a coordinated  effort
to becoming Year 2000 compliant. Our efforts, both internal and external, should
be fully tested and operational by December 31, 1998.

We appreciate the loyal support that our  stockholders,  customers and employees
have given us during the past  years and ask for your  continued  support in the
future.

Sincerely,



William L. Cunningham
President and Chief Executive Officer






                                      - 1 -


<PAGE>



Guthrie Savings, Inc..

Corporate Profile and Related Information

Guthrie Savings,  Inc. (the "Company") is the parent company for Guthrie Federal
Savings Bank (the "Bank"). The Company is an Oklahoma  corporation  organized in
May 1994 at the direction of Guthrie Federal Savings and Loan  Association  (the
"Association") in connection with the  Association's  conversion from the mutual
to stock  form of  ownership  (the  "Conversion").  On  October  11,  1994,  the
Association  completed its  conversion  and changed its name to Guthrie  Federal
Savings Bank and became a wholly owned subsidiary of the Company. The Company is
a unitary savings and loan holding company which, under existing laws, generally
is not  restricted  in the types of business  activities  in which it may engage
provided  the Bank retains a specified  amount of its assets in  housing-related
investments.  At the present time, since the Company does not conduct any active
business,  the Company does not intend to employ any persons other than officers
but utilizes the support staff and facilities of the Bank from time to time.

Guthrie  Federal  Savings  Bank is a  federally  chartered  stock  savings  bank
headquartered in Guthrie,  Oklahoma. The Bank was founded in 1906 with a charter
from the Territory of Oklahoma  under the name of  "Employees  Building and Loan
Association."  Employees  Building and Loan Association became known as "Guthrie
Savings and Loan  Association" in 1968 when it changed its name. In early August
1994,  Guthrie  became a federal  association  under the name  "Guthrie  Federal
Savings and Loan  Association."  The Bank  changed  its name to Guthrie  Federal
Savings Bank in October of 1994 in connection with its conversion from mutual to
stock  form.  The Bank's  deposits  have been  federally  insured by the Savings
Association Insurance Fund ("SAIF") and its predecessor, the Federal Savings and
Loan Insurance Corporation,  since 1948, and the Bank is a member of the Federal
Home Loan Bank (the "FHLB") System.

Guthrie  Federal Savings Bank is primarily  engaged in attracting  deposits from
the general  public and using those  deposits,  together  with other  funds,  to
originate real estate loans on one- to four-family  residences  and, to a lesser
extent, consumer loans. The Bank has one office in Guthrie,  Oklahoma,  which is
located in its primary market area of Logan County,  Oklahoma. In addition,  the
Bank holds interest bearing deposits in other financial institutions and invests
in  mortgage-backed  securities and investment  securities.  The Bank offers its
customers  fixed-rate and  adjustable-rate  mortgage  loans, as well as consumer
loans, including home equity and savings account loans.

Stock Market Information

There were  417,457  shares of common  stock (net of treasury  stock) of Guthrie
Savings,  Inc.  outstanding  on  March  31,  1998,  held  by  approximately  200
stockholders of record (not including the number of persons or entities  holding
the stock in nominee or street name though various brokerage  firms).  Since its
issuance in October  1994,  the  Company's  common  stock has been traded in the
over-the-counter   market.  The  following  table  reflects  high  and  low  bid
information  for stock  quotations as published by the National Daily  Quotation
System "pink sheets".  These quotations  reflect  inter-dealer  prices,  without
retail  mark-up,   mark-down  or  commission,   and  may  not  represent  actual
transactions.

                                           Year Ended March 31,
                          ------------------------------------------------------
                                          1998                        1997
                          --------------------------  --------------------------

                             HIGH           LOW          HIGH           LOW
                          ------------  ------------  ------------  ------------

         First Quarter      17 1/8        15 1/2        13 1/2          13
         Second Quarter       17            17          13 1/2          13
         Third Quarter        18            17            14            13
         Fourth Quarter     18 1/4        17 1/2        14 1/2          14


During the year ended March 31, 1998,  the Board of Directors  declared and paid
two dividends of $0.50 per share.  The first $0.50  dividend was paid on October
10, 1997 and the second $0.50 dividend was paid on February 10, 1998. During the
year ended March 31, 1997 the Board of Directors declared and paid a dividend of
$0.50 per share.  The  Company's  ability to pay  dividends to  shareholders  is
largely  dependent  upon the  dividends it receives  from the Bank.  The Bank is
subject to regulatory  limitations  on the amount of cash  dividends it may pay.
The Bank  may not  declare  or pay a cash  dividend  on any of its  stock if the
effect thereof would cause the Bank's regulatory capital to be reduced below (1)
the amount required for the liquidation  account  established in connection with
the Bank's  conversion from mutual to stock form, or (2) the regulatory  capital
requirements imposed by the Office of Thrift Supervision ("OTS").

                                      - 2 -

<PAGE>



Guthrie Savings, Inc.
<TABLE>
<CAPTION>
================================================================================
FIVE-YEAR FINANCIAL SUMMARY
Selected Financial Condition Data (Dollars in Thousands) (*)
===========================================================================================================================
At March 31,                                             1998           1997           1996          1995           1994
---------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>            <C>           <C>            <C>     
Total assets                                           $ 48,627       $ 49,047       $ 46,820      $ 44,727       $ 42,839
Loans receivable (1)                                     25,655         23,461         22,972        23,182         21,630
Investment securities held-to-maturity                    3,900          8,700          9,751         8,366          5,485
Investment securities available-for-sale                  2,175          2,062          2,133           929            659
Mortgage-backed securities held-to-maturity              12,615         13,273          9,428         9,869         11,145
Cash and cash equivalents                                 3,307            523          1,402         1,090          2,392
Deposits                                                 35,538         34,293         36,311        34,543         39,084
FHLB borrowings                                           5,196          6,700          2,000         1,700              -
Stockholders' equity                                      7,536          7,805          8,049         8,236          3,410
</TABLE>
<TABLE>
<CAPTION>
Summary of Operations (Dollars in Thousands) (*)
---------------------------------------------------------------------------------------------------------------------------
Year Ended March 31,                                     1998           1997           1996          1995           1994
---------------------------------------------------------------------------------------------------------------------------

<S>                                                     <C>            <C>            <C>           <C>            <C>    
Interest income                                         $ 3,668        $ 3,632        $ 3,416       $ 3,198        $ 3,274
Interest expense                                          1,877          1,833          1,761         1,489          1,512
                                                   -------------  -------------  -------------  ------------   ------------
  Net interest income                                     1,791          1,799          1,655         1,709          1,762
Provision for loan losses                                     3              1           (132)           12             70
                                                   -------------  -------------  -------------  ------------   ------------
  Net interest income after
     provision for loan losses                            1,788          1,798          1,787         1,697          1,692

Non-interest income                                         242            251            336           193            215
Non-interest expense (2)                                  1,179          1,416          1,229         1,095          1,093
                                                   -------------  -------------  -------------  ------------   ------------
Income before income taxes and
     cumulative effect of accounting change                 851            633            894           795            814
Provision for income taxes                                  315            253            309           250            278
                                                   -------------  -------------  -------------  ------------   ------------
Income before cumulative effect of
     accounting change                                      536            380            585           545            536
Cumulative effect of accounting change                        -              -              -             -            128
                                                   -------------  -------------  -------------  ------------   ------------
Net income                                              $   536        $   380        $   585       $   545        $   664
                                                   =============  =============  =============  ============   ============
Basic earnings per share* (3)                           $  1.41        $  0.92        $  1.28       $  0.48        $     -
                                                   =============  =============  =============  ============   ============
Diluted earnings per share* (3)                         $  1.36        $  0.91        $  1.27       $  0.48        $     -
                                                   =============  =============  =============  ============   ============
Dividends per share (3)                                 $  1.00        $  0.50        $  0.50       $  0.20        $     -
                                                   =============  =============  =============  ============   ============
Book value per common share
   outstanding at March 31                              $ 18.05        $ 17.33        $ 16.61       $ 15.99        $     -
                                                   =============  =============  =============  ============   ============
</TABLE>


----------------
*    Data presented  prior to October 11, 1994,  the date of conversion,  is for
     Guthrie Federal Savings Bank only.
(1)  Includes loans held for sale totaling $81,757 at March 31, 1998.
(2)  For 1997,  includes  $225,000 for a special  assessment to recapitalize the
     federal  deposit  insurance fund to which Guthrie Federal Savings Bank pays
     premiums.
(3)  For 1995, only includes period following conversion from mutual to stock on
     October 11, 1994 (October 11, 1994 through March 31, 1995).


                                      - 3 -

<PAGE>



Guthrie Savings, Inc.
<TABLE>
<CAPTION>
===========================================================================================================================
FIVE-YEAR FINANCIAL SUMMARY

Selected Ratios and Other Data (*)
===========================================================================================================================
Year Ended March 31,                               1998           1997            1996           1995            1994
---------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>            <C>             <C>            <C>             <C> 
Return on average assets                            1.11 %         0.79 %          1.30 %         1.24 %          1.51 %
Return on average equity                            7.25           4.89            7.12          10.39           22.53
Average equity to average assets                   15.26          16.13           18.18          11.93            6.71
Equity to assets at period end                     15.50          15.91           17.19          18.41            7.96
Net interest spread                                 3.13           3.14            2.98           3.59            3.95
Net yield on average interest earning assets        3.79           3.81            3.78           4.02            4.15
Non-performing loans to total assets                0.42           0.85            1.33           1.80            1.35
Non-performing loans to net loans                   0.80           1.79            2.72           3.46            2.68
Non-performing assets to total assets               0.44           0.85            1.33           1.94            1.80
Allowance for loan losses to total loans            1.38           1.61            1.70           2.33            2.58
Dividend payout                                    72.17          55.32           38.08          17.38
Number of:
  Real estate loans outstanding                      556            550             576            621             633
  Deposit accounts                                 4,435          4,538           4,772          4,744           5,133

</TABLE>



           Net Income                         Non-Performing Assets/Total Assets

      [GRAPHICS OMITTED]                        [GRAPHICS OMITTED]




          Total Assets                        Stockholder's Equity

       [GRAPHICS OMITTED]                        [GRAPHICS OMITTED]




(*)  Data presented  prior to October 11, 1994,  the date of conversion,  is for
     Guthrie Federal Savings Bank only.


                                      - 4 -


<PAGE>



                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


Guthrie Savings, Inc.

The  following  is a  discussion  of the  financial  condition  and  results  of
operations of the Company and its subsidiary  Guthrie  Federal Savings Bank (the
"Bank"),  and should be read in conjunction with the  accompanying  Consolidated
Financial Statements.

General

The Bank is primarily engaged in the business of accepting deposit accounts from
the general  public and using these funds to  originate  mortgage  loans for the
purchase  or  refinancing  of  single-family  residences  located  in Logan  and
northern  counties in  Oklahoma,  and for the  purchase of  mortgage-backed  and
investment  securities.  The  Bank  also  originates  automobile  loans,  second
mortgage loans, and deposit loans.  The Bank's market has historically  provided
an excess of savings  deposits  over loan  demand.  Accordingly,  in addition to
originating  loans  in  its  market  the  Bank  also  purchases  mortgage-backed
securities and investment securities.

The Company's  operations,  as with those of the entire  banking  industry,  are
significantly affected by prevailing economic conditions,  competition,  and the
monetary and fiscal policies of governmental  agencies.  Lending  activities are
influenced by the demand for loans,  competition  among lenders,  the prevailing
market  rates  of  interest,   primarily  on  competing   investments,   account
maturities, and the levels of personal income and savings in the market area.

The earnings of the Bank depend  primarily on its level of net interest  income,
which is the difference between interest income and interest expense. The Bank's
net  interest  income  is a  function  of its  interest  rate  spread,  which is
determined   by  the   difference   between   rates  of   interest   earned   on
interest-earning   assets,  and  rates  of  interest  paid  on  interest-bearing
liabilities.  The Bank's  earnings are also affected by its provision for losses
on loans, as well as the amount of non-interest income and non-interest expense,
such as compensation and related  expenses,  deposit  insurance  premiums,  data
processing costs, and income taxes.

The Company's strategy for growth focuses on making loans,  increasing  deposits
and providing customers with a high level of customer service.

Financial Condition

Consolidated total assets remained consistent during the year, with a balance at
March 31, 1998 of $48,626,898  compared to a balance of $49,047,256 at March 31,
1997, a slight decrease of $420,358 or 0.86%.

Cash and cash equivalents:
The  Bank's  cash and cash  equivalents  increased  $2,784,590  or  532.6%  from
$522,829 at March 31, 1997 to  $3,307,419  at March 31, 1998.  This  substantial
increase is directly related to the decrease in investment  securities discussed
in the next paragraph.  Several investment  securities were called close to year
end and the proceeds on these  investments  had not yet been reinvested at March
31, 1998.

                                      - 5 -
<PAGE>

Investment securities:
The Bank's securities  portfolio  provides  liquidity for additional  lending as
well as additional  interest income. The investment  securities in the portfolio
have varying maturities of ten years or less. Investment  securities,  including
available-for-sale,  decreased  $4,686,976,  or 43.55% from $10,761,727 at March
31, 1997 to $6,074,751 at March 31, 1998.  This  decrease  relates  primarily to
several  investment  securities,  classified as  held-to-maturity,  being called
during the year ended March 31, 1998.  Securities  called  during the year ended
March 31, 1998 amounted to $4,800,000.

Mortgage-backed securities:
Mortgage-backed  securities  decreased  $658,236,  or 4.96%, from $13,273,398 at
March 31, 1997 to $12,615,162 at March 31, 1998. During the year ended March 31,
1998, the Bank purchased $1,705,880 in mortgage-backed securities and repayments
of  mortgage-backed  securities  amounted to $2,340,044.  Repayments  included a
$998,746  collateralized  mortgage obligation ("CMO") that was called during the
year.  During the year ended March 31, 1997,  the Bank  purchased  $5,227,289 in
CMOs in conjunction with FHLB adjustable-rate  advances with the intent to match
the interest rate base and repricing dates to establish a desired  interest rate
spread.  The yield on  mortgage-backed  securities  at March 31,  1998 was 6.75%
compared  to  a  yield  on  investment  securities  of  6.39%.   Mortgage-backed
securities generally provide for lower returns than loans originated by the Bank
and are utilized when investable funds exceed loan demand.

The Company had net unrealized losses on investment securities held-to-maturity,
not reflected on the consolidated  financial statements,  of $6,881 and $120,894
at March 31, 1998 and 1997, respectively.  The Company had net unrealized losses
on   mortgage-backed   securities   held-to-maturity,   not   reflected  on  the
consolidated  financial  statements,  of  $87,596  at  March  31,  1997  and net
unrealized gains on mortgage-backed  securities  held-to-maturity of $129,115 at
March 31, 1998. The Bank's  portfolio has experienced an overall  improvement as
fair market  values  have become  consistent  with the  amortized  cost of these
securities  held-to-maturity and the Company has experienced  improvement in the
interest rate environment.

Loans receivable:
Net loans receivable increased  $2,193,937,  or 9.35%, from $23,461,257 at March
31, 1997 to $25,655,194 at March 31, 1998.  This growth in the loan portfolio is
attributed to increased  lending  activity as a result of increased loan demand.
This increase was primarily due to an increase in mortgage loans secured by one-
to four-family  residences of $1,485,167  from  $17,273,266 at March 31, 1997 to
$18,758,433  at March 31, 1998 and an  increase  in consumer  and other loans of
$806,278 from $2,857,100 at March 31, 1997 to $3,663,378 at March 31, 1998.

The Bank has recognized  impaired loans having recorded  investments of $440,137
at March 31, 1998 and $366,316 at March 31, 1997. A loan is impaired when, based
on management's  evaluation of current and historical information and events, it
is probable that all amounts due according to the contractual  terms of the loan
agreement  will not be  collected.  Loans which are  classified  as impaired are
typically collateral dependent; therefore, impairment is measured based upon the
fair  value of the  collateral  less  estimated  costs to  sell.  Impairment  is
recognized  by creating a valuation  allowance  with a  corresponding  charge to
provision for loss on loans.

Management,  as a part of the monitoring and evaluation of non-performing loans,
classifies loans in accordance with regulatory  provisions as loss,  doubtful or
substandard.  Total loans classified as of March 31, 1998 and 1997,  amounted to
$652,442 and $673,647,  respectively,  including  loans  recognized as impaired.
Those loans  classified which are not recognized as impaired include loans which
are



                                      - 6 -
<PAGE>


currently  past due 90 days or more or have a past history of  delinquency.  The
level of  classified  loans has  continued  to decline  primarily as a result of
improving economic conditions and real estate values. Classified loans have been
considered by management in the  evaluation of the adequacy of the allowance for
loan loss. The Bank will continue with its existing  collection policies to keep
non-performing  assets  to a  minimum,  but  no  assurance  can  be  given  that
negotiations  with  borrowers  will  continue to be  successful.  Management  is
unaware of any trends which it reasonably  expects will materially impact future
operating results, liquidity, or capital resources.

Foreclosed real estate:
The balance in foreclosed  assets ("REO") at March 31, 1998 and 1997 was $10,500
and $0,  respectively.  The March 31, 1998 balance in REO consisted of land. The
balance in REO continues to be substantially  lower than that experienced by the
Bank in prior years.

Deposits:
Deposits  increased  from  $34,293,278 at March 31, 1997 to $35,537,831 at March
31, 1998, an increase of $1,244,553, or 3.63%. The Bank continues to offer rates
consistent  with rates offered by other  financial  institutions in the area but
has not focused on offering  aggressive  rates to increase the deposit base. The
average cost on deposits  decreased slightly from 4.42% for the year ended March
31, 1997 to 4.40% for the year ended March 31, 1998.

Of the  $23,748,299  in  certificates  of deposit  held by the Bank at March 31,
1998,  $20,149,866 of these deposits will mature during the year ended March 31,
1999. The majority of the Bank's time deposits  consist of regular deposits from
consumers within the Bank's  surrounding  community rather than institutional or
brokered  deposit  accounts.  As a  result,  most of  these  accounts  of  local
customers are expected to be renewed.

Advances and other borrowings from Federal Home Loan Bank:
The Bank has  continued to utilize  advances from the FHLB as a source of funds.
Fixed term advances from the FHLB totaled $5,196,000 and $6,000,000 at March 31,
1998 and 1997, respectively. The advances outstanding at March 31, 1998 were all
adjustable rate advances. Proceeds from the FHLB advances received during fiscal
1998 were used  primarily to fund lending  activity  throughout the year. Of the
fixed term advances  outstanding at March 31, 1997,  $2,000,000  were fixed rate
advances and $4,000,000 were adjustable rate advances. The funds provided by the
advances   received   during  fiscal  1997  were  used   primarily  to  purchase
mortgage-backed  securities.  The advances and related mortgage-backed  security
purchases  were  initiated  together and are intended to match the interest rate
base and repricing dates.

The Bank also has a line of credit with the FHLB with an outstanding  balance of
$0 and $700,000 at March 31, 1998 and 1997, respectively.  The funds provided by
the line of credit are used to fund lending activity and for regular operations.

The weighted average cost of theses borrowings from the FHLB was 5.58% and 5.50%
for the years ended March 31, 1998 and 1997,  respectively.  Of the advances and
other borrowings  outstanding at March 31, 1998,  $2,196,000  matures during the
year ended March 31, 1999.

Stockholders' equity:
Stockholders'  equity decreased  $268,912,  from $7,805,040 at March 31, 1997 to
$7,536,128 at March 31,


                                      - 7 -
<PAGE>

1998.  The Company was granted  approval by the OTS to purchase up to 15% of the
Company's  outstanding  shares.  At March 31, 1998 the  Company had  repurchased
97,668  shares  of its  common  stock as part of a plan to  enhance  stockholder
value. The book value per common share outstanding at March 31, 1998 was $18.05,
up from $17.33 at March 31, 1997 and $16.61 at March 31,  1996.  As noted in the
Stock  Price  Information  section  of this  report  the  Company  has also been
consistently  paying  dividends to  stockholders.  The Company's stock price has
increased from $14.13 at March 31, 1997 to $18.50 at March 31, 1998, an increase
of $4.37 or 30.93%.

Implementation of New Accounting Pronouncements

During fiscal year 1998, the Company adopted the provisions of Statement No. 128
titled "Changes in Earnings Per Share" and Statement No. 123 titled  "Accounting
for Stock-Based  Compensation." See Notes 1 and 11 to the Consolidated Financial
Statements  for a discussion  of this new  accounting  pronouncements  and their
effect on the Company.

Asset and Liability Management

The  ability to  maximize  net  interest  income is largely  dependent  upon the
achievement  of a positive  interest  rate spread that can be  sustained  during
fluctuations  in  prevailing  interest  rates.  Interest rate  sensitivity  is a
measure  of the  difference  between  amounts  of  interest-earning  assets  and
interest-bearing  liabilities  which  either  reprice  or mature  within a given
period of time. The difference,  or the interest rate repricing  "gap," provides
an indication of the extent to which an institution's  interest rate spread will
be  affected  by  changes  in  interest  rates  over a period of time.  A gap is
considered positive when the amount of interest-rate  sensitive assets maturing,
or  repricing  over  a  specified   period  of  time,   exceeds  the  amount  of
interest-rate sensitive liabilities maturing or repricing within that period and
is considered  negative when the amount of interest-rate  sensitive  liabilities
maturing  or  repricing  over a specified  period of time  exceeds the amount of
interest-rate  sensitive  assets  maturing  or  repricing  within  that  period.
Generally,  during a period of rising  interest  rates,  a negative gap within a
given  period of time  would  adversely  affect  net  interest  income,  while a
positive  gap within a given  period of time would  result in an increase in net
interest  income;  during a period of falling  interest  rates,  a negative  gap
within a given period of time would result in an increase in net interest income
while a  positive  gap within a given  period of time  would  have the  opposite
effect.

In an effort to reduce  interest  rate  risk and  protect  it from the  negative
effect of increases in interest rates, the Bank has instituted certain asset and
liability  management  measures.  The primary elements of this strategy include:
(i)  balance  sheet   restructuring,   and  (ii)   asset/liability   management.
Management's  strategy  for  asset/liability  management  has  consisted  of (i)
minimizing the  origination of fixed rate mortgage loans with maturities of more
than 15 years,  (ii)  originating  adjustable  rate mortgage loans for portfolio
where maturities exceed 15 years,  (iii)  originating  consumer and equity loans
that are  short-term or adjustable,  (iv)  collecting fee income from fixed rate
loans with terms of more than 15 years that the Bank  refers to other  financial
institution,  and (v)  focusing  marketing  efforts  and  pricing  to extend the
average maturities on deposits.

Quarterly, the OTS prepares a report on the interest rate sensitivity of the net
portfolio  value ("NPV") from  information  provided by Bank.  The OTS adopted a
rule in August 1993  incorporating an interest rate risk ("IRR")  component into
the risk-based capital rules.  Implementation of the rule has been delayed until
the OTS has tested the process under which  institutions may appeal such capital
deductions.  The IRR  component  is a dollar  amount that will be deducted  from
total capital for the purpose of

                                      - 8 -

<PAGE>


calculating an institution's  risk-based capital  requirement and is measured in
terms of the sensitivity of its NPV to changes in interest rates. The NPV is the
difference  between  incoming  and outgoing  discounted  cash flows from assets,
liabilities,  and off-balance sheet contracts.  An institution's IRR is measured
as the change to its NPV as the result of a hypothetical  200 basis point change
in  market  interest  rates.  A  resulting  change in NPV of more than 2% of the
estimated market value of its assets will require the institution to deduct from
its capital  50% of that  excess  change.  The rule  provides  that the OTS will
calculate the IRR component quarterly for each institution. The following tables
present the Bank's NPV as well as other data as of March 31, 1998, as calculated
by the OTS, based on information provided to the OTS by the Bank.

<TABLE>
<CAPTION>
     Change in Interest
       Rates in Basis
     Points (Rate Shock)                       Net Portfolio Value                               NPV as % of Present Value of Assets
   ---------------------------------------------------------------------------------------      ------------------------------------
                                  $ Amount              $ Change             Change %            NPV Ratio            Change
                                -------------      -------------------      --------------      ----------------    ----------------
                                                                                             
                                                 (Dollars in Thousands)                      
                                                                                             
           <S>                  <C>                    <C>                   <C>                   <C>                <C>   
           +400 bp               $ 4,526                (3,271)               (42)  %                9.98%             -582 bp
           +300 bp               $ 5,479                (2,318)               (30)  %               11.78%             -401 bp
           +200 bp (1)           $ 6,401                (1,396)               (18)  %               13.45%             -235 bp
           +100 bp               $ 7,214                  (583)                (7)  %               14.85%              -95 bp
              0 bp               $ 7,797                                                            15.79%
           -100 bp               $ 8,121                   325                  4   %               16.29%              +49 bp
           -200 bp               $ 8,314                   517                  7   %               16.54%              +75 bp
           -300 bp               $ 8,735                   938                 12   %               17.17%             +137 bp
           -400 bp               $ 9,316                 1,519                 19   %               18.03%             +224 bp
                                                                                           
   --------------------
   (1) Denotes rate shock used to compute interest rate risk capital component.
</TABLE>

<TABLE>
<CAPTION>
                                                                              March 31, 1998
                                                                              -------------- 

Risk  Measures (200 Basis Point Rate Shock):
<S>                                                                              <C>
       Pre-Shock NPV Ratio:  NPV as % of Present Value of Assets                   15.79 %
       Exposure Measure:  Post-Shock NPV Ratio                                     13.45 %
       Sensitivity Measure:  Change in NPV Ratio                                   -235 bp

Calculation of Capital Component:

       Change in NPV as % of Present Value of Assets                                2.83 %
</TABLE>

Utilizing the data above, the Bank, at March 31,1998, would have been considered
by the OTS to have been  subject  to  "above  normal"  interest  rate risk and a
deduction from risk-based capital would have been required.

Set forth below is a breakout, by basis points of the Bank's NPV as of March 31,
1998 by assets, liabilities and off-balance
sheet items.
<TABLE>
<CAPTION>
                                                                    No
Net Portfolio Value  -400 bp    -300 bp    -200 bp    -100 bp     Change     +100 bp    +200 bp    +300 bp    +400 bp
------------------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
<S>                  <C>        <C>         <C>        <C>        <C>        <C>        <C>        <C>        <C>     
Assets               $ 51,665   $ 50,883    $ 50,266   $ 49,880   $ 49,366   $ 48,596   $ 47,600   $ 46,497   $ 45,367
-Liabilities           42,379     42,173      41,971     41,772     41,576     41,383     41,195     41,008     40,826
+Off Balance Sheet         30         25          19         13          7          1         (4)       (10)       (15)
                    ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Net Portfolio Value  $  9,316   $  8,735    $  8,314   $  8,121   $  7,797   $  7,214   $  6,401   $  5,479   $  4,526
                    ========== ========== =========== ========== ========== ========== ========== ========== ==========
</TABLE>


                                      - 9 -
<PAGE>

Certain  assumptions  utilized by the OTS in assessing the interest rate risk of
savings  associations  were  employed in  preparing  the previous  table.  These
assumptions  related to interest  rates,  loan prepayment  rates,  deposit decay
rates,  and the market values of certain assets under the various  interest rate
scenarios.  It was also  assumed  that  delinquency  rates  will not change as a
result of changes in interest rates although there can be no assurance that this
will be the case. Even if interest rates change in the designated amounts, there
can be no assurance that the Bank's assets and liabilities  would perform as set
forth above.

Certain  shortcomings  are inherent in the preceding NPV tables because the data
reflect  hypothetical  changes in NPV based upon  assumptions used by the OTS to
evaluate the Bank as well as other  institutions.  However,  net interest income
should decline with instantaneous increases in interest rates while net interest
income should increase with instantaneous declines in interest rates. Generally,
during periods of increasing  interest rates, the Bank's interest rate sensitive
liabilities would reprice faster than its interest rate sensitive assets causing
a decline in the Bank's interest rate spread and margin.  This would result from
an increase in the Bank's cost of funds that would not be immediately  offset by
an  increase  in its yield on earning  assets.  An increase in the cost of funds
without an  equivalent  increase  in the yield on earning  assets  would tend to
reduce net interest income.

In times of decreasing interest rates, fixed rate assets could increase in value
and the lag in repricing of interest rate sensitive  assets could be expected to
have a positive effect on the Bank's net interest income.


                                     - 10 -


<PAGE>



Average Balances, Interest and Average Yields and Rates

The  following  table  sets forth  certain  information  relating  to the Bank's
average  balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated and the average yields earned and rates
paid.  Such yields and costs are  derived by  dividing  income or expense by the
average  balance  of  assets  or  liabilities,  respectively,  for  the  periods
presented. Average balances are derived from month-end balances. Management does
not believe that the use of month-end balances instead of daily average balances
has caused any material difference in the information presented.
<TABLE>
<CAPTION>
                                                                            Years Ended March 31,
                                              ----------------------------------------------------------------------------------
                                 At March 31,
                                   1998                    1998                        1997                     1996
                                 ------------ -------------------------- --------------------------  ---------------------------
                                            Average            Average   Average           Average   Average           Average
                                            Balance  Interest Yield/Cost Balance Interest Yield/Cost Balance Interest Yield/Cost
                                            -------- -------- ---------- ------- -------- ---------- ------- -------- ----------
                                (Dollars in Thousands)
<S>                                <C>     <C>        <C>       <C>      <C>      <C>     <C>      <C>        <C>     <C>    
Interest-earning assets:
  Loans receivable (1)              8.55%  $ 24,619   $ 2,218     9.01%  $ 22,895 $ 2,087   9.12%  $ 22,729   $ 2,087   9.19%  
  Mortgage-backed securities        6.75%    12,213       800     6.55%    12,146     775   6.38%     9,507       599   6.31
  Investment securities (2)         6.39%     8,923       583     6.53%    11,224     735   6.55%     9,385       616   6.57
 Other interest-earning assets      5.62%     1,514        67     4.43%       866      35   4.04%     2,170       114   5.27
                                 -------- ---------- --------- --------- -------- ------- ------  ----------  -------- -------
                                                                                                  
     Total interest-earning         7.61%  $ 47,269   $ 3,668     7.76%  $ 47,131 $ 3,632   7.71%  $ 43,791   $ 3,416   7.80
       assets:                   ======== ========== ========= ========= ======== ======= ======  ==========  ======== =======
                                                                                                  
Non-interest-earning assets:                  1,165                         1,151                     1,376
                                          ---------                      --------                  ---------
                                                                                                  
     Total assets                          $ 48,434                      $ 48,282                  $ 45,167
                                          =========                      ========                  =========
                                                                                                  
Interest-bearing liabilities:                                                                     
  Savings accounts                  2.60%  $  2,895   $    75     2.59%  $  3,136 $    81   2.58%  $  3,481   $   102   2.94
  Demand deposits                   2.28%     8,278       198     2.39%     8,249     201   2.44%     8,083       235   2.90
  Certificates of deposit           5.41%    23,351     1,266     5.42%    23,187   1,247   5.38%    24,653     1,405   5.69
Other borrowed funds                5.14%     6,057       338     5.58%     5,545     305   5.50%       348        19   5.46
                                 -------- ---------- --------- --------- -------- ------- ------  ----------  -------- -------
                                                                                                  
     Total interest-bearing         4.50%  $ 40,581   $ 1,877     4.63%  $ 40,117 $ 1,834   4.57%  $ 36,565   $ 1,761   4.82
       liabilities               ======== ========== ========= ========= ======== ======= ======  ==========  ======== =======
                                                                                                  
Non-interest bearing                            464                           379                       394
  liabilities                            ----------                      --------                  ---------
                                                                                                  
     Total liabilities                     $ 41,045                      $ 40,496                  $ 36,959
                                         ==========                      ========                  =========
                                                                                                  
Stockholder's equity                          7,389                         7,786                     8,208
                                         ----------                      --------                  ---------
                                                                                                  
     Total liabilities and                 $ 48,434                      $ 48,282                  $ 45,167
       stockholders' equity              ==========                      ========                  =========
                                                                                                   
Net interest income                                   $ 1,791                     $ 1,798                     $ 1,655
                                                    ==========                    =======                     ========
                                                                                                  
Interest rate spread (3)            3.11%                         3.13%                     3.14%                       2.98
                                 ========                      ========                  =======                       =======
                                                                                                  
Net yield on interest-                                            3.79%                     3.81%                       3.78
  earning assets (4)                                           ========                  =======                       ======
                                                                                                  
Ratio of average                                                                                  
  interest earning assets                                       116.48%                   117.48%                     119.79
  to average interest-                                         ========                  =======                     =======
  bearing liabilities                                                                             
</TABLE>
                                                                               
(1)  Average balances include non-accrual loans.
(2)  Includes interest-bearing deposits in other financial institutions.
(3)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(4)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                      -11 -
<PAGE>


The following  Rate/Volume  Analysis table presents,  for the periods indicated,
information  regarding  changes in  interest  income and  interest  expense  (in
thousands)  of the  Bank.  For each  category  of  interest-earning  assets  and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (changes in average volume  multiplied by old rate);  (ii)
changes in rates (changes in rate multiplied by old average  volume);  and (iii)
changes in  rate-volume  (changes  in rate  multiplied  by the change in average
volume).
<TABLE>
<CAPTION>
                                                                  Years Ended March 31,
                                        -----------------------------------------------------------------------
                                                   1998 vs. 1997                       1997 vs. 1996
                                        ------------------------------------   --------------------------------
                                            Increase (Decrease) Due to           Increase (Decrease) Due to
                                        ------------------------------------   --------------------------------
                                                            Rate/                                Rate/
                                          Volume     Rate   Volume      Net    Volume    Rate    Volume    Net
                                        ---------- -------  --------- -----    ------   ------   ------- ------
                                                                      (In Thousands)
<S>                                        <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>   
Interest income:
    Loans receivable                       $ 157    $ (25)   $  (1)   $ 131    $  15    $ (15)   $--      $--
    Mortgage-backed securities                 4       21     --         25      167        7        2      176
    Investment securities                   (150)      (2)    --       (152)     121       (1)      (1)     119
    Other interest-earning assets             26        3        3       32      (69)     (26)      16      (79)
                                           -----    -----    -----    -----    -----    -----    -----    -----

      Total interest-earning assets        $  37    $  (3)   $   2    $  36    $ 234    $ (35)   $  17    $ 216
                                           =====    =====    =====    =====    =====    =====    =====    =====

Interest expense:
    Savings accounts                       $  (6)   $--      $--      $  (6)   $ (10)   $ (13)   $   2    $ (21)
    Demand deposits                            1       (4)    --         (3)       4      (37)      (1)     (34)
    Certificates of deposits                   9        9        1       19      (84)     (77)       3     (158)
    Other borrowed funds                      28        4        1       33      283     --          3      286
                                           -----    -----    -----    -----    -----    -----    -----    -----

      Total interest-bearing liabilities   $  32    $   9    $   2    $  43    $ 193    $(127)   $   7    $  73
                                           =====    =====    =====    =====    =====    =====    =====    =====

Net change in interest income              $   5    $ (12)   $--      $  (7)   $  41    $  92    $  10    $ 143
                                           =====    =====    =====    =====    =====    =====    =====    =====
</TABLE>

Comparison of Operating Results for the Years Ended March 31, 1998 and 1997

General:
Net income increased $155,215, or 40.81%, from $380,380 for the year ended March
31, 1997 to $535,595  for the year ended March 31,  1998.  As  discussed  in the
following paragraphs,  the net income for the year ended March 31, 1997 included
a  one-time  special  SAIF  assessment  of  $225,433,  which net of tax  effect,
resulted in decreasing  fiscal year 1997 net income by  approximately  $149,000.
Without the special  assessment  during the year ended March 31, 1997 net income
would have been approximately $530,000,  which is consistent with net income for
the year ended March 31, 1998.

On September 30, 1996,  President  Clinton  signed into law a bill that provided
for a special  assessment of SAIF insured  institutions  amounting to 65.7 basis
points  applied to the Bank's  deposit base  measured as of March 31, 1995.  The
total amount of the special  assessment for the Bank was included in expense and
paid during the year ended March 31, 1997.

Beginning January 1, 1997,  deposit insurance  assessments for most SAIF members
were  reduced to  approximately  6.4 basis points of deposits on an annual basis
and are expected to remain at that rate  through the end of 1999,  down from the
previous level of 23 basis points, a reduction in the rate of deposit  insurance
assessed the Bank of approximately 70%. Through 1999 BIF members are expected to
be  assessed  at  approximately  1.3  basis  points  on  deposits.   Thereafter,
assessments  for BIF and SAIF members should be the same and SAIF and BIF may be
merged.  It is expected that these continuing  assessments for both SAIF and BIF
members  will  be  used  to  repay   outstanding   Financing   Corporation  bond
obligations.
                                     - 12 -

<PAGE>

The  operating  results  of the  Company  depend  to a great  degree  on its net
interest   income,   which  is  the  difference   between   interest  income  on
interest-earning  assets,  primarily  loans,   mortgage-backed   securities  and
investment  securities,  and interest expense on  interest-bearing  liabilities,
primarily deposits and borrowings.  The Company's net income is also affected by
the  level of its  provision  for  losses  on  loans,  non-interest  income  and
non-interest expense.

Interest income:
Total interest income increased $35,771,  or 0.98%, from $3,631,987 for the year
ended  March 31, 1997 to  $3,667,758  for the year ended  March 31,  1998.  This
slight  increase  resulted  primarily from an increase in the average balance of
loans  receivable.  As  reflected  in the  rate/volume  analysis,  the change in
interest  income  due to the  volume  of loans  receivable  was an  increase  of
$157,000  during fiscal year 1998 from fiscal year 1997. This increase is offset
by a decrease in interest  income due to the volume of investment  securities of
$150,000 during fiscal year 1998 from fiscal year 1997.

Interest expense:
Total interest expense  increased $43,371 or 2.37%, from $1,833,583 for the year
ended  March 31, 1997 to  $1,876,954  for the year ended  March 31,  1998.  This
increase was due to the increase in borrowed  funds  throughout the fiscal year.
Approximately $28,000 of the increase in interest expense was due to an increase
in the volume of other  borrowed funds which consists of advances and borrowings
from the FHLB.  The  average  cost for  interest-bearing  liabilities  increased
slightly  from  4.57% for the year  ended  March 31,  1997 to 4.63% for the year
ended March 31, 1998.

Net interest income:
As a result of the above,  net interest  income  decreased  $7,600 or 0.42% from
$1,798,404  for the year ended March 31, 1997 to  $1,790,804  for the year ended
March 31,  1998.  Net  interest  income  declined  $12,000 as a result of rising
interest rates.  This was partially offset by an increase in net interest income
attributable  to an  increase  in the volume of  interest  bearing  assets  over
interest bearing liabilities of $5,000.

Provision for losses on loans:
The Bank currently  maintains,  and the Board of Directors monitors,  allowances
for  possible  loan  losses.   These  allowances  are  established   based  upon
management's  periodic  evaluation  of  known  and  inherent  risks  in the loan
portfolio,  review of significant  individual  loans and  collateral,  review of
delinquent loans, past loss experience,  adverse  situations that may affect the
borrowers'  ability to repay loans,  current and expected market  conditions and
other factors  management deems important.  Determining the appropriate level of
reserves  involves  a high  degree  of  management  judgment  and is based  upon
historical and projected  losses in the loan portfolio and the collateral  value
of specifically identified problem loans. Additionally, allowance strategies and
policies  are  subject to  periodic  review and  revision in response to current
market conditions, actual loss experience and management's expectations.

The  provision  for  losses on loans is the  method by which the  allowance  for
losses is adjusted during the period. The provision for losses on loans directly
impacts net interest  income;  the amount of the  provision  for losses on loans
reduces net interest  income by the same amount.  Likewise,  if a provision  for
losses on loans is  regularly  recorded in prior  periods and a smaller,  or no,
provision for losses on loans is recorded during a subsequent period, the amount
of the reduction has the effect of increasing  net interest  income by that same
amount.

The  provision for loan losses was $3,186 and $763 for the years ended March 31,
1998 and 1997, respectively.  The provision for loan losses increased $2,423 for
the year ended  March 31,  1998 as a result of  management's  evaluation  of the
adequacy  of the  allowance  in  relation  to the  increase  in the Bank's  loan
portfolio,    including   increases   in   non-mortgage   lending.    Historical
non-performing loan rations are presented with the five-year


                                     - 13 -
<PAGE>


financial  summary  information.  The  allowance for loan losses as a percent of
non-performing  assets  164.6% at March 31, 1998  compared to 89.9% at March 31,
1997.

While the Bank  maintains  its allowance for losses at a level that it considers
to be adequate to provide for potential  losses,  there can be no assurance that
further  additions  will not be made to the loss  allowance and that such losses
will not exceed the estimated amounts.

Non-interest income:
Non-interest  income decreased $8,841 from $251,277 for the year ended March 31,
1997 to $242,436 for the year ended March 31, 1998.  This decrease is the result
of a $46,528  gain on the sale of certain  equity  investments  realized  during
fiscal  1997.  This  decrease  was offset by an increase in income from  service
charges of $18,770 or 11.41%.  Service and late charges increased  primarily due
to more strict enforcement of fee policies throughout fiscal year 1998.

Non-interest expense:
Total non-interest expense decreased $236,751 from $1,415,875 for the year ended
March 31, 1997 to  $1,179,124  for the year ended March 31, 1998.  This decrease
was  primarily the result of the special  one-time  SAIF  assessment of $225,433
during fiscal 1997.  Federal insurance premium expense also decreased $41,341 or
65.71%  from  $62,913  for the year ended March 31, 1997 to $21,572 for the year
ended March 31, 1998. The decrease in regulatory  insurance and  assessments was
substantially  due to the revised rate structure on insured  deposits adopted by
the FDIC  after the  recapitalization  of the SAIF.  The Bank's  annual  deposit
insurance  rate in effect  prior to this  recapitalization  was 0.23% of insured
deposits,  declining to 0.18% of insured deposits for the quarter ended December
31, 1996, and reduced to 0.064% of insured deposits effective January 1, 1997.

Income tax expense:
The Company's income tax expense increased $62,672 or 24.80%,  from $252,663 for
the year ended March 31, 1997 to $315,335 for the year ended March 31, 1998. The
principal reason for the increase was the increase in pre-tax income.

Comparison of Operating Results for the Years Ended March 31, 1997 and 1996

General:
Net income  decreased  $204,578  or 34.97%,  from  $584,958 at March 31, 1997 to
$380,380 for the year ended March 31, 1997. This decrease related primarily to a
special one-time SAIF assessment of $225,433.

Net interest income:
The Bank's net  interest  income for the year  ended  March 31,  1997  increased
$143,107,  or 8.65%,  from  $1,655,297  for the year  ended  March  31,  1996 to
$1,798,404 for the year ended March 31, 1997. Interest income increased $215,600
and interest expense increased $72,493. Yields on the Company's interest-earning
assets  declined by 9 basis points during the year ended March 31, 1997, and the
rates paid on the Company's  interest-bearing  liabilities decreased by 25 basis
points  resulting in a slight  increase in the interest rate spread to 3.14% for
the year ended March 31, 1997 from 2.98% for the year ended March 31, 1996.

The $215,600  increase in total  interest  income is primarily the result of the
$175,716 increase in interest on mortgage-backed securities and $40,031 increase
in  interest  on  investment   securities.   The  increase  in   mortgage-backed
securities,  as reflected in the Bank's rate/volume analysis,  resulting from an
increase in the volume of mortgage-backed securities was $167,000.


                                     - 14 -
<PAGE>

The $72,493 increase in total interest expense consists  primarily of a $285,501
increase in interest on borrowed funds offset by a $213,008 decrease in interest
expense on  deposits.  As  reflected  in the Bank's  rate/volume  analysis,  the
increase in interest  expense  resulting  from the increased  volume of borrowed
funds was  $283,000,  while the net  decrease  in  interest  expense on deposits
resulting from the changes in rate was $127,000 and in volume was $90,000.

Provision for losses on loans:
The provision for loan losses was $763 and  ($131,875) for the years ended March
31,  1997 and  1996,  respectively.  The  provision  for loan  losses  decreased
significantly  during the year ended March 31, 1996, as a result of management's
evaluation  of  the  adequacy  of  the  allowance  for  losses  on  loans  after
considering  the loan portfolio in conjunction  with current and expected market
conditions.  This  decrease in the  provision  for losses on loans is  primarily
attributable  to an  improving  economy  and real  estate  market in the primary
market area, resulting in a decrease in non-performing  loans. The allowance for
loan  losses as a percent of  non-performing  assets was 1.61% at March 31, 1997
and 1.70% at March 31, 1996. Charge-offs, net of recoveries, remained comparable
between 1997 and 1996,  consisting of approximately  $15,260 in 1997 and $16,372
in 1996.

Non-interest income:
Non-interest income decreased $84,888 from $336,165 for the year ended March 31,
1996 to $251,277 for the year ended March 31, 1997.  During the year ended March
31, 1997,  the Bank  realized  gains of $46,528 from the sale of certain  equity
investments.  This gain was  offset  by a  decrease  in gain  from  real  estate
operations.  During  the year  ended  March  31,  1996 the  Company  experienced
$134,788 income from real estate  operations from a gain on the sale of a parcel
of land that the bank obtained through foreclosure of a participation loan.

Non-interest expense:
Non-interest  expense increased  $186,506 or 15.17% for the year ended March 31,
1997  compared to March 31, 1996.  The increase was  primarily the result of the
special one-time SAIF assessment of $225,433, discussed earlier.

Exclusive of the special SAIF  assessment  incurred  during the year ended March
31, 1997,  non-interest  expense  decreased $39,000 from $1,229,369 for the year
ended  March 31, 1996 to  $1,190,442  for the year ended  March 31,  1997.  This
relates to  decreases  in  professional  fees and  federal  insurance  premiums.
Federal  insurance  premiums  decreased $19,354 or 23.53% due to the decrease in
insurance  assessments  which  were  effective  January 1,  1997,  as  discussed
earlier.

Income taxes:
The Bank's income tax expense decreased  $56,347,  or 18.23%,  from $309,010 for
the year ended  March 31, 1996 to  $252,663  for the year ended March 31,  1997.
This decrease in income tax resulted from a decrease in pre-tax  income  largely
attributable  to the  accrual  of  the  special  SAIF  assessment.  Tax  benefit
attributable to the SAIF assessment was approximately $75,000.


Liquidity and Capital Resources

Liquidity  is  measured  by a  financial  institution's  ability to raise  funds
through  deposits,  borrowed  funds,  capital  or the sale of highly  marketable
assets such as available-for-sale  securities.  Additional sources of liquidity,
including  cash flow from both  repayment  of loans and  maturity of  investment
securities, are also included in determining whether liquidity is satisfactory.

During fiscal 1998, cash and cash equivalents increased by $2,784,590, primarily
as  a  result  of  investment  and  mortgage-backed   securities  classified  as
held-to-maturity being called during the year ended March 31, 1998

                                     - 15 -
<PAGE>

resulting in total funds  provided by investing  activities of  $3,281,508.  The
Company also had net cash provided by operating activities of $710,136. The cash
provided by investing and operating  activities  were  partially  offset by cash
used by financing  activities of $1,207,054.  Cash and cash  equivalents used by
financing  activities resulted primarily from the repayment of FHLB advances and
other borrowings.

During the year ended March 31,  1997,  cash and cash  equivalents  decreased by
$879,280 as compared to March 31, 1996. The decrease was the result of cash used
in investing  activities of $3,237,915  off set by cash generated from operating
activities of $588,693 and financing  activities of $1,769,942.  The increase in
cash and cash equivalents used by investing  activities  resulted primarily from
the acquisition of held-to-maturity  mortgage-backed securities. The increase in
cash provided by financing activities was largely attributable to an increase in
FHLB advances and borrowings of  $4,700,000.  As of March 31, 1997, the Bank had
an existing  line of credit with the FHLB of  $2,500,000  against which the Bank
had an outstanding  balance of $700,000 that could serve as an additional source
of liquidity.

The Bank is required under applicable federal  regulations to maintain specified
levels of "liquid" investments in qualifying types of U.S.  Government,  federal
agency and other investments  having  maturities of five years or less.  Current
OTS  regulations  require that a savings bank maintain liquid assets of not less
than 4% of its average daily balance of net  withdrawable  deposit  accounts and
borrowings  payable in one year or less, of which short-term  liquid assets must
consist  of not less  than 1%.  At March 31,  1998,  the Bank met its  liquidity
requirement and expects to meet this requirement in the future. The Bank adjusts
liquidity as appropriate to meet its asset/liability objectives.

OTS has also set minimum  capital  requirements  for  savings  banks such as the
Bank.  The capital  standards  generally  require the  maintenance of regulatory
capital  sufficient  to meet a  tangible  capital  requirement,  a core  capital
requirement  and a risk-based  capital  requirement.  At March 31, 1998 the Bank
exceeded all of the minimum capital  requirements as currently required.  Please
refer to Note 12 of the accompanying Notes to Consolidated  Financial Statements
for more information  regarding the Bank's regulatory  capital position at March
31, 1998.

Impact of Inflation and Changing Prices

The financial statements of Guthrie Savings,  Inc. and notes thereto,  presented
elsewhere  herein,  have been prepared in  accordance  with  generally  accepted
accounting  principles,  which require the measurement of financial position and
operating results in terms of historical dollars without  considering the change
in the relative  purchasing  power of money over time and due to inflation.  The
impact of inflation is reflected in the increased cost of the Bank's operations.
Nearly all the assets and  liabilities  of the Bank are  monetary.  As a result,
interest  rates  have a greater  impact on the  Bank's  performance  than do the
effects of general levels of inflation.
Interest  rates do not  necessarily  move in the same  direction  or to the same
extent as the price of goods and services.

Year 2000 Issue

A great deal of  information  has been  disseminated  about the global  computer
crash  that may occur in the year 2000.  Many  computer  programs  that can only
distinguish  the final  two  digits of the year  entered  (a common  programming
practice in earlier years) are expected to read entries for the year 2000 as the
year 1900 and compute payment,  interest or delinquency  based on the wrong date
or are expected to be unable to compute payment, interest or delinquency.  Rapid
and accurate data  processing  is essential to the  operation of the Bank.  Data
processing is also essential to most other financial institutions and many other
companies.

                                     - 16 -

<PAGE>

The most  significant  data  processing  applications  of the Bank that could be
affected by this problem are provided by a third party service bureau.  The Bank
is currently  in the process of  evaluating  its  situation as it relates to the
year 2000 issue and the Bank's  service  center.  The Bank is  evaluating  their
internal  data  processing  applications  and is in the process of updating  all
computer  terminals and installing a network system.  The Bank has estimated the
cost of addressing the Year 2000 issue to be approximately $100,000,  consisting
of $60,000 for new bank computer  equipment,  $30,000 relating to service bureau
fees and  approximately  $10,000 for various other training and consulting fees.
The Bank's data  service  center  currently  has a target date of not later than
December 31, 1998 for external and internal testing of modifications to critical
systems.  This  testing is to include  testing of  interfaces  between  the bank
computer network, yet to be installed,  and the data service center. If there is
a problem  with the service  center or the Bank  relating to the year 2000 issue
the Bank would likely experience significant data processing delays, mistakes or
failures.  These delays,  mistakes or failures could have a significant  adverse
impact on the financial condition and results of operation of the Bank.




                                     - 17 -


<PAGE>
                          Independent Auditor's Report



To the Board of Directors and Stockholders of
   Guthrie Savings, Inc.
Guthrie, Oklahoma



We have audited the accompanying  consolidated statements of financial condition
of Guthrie  Savings,  Inc. and  subsidiary as of March 31, 1998 and 1997 and the
related consolidated statements of operations,  changes in stockholders' equity,
and cash flows for each of the three years in the period  ended March 31,  1998.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Guthrie  Savings,  Inc. and
subsidiary  as of March 31, 1998 and 1997,  and the results of their  operations
and cash flows for each of the three years in the period ended March 31, 1998 in
conformity with generally accepted accounting principles.





                                    Regier Carr & Monroe, L.L.P.






April 23, 1998
Wichita, Kansas



<PAGE>




                              Guthrie Savings, Inc.

                 Consolidated Statements of Financial Condition
                             March 31, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS                                                                          1998              1997
                                                                          ---------------   ---------------
<S>                                                                       <C>               <C>           

Cash and cash equivalents:
       Interest bearing                                                   $    2,995,502    $      311,624
       Non-interest bearing                                                      311,917           211,205
                                                                          ---------------   ---------------

           Total cash and cash equivalents                                     3,307,419           522,829
Investment securities held-to-maturity (estimated market
       value of $3,893,119 and $8,579,106 at March 31,
       1998 and 1997, respectively)                                            3,900,000         8,700,000
Investment securities available-for-sale                                       2,174,751         2,061,727
Mortgage-backed securities held-to-maturity (estimated
       market value of $12,744,277 and $13,185,802 at
       March 31, 1998 and 1997, respectively)                                 12,615,162        13,273,398
Loans receivable, net                                                         25,573,437        23,461,257
Loans held-for-sale                                                               81,757
Accrued income receivable                                                        262,853           330,277
Real estate owned and other repossessed assets, net                               10,500
Office properties and equipment, net                                             569,093           598,633
Prepaid expenses and other assets                                                131,926            99,135
                                                                          ---------------   ---------------

            Total assets                                                  $   48,626,898    $   49,047,256
                                                                          ===============   ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
       Deposits                                                           $   35,537,831    $   34,293,278
       Advances and other borrowings from
           Federal Home Loan Bank                                              5,196,000         6,700,000
       Advances from borrowers for taxes and insurance                            48,988            32,830
       Other liabilities and accrued expenses                                    109,081            60,805
       Deferred income                                                            50,824            57,956
       Income taxes payable, current                                              26,840            17,816
       Deferred income taxes                                                     121,206            79,531
                                                                          ---------------   ---------------

            Total liabilities                                                 41,090,770        41,242,216
                                                                          ---------------   ---------------

Commitments

Stockholders' equity:
       Preferred stock, $0.01 par value; 1,000,000 shares
         authorized; no shares outstanding
       Common stock, $0.01 par value; 3,000,000 shares
         authorized; 515,125 shares issued and outstanding                         5,151             5,151
       Additional paid-in capital                                              4,811,997         4,779,668
       Retained income, substantially restricted                               4,541,553         4,392,507
       Unrealized loss on available-for-sale securities                           (3,443)          (46,379)
       Unamortized stock acquired by Employee Stock
         Ownership Plan                                                         (267,865)         (309,075)
       Unamortized compensation related to Management
         Stock Bonus Plan                                                       (103,490)         (134,836)
       Treasury stock, at cost, 97,668 and 64,766 shares
         at March 31, 1998 and 1997, respectively                             (1,447,775)         (881,996)
                                                                          ---------------   ---------------

            Total stockholders' equity                                         7,536,128         7,805,040
                                                                          ---------------   ---------------

            Total liabilities and stockholders' equity                    $   48,626,898    $   49,047,256
                                                                          ===============   ===============
</TABLE>

      The Notes to Consolidated Financial Statements are an integral part
                              of these statements.

                                      F-2
<PAGE>

                              Guthrie Savings, Inc.

                      Consolidated Statements of Operations
                    Years Ended March 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
                                                               1998             1997               1996
                                                          --------------   -------------    ----------------
<S>                                                       <C>              <C>              <C>            
Interest income:
    Interest on loans                                     $   2,217,831    $  2,087,179     $     2,087,326
    Interest on mortgage-backed securities                      800,182         774,790             599,074
    Interest and dividends on investment securities             649,745         770,018             729,987
                                                          --------------   -------------    ----------------
         Total interest income                                3,667,758       3,631,987           3,416,387
                                                          --------------   -------------    ----------------
Interest expense:
    Deposits                                                  1,538,585       1,528,658           1,741,666
    Borrowed funds                                              338,369         304,925              19,424
                                                          --------------   -------------    ----------------
         Total interest expense                               1,876,954       1,833,583           1,761,090
                                                          --------------   -------------    ----------------
         Net interest income                                  1,790,804       1,798,404           1,655,297

Provision for losses on loans                                     3,186             763            (131,875)
                                                          --------------   -------------    ----------------
    Net interest income after provision for
      losses on loans                                         1,787,618       1,797,641           1,787,172
                                                          --------------   -------------    ----------------
Non-interest income:
    Service charges                                             183,331         164,561             166,907
    Gain on sale of loans                                         4,813
    Net gain on sale of investments                                              46,528
    Gain from real estate operations                              4,289              12             134,788
    Other                                                        50,003          40,176              34,470
                                                          --------------   -------------    ----------------
         Total non-interest income                              242,436         251,277             336,165
                                                          --------------   -------------    ----------------
Non-interest expense:
    Compensation and related expenses                           624,197         589,319             581,507
    Occupancy expense                                            63,715          63,368              62,947
    Professional fees                                           110,740         118,628             134,744
    Federal insurance premium                                    21,572          62,913              82,267
    SAIF special assessment                                                     225,433
    Data processing                                              82,873          83,210              93,594
    Bank charges                                                 52,534          57,922              52,438
    Other expense                                               223,493         215,082             221,872
                                                          --------------   -------------    ----------------
         Total non-interest expense                           1,179,124       1,415,875           1,229,369
                                                          --------------   -------------    ----------------
         Income before income taxes                             850,930         633,043             893,968
                                                          --------------   -------------    ----------------
Income taxes:
    Currently payable                                           295,447         211,499             205,832
    Deferred tax expense                                         19,888          41,164             103,178
                                                          --------------   -------------    ----------------
         Total income taxes                                     315,335         252,663             309,010
                                                          --------------   -------------    ----------------
         Net income                                       $     535,595    $    380,380     $       584,958
                                                          ==============   =============    ================

Basic:
    Earnings per share                                    $        1.41    $       0.92     $          1.28
                                                          ==============   =============    ================
    Weighted average common shares outstanding                  380,544         413,112             458,475
                                                          ==============   =============    ================
Diluted:
    Earnings per share                                    $        1.36    $       0.91     $          1.27
                                                          ==============   =============    ================
    Weighted average common shares outstanding                  392,522         417,485             459,888
                                                          ==============   =============    ================
</TABLE>

         The Notes to Consolidated Financial Statements are an integral
                            part of these statements.

                                      F-3
<PAGE>
                              Guthrie Savings, Inc.

           Consolidated Statements of Changes in Stockholders' Equity
                    Years Ended March 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
                                                                    Unrealized      Unamortized  
                                                                     Loss on        Common     Unamortized                   Total
                                           Additional               Available-      Stock      Compensation                  Stock-
                                  Common    Paid-In       Retained   for-Sale      Acquired    Related to       Treasury    holders'
                                  Stock     Capital       Earnings  Securities     by ESOP        MSBP            Stock      Equity
                                 -------- ------------  ----------- ----------  ------------ ------------ ------------ -------------
<S>                               <C>      <C>          <C>         <C>         <C>          <C>          <C>          <C>         
Balance, March 31, 1995           $ 5,151  $4,763,293   $3,860,335  $    (915)  $  (391,495) $         -  $         -  $  8,236,369
Acquisition of 20,605 
     shares of common stock
     by Management Stock 
     Bonus Plan, 15,863
     shares awarded, 
     4,742 held in treasury                    (9,518)                                          (202,253)     (63,312)     (275,083)
Allocation of shares by 
     Employees' Stock 
     Ownership Plan                            11,741                                41,210                                  52,951
Amortization of compensation
     related to Management
     Stock Bonus Plan                                                                             26,967                     26,967
Net income for the year
     ended March 31, 1996                                  584,958                                                          584,958
Cash dividend paid ($0.50
     per share)                                           (222,740)                                                        (222,740)
Net change in unrealized 
     loss on available-for-
     sale securities                                                   (9,001)                                               (9,001)
Purchase of 25,756 
     treasury shares                                                                                         (345,766)     (345,766)
                                 ---------------------  ----------- ----------  ------------ ------------ ------------ -------------
Balance, March 31, 1996             5,151   4,765,516    4,222,553     (9,916)     (350,285)    (175,286)    (409,078)    8,048,655
Allocation of shares by
     Employees' Stock
     Ownership Plan                            14,152                                41,210                                  55,362
Amortization of
     compensation related
     to Management Stock
     Bonus Plan                                                                                   40,450                     40,450
Net income for the year
     ended March 31, 1997                                  380,380                                                          380,380
Cash dividend paid ($0.50 
     per share)                                           (210,426)                                                        (210,426)
Net change in unrealized
     loss on available-for-
     sale securities                                                  (36,463)                                              (36,463)
Purchase of 34,268 
     treasury shares                                                                                         (472,918)     (472,918)
                                 ---------------------  ----------- ----------  ------------ ------------ ------------ -------------
Balance, March 31, 1997             5,151   4,779,668    4,392,507    (46,379)     (309,075)    (134,836)    (881,996)    7,805,040
Allocation of shares 
     by Employees' Stock
     Ownership Plan                            21,813                                41,210                                  63,023
Management Stock Bonus 
     Plan shares  awarded
     (618 shares)                               2,255                                            (10,506)       8,251             -
Compensation related to 
     stock options issued                       3,090                                                                         3,090
Amortization of 
     compensation related 
     to Management Stock 
     Bonus Plan                                 5,171                                             41,852                     47,023
Net income for the year 
     ended March 31, 1998                                  535,595                                                          535,595
Cash dividend paid 
     ($1.00 per share)                                    (386,549)                                                        (386,549)
Net change in unrealized 
     loss on available-
     for-sale securities                                               42,936                                                42,936
Purchase of 33,520 
     treasury shares                                                                                         (574,030)     (574,030)
                                 --------  ------------  --------- ------------  ------------ ------------ ------------ ------------
Balance, March 31, 1998          $  5,151  $4,811,997   $4,541,553  $  (3,443)  $  (267,865) $  (103,490) $(1,447,775) $  7,536,128
                                 ========  ============  ========= ============  ============ ============ ============ ============
</TABLE>

         The Notes to Consolidated Financial Statements are an integral
                            part of these statements.

                                      F-4
<PAGE>
                              Guthrie Savings, Inc.

                      Consolidated Statements of Cash Flows
                    Years Ended March 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
                                                                      1998           1997            1996
                                                                  -----------  -------------  -------------
<S>                                                               <C>           <C>           <C>         
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                   $  535,595    $   380,380   $    584,958
     Adjustments to reconcile net income to net cash
        provided by operating activities:
            Gain on sale of investments                                             (46,528)
            (Gain) loss on sale of real estate acquired in
              settlement of loans                                                     1,698       (114,611)
            Depreciation                                              31,593         37,027         48,245
            Amortization of premiums and discounts
              on investments and loans                                (3,437)         3,660         24,535
            Provision for losses on loans and real
              estate owned                                             3,186            763       (131,875)
            Origination of loans held-for-sale                      (755,957)
            Sale of loans held-for-sale                              679,013
            Gain on sale of loans held-for-sale                       (4,813)
            (Increase) decrease in accrued interest
              receivable                                              67,424         33,251         (7,506)
            (Increase) decrease in other assets                      (32,791)        11,710          3,368
            Increase (decrease) in accrued expenses                   48,276        (17,979)        18,332
            Increase in accrued and deferred income taxes             28,911         90,738        123,516
            Amortization related to ESOP and MSBP                    110,046         95,812         79,918
            Other non-cash items, net                                  3,090         (1,839)       (25,646)
                                                                  -----------  -------------  -------------

     Net cash provided by operating activities                       710,136        588,693        603,234
                                                                  -----------  -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Loan originations and principal payments on loans
       held-for-investment                                        (2,102,303)      (485,968)       254,832
     Proceeds from maturities and calls of investment
       securities held-to-maturity                                 5,300,000      1,550,000      2,850,000
     Proceeds from sales of investment securities
       available-for-sale                                                           102,347
     Proceeds from maturities and calls of investment
       securities available-for-sale                                                               300,000
     Acquisition of investment securities held-to-maturity          (500,000)      (500,000)    (4,250,000)
     Acquisition of investment securities available-for-sale         (48,300)       (39,700)    (1,518,100)
     Repayment of mortgage-backed securities
       held-to-maturity                                            2,340,044      1,357,171      1,415,997
     Acquisition of mortgage-backed securities
       held-to-maturity                                           (1,705,880)    (5,227,289)    (1,000,965)
     Acquisition of fixed assets                                      (2,053)        (7,824)       (12,800)
     Proceeds from sale of foreclosed real estate                                    13,348        286,122
     Other investing activities, net                                                                    50
                                                                  -----------  -------------  -------------

     Net cash provided (used) by investing activities              3,281,508     (3,237,915)    (1,674,864)
                                                                  -----------  -------------  -------------

</TABLE>
      The Notes to Consolidated Financial Statements are an integral part
                              of these statements.

                                      F-5
<PAGE>



                              Guthrie Savings, Inc.

                Consolidated Statements of Cash Flows (Continued)
                    Years Ended March 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
                                                                 1998            1997            1996
                                                            -------------   -------------   -------------
<S>                                                         <C>             <C>             <C>         
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in deposits                      $  1,241,367    $ (2,016,506)   $  1,764,923
   Net increase (decrease) in escrow accounts                     16,158          (7,468)        (60,808)
   Proceeds from FHLB advance and other borrowings            11,300,000      12,000,000       2,300,000
   Repayment of FHLB advance and other borrowings            (12,804,000)     (7,300,000)     (2,000,000)
   Purchase of treasury stock                                   (574,030)       (472,918)       (345,766)
   Purchase of company stock by MSBP held in treasury                                            (63,312)
   Purchase of company stock by MSBP
      awarded to participants                                                                   (211,771)
   Cash dividends paid                                          (386,549)       (433,166)
                                                            ------------    ------------    ------------

Net cash provided (used) by financing activities              (1,207,054)      1,769,942       1,383,266
                                                            ------------    ------------    ------------

Net increase (decrease) in cash and cash equivalents           2,784,590        (879,280)        311,636

Cash and cash equivalents at beginning of year                   522,829       1,402,109       1,090,473
                                                            ------------    ------------    ------------

Cash and cash equivalents at end of year                    $  3,307,419    $    522,829    $  1,402,109
                                                            ============    ============    ============

SUPPLEMENTAL DISCLOSURES
   Cash paid during the year for:
      Interest on deposits, advances and other
        borrowings                                          $  1,873,167    $  1,835,422    $  1,760,621
                                                            ============    ============    ============

      Income taxes                                          $    237,703    $    189,059    $    226,170
                                                            ============    ============    ============

   Transfers from loans to foreclosed real estate           $     19,690    $     54,446    $    107,333
                                                            ============    ============    ============

   Transfers from foreclosed real estate to
     deferred income                                        $       --      $       --      $       (351)
                                                            ============    ============    ============

   Loans to facilitate the sale of foreclosed real estate   $       --      $     39,400    $     32,500
                                                            ============    ============    ============

   Dividend declared and payable                            $       --      $       --      $    222,740
                                                            ============    ============    ============
</TABLE>
      The Notes to Consolidated Financial Statements are an integral part
                               of these statements.

                                      F-6
<PAGE>



                              Guthrie Savings, Inc.

                   Notes to Consolidated Financial Statements
                          March 31, 1998, 1997 and 1996


1.     Summary of Significant Accounting Policies

       Nature of operations:
       Guthrie  Savings,  Inc. (the Company) is an Oklahoma  corporation and  is
       the parent  company  of  its  wholly-owned  subsidiary,  Guthrie  Federal
       Savings  Bank (the Bank).  At  the  present  time, the  Company does  not
       conduct any active business.

       Guthrie Federal Savings Bank is primarily engaged in attracting  deposits
       from the general  public and using those  deposits,  together  with other
       funds, to originate real estate loans on one- to four-family  residences,
       and,  to a lesser  extent,  consumer  loans.  The Bank has one  office in
       Guthrie,  Oklahoma,  which is located in its primary market area of Logan
       County,  Oklahoma. In addition, the Bank holds interest-bearing  deposits
       in other financial institutions and invests in mortgage-backed securities
       and investment  securities.  The Bank offers its customers fixed-rate and
       adjustable-rate mortgage loans, as well as consumer loans, including home
       equity and savings account loans.

       Principles of consolidation:
       The accompanying  consolidated  financial statements include the accounts
       of Guthrie Savings, Inc. and its wholly-owned subsidiary, Guthrie Federal
       Savings Bank.  Significant  intercompany  transactions  and balances have
       been eliminated.

       Use of estimates:
       The  preparation  of financial  statements in conformity  with  generally
       accepted accounting  principles requires management to make estimates and
       assumptions  that affect the reported  amounts of assets and  liabilities
       and  disclosure of contingent  assets and  liabilities at the date of the
       financial  statements  and the reported  amounts of revenues and expenses
       during the reporting  period.  Actual results could differ  significantly
       from those estimates.

       Material  estimates  that are  particularly  susceptible  to  significant
       change in the near-term relate to the  determination of the allowance for
       loan  losses and the  valuation  of assets  acquired in  connection  with
       foreclosures  or  in  satisfaction  of  loans.  In  connection  with  the
       determination  of the  allowances  for loan losses and the  valuation  of
       assets acquired by foreclosure, management obtains independent appraisals
       for significant properties.

       Management   believes  that  the  allowances  for  losses  on  loans  and
       valuations   of  assets   acquired  by   foreclosure   are  adequate  and
       appropriate.  While  management  uses available  information to recognize
       losses on loans and assets  acquired by  foreclosure,  future loss may be
       accruable  based on  changes  in  economic  conditions,  particularly  in
       central  Oklahoma.  In  addition,  various  regulatory  agencies,  as  an
       integral  part of their  examination  process,  periodically  review  the
       Bank's  allowances for losses on loans and valuations of assets  acquired
       by  foreclosure.   Such  agencies  may  require  the  Bank  to  recognize
       additional  losses based on their  judgment of  information  available to
       them at the time of their examination.

                                      F-7
<PAGE>



1.     Summary of Significant Accounting Policies (Continued)

       Cash and cash equivalents:
       Cash and  cash  equivalents  include  unrestricted  cash on hand,  demand
       deposits   maintained  in  depository   institutions  and  other  readily
       convertible  investments with original  contractual  terms to maturity of
       three months or less.

       Investment and mortgage-backed securities:
       Investments,  including  mortgage-backed  securities,  are  classified as
       either held-to-maturity, trading, or available-for-sale. Held-to-maturity
       securities are securities for which the Bank has the positive  intent and
       ability to hold to maturity and are reported at amortized  cost.  Trading
       securities are securities held principally for resale and are reported at
       fair  value,   with   unrealized   changes  in  value   reported  in  the
       institution's    income    statement    as   part   of   its    earnings.
       Available-for-sale  securities  are  securities not classified as trading
       nor as  held-to-maturity  securities and are also reported at fair value,
       but any unrealized appreciation or depreciation,  net of tax effects, are
       reported as a separate component of stockholders' equity until realized.

       Gains or losses on sales of available-for-sale  securities are determined
       using  the  specific-identification  method.  All  sales are made without
       recourse.

       Premiums  and  discounts  are  recognized  in interest  income  using the
       interest method over the period to maturity.

       Loans receivable:
       Loans  receivable  that management has the intent and ability to hold for
       the foreseeable future or until maturity or pay-off are reported at their
       outstanding  principal  balances,   net  of  deferred  income  on  loans,
       undisbursed  loan proceeds and the allowance for loss on loans.  Premiums
       and  discounts  on loans are  amortized  into income  using the  interest
       method.

       The  allowance  for loan  losses is  increased  by  charges to income and
       decreased  by  charge-offs  (net of  recoveries).  Management's  periodic
       evaluation  of the adequacy of the  allowance is based on the Bank's past
       loan loss experience,  known and inherent risks in the portfolio, adverse
       situations that may affect the borrower's ability to repay, the estimated
       value of any  underlying  collateral,  current  level  of  non-performing
       assets, and current economic conditions.

       The  accrual of  interest  on impaired  loans is  discontinued  when,  in
       management's opinion, the borrower may be unable to meet payments as they
       become due. When interest  accrual is  discontinued,  all unpaid  accrued
       interest is reversed.  Interest income is subsequently recognized only to
       the extent cash payments are received.

       Loan  origination  fees and  certain  direct  costs are  capitalized  and
       recognized as an adjustment of the yield of the related loan.

       Loans held-for-sale:
       Mortgage loans  originated and intended for sale in the secondary  market
       are  carried  at the  lower  of cost or  estimated  market  value  in the
       aggregate.  Net  unrealized  losses are  recognized  through a  valuation
       allowance by charges to income.

                                      F-8

<PAGE>



1.     Summary of Significant Accounting Policies (Continued)

       Foreclosed real estate:
       Real estate properties  acquired through, or in lieu of, loan foreclosure
       are to be sold and are  initially  recorded  at fair value at the date of
       foreclosure  establishing a new cost basis.  Valuations are  periodically
       performed by management,  and an allowance for losses is established by a
       charge to operations if the carrying value of a property exceeds the fair
       value less estimated costs to sell.  Revenue and expenses from operations
       and changes in the  valuation  allowance  are included in gain or loss on
       foreclosed  real estate.  The historical  average holding period for such
       property is approximately one year.

       Financial instruments:
       All derivative  financial  instruments  previously  held or issued by the
       Company were held or issued for purposes other than trading.  The Company
       did not hold or issue any  derivative  financial  instruments  during the
       years ended March 31, 1998, 1997 and 1996.

       Off-balance sheet instruments:
       In the ordinary course of business the Bank has entered into  off-balance
       sheet financial  instruments  consisting of commitments to extend credit,
       commercial  letters  of credit,  and  standby  letters  of  credit.  Such
       financial  instruments are recorded in the financial statements when they
       are funded or related fees are incurred or received.

       Office properties and equipment:
       Office  properties  and  equipment  are  stated at cost less  accumulated
       depreciation.  Depreciation  is  computed  on a  straight-line  basis  or
       accelerated  methods  over the  estimated  useful  lives of five to fifty
       years for  buildings  and  improvements  and  three to  twenty  years for
       furniture, fixtures, equipment and automobiles.

       Income taxes:
       Deferred tax assets and  liabilities  are reflected at currently  enacted
       income  tax rates  applicable  to the  period in which the  deferred  tax
       assets or liabilities are expected to be realized or settled.  As changes
       in tax laws or rates are enacted, deferred tax assets and liabilities are
       adjusted through the provision for income taxes.

       Stock-based compensation:
       In  October,   1995,  the  FASB  issued  SFAS  No.  123,  Accounting  for
       Stock-Based  Compensation.  This Statement establishes a fair-value-based
       method of  accounting  for stock  compensation  plans with  employees and
       others.  It applies to 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
       the  employer's  stock.  Although  encouraged to do so,  entities are not
       required to adopt the  recognition  and  measurement  aspects of SFAS No.
       123, and may continue to account for  stock-based  compensation  plans in
       accordance  with APB Opinion 25. The Company has adopted the  recognition
       and measurement  provisions of SFAS No. 123 effective for the fiscal year
       beginning  April 1, 1997.  SFAS No. 123 will effect the  Company's  stock
       options  granted after April 1, 1997.  These options are  recognized  and
       measured in accordance with the fair-value-based method of accounting.


                                      F-9
<PAGE>



1.     Summary of Significant Accounting Policies (Continued)

       Impact of new accounting standards:
       In June 1997,  the FASB  issued  SFAS No.  130,  Reporting  Comprehensive
       Income.  SFAS 130  establishes  standards  of  disclosure  and  financial
       statement  display  for  reporting  total  comprehensive  income  and the
       individual  components  thereof.  This Statement  requires that all items
       that  are  required  to  be  recognized  under  accounting  standards  as
       components of comprehensive  income be reported in a financial  statement
       that is displayed with the same prominence as other financial statements.
       This  Statement  requires that an enterprise  (a) classify items of other
       comprehensive  income by their  nature in a financial  statement  and (b)
       display the accumulated balance of other comprehensive  income separately
       from  retained  earnings  and  additional  paid-in  capital in the equity
       section of a statement of financial position. This Statement is effective
       for fiscal years beginning after December 15, 1997.  Reclassification  of
       financial   statements  for  earlier  periods  provided  for  comparative
       purposes is required.  SFAS No. 130  provisions  are only of a disclosure
       nature and at present the only  significant  item having an impact on the
       Company's  financial  statements is the  inclusion of unrealized  gain or
       loss,  net of tax, on  available-for-sale  securities  as a component  of
       comprehensive income.

       FASB  issued  Statement  No.  131,   Disclosures  about  Segments  of  an
       Enterprise and Related  Information,  in June 1997.  SFAS 131 establishes
       new standards for  determining  a reportable  segment and for  disclosing
       information  regarding each such segment.  This Statement requires that a
       public business  enterprise report financial and descriptive  information
       about  its  reportable   operating   segments.   Operating  segments  are
       components of an enterprise about which separate financial information is
       available  that is evaluated  regularly by the chief  operating  decision
       maker in deciding how to allocate resources and in assessing performance.
       This  Statement  requires  that a  public  business  enterprise  report a
       measure of segment profit or loss,  certain  specific revenue and expense
       items,  and segment assets.  However,  this Statement does not require an
       enterprise to report information that is not prepared for internal use if
       reporting  it would be  impracticable.  Statement  131 is  effective  for
       financial  statements for periods  beginning  after December 15, 1997. In
       the initial  year of  application,  comparative  information  for earlier
       years is to be restated. SFAS No. 131 provisions are only of a disclosure
       nature and the Bank currently does not have any components  that would be
       considered separate operating segments.

       In February 1998, FASB issued Statement No. 132,  Employers'  Disclosures
       about  Pensions  and  Other  Postretirement  Benefits.  SFAS 132  revises
       employers'  disclosures  about pension and other  postretirement  benefit
       plans.  It does not change the measurement or recognition of those plans.
       It  standardizes  the  disclosure  requirements  for  pensions  and other
       postretirement  benefits to the extent  practicable,  requires additional
       information on changes in the benefit obligations and fair values of plan
       assets that will facilitate  financial  analysis,  and eliminates certain
       disclosures  that  are no  longer  as  useful  as  they  were  when  FASB
       Statements No. 87, 88 and 106 were issued. The Statement is effective for
       fiscal years  beginning  after  December 15, 1997 earlier  application is
       encouraged. SFAS No. 132 will not have a material effect on the Company's
       financial statements.

       Earnings per share:
       Basic  earnings  per share is computed by dividing  income  available  to
       common  stockholders  by the  weighted-average  number of  common  shares
       outstanding  for the period.  Diluted  earnings  per share  reflects  the
       potential  dilution that could occur if securities or other  contracts to
       issue common stock  (potential  common stock) were exercised or converted
       to  common  stock.  For the  periods  presented  potential  common  stock
       includes  outstanding stock options and nonvested stock awarded under the
       Management Stock Bonus Plan.

                                      F-10
<PAGE>



1.     Summary of Significant Accounting Policies (Continued)

       Financial statement presentation:
       Certain items in prior year financial  statements have been  reclassified
to conform to the 1998 presentation.


2.     Investment Securities

       The amortized cost and estimated  market values of investment  securities
       at March 31 are summarized as follows:
<TABLE>
<CAPTION>
                                                                March 31, 1998                      
                                               -------------------------------------------------
        
                                                              Gross       Gross       Estimated
                                                Amortized   Unrealized  Unrealized       Market
                                                  Cost        Gains       Losses         Value
                                               ----------  ----------- ------------   ----------
        <S>                                    <C>          <C>          <C>          <C>       
        Held-to-maturity:
            Government Agency Securities       $3,900,000   $    1,292   $    8,173   $3,893,119
                                               ----------   ----------   ----------   ----------
                Total held-to-maturity         $3,900,000   $    1,292   $    8,173   $3,893,119
                                               ==========   ==========   ==========   ==========
        
        Available-for-sale:
            Government Agency Securities       $1,500,000   $     --     $    5,549   $1,494,451
            Stock in Federal Home Loan Bank,
              at cost                             680,300         --            --       680,300
                                               ----------   ----------   ----------   ----------
        
                 Total available-for-sale      $2,180,300   $     --     $    5,549   $2,174,751
                                               ==========   ==========   ==========   ==========
        
</TABLE>
        
<TABLE>
<CAPTION>
                                                                March 31, 1997
                                               -------------------------------------------------
        
                                                              Gross       Gross       Estimated
                                                Amortized   Unrealized  Unrealized       Market
                                                  Cost        Gains       Losses         Value
                                               ----------  ----------- ------------   ----------
        <S>                                    <C>          <C>          <C>          <C>       
        Held-to-maturity:
            Government Agency Securities       $8,700,000   $   18,323   $  139,217   $8,579,106
                                               ----------   ----------   ----------   ----------
                Total held-to-maturity         $8,700,000   $   18,323   $  139,217   $8,579,106
                                               ==========   ==========   ==========   ==========
        
        Available-for-sale:
            Government Agency Securities       $1,500,000   $     --     $   70,273   $1,429,727
            Stock in Federal Home Loan Bank,
              at cost                             632,000         --            --       632,000
                                               ----------   ----------   ----------   ----------
        
                 Total available-for-sale      $2,132,000   $     --     $   70,273   $2,061,727
                                               ==========   ==========   ==========   ==========
</TABLE>
       Government  agency  securities  above  include  bonds and notes issued by
       various  government  agencies.  Those  agencies  include  the  following:
       Federal Home Loan Bank, Fannie Mae, and Freddie Mac.

       Government  Agency Securities at March 31, 1998 and 1997 include $500,000
       and $1,000,000,  respectively,  of Federal Home Loan Bank bonds, at cost,
       with dual indexed or inverse floating rate structures whose yield may not
       move consistent with general interest rate movements.

                                      F-11
<PAGE>



2.     Investment Securities (Continued)

       Federal Home Loan Bank members are required to maintain an  investment in
       stock at an amount equal to a percentage of outstanding home loans.  Such
       stock is assumed to have a market value which is equal to cost.

       The amortized cost and estimated market value of debt securities at March
       31, 1998, by contractual  maturity,  are shown below. Expected maturities
       will differ from contractual  maturities  because  borrowers may have the
       right to call or prepay  obligations  with or without call or  prepayment
       penalties. The equity securities, including Federal Home Loan Bank Stock,
       have been excluded from the maturity table below because they do not have
       contractual maturities associated with debt securities.

                                              Amortized   Estimated
                                                 Cost    Market Value
                                             ----------  ------------

  Held-to-maturity:
    Due in one year or less                  $1,400,000   $1,392,461
    Due after one year through five years     2,000,000    1,999,440
    Due after five years through ten years      500,000      501,218
                                             ----------   ----------

       Total held-to-maturity                $3,900,000   $3,893,119
                                             ==========   ==========

  Available-for-sale:

    Due after one year through five years    $  500,000   $  497,686
    Due after five years through ten years    1,000,000      996,765
                                             ----------   ----------

       Total available-for-sale              $1,500,000   $1,494,451
                                             ==========   ==========


       There were no sales of investment  securities  available-for-sale  during
       the year ended  March 31,  1998.  During the year ended  March 31,  1997,
       there   were   realized   gains  on  sales   of   investment   securities
       available-for-sale of $46,528.  Proceeds from sales during the year ended
       March 31, 1997 totaled $102,347 and consisted of equity securities and an
       interest in an entity related to the Bank's prior data  processor.  There
       were no realized gains or losses on sales of investment securities during
       the year ended March 31, 1996.

3.     Mortgage-Backed Securities

       Mortgage-backed   securities,   all   of   which   were   classified   as
       held-to-maturity at March 31, 1998 and 1997, consist of the following:
<TABLE>
<CAPTION>
                                                          March 31, 1998
                                       -----------------------------------------------------

                                                       Gross         Gross        Estimated
                                        Amortized    Unrealized    Unrealized      Market
                                           Cost        Gains         Losses        Value
                                       -----------   -----------  ------------   -----------

<S>                                    <C>           <C>           <C>           <C>        
FHLMC - fixed rate                     $ 1,252,544   $    10,226   $      --     $ 1,262,770
FHLMC - ARM's                            1,254,724           772        18,935     1,236,561
GNMA - ARM's                             2,920,533        16,944         4,905     2,932,572
FNMA - ARM's                             1,324,286           --         29,363     1,294,923
GNMA - fixed rate                          309,791        12,869           --        322,660
FNMA - fixed rate                          559,283           --          7,144       552,139
Collateralized mortgage obligations-
  government agency issue                4,994,001       151,962         3,311     5,142,652
                                       -----------   -----------   -----------   -----------

                                       $12,615,162   $   192,773   $    63,658   $12,744,277
                                       ===========   ===========   ===========   ===========
</TABLE>
                                      F-12
<PAGE>



3.     Mortgage-Backed Securities (Continued)
<TABLE>
<CAPTION>
                                                                         March 31, 1997
                                                    -----------------------------------------------------
                                                                     Gross         Gross       Estimated
                                                     Amortized    Unrealized    Unrealized       Market
                                                       Cost          Gains         Losses        Value
                                                    -----------   -----------   -----------   -----------

<S>                                                 <C>           <C>           <C>           <C>        
             FHLMC - fixed rate                     $ 1,374,266   $     5,320   $    28,561   $ 1,351,025
             FHLMC - ARM's                            1,420,037           --         48,564     1,371,473
             GNMA - ARM's                             3,163,609        10,285        27,539     3,146,355
             FNMA - ARM's                               847,681           --         31,481       816,200
             GNMA - fixed rate                          388,256         8,020           --        396,276
             FNMA - fixed rate                          695,621           --         29,167       666,454
             Collateralized mortgage obligations-
               government agency issue                5,383,928        54,091           --      5,438,019
                                                    -----------   -----------   -----------   -----------

                                                    $13,273,398   $    77,716   $   165,312   $13,185,802
                                                    ===========   ===========   ===========   ===========
</TABLE>

       Collateralized  mortgage  obligations consist of floating rate notes with
       varying contractual principal maturities. The Bank has no principal only,
       interest only, or residual collateralized mortgage obligations.

       There  were no  realized  gains or  losses  on  sales of  mortgage-backed
       securities during the years ended March 31, 1998, 1997 and 1996.

       There were no mortgage-backed securities classified as available-for-sale
       as of March 31, 1998 and 1997.

4.     Loans Receivable

       Loans receivable at March 31 are summarized as follows:

                                                        March 31,
                                               ----------------------------
                                                   1998           1997
                                               ------------    ------------

First mortgage loans:
  Secured by one to four family residences     $ 18,758,433    $ 17,273,266
  Secured by other properties                     1,763,895       1,958,081
  Construction loans                              2,097,800       1,790,945
  Other                                             727,864         579,276
                                               ------------    ------------
                                                 23,347,992      21,601,568

  Less:  Undisbursed loan proceeds               (1,092,005)       (641,971)
            Unearned discounts and loan fees        (72,674)        (72,996)
            Allowance for loan losses              (273,254)       (282,444)
                                               ------------    ------------

  Total first mortgage loans                     21,910,059      20,604,157
                                               ------------    ------------

Consumer and other loans:
  Home equity and second mortgage                 1,267,008       1,222,531
  Loans on deposits                                 560,014         403,099
  Other                                           1,923,108       1,325,718
                                               ------------    ------------
                                                  3,750,130       2,951,348

  Less:  Undisbursed loan proceeds                   (6,770)
             Allowance for loan losses              (79,982)        (94,248)
                                               ------------    ------------
  Total consumer and other loans                  3,663,378       2,857,100
                                               ------------    ------------

  Net loans receivable                         $ 25,573,437    $ 23,461,257
                                               ============    ============

                                      F-13
<PAGE>



4.     Loans Receivable (Continued)

       The following is an analysis of the allowance for loss on loans:

                                                     March 31,
                                       -----------------------------------

                                           1998        1997         1996
                                       ----------   ---------    ---------

Balance, beginning of year             $ 376,692    $ 391,189    $ 539,436
     Provision charged to operations       3,186          763     (131,875)
     Loans charged off                   (33,844)     (29,056)     (30,113)
     Recoveries                            7,202       13,796       13,741
                                       ---------    ---------    ---------

Balance, end of year                   $ 353,236    $ 376,692    $ 391,189
                                       =========    =========    =========

       Impairment of loans having recorded  investments of $440,137 at March 31,
       1998 and  $366,316 at March 31, 1997 has been  recognized  in  conformity
       with FASB  Statement  No. 114, as amended by FASB  Statement No. 118. The
       average  recorded  investment  in impaired  loans  during the years ended
       March 31, 1998 and 1997,  was $403,227 and  $357,606,  respectively.  The
       total  allowance for loan losses related to theses loans was $106,625 and
       $109,397 at March 31, 1998 and 1997.  Allowances  for loss on these loans
       are included in the above  analysis of the overall  allowance for loss on
       loans.  Interest  income on  impaired  loans of $46,105  and  $45,964 was
       recognized for cash payments  received for the years ended March 31, 1998
       and 1997, respectively.

       It is Bank policy not to modify  interest rates on loans  associated with
       troubled debt restructuring. The Bank is not committed to lend additional
       funds to debtors whose loans have been modified.

       See Note 17 for disclosure of loans to related parties.

5.     Accrued Income Receivable

       Accrued interest receivable at March 31 is summarized as follows:

                                      1998       1997    
                                    --------   --------
       
       Mortgage-backed securities   $ 61,121   $ 62,345
       Loans receivable              144,236    127,419
       Investments                    57,496    140,513
                                    --------   --------
       
                                    $262,853   $330,277
                                    ========   ========

6.     Foreclosed Real Estate

       Real estate owned or in judgment and other repossessed  assets consist of
       the following:

                                                    1998     1997      
                                                  -------   -------
        
        
        Real estate acquired by foreclosure       $10,500   $    --
                                                  =======   =======

                                   F-14
<PAGE>



6.     Foreclosed Real Estate (Continued)

       The following is a statement of changes in the allowance for loss account
       for the years ended March 31:

                                                    1998       1997     1996   
                                                  -------    -------   -------
       
       Balance at beginning of year               $     -    $     -   $ 7,888
         Provision charged (credited) to income
         Losses charged to allowance                                    (7,888)
                                                  -------    -------   -------
       
       Balance at end of year                     $     -    $     -   $     -
                                                  =======    =======   =======


       Income (loss) from real estate operations for the years ended March 31 is
       as follows:

                                            1998         1997         1996    
                                          ---------    ---------    ---------
      
      Gain on sale of real estate owned   $   7,131    $   1,439    $ 139,158
      Rental income                             --           --           500
      Operating expenses                     (2,842)      (1,427)      (4,870)
                                          ---------    ---------    ---------
      
                                          $   4,289    $      12    $ 134,788
                                          =========    =========    =========
      
7.     Office Properties and Equipment

       Office  properties  and  equipment  are  stated at cost less  accumulated
       depreciation as follows:

                                                          March 31,
                                                    1998           1997
                                                ------------   -----------

        Land                                    $   398,332    $   398,332   
        Building and improvements                   622,292        622,292
        Furniture and equipment                     246,501        245,791
        Automobiles                                  13,103         13,103
                                                -----------    -----------
        
                                                  1,280,228      1,279,518
        Less accumulated depreciation              (711,135)      (680,885)
                                                -----------    -----------
        
                                                $   569,093    $   598,633
                                                ===========    ===========
        
        Depreciation expense (1996 - $48,245)   $    31,593    $    37,027
                                                ===========    ===========

8.     Deposits

       Deposits at March 31 are summarized as follows:

                                     1998          1997  
                                 -----------   -----------
       
       Demand deposits           $ 8,862,808   $ 8,099,082
       Savings deposits            2,926,724     2,991,923
       Certificates of deposit    23,748,299    23,202,273
                                 -----------   -----------
       
                                 $35,537,831   $34,293,278
                                 ===========   ===========


                                      F-15
<PAGE>



8.     Deposits (Continued)


       The  aggregate  amount of jumbo  certificates of  deposit  with a minimum
       denomination  of  $100,000  was  $1,420,654  and  $1,918,481 at March 31,
       1998 and 1997, respectively.

       At March 31, 1998, scheduled maturities of certificates of deposit are as
       follows:

          Year Ending March 31,                                                 
          ---------------------------
                 1999                           $ 20,149,866
                 2000                              2,373,249
                 2001                                603,442
                 2002                                429,676
                 Thereafter                          192,066
                                                ------------
                                                $ 23,748,299
                                                ============
          
9.     Advances and Other Borrowings from Federal Home Loan Bank

       Advances and other borrowings from the Federal Home Loan Bank at March 31
       are summarized as follows:

                                   1998         1997     
                                ----------   ----------
               
               Advances         $5,196,000   $6,000,000
               Line of credit          --       700,000
                                ----------   ----------
               
                                $5,196,000   $6,700,000
                                ==========   ==========
               

       At March 31, 1998 the Bank had $0 outstanding  under a $3,000,000 line of
       credit  with the  Federal  Home Loan Bank.  The  existing  line of credit
       expires  August  15,  1998.  At March  31,  1997,  the Bank had  $700,000
       outstanding  under a $2,500,000 line of credit,  due August 15, 1997. The
       line of credit bears  interest at the line of credit rate  established by
       the Federal Home Loan Bank. This rate is adjusted from time to time.


       Advances  from the  Federal  Home  Loan  Bank are  subject  to fixed  and
       adjustable interest rates and at March 31 consist of the following:

                              1998                           1997
   Fiscal           --------------------------    ----------------------------
    Year                            Weighted                       Weighted
  Maturity            Amount      Average Rate        Amount      Average Rate
-------------       ----------    ------------    -------------   ------------

   1998             $     --             %          $5,304,000       5.55%
   1999              2,196,000       5.64              696,000       5.69
   2008              3,000,000       4.78                          
                    ----------       ----           ----------       ----
                                                                   
                    $5,196,000       5.14%          $6,000,000       5.56%
                    ==========       ====           ==========       ====
                                                             
                                      F-16
<PAGE>

          

9.     Advances and Other Borrowings from Federal Home Loan Bank (Continued)

       The advances and line of credit are  collateralized  by a blanket  pledge
       agreement,  including  all stock in Federal  Home Loan  Bank,  qualifying
       mortgage   loans,   certain   mortgage-related   securities   and   other
       investments.

10.    Income Taxes

       The Company and subsidiary file consolidated  federal income tax returns.
       The Company's  effective income tax rate was different than the statutory
       federal income tax rate for the following reasons:
<TABLE>
<CAPTION>
                                                                     March 31,
                                                      ---------------------------------------
                                                         1998          1997          1996
                                                      ------------ ------------    ----------

<S>                                                      <C>           <C>           <C>    
     Statutory federal income tax                        34.0   %      34.0  %       34.0  %
     Increase (reductions) resulting from:
       Oklahoma income tax                                1.5
       Adjust tax bad debt reserves                       0.8           5.4
       Non-deductible items                               0.4           0.3           0.1
       Other                                              0.4           0.2           0.5
                                                      ------------ ------------    ----------

                                                         37.1   %      39.9  %       34.6  %
                                                      ============ ============    ==========

</TABLE>

       Deferred  taxes are included in the  accompanying  Statement of Financial
       Condition at March 31, 1998 and 1997 for the estimated future tax effects
       of  differences  between the financial  statement and federal  income tax
       basis of assets and liabilities given the provisions of currently enacted
       tax laws.  The net deferred tax asset  (liability)  at March 31, 1998 and
       1997 was comprised of the following:

                                                           1998         1997    
                                                         ---------    ---------
    Deferred tax assets:
      Deferred loan fees and costs                       $   9,319    $  11,184
      Allowance for loan losses                             93,614       90,880
      Unrealized loss on available-for-sale securities       2,106       23,893
      Accrued compensation                                  15,911       13,275
                                                         ---------    ---------
        Total deferred tax assets                          120,950      139,232
                                                         ---------    ---------
    
    Deferred tax liabilities:
      Accumulated depreciation                             (11,155)      (9,402)
      Special bad debt deduction                           (76,353)     (87,267)
      FHLB stock dividends                                (154,648)    (122,094)
                                                         ---------    ---------
         Total deferred tax liabilities                   (242,156)    (218,763)
                                                         ---------    ---------
    
         Net liability                                   $(121,206)   $ (79,531)
                                                         =========    =========
    
       No valuation  allowance was recorded against deferred tax assets at March
31, 1998 or 1997.

        Prior to the year ended March 31,  1997,  the Bank was allowed a special
        bad debt  deduction  based on a percentage of taxable  income (8%) or on
        specified experience formulas, subject to certain limitations based upon
        aggregate  loan  balances  at the end of the  year.  The  Bank  used the
        percentage-of-taxable income method in 1996.

                                      F-17
<PAGE>



10.    Income Taxes (Continued)

        Effective  with the tax year  beginning  April 1,  1996,  the Bank is no
        longer able to use the  percentage of taxable income method and began to
        recapture tax bad debt reserves of $377,949 over a six year period.  The
        Bank recaptured $62,992 in tax bad debt reserves during each of the year
        ended March 31, 1998 and 1997. The reserves to be recaptured  consist of
        bad debt  deductions  after  December 31, 1987. If the amounts  deducted
        prior to  December  31, 1987 are used for  purposes  other than for loan
        losses,  such as in a  distribution  in  liquidation  or otherwise,  the
        amounts  deducted  would be subject  to  federal  income tax at the then
        current  corporate tax rate.  The Bank has recorded a deferred tax asset
        related  to  the  allowance  for  loan  losses  reported  for  financial
        reporting  purposes  and a deferred tax  liability  for special bad debt
        deductions  after December 31, 1987.  The Bank, in accordance  with SFAS
        No. 109 had not  recorded  a deferred  tax  liability  of  approximately
        $372,000  related to  approximately  $979,000 of cumulative  special bad
        debt deductions prior to December 31, 1987.

       At March  31,1998,  the Company has net operating loss  carryforward  for
       state income tax purposes of $163,000, which will expire March 31, 2006.

       The Company is currently protesting a notice of additional income tax due
       to the State  relating to the  taxation  of interest  received on certain
       U.S.  government  securities  for the tax  years  1994,  1995  and  1996.
       Management of the Company believes its protest is with merit; however, if
       the Company is unsuccessful in its protest the additional  expense to the
       Company is estimated to be approximately $80,000.

11.    Earnings Per Share

       Effective  for the year ended March 31,  1998,  the  Company  adopted the
       provisions  of  Statement  of  Financial  Accounting  Standards  No. 128,
       Earnings  per  Share.  The  Statement  is  to  be  applied  to  financial
       statements  issued for periods ending after December 15, 1997,  including
       interim  periods;  earlier  application is not  permitted.  The Statement
       requires  restatement of all  prior-period  earnings per share (EPS) data
       presented.

       FAS No. 128  simplifies  the  standards  for computing EPS and makes them
       comparable to international  EPS standards.  It replaces the presentation
       of  primary  EPS with a  presentation  of  basic  EPS.  It also  requires
       presentation of basic and diluted EPS on the face of the income statement
       for all entities  with  complex  capital  structures.  Basic EPS excludes
       dilution  and  is  computed  by  dividing  income   available  to  common
       stockholders by the weighted-average  number of common shares outstanding
       for the period.  Diluted EPS reflects the  potential  dilution that could
       occur  if  securities  or other  contracts  to issue  common  stock  were
       exercised or  converted  into common stock or resulted in the issuance of
       common stock that then shared in the earnings of the company. Diluted EPS
       is computed similarly to the previously  presented fully diluted earnings
       per share.

                                                                March 31,
                                                            -----------------
                                                              1997     1996
                                                            -------   -------

       Earnings per share, as originally reported            $ 0.89   $ 1.25

       Earnings per share, after restatement
           Basic                                             $ 0.92   $ 1.28
           Diluted                                           $ 0.91   $ 1.27


                                      F-18
<PAGE>



12.    Regulatory and Capital Matters

        The  Bank  is  subject  to  various  regulatory   capital   requirements
        administered  by the federal banking  agencies.  Failure to meet minimum
        capital   requirements  can  initiate  certain  mandatory  and  possibly
        additional  discretionary--actions  by regulators  that, if  undertaken,
        could have a direct material effect on the Bank's financial  statements.
        Under  capital  adequacy  guidelines  and the  regulatory  framework for
        prompt corrective action, the Bank must meet specific capital guidelines
        that involve  quantitative  measures of the Bank's assets,  liabilities,
        and certain  off-balance  sheet  items as  calculated  under  regulatory
        accounting practices.  The Bank's capital amounts and classification are
        also  subject  to  qualitative   judgments  by  the   regulators   about
        components, risk weightings, and other factors.

        Quantitative  measures  established  by  regulation  to  ensure  capital
        adequacy  require the Bank to maintain  minimum  amounts and ratios (set
        forth  in  the  table   below)  of  core  capital  (as  defined  in  the
        regulations)  to assets (as defined) and core and total  capital to risk
        weight assets (as defined).  Management believes,  as of March 31, 1998,
        that the Bank meets all  capital  adequacy  requirements  to which it is
        subject.

        As of March 31, 1998,  the most recent  notification  from the Office of
        Thrift  Supervision (OTS) categorized the Bank as well capitalized under
        the regulatory framework for prompt corrective action. To be categorized
        as well  capitalized  the Bank must maintain  minimum total  risk-based,
        Tier I risk-based, and Tier I leverage ratios as set forth in the table.
        There  are  no  conditions  or  events  since  that   notification  that
        management believes have changed the Bank's category.

        The Bank's actual  capital  amounts (in  thousands)  and ratios are also
        presented in the following table:
<TABLE>
<CAPTION>
                                                                                                 To Be Well
                                                                                              Capitalized Under
                                                                      For Capital             Prompt Corrective
                                                  Actual           Adequacy Purposes:        Action Provisions:
                                         -----------------------  ---------------------   ------------------------
                                           Amount         Ratio       Amount      Ratio       Amount       Ratio
                                         ------------  ---------  ------------  -------   -----------   ----------
<S>                                          <C>             <C>      <C>            <C>     <C>             <C>  
As of March 31, 1998:
Total (Risk-Based) Capital
    (to Risk Weighted Assets)                $ 7,080         33.4%    $ 1,696        8.0%    $ 2,120         10.0%
Core (Tier I) Capital
    (to Risk Weighted Assets)                  6,833         32.2%        N/A                  1,272          6.0%
Core (Tier I) Capital - leverage
    (to Assets)                                6,833         14.1%      1,943        4.0%      2,428          5.0%

As of March 31, 1997:
Tangible Capital (to Assets)                 $ 6,586         13.4%      $ 735        1.5%      $ N/A
Total (Risk-Based) Capital
    (to Risk Weighted Assets)                  6,839         33.8%      1,618        8.0%      2,023         10.0%
Core (Tier I) Capital
    (to Risk Weighted Assets)                  6,586         32.6%        N/A                  1,214          6.0%
Core (Tier I) Capital - leverage
    (to Assets)                                6,586         13.4%      1,471        3.0%      2,452          5.0%

</TABLE>

                                      F-19
<PAGE>



12.    Regulatory and Capital Matters (Continued)

       The following is a reconciliation  of net worth to regulatory  capital as
       reported  in the  March  31,  1998 and  1997  reports  to the  Office  of
       Thrift Supervision:

                                                              March 31,        
                                                     --------------------------
    
                                                        1998           1997
                                                     -----------    -----------
    
    Bank net worth per report
      to Office of Thrift Supervision                $ 6,830,000    $ 6,540,000
    
    Rounding                                                (584)           251
                                                     -----------    -----------
    Net worth as reported in accompanying
      financial statements (Bank only)                 6,829,416      6,540,251
    Adjustments to arrive at Core (Tier I)
      and Tangible Capital:
              Unrealized losses (gains) on certain
                    available-for-sale securities          3,000         46,000
                                                     -----------    -----------
    
    Core (Tier I) and Tangible Capital                 6,832,416      6,586,251
    Adjustments to arrive at Total Capital:
               Allowable portion of general
                    allowance for loan losses            247,000        253,000
                                                     -----------    -----------
    
    Total Capital                                    $ 7,079,416    $ 6,839,251
                                                     ===========    ===========

13.    Employee Benefits Plans

       Employee Retirement Plan:
       The Bank adopted a 401(k)  defined  contribution  savings plan during the
       year ended March 31, 1997.  Substantially all employees are covered under
       the contributory plan. Pension costs attributable to the year ended March
       31,  1998 and 1997 were $9,748 and $6,221,  respectively,  including  all
       current service costs.

       Employee Stock Ownership Plan:
       Upon  conversion  from  mutual to stock  form,  the Bank  established  an
       employee stock ownership plan (ESOP). The original  acquisition of 41,210
       shares of Company stock by the plan was funded by a loan from the Company
       to the ESOP, in the amount of $412,100. The loan, together with interest,
       is to be repaid over a ten year period.  The debt, which is accounted for
       as a liability  of the Bank and a receivable  for the  Company,  has been
       eliminated in consolidation.

       The Bank makes annual  contributions to the ESOP equal to the ESOP's debt
       service less dividends  received by the ESOP.  All dividends  received by
       the ESOP are used to pay debt  service.  The ESOP shares  initially  were
       pledged as  collateral  for its debt.  As the debt is repaid,  shares are
       released from the collateral  and will be allocated to active  employees,
       based  on the  proportion  of debt  service  paid in the  year.  The Bank
       accounts for its ESOP in accordance  with Statement of Position No. 93-6.
       Accordingly, the debt of the ESOP is recorded as debt of the Bank and the
       shares  pledged as collateral are reported as unearned ESOP shares in the
       Statement of Financial  Condition.  As of March 31, 1998,  the balance of
       indebtedness from the ESOP to the Company was $267,865, which is shown as
       a deduction from  stockholders'  equity on the consolidated  statement of
       financial condition. As shares are released from collateral,  the Company
       reports  compensation  expense  equal to the current  market price of the
       shares,  and the shares become  outstanding  for earnings per share (EPS)
       computations. Dividends on allocated ESOP shares are recorded as a


                                      F-20
<PAGE>




 13.   Employee Benefits Plans (Continued)

       reduction of retained earnings;  dividends on unallocated ESOP shares are
       recorded as compensation  expense. ESOP compensation expense was $52,721,
       $29,606 and $72,526  for the years ended March 31,  1998,  1997 and 1996,
       respectively. As of March 31, 1998, of the 41,210 shares of Company stock
       acquired by the ESOP, 14,423 shares were allocated and 26,787 shares were
       unallocated.  The 26,787 unallocated shares had an estimated market value
       of $488,863 at March 31, 1998.

       Management Stock Bonus Plan:

       During the year ended March 31, 1996, the Bank adopted a Management Stock
       Bonus Plan (MSBP), the objective of which is to enable the Bank to retain
       personnel of experience  and ability in key positions of  responsibility.
       All  employees  of the Bank are  eligible to receive  benefits  under the
       MSBP.  Benefits  may be granted  at the sole  discretion  of a  committee
       appointed by the Board of Directors.  The MSBP is managed by trustees who
       are non-employee  directors and who have the responsibility to invest all
       funds contributed by the Bank to the trust created for the MSBP.

       The MSBP has purchased 20,605 shares of the Company's stock for $275,083.
       Of these  shares,  16,481  shares were granted in the form of  restricted
       stock  payable  over a five-year  period at the rate of one-fifth of such
       shares per year  following  the date of grant of the award.  Compensation
       expense,  in the amount of the fair market  value of the common  stock at
       the date of the grant to the employee,  will be recognized  pro rata over
       the five years during  which the shares are payable.  A recipient of such
       restricted  stock will be  entitled  to all voting and other  stockholder
       rights,  except  that  the  shares,  while  restricted,  may not be sold,
       pledged or  otherwise  disposed of and are required to be held in escrow.
       If a holder of such restricted  stock  terminates  employment for reasons
       other than death,  disability or  retirement,  the employee  forfeits all
       rights  to  shares  under  restriction.   If  the  participant's  service
       terminates  as a result of death,  disability,  retirement or a change in
       control  of the Bank,  all  restrictions  expire  and all  shares  become
       unrestricted.  The 4,124 shares that have not been granted are  accounted
       for as treasury  stock.  The Board of Directors can terminate the MSBP at
       any time,  and if it does so, any shares not allocated will revert to the
       Company.

14.    Stock Option Plan

       The Company's  Board of Directors and  stockholders  ratified,  effective
       July 27, 1995, the 1994 Stock Option Plan (the Option Plan).  Pursuant to
       the Option Plan,  51,512 shares of common stock are reserved for issuance
       by the  Company  upon  exercise  of stock  options  granted to  officers,
       directors  and  employees of the Company and Bank from time to time under
       the Option Plan. The purpose of the Option Plan is to provide  additional
       incentive  to  certain   officers,   directors   and  key   employees  by
       facilitating  their  purchase  of a stock  interest in the  Company.  The
       Option Plan  provides  for the granting of  incentive  and  non-incentive
       stock options with a duration of ten years,  after which no awards may be
       made, unless earlier terminated by the Board of Directors pursuant to the
       Option Plan.  Stock to be offered  under the Plan may be  authorized  but
       unissued  common  stock or  previously  issued  shares  which  have  been
       reacquired by the Company and held as Treasury shares.

       The Option Plan will be  administered  by a  committee  of at least three
       non-employee  directors  designated by the Board of Directors (the Option
       Committee).  The  Option  Committee  will  select the  employees  to whom
       options  are to be granted  and the number of shares to be  granted.  The
       option  price may not be less than 100% of the fair  market  value of the
       shares on the date of the

                                      F-21
<PAGE>




14.    Stock Option Plan (Continued)

       grant,  and no option shall be  exercisable  after the  expiration of ten
       years from the grant date. In the case of any employee who owns more than
       10% of the  outstanding  common  stock at the time the option is granted,
       the option  price may not be less than 110% of the fair  market  value of
       the  shares  on the  date of the  grant,  and  the  option  shall  not be
       exercisable  after the  expiration of five years from the grant date. The
       exercise  price may be paid in cash,  shares of the  common  stock,  or a
       combination of both.

       Effective  with  ratification  of the Option Plan,  the Option  Committee
       granted 39,661 shares of common stock, at an exercise price of $12.63 per
       share.  Except as otherwise  noted, all such options shall be exercisable
       at the  rate  of  20%  on  the  one-year  anniversary  and  20%  annually
       thereafter,  except that in the event that the fair  market  value of the
       common  stock  subject  to  such  grant  to any  one  individual  exceeds
       $100,000,  the  amount  in  excess of  $100,000  shall not be  considered
       exercisable until the next calendar year.

       Notwithstanding  anything  herein to the contrary,  in no event shall any
       options  granted be exercisable  for a period of six months from the date
       of grant,  except in the event of the death or  disability  of the option
       holder.  Options  shall be  immediately  exercisable  in the event of the
       retirement  following  not  less  than 10  years  of  service,  death  or
       disability of the option holder, or upon change of control in the Company
       as  provided  in the plan.  As of March 31,  1998,  no options  have been
       exercised and all options granted remain outstanding.

       The Company  accounts  for the fair value of its grants  issued under the
       plan  subsequent to April 1, 1997 in accordance  with FASB Statement 123.
       The  compensation  cost that has been charged against income for the plan
       was $3,090 for the year ended March 31, 1998.

       In  accordance  with SFAS No. 123, the fair value of each option grant is
       estimated on the date of grant based on discussions  with  management and
       various assumptions relating to the dividend yield,  expected volatility,
       risk-free  interest rate and expected life.  Common stock options granted
       during the year ended March 31, 1998 had an exercise  price of $17.00 per
       share and an estimated fair value of $2.00 per share.

       Certain  information for the years ended March 31, 1998 and 1997 relative
to stock options are comprised of the following:

<TABLE>
<CAPTION>
                                                                        March 31,
                                                     ----------------------------------------------
                                                               1998                       1997
                                                     --------------------------------  ------------

                                                                     Weighted-Average
Fixed Options                                        Shares           Exercise Price     Shares
-------------                                        -------         ----------------    ------
                                                                                        
<S>                                                  <C>                <C>              <C>       
Outstanding at beginning of year                     39,661             $ 12.63          39,661
   Granted                                            1,545               17.00         
   Canceled                                                                             
   Exercised                                                                            
                                                     -------            -------          ------ 
                                                                                        
Outstanding at end of year                           41,206             $ 12.79          39,661
                                                     ======             =======          ====== 
                                                                                        
Exercisable at end of year                           41,206                              39,661
                                                     ======                              ====== 
                                                                                        
Number of shares available for future grant:                                            
   Beginning of year                                 11,851                              11,851
                                                     ======                              ======  
                                                                                        
   End of year                                       10,306                              11,851
                                                     ======                             =======
</TABLE>                                                                 
                                                                   
                                      F-22
<PAGE>



15.    Financial Instruments with Off-Balance-Sheet Risk/Commitments

       The Bank is a party to financial instruments with  off-balance-sheet risk
       in the  normal  course of  business  to meet the  financial  needs of its
       customers  and to reduce its own  exposure  to  fluctuations  in interest
       rates. These financial  instruments include commitments to extend credit,
       standby  letters  of  credit  and   commitments  to  sell  loans.   These
       instruments involve, to varying degrees,  elements of credit and interest
       rate  risk  in  excess  of the  amount  recognized  in the  Statement  of
       Financial   Condition.   The  contract  or  notional   amounts  of  those
       instruments  reflect  the  extent  of  involvement  the  Company  has  in
       particular classes of financial instruments.

       The Bank's exposure to credit loss in the event of non-performance by the
       other party to the financial  instrument for loan commitments and standby
       letters of credit is represented by the  contractual  notional  amount of
       those  instruments.  The Bank  uses the same  credit  policies  in making
       commitments as it does for on-balance-sheet instruments.

       At March 31, 1998 and 1997, the Bank had outstanding  commitments to fund
       real estate loans of $220,500 and $0,  respectively.  Of the  commitments
       outstanding  at March 31,  1998,  $81,400  were for fixed rate loans with
       rates of  8.00%.  Commitments  for  adjustable  rate  loans  amounted  to
       $139,100 with initial rates of 6.00% to 7.50% at March 31, 1998.

       At March 31, 1998,  the Bank had  outstanding a standby letter of  credit
       of $150,000 with a fixed  interest rate of 8.00%. The Bank had no standby
       letters of credit outstanding at March 31, 1997.

       Loan commitments are agreements to lend to a customer as long as there is
       no violation of any condition  established  in the contract.  Commitments
       generally have fixed  expiration dates or other  termination  clauses and
       may require  payment of a fee. Since many of the commitments are expected
       to expire without being drawn upon, the total  commitment  amounts do not
       necessarily  represent future cash requirements.  The Bank evaluates each
       customer's  creditworthiness  on a  case-by-case  basis.  The  amount  of
       collateral  obtained if deemed  necessary  by the Bank upon  extension of
       credit is based on management's  credit evaluation of the  counter-party.
       Collateral  held is primarily  residential  real estate,  but may include
       autos, accounts receivable, inventory, property, plant and equipment.

       The Bank had an outstanding  commitment to a mortgage  banking concern to
       sell a $57,600 loan yet to be originated at March 31, 1998.  The Bank has
       an  outstanding  commitment  to  originate  the loan at an  approximately
       equivalent  interest  rate.  The Bank had no commitments to sell loans at
       March 31, 1997.

       At March 31,  1998 and 1997,  loans with a carrying  value of $81,757 and
       $0,  respectively,  have been classified by management as  held-for-sale.
       The carrying value of these loans is at the lower of cost or market value
       as of March 31, 1998 and 1997.

       The Bank had no  commitments  to purchase  mortgage-backed  securities or
       investment securities at March 31, 1998 and 1997.

16.    Significant Concentrations of Credit Risk

       The Bank grants  mortgage,  consumer  and  business  loans  primarily  to
       customers  within the state.  Although  the Bank has a  diversified  loan
       portfolio, a substantial portion of its customers' ability to honor their
       contracts is dependent  upon the  agribusiness  and energy sectors of the
       economy.  The Bank's net  investment in loans is subject to a significant
       concentration  of credit  risk given  that the  investment  is  primarily
       within a specific geographic area.

                                      F-23
<PAGE>



16.    Significant Concentrations of Credit Risk (Continued)

       As of March 31, 1998,  the Bank had a net  investment of  $25,655,194  in
       loans  receivable.  These loans possess an inherent credit risk given the
       uncertainty  regarding the  borrower's  compliance  with the terms of the
       loan  agreement.  To reduce credit risk, the loans are secured by varying
       forms of collateral,  including first mortgages on real estate,  liens on
       personal property,  savings accounts, etc. It is generally Bank policy to
       file liens on titled property taken as collateral on loans,  such as real
       estate  and  autos.  In the event of  default,  the  Bank's  policy is to
       foreclose or repossess collateral on which it has filed liens.

       In the event that any borrower completely failed to comply with the terms
       of the loan agreement and the related  collateral proved  worthless,  the
       Bank would incur a loss equal to the loan balance.

17.    Related Party Transactions

       Directors and primary  officers of the Company were customers of, and had
       transactions with, the Bank in the ordinary course of business during the
       years  ended  March  31,  1998 and 1997,  and  similar  transactions  are
       expected in the future. All loans included in such transactions were made
       on substantially the same terms, including interest rates and collateral,
       as those  prevailing at the time for comparable  transactions  with other
       persons  and did not  involve  more than  normal  risk of loss or present
       other unfavorable features.

       The following analysis is of loans made to principal  officers, directors
       and principal holders of equity  securities which  individually  exceeded
       $60,000 in aggregate during the year ended March 31, 1998:

       Balance, March 31, 1997                                    $ 76,278      
       
       New loans                                                    20,055
       Repayments                                                    4,999
       
                                                                  ========
       Balance, March 31, 1998                                    $ 91,334
                                                                  ========

18.    Restrictions on Retained Earnings

       Office of Thrift  Supervision  regulations  require that upon  conversion
       from  mutual to stock  form of  ownership,  a  "liquidation  account"  be
       established  by  restricting  a portion  of net worth for the  benefit of
       eligible savings account holders who maintain their savings accounts with
       the Bank after conversion. In the event of complete liquidation (and only
       in such event) each  savings  account  holder who  continues  to maintain
       their savings  account shall be entitled to receive a  distribution  from
       the  liquidation  account  after  payment to all creditors but before any
       liquidation  distribution  with  respect  to common  stock.  The  initial
       liquidation  account was  established at $3,534,000.  This account may be
       proportionately  reduced for any  subsequent  reduction  in the  eligible
       holder's savings accounts.

       The Bank may not  declare or pay a cash  dividend  to the  Company if the
       effect  would cause the net worth of the Bank to be reduced  below either
       the  amount  required  for the  "liquidation  account"  or the net  worth
       requirement imposed by the OTS. If all capital  requirements  continue to
       be met,  the Bank may not declare or pay a cash  dividend in an amount in
       excess  of the  Bank's  net  earnings  for the  fiscal  year in which the
       dividend  is  declared  plus  one-half  of the  surplus  over the capital
       requirements, without prior approval of the OTS.

                                      F-24
<PAGE>



19.    Disclosures about Fair Value of Financial Instruments

       The  following  methods and  assumptions  were used to estimate  the fair
       value of each class of financial instruments for which it is  practicable
       to estimate that value.

       Cash and cash equivalents:
       For those  short-term  instruments,  the carrying  amount is a reasonable
       estimate of fair value.

       Investment securities and mortgage-backed securities:
       Fair  values  are based on quoted  market  prices  or dealer  quotes,  if
       available.  If a quoted  market price or dealer  quote is not  available,
       fair  value  is  estimated   using  quoted   market  prices  for  similar
       securities.

       Loans receivable:
       The fair value of loans is estimated by discounting the future cash flows
       using the current rates at which similar loans would be made to borrowers
       with similar credit ratings and for the same remaining maturities.

       Deposit liabilities:
       The fair value of demand deposits,  savings  accounts,  and certain money
       market  deposits is the amount  payable on demand at the reporting  date.
       The fair value of  fixed-maturity  certificates  of deposit are estimated
       using the rates  currently  offered  for  deposits  of similar  remaining
       maturities.

       Advances and other borrowings from Federal Home Loan Bank:
       The fair value of advances  from the Federal Home Loan Bank are estimated
       using the rates offered for similar borrowings.

       Commitments to extend credit:
       The fair  value of  commitments  is  estimated  using the fees  currently
       charged  to enter  into  similar  agreements,  taking  into  account  the
       remaining terms of the agreements and the present creditworthiness of the
       counterparties.   For  fixed-rate  loan  commitments,   fair  value  also
       considers the difference between current levels of interest rates and the
       committed rates.



<PAGE>



19.    Disclosures about Fair Value of Financial Instruments (Continued)

       The estimated fair values of the Company's  financial  instruments are as
       follows:
<TABLE>
<CAPTION>
                                                              March 31, 1998                March 31, 1997
                                                       ---------------------------   ---------------------------
                                                         Carrying                      Carrying
                                                          Amount       Fair Value       Amount       Fair Value
                                                       ------------   ------------   ------------   ------------
                                                             (In Thousands)                (In Thousands)
<S>                                                        <C>            <C>              <C>            <C>  
  Financial assets:
    Cash and cash equivalents:
      Interest bearing                                     $ 2,996        $ 2,996          $ 312          $ 312
      Non-interest bearing                                     312            312            211            211

    Investment securities held-to-maturity                   3,900          3,893          8,700          8,579
    Investment securities available-for-sale                 2,175          2,175          2,062          2,062
    Mortgage-backed securities held-to-maturity             12,615         12,744         13,273         13,186
    Loans receivable                                        25,573         26,249         23,461         23,874
    Loans held-for-sale                                         82             82

  Financial liabilities:
      Deposits                                              35,538         35,541         34,293         34,203
      Advances and borrowings from FHLB                      5,196          5,161          6,700          6,677

</TABLE>

<TABLE>
<CAPTION>
                                                        Par Value      Fair Value     Par Value      Fair Value
                                                       ------------   ------------   ------------   ------------
                                                                    (In Thousands)                (In Thousands)
<S>                                                       <C>            <C>              <C>            <C>
  Unrecognized financial instruments:
    Commitments to extend credit                          $ 221          $ 228            $ -            $ -

</TABLE>

                                      F-26

<PAGE>



20.    Parent Company Financial Information

       Condensed financial statements of Guthrie Savings, Inc. (Parent  Company)
       are  shown  below.  The  Parent  Company  has  no  significant  operating
       activities.

                   Condensed Statement of Financial Condition
                          As of March 31, 1998 and 1997
                                 (In Thousands)
<TABLE>
<CAPTION>
Assets                                                            1998       1997
                                                                -------    -------


<S>                                                             <C>        <C>    
       Cash and cash equivalents                                $    86    $    82
       Investment in subsidiary                                   3,148      2,859
       Loans receivable (subsidiary and ESOP)                       548      1,139
       Other                                                         73         44
                                                                -------    -------

            Total assets                                        $ 3,855    $ 4,124
                                                                =======    =======


Stockholders' equity

         Common stock                                           $     5    $     5
         Additional paid-in capital                               4,812      4,779
         Retained income                                            861        712
         Net unrealized loss on available-for-sale securities        (4)       (46)
         Unamortized amounts related to ESOP and MSBP              (371)      (444)
         Treasury stock                                          (1,448)      (882)
                                                                -------    -------


            Total stockholders' equity                          $ 3,855    $ 4,124
                                                                =======    =======

</TABLE>


                        Condensed Statement of Operations
                    Year Ended March 31, 1998, 1997 and 1996
                                 (In Thousands)


                                              1998        1997        1996  
                                             -----       -----       -----
                                                                   
           Equity earnings of subsidiary     $ 605       $ 419       $ 598
           Interest income                      48          77         130
                                             -----       -----       -----
                                                                   
                       Total income            653         496         728
                                             -----       -----       -----
                                                                   
           Other expenses                      147         128         140
                                             -----       -----       -----
                                                                   
                Income before income taxes     506         368         588
                                                                   
           Income tax expense (benefit)        (30)        (12)          3
                                             -----       -----       -----
                                                                   
                       Net income            $ 536       $ 380       $ 585
                                             =====       =====       =====
                                                                   
                                      F-27                      
<PAGE>



20.    Parent Company Financial Information (Continued)

                        Condensed Statement of Cash Flows
                    Year Ended March 31, 1998, 1997 and 1996
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                       1998       1997       1996
                                                      -------    -------    -------
<S>                                                   <C>        <C>        <C>    
Cash flows from operating activities
    Net income                                        $   536    $   380    $   585
    Adjustments to reconcile net income to net cash
      provided (used for) operating activities:
       Equity in net income of subsidiary                (605)      (419)      (598)
       Increase in other assets                           (29)       (39)        (5)
       (Decrease) increase in other liabilities           --        (242)         2
       Other non-cash items, net                           22
                                                      -------    -------    -------

Net cash used by operating activities                     (76)      (320)       (16)
                                                      -------    -------    -------

Cash flow from investing activities:
    Reduction of investment in subsidiary                 450        250
    Loans to subsidiary and ESOP, net                     591        761        367
                                                      -------    -------    -------

Net cash provided by investing activities               1,041      1,011        367
                                                      -------    -------    -------

Cash flows from financing activities:
    Cash dividends paid                                  (387)      (210)
    Purchase of treasury stock                           (574)      (473)      (346)
                                                      -------    -------    -------

Net cash provided used by financing activities           (961)      (683)      (346)
                                                      -------    -------    -------

Increase in cash and cash equivalents                       4          8          5

Cash at beginning of year                                  82         74         69
                                                      -------    -------    -------

Cash at end of year                                   $    86    $    82    $    74
                                                      =======    =======    =======
</TABLE>

21.    Deposit Insurance

        Deposits  of the Bank are  insured  by the SAIF as  administered  by the
        FDIC.  As a member  of the SAIF,  the Bank  formerly  paid an  insurance
        premium to the FDIC  equal to a minimum of 0.23% of its total  deposits.
        The FDIC also maintains  another insurance fund, the Bank Insurance Fund
        (BIF),  which  primarily  insures  commercial  bank deposits.  Effective
        September  30,  1995,  the FDIC  lowered  the  insurance  premium of BIF
        insured  deposits to range of between 0.04% and 0.31% of deposits,  with
        the result that most commercial banks would pay the lower rate of 0.04%.
        Effective  January 1, 1996,  the annual  insurance  premium for most BIF
        members was lowered to $2,000.  These  reductions in insurance  premiums
        for BIF members placed SAIF members at a competitive disadvantage to BIF
        members.

        Effective  September  30,  1996,  federal  law was  revised to mandate a
        one-time  special  assessment  of  SAIF  members  such  as the  Bank  of
        approximately  0.657%  of  deposits  held on March  31,  1995.  The Bank
        reflected a $225,433  pre-tax  expense for this  assessment for the year
        ended  March 31,  1997.  Beginning  January 1, 1997,  deposit  insurance
        assessments  for SAIF members were  reduced to  approximately  0.064% of
        deposits  on an  annual  basis and are  expected  to remain at that rate
        through  the end of 1999.  During  this same  period,  BIF  members  are
        expected to be assessed  approximately  0.013% of deposits.  Thereafter,
        assessments for BIF and SAIF members should be the same and SAIF and BIF
        may be merged. It is expected that these continuing assessments for both
        SAIF  and  BIF  members  will be used  to  repay  outstanding  Financing
        Corporation bond obligations. Based on this reduction, beginning January
        1, 1997, the rate of deposit  insurance  assessed the Bank declined from
        prior levels by approximately 70%.


                                      F-28



<PAGE>



                                 OFFICE LOCATION

                                CORPORATE OFFICE
                              Guthrie Savings, Inc.
                               120 North Division
                             Guthrie, Oklahoma 73044


                   Board of Directors of Guthrie Savings, Inc.

William L. Cunningham                           H. Stephen Ochs
President and Chief Executive Officer           Vice President

Keith Camerer                                   James V. Seamans
Retired                                         Dentist

Alvin R. Powell, Jr.
Self Employed, Theater Owner/Real Estate Broker



                   Executive Officers of Guthrie Savings, Inc.

William L. Cunningham                           H. Stephen Ochs
President and Chief Executive Officer           Vice President

Kathleen Ann Warner                             Kimberly D. Walker
Vice President                                  Treasurer


--------------------------------------------------------------------------------

      Corporate Counsel:                        Independent Auditors:
      Brian W. Pierson Law Offices, Inc.        Regier Carr & Monroe, L.L.P.
      109 E. Oklahoma                           300 West Douglas
      P.O. Box 1459                             Suite 100
      Guthrie, Oklahoma  73044                  Wichita, Kansas  67202

      Special Counsel:                          Transfer Agent and Registrar:
      Malizia, Spidi, Sloane & Fisch, P.C.      American Securities Transfer &
      One Franklin Square                         Trust, Inc.
      1301 K Street, N.W., Suite 700 East       1825 Lawrence Street, Suite 444
      Washington, D.C. 20005                    Denver, Colorado  80202-1817


The  Company's  Annual  Report for the year ended  March 31, 1998 filed with the
Securities  and Exchange  Commission on Form 10-KSB is available  without charge
upon  written  request.  For a copy of the Form  10-KSB  or any  other  investor
information,  please  write  or  call  Deborah  K.  Bozarth,  Secretary,  at the
Company's  corporate  office  in  Guthrie,   Oklahoma.  The  annual  meeting  of
stockholders  will be held on July 15,  1998 at 5:00  p.m.  at  Guthrie  Federal
Savings Bank, located on 120 N. Division , Guthrie, Oklahoma.


                                     - 18 -