EXHIBIT 13

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                                  [** LOGO **]

                              Guthrie Savings, Inc.

                              Annual Report - 1999

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                              Guthrie Savings, Inc.
                              ANNUAL REPORT - 1999


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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................................................    4

Management's Discussion and Analysis.......................................    6

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

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

Notes to Consolidated Financial Statements.................................  F-8

Corporate Information......................................................   19





<PAGE>














To Our Stockholders:

With great  pleasure,  we have announced that as of May 26, 1999 the Company and
its  subsidiary,  Guthrie  Federal  Savings Bank,  have signed a stock  purchase
agreement with Local Oklahoma Bank, N.A. If you, our  stockholders,  approve the
agreement, then the Company and the Bank will be acquired by Local Oklahoma Bank
through a share  acquisition  of all of the shares of the  Company  and the Bank
will be owned by Local Oklahoma Bank.  All current  stockholders  of the Company
will receive a cash payment for their shares. We feel this move will provide our
customers the opportunity to grow with a larger banking  entity,  which offers a
broader range of products and services.


As for the year ended  March 31,  1999,  net income  was  $414,320  or $1.06 per
share,  this is a decrease of 22.64% from the year ended  March 31,  1998.  This
decrease  related to an overall  decrease in net interest income and an increase
in operating expenses.

The Board of Directors  declared two $0.50 per share cash  dividends  during the
year.  The first  dividend was declared in September  1998 for  stockholders  of
record on  October  5, 1998 and the other in January  1999 for  stockholders  of
record on February 1, 1999.  The special cash dividends were paid as a result of
continued  profitability  of the Company and its wholly  owned  subsidiary,  the
Bank.

Guthrie  Federal  management is continuing to make the transition  into the next
millennium  a priority.  As Guthrie  Federal  moves  forward,  we can assure our
employees,  customers and stockholders that we are working  diligently to make a
coordinated effort to becoming Year 2000 compliant.  Our efforts,  both internal
and external, are under going testing, and contingency plans are in place in the
event of significant data processing delays, mistakes or failures.

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.

The  Company  and the Bank have signed a stock  purchase  agreement,  subject to
stockholder  approval,  with Local Oklahoma Bank, N.A. Upon  consummation of the
agreement,  the Company and the Bank will be  acquired  by Local  Oklahoma  Bank
through a share acquisition procedure.  All of the shares of common stock of the
Company  and the  Bank  will be owned by  Local  Oklahoma  Bank and all  current
stockholders  of the Company will receive a cash payment for their  shares.  See
further  discussion  at  Management's   Discussion  and  Analysis  of  Financial
Condition and Results of Operations.





                                      - 2 -

<PAGE>






Stock Market Information

There were  402,257  shares of common  stock (net of treasury  stock) of Guthrie
Savings,  Inc.  outstanding  on  March  31,  1999,  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,
                        ------------------------------------------------------
                                        1999                        1998
                        --------------------------  --------------------------

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

      First Quarter       18 9/16       17 5/8        17 1/8        15 1/2
      Second Quarter      19 1/4        18 9/16       17            17
      Third Quarter       19 1/2        17            18            17
      Fourth Quarter      19 1/2        16 1/2        18 1/4        17 1/2


During the year ended March 31, 1999,  the Board of Directors  declared and paid
two  dividends  of $0.50 each per share.  The first $0.50  dividend  was paid on
October 15, 1998 and the second  $0.50  dividend  was paid on February 10, 1999.
During the year ended March 31, 1998 the Board of  Directors  declared  and paid
two dividends totaling $1.00 per share. A $0.50 dividend was paid on October 10,
1997 and another  $0.50  dividend was paid on February 10, 1998.  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").  The stock purchase agreement with Local
Oklahoma Bank, N.A. further restricts the Company's ability to pay dividends.

















                                      - 3 -

<PAGE>
Guthrie Savings, Inc.
<TABLE>
<CAPTION>

============================================================================================================================
FIVE-YEAR FINANCIAL SUMMARY

Selected Financial Condition Data (Dollars in Thousands) (*)
============================================================================================================================
At March 31,                                           1999           1998           1997           1996           1995
----------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>            <C>            <C>            <C>
Total assets                                            $45,768        $48,627        $49,047        $46,820        $44,727
Loans receivable (1)                                     23,802         25,655         23,461         22,972         23,182
Investment securities held-to-maturity                    1,000          3,900          8,700          9,751          8,366
Investment securities available-for-sale                    648          2,175          2,062          2,133            929
Mortgage-backed securities held-to-maturity              11,460         12,615         13,273          9,428          9,869
Cash and cash equivalents                                 7,186          3,307            523          1,402          1,090
Deposits                                                 35,079         35,538         34,293         36,311         34,543
FHLB borrowings                                           3,000          5,196          6,700          2,000          1,700
Stockholders' equity                                      7,393          7,536          7,805          8,049          8,236

Summary of Operations (Dollars in Thousands) (*)
----------------------------------------------------------------------------------------------------------------------------
Year Ended March 31,                                   1999           1998           1997           1996           1995
----------------------------------------------------------------------------------------------------------------------------

Interest income                                         $ 3,442        $ 3,668        $ 3,632        $ 3,416        $ 3,198
Interest expense                                          1,721          1,877          1,833          1,761          1,489
                                                    ------------   ------------   ------------  -------------  -------------

  Net interest income                                     1,721          1,791          1,799          1,655          1,709
Provision for loan losses                                     7              3              1           (132)            12
                                                    ------------   ------------   ------------  -------------  -------------

  Net interest income after
     provision for loan losses                            1,714          1,788          1,798          1,787          1,697

Non-interest income                                         257            242            251            336            193
Non-interest expense (2)                                  1,295          1,179          1,416          1,229          1,095
                                                    ------------   ------------   ------------  -------------  -------------
Income before income taxes and
     cumulative effect of accounting change                 676            851            633            894            795
Provision for income taxes                                  262            315            253            309            250
                                                    ------------   ------------   ------------  -------------  -------------

Income before cumulative effect of
     accounting change                                      414            536            380            585            545
Cumulative effect of accounting change                        -              -              -              -              -
                                                    ------------   ------------   ------------  -------------  -------------

Net income                                                $ 414          $ 536          $ 380          $ 585          $ 545
                                                    ============   ============   ============  =============  =============

Basic earnings per share* (3)                            $ 1.10         $ 1.41         $ 0.92         $ 1.28         $ 0.48
                                                    ============   ============   ============  =============  =============

Diluted earnings per share* (3)                          $ 1.06         $ 1.36         $ 0.91         $ 1.27         $ 0.48
                                                    ============   ============   ============  =============  =============

Dividends per share (3)                                  $ 1.00         $ 1.00         $ 0.50         $ 0.50         $ 0.20
                                                    ============   ============   ============  =============  =============

Book value per common share
   outstanding at March 31                              $ 18.38        $ 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).


                                     - 4 -

<PAGE>
Guthrie Savings, Inc.
<TABLE>
<CAPTION>

============================================================================================================================
FIVE-YEAR FINANCIAL SUMMARY

Selected Ratios and Other Data (*)
============================================================================================================================
Year Ended March 31,                               1999            1998           1997            1996            1995
----------------------------------------------------------------------------------------------------------------------------

<S>                                              <C>             <C>            <C>             <C>             <C>
Return on average assets                              0.88 %          1.11 %         0.79 %          1.30 %          1.24 %
Return on average equity                              5.61            7.25           4.89            7.12           10.39
Average equity to average assets                     15.66           15.26          16.13           18.18           11.93
Equity to assets at period end                       16.15           15.50          15.91           17.19           18.41
Net interest spread                                   3.11            3.13           3.14            2.98            3.59
Net yield on average interest earning assets          3.74            3.79           3.81            3.78            4.02
Non-performing loans to total assets                  0.68            0.42           0.85            1.33            1.80
Non-performing loans to net loans                     1.31            0.80           1.79            2.72            3.46
Non-performing assets to total assets                 0.68            0.44           0.85            1.33            1.94
Allowance for loan losses to total loans              1.43            1.38           1.61            1.70            2.33
Dividend payout                                      90.62           72.17          55.32           38.08           17.38
Number of:
  Real estate loans outstanding                        512             556            550             576             621
  Deposit accounts                                   4,326           4,435          4,538           4,772           4,744
</TABLE>

                         [NET INCOME GRAPHICS OMITTED]

              [NON-PERFORMING ASSETS/TOTAL ASSETS GRAPHICS OMITTED]

                        [TOTAL ASSETS GRAPHICS OMITTED]

                     [STOCKHOLDERS' EQUITY GRAHICS OMITTED]



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


                                     - 5 -


<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.

Subsequent  to the end of the fiscal  year,  the  Company  and the Bank signed a
stock purchase agreement,  subject to stockholder approval,  with Local Oklahoma
Bank, N.A. Upon consummation of the agreement,  the Company and the Bank will be
acquired by Local Oklahoma Bank through a share acquisition of all of the shares
of common  stock of the  Company  and the Bank  will be owned by Local  Oklahoma
Bank.  All current  stockholders  of the Company will receive a cash payment for
their  shares.  Although  the  parties  will  remain  separate  until  the share
acquisition  procedure,  the  Company  and the  Bank  may,  prior  to the  share
acquisition  procedure,  begin to change the way they categorize and account for
certain items that are  reflected in the  consolidated  financial  statements to
reduce the  number of  changes  that are made  following  the share  acquisition
procedure.  It is not  expected  that these  changes will result in any material
differences  from  current  practice  until   immediately  prior  to  the  share
acquisition  procedure.  In the event the share  acquisition  procedure does not
occur,  there will be no material  change in the  operations of the Bank and the
Company although there would be a one-time charge to cover expenses  incurred in
preparing for the acquisition.  This charge could total approximately  $150,000.
Under certain  circumstances if Local Oklahoma Bank, N.A. breaches the agreement
with the Company,  the Company  could be entitled to receive a $500,000  earnest
money deposit, which was paid by Local Oklahoma Bank, and any interest earned.

                                      - 6 -
<PAGE>

Financial Condition

Consolidated  total assets decreased 5.88% from $48,626,898 at March 31, 1998 to
$45,768,401  at March 31,  1999.  This  decrease is the result of the  continued
maturity of investment  and  mortgage-backed  securities  held-to-maturity.  The
proceeds from these maturities were used to decrease borrowings from the Federal
Home Loan Bank and purchase treasury stock.

Cash and cash equivalents:
The Bank's  cash and cash  equivalents  increased  $3,878,695  or  117.27%  from
$3,307,419 at March 31, 1998 to $7,186,114 at March 31, 1999.  This  substantial
increase is directly  related to the decrease in investment and  mortgage-backed
securities discussed in the next two paragraphs.

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 $4,426,351, or 72.86% from 6,074,751 at March 31,
1998 to $1,648,400 at March 31, 1999. This decrease was directly  related to the
decrease in borrowings from FHLB and purchase of treasury stock discussed above.
Securities called during the year ended March 31, 1999 totaled $3,900,000.

Mortgage-backed securities:
Mortgage-backed  securities decreased $1,154,701,  or 9.15%, from $12,615,162 at
March 31, 1998 to  $11,460,461  at March 31, 1999.  The Company did not have any
mortgage-backed securities classified as available-for-sale at March 31, 1999 or
1998.  During the year ended March 31, 1999,  the Bank  purchased  $2,523,109 in
mortgage-backed securities and repayments of mortgage-backed securities amounted
to $3,647,283.  Mortgage-backed  securities  generally provide for lower returns
than loans  originated by the Bank and are utilized when investable funds exceed
loan demand.

Loans receivable:
Net loans receivable decreased  $1,852,969,  or 7.22%, from $25,655,194 at March
31, 1998 to $23,802,225 at March 31, 1999. This decline in the loan portfolio is
related to an increase in loans  originated  for sale during the year.  The Bank
originated  loans  held-for-sale  of  $2,932,925  during fiscal 1999 compared to
originations  of  $755,957  in  fiscal  1998.  Proceeds  from  the sale of loans
classified  as  held-for-sale  amounted to $3,038,784 in fiscal 1999 compared to
sales of $679,013 in fiscal 1998. The Bank has supplemented its lending activity
by originating  and selling loans that are not  consistent  with the Bank's loan
portfolio objectives.

The Bank has recognized  impaired loans having recorded  investments of $511,042
at March 31, 1999 and $440,137 at March 31, 1998. 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 that 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, 1999 and 1998,  amounted to
$731,093 and $652,442, respectively, including loans recognized

                                      - 7 -
<PAGE>


as impaired.  Those loans classified that are not recognized as impaired include
loans  which are  currently  past due 90 days or more or have a past  history of
delinquency.  The level of classified loans have remained relatively constant 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 that 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, 1999 and 1998 was $0 and
$10,500,   respectively.  The  March  31,  1998  balance  in  REO  consisted  of
undeveloped  land. The balance in REO continues to be  substantially  lower than
that experienced by the Bank in prior years.

Deposits:
Deposits remained fairly  consistent,  decreasing only 1.29% from $35,537,831 at
March 31, 1998 to  $35,078,760  at March 31, 1999.  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 4.46% for the year ended
March 31, 1998 to 4.29% for the year ended March 31, 1999.

Of the  $22,910,213  in  certificates  of deposit  held by the Bank at March 31,
1999,  $19,604,566 of these deposits will mature during the year ended March 31,
2000. 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 $3,000,000 and $5,196,000 at March 31,
1999 and 1998,  respectively.  There was one  advance  outstanding  at March 31,
1999, this advance was an adjustable rate advance.  The Bank did not receive any
proceeds from FHLB advances  during fiscal 1999. Of the $5,196,000 in fixed term
advances  outstanding at March 31, 1998, all were adjustable rate advances.  The
funds provided by the advances  received  during fiscal 1998 were used primarily
to fund lending activity throughout the year.

The Bank also has a line of credit with the FHLB with no outstanding  balance at
March 31, 1999 or 1998. The funds available under the line of credit can be used
to fund lending activity or for regular operations.

The weighted  average cost of these borrowings from the FHLB was 5.08% and 5.58%
for the  years  ended  March  31,  1999  and  1998,  respectively.  The  advance
outstanding at March 31, 1999 matures during the year ended March 31, 2008.

Stockholders' equity:
Stockholders'  equity decreased  $143,034,  from $7,536,128 at March 31, 1998 to
$7,393,094 at March 31, 1999.  The Company  adopted a plan to purchase up to 15%
of the  Company's  outstanding  shares.  At  March  31,  1999  the  Company  had
repurchased  112,868  shares of its  common  stock as part of a plan to  enhance
stockholder value. The book value per common share outstanding at March 31, 1999
was $18.38,  up from $18.05 at March 31, 1998 and $17.33 at March 31,  1997.  As
noted in the Stock Price Information section of this report the Company has also
been consistently paying dividends to stockholders.

                                      - 8 -

<PAGE>

Implementation of New Accounting Pronouncements

During fiscal year 1999, the Company adopted the provisions of Statement No. 129
titled "Disclosure of Information about Capital Structure" and Statement No. 130
titled  "Reporting  Comprehensive  Income."  See  Note  1  of  the  Consolidated
Financial Statements for a discussion of these 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 that 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 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.



                                      - 9 -
<PAGE>

The  following  tables  present the Bank's NPV as well as other data as of March
31, 1999, 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>                         <C>
           +300 bp                  $7,341                  (973)          (12)  %            16.18   %                  -158 bp
           +200 bp (1)              $7,861                  (453)           (5)  %            17.07   %                   -69 bp
           +100 bp                  $8,172                  (142)           (2)  %            17.57   %                   -19 bp
                  0 bp              $8,314                                                    17.76   %
           -100 bp                  $8,485                   171             2   %            18.00   %                   +24 bp
           -200 bp                  $8,698                   385             5   %            18.31   %                   +54 bp
           -300 bp                  $9,096                   782             9   %            18.92   %                  +116 bp

</TABLE>

--------------------
(1) Denotes rate shock used to compute interest rate risk capital component.

                                                                  March 31, 1999
                                                                  --------------

Risk  Measures (200 Basis Point Rate Shock):

        Pre-Shock NPV Ratio:  NPV as % of Present Value of Assets       17.76 %
        Exposure Measure:  Post-Shock NPV Ratio                         17.07 %
        Sensitivity Measure:  Change in NPV Ratio                          69 bp



Set forth below is a breakout, by basis points of the Bank's NPV as of March 31,
1999 by assets, liabilities and off-balance sheet items.
<TABLE>
<CAPTION>
                                                               No
  Net Portfolio Value      -300 bp    -200 bp    -100 bp     Change    +100 bp    +200 bp     +300 bp
------------------------  ---------- ---------- ---------- --------------------------------- ----------

<S>                        <C>        <C>        <C>         <C>        <C>        <C>        <C>
Assets                      $48,081    $47,517    $47,139     $46,807    $46,506    $46,039    $45,367
-Liabilities                 19,019     38,843     38,670      38,501     38,335     38,170     38,009
+Off Balance Sheet               34         24         16           8          1         (8)       (17)
                          ---------- ---------- ---------- --------------------------------- ----------
Net Portfolio Value         $29,096    $ 8,698    $ 8,485     $ 8,314    $ 8,172    $ 7,861    $ 7,341
                          ========== ========== ========== ================================= ==========

</TABLE>

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 would 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

                                     - 10 -


<PAGE>



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.  However,  changes in
only certain rates,  such as shorter term interest rate declines  without longer
term interest rate declines,  could reduce or reverse the expected  benefit from
decreasing interest rates.








                                     - 11 -


<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,
                                            ----------------------------------------------------------------------------------------
                                   March 31,
                                    1999               1999                            1998                         1997
                                   -------- ----------------------------- ----------------------------- ----------------------------
                                             Average             Average    Average            Average   Average            Average
                                                                 Yield/                        Yield/                       Yield/
                                             Balance  Interest    Cost      Balance  Interest   Cost     Balance  Interest   Cost
                                            --------- -------- ---------- ---------- --------- -------- --------- --------- --------
                                 (Dollars in Thousands)
<S>                               <C>     <C>       <C>         <C>      <C>        <C>       <C>     <C>        <C>       <C>
Interest-earning assets:
  Loans receivable (1)              8.37 %  $ 25,018  $ 2,208     8.83 %   $ 24,619   $ 2,218   9.01 %  $ 22,895   $ 2,087   9.12 %
  Mortgage-backed securities        6.37 %    12,414      772     6.22 %     12,213       800   6.55 %    12,146       775   6.38 %
  Investment securities (2)         6.96 %     3,371      217     6.44 %      8,923       583   6.53 %    11,224       735   6.55 %
 Other interest-earning assets      4.78 %     5,174      245     4.74 %      1,514        67   4.43 %       866        35   4.04 %
                                   -------- --------- -------- ---------- ---------- --------- -------- --------- --------- --------
     Total interest-earning assets  7.21 %  $ 45,977  $ 3,442     7.49 %   $ 47,269   $ 3,668   7.76 %  $ 47,131   $ 3,632   7.71 %
                                   ======== ========= ======== ========== ========== ========= ======== ========= ========= ========
Non-interest-earning assets:                   1,180                          1,165                        1,151
                                            ---------                     ----------                    ---------
     Total assets                           $ 47,157                       $ 48,434                     $ 48,282
                                            =========                     ==========                    =========
Interest-bearing liabilities:
  Savings accounts                  2.41 %   $ 2,961     $ 76     2.57 %    $ 2,895      $ 75   2.59 %   $ 3,136      $ 81   2.58 %
  Demand deposits                   2.17 %     8,818      202     2.29 %      8,278       198   2.39 %     8,249       201   2.44 %
  Certificates of deposit           4.97 %    23,218    1,224     5.27 %     23,351     1,266   5.42 %    23,187     1,247   5.38 %
Other borrowed funds                4.78 %     4,313      219     5.08 %      6,057       338   5.58 %     5,545       305   5.50 %
                                   -------- --------- -------- ---------- ---------- --------- -------- --------- --------- --------
     Total interest-bearing
        liabilities                 4.08 %  $ 39,310  $ 1,721     4.38 %   $ 40,581   $ 1,877   4.63 %  $ 40,117   $ 1,834   4.57 %
                                   ======== ========= ======== ========== ========== ========= ======== ========= ========= ========

Non-interest bearing liabilities                 464                            464                          379
                                            ---------                     ----------                    ---------
     Total liabilities                      $ 39,774                       $ 41,045                     $ 40,496
                                            =========                     ==========                    =========
Stockholder's equity                           7,383                          7,389                        7,786
                                            ---------                     ----------                    ---------
     Total liabilities and
        stockholders' equity                $ 47,157                       $ 48,434                     $ 48,282
                                            =========                     ==========                    =========
                                                                        .
Net interest income                                   $ 1,721                         $ 1,791                      $ 1,798
                                                      ========                       =========                    =========
Interest rate spread (3)            3.13 %                        3.11 %                        3.13 %                       3.14 %
                                   ========                    ==========                      ========                     ========

Net yield on interest-earning
    assets (4)                                                    3.74 %                        3.79 %                       3.81 %
                                                               ==========                      ========                     ========
Ratio of average interest-
    earning assets to
    average interest-bearing
    liabilities                                                  116.96 %                      116.48 %                     117.48 %
                                                               ==========                      ========                    ========
</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.

                                     - 12 -
<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,
                                         --------------------------------------------------------------------------------------
                                                       1999 vs. 1998                               1998 vs. 1997
                                         ------------------------------------------  ------------------------------------------
                                                 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                         $ 35       $ (44)     $ (1)      $(10)     $ 157       $ (25)     $ (1)     $ 131
    Mortgage-backed securities                 13         (40)       (1)       (28)         4          21         -         25
    Investment securities                    (362)         (8)        5       (365)      (150)         (2)        -       (152)
    Other interest-earning assets             161           5        11        177         26           3         3         32
                                         ---------  ----------  --------  ---------  ---------  ---------- ---------  ---------

       Total interest-earning assets        $(153)      $ (87)     $ 14      $(226)      $ 37        $ (3)      $ 2       $ 36
                                         =========  ==========  ========  =========  =========  ========== =========  =========

Interest expense:
    Savings accounts                          $ 2        $ (1)      $ -        $ 1       $ (6)        $ -       $ -       $ (6)
    Demand deposits                            13          (8)       (1)         4          1          (4)        -         (3)
    Certificates of deposits                   (7)        (35)        -        (42)         9           9         1         19
    Other borrowed funds                      (97)        (30)        8       (119)        28           4         1         33
                                         ---------  ----------  --------  ---------  ---------  ---------- ---------  ---------

       Total interest-bearing liabilities    $(89)      $ (74)      $ 7      $(156)      $ 32         $ 9       $ 2       $ 43
                                         =========  ==========  ========  =========  =========  ========== =========  =========

Net change in interest income                $(64)      $ (13)      $ 7       $(70)       $ 5       $ (12)      $ -       $ (7)
                                         =========  ==========  ========  =========  =========  ========== =========  =========

</TABLE>

Comparison of Operating Results for the Years Ended March 31, 1999 and 1998

General:
Net income  decreased  $121,275  or 22.64%,  from  $535,595 at March 31, 1998 to
$414,320 for the year ended March 31, 1999. This decrease  relates to an overall
decrease in net interest income and an increase in operating expenses.

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.

Net interest income:
The Bank's net  interest  income for the year  ended  March 31,  1999  decreased
$70,272,  or  3.92%,  from  $1,790,804  for the year  ended  March  31,  1998 to
$1,720,532  for the  year  ended  March  31,  1999.  Interest  income  decreased
$226,224, or 6.17%, and interest expense decreased $155,952, or 8.31%. Yields on
the  Company's  interest-earning  assets  declined by 27 basis points during the
year ended March 31, 1999, and the rates paid on the Company's  interest-bearing
liabilities  decreased by 25 basis points  resulting in a slight decrease in the
interest  rate  spread to 3.11% for the year ended March 31, 1999 from 3.13% for
the year ended March 31, 1998.


                                     - 13 -
<PAGE>

The $226,224  decrease in total  interest  income is primarily the result of the
$187,851  decrease in  interest  on  investment  securities  resulting  from the
overall  decrease  in  the  Company's  investment  portfolio.  The  decrease  in
investment  securities,   as  reflected  in  the  Bank's  rate/volume  analysis,
resulting from a decrease in the volume of investment securities was $362,000.

The $155,952 decrease in total interest expense consists primarily of a $119,020
decrease in interest on borrowed  funds as proceeds from  investment  securities
were used to reduce  advances from FHLB. As reflected in the Bank's  rate/volume
analysis,  the decrease in interest expense  resulting from the decreased volume
of borrowed funds was $97,000,  accompanied with the net decrease in the rate on
total interest-bearing liabilities of $74,000.

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  allowance  for loan losses was  $339,290 and $353,236 at March 31, 1999 and
1998, respectively.  The provision for loan losses was $6,511 and $3,186 for the
years ended March 31, 1999 and 1998, respectively. The provision for loan losses
remained fairly  consistent during the year ended March 31, 1999, 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 continuation in the level of allowance for loan losses
is primarily  attributable  to the continued  improving  economy and real estate
market in the primary market area, and the resulting low level of non-performing
loans.  Historical  non-performing loan rations are presented with the five-year
financial  summary  information.  The  allowance for loan losses as a percent of
total  loans  was 1.43% at March 31,  1999 and  1.38% at March 31,  1998.  While
non-performing loans to net loans experienced a moderate increase in fiscal 1999
from 1998,  both the fiscal 1999 and 1998 levels are the lowest in the past five
years.  Charge-offs,  net of recoveries,  remained  comparable  between 1998 and
1997, consisting of approximately $20,457 in 1999 and $26,642 in 1998.

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 increased $15,252 from $242,436 for the year ended March 31,
1998 to $257,688 for the year ended March 31, 1999. This was primarily due to an
increase  in the net gain on the sale of loans of $19,289,  from  $4,813  during
fiscal 1998 to $24,102  during  fiscal 1999.  The increase in loan sales results
largely from an effort to supplement the Bank's  traditional  portfolio  lending
activity by making available to customers a broader array of loan products.

                                     - 14 -
<PAGE>

Non-interest expense:
Non-interest  expense  increased  $116,219 or 9.86% for the year ended March 31,
1999  compared to March 31,  1998.  The  increase  was  primarily  the result of
increased  occupancy  expenses resulting from remodeling of the Bank facilities,
additional  non-capital  expenses  incurred to become Year 2000 compliant and an
increase in  professional  fees relating to various tax and  strategic  planning
issues arising during the year.

Income taxes:
The Bank's income tax expense decreased  $53,289,  or 22.64%,  from $315,335 for
the year ended  March 31, 1998 to  $262,046  for the year ended March 31,  1999.
This decrease in income tax resulted from a decrease in pre-tax income.

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.

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.
                                     - 15 -
<PAGE>

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

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.

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 1999, cash and cash equivalents increased by $3,878,695, primarily
as a result of investment  securities  being called or maturing  during the year
ended March 31, 1999 resulting in total funds  provided by investing  activities
of $6,680,849. The Company also had net cash provided by operating activities of
$529,418. The cash provided by investing and operating activities were partially
offset  by cash  used by  financing  activities  of  $3,331,572.  Cash  and cash
equivalents used by financing  activities  resulted primarily from the repayment
of FHLB advances.



                                     - 16 -
<PAGE>

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 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.

The  Company's  principal  asset is its  investment  in the capital stock of the
Bank, and because it does not generate any significant  revenues  independent of
the  Bank,  the  Company's  liquidity  is  dependent  on the  extent to which it
receives  dividends  from the Bank.  The Bank's  ability to pay dividends to the
Company is  dependent  on its ability to generate  earnings  and is subject to a
number  of   regulatory   restrictions,   the   liquidation   account   and  tax
considerations.  Under capital  distribution  regulations  of the OTS, a savings
institution  that,  immediately  prior to, and on a proforma  basis after giving
effect to, a proposed dividend,  has total capital that is at least equal to the
amount of its fully phased-in  capital  requirements (a "Tier I Association") is
permitted  to pay  dividends  during a calendar  year in an amount  equal to the
greater of (i) 75.0% of its net income for the  recent  four  quarters,  or (ii)
100.0% of its net income to date  during the  calendar  year plus an amount that
would  reduce by  one-half  the  amount by which its ratio of total  capital  to
assets exceeded its fully phased-in  risk-based capital ratio requirement at the
beginning of the calendar  year. At March 31, 1999, the Bank qualified as a Tier
I  Association.  See  Notes  10,  13 and 19 of Notes to  Consolidated  Financial
Statements for additional information on capital levels and compliance,  tax bad
debt reserves and the liquidation account.
These capital distribution regulations were revised on April 1, 1999.

Cash  dividends  paid by the parent  company to its  common  stock  shareholders
totaled   $375,471  and  $386,549   during  the  fiscal  years  1999  and  1998,
respectively.  The payment of  dividends  on the common  stock is subject to the
direction  of the Board of  Directors of the Company and depends on a variety of
factors,  including  operating  results  and  financial  condition,   liquidity,
regulatory  capital  limitations  and other factors.  It is the intention of the
Bank to continue to pay dividends to the parent company,  subject to regulatory,
income tax and liquidation  account  considerations,  to cover cash dividends on
common stock when and as declared by the parent company.

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.  At
March 31, 1999, 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, 1999 the Bank
exceeded all of the minimum capital requirements as currently required.

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.

                                     - 17 -
<PAGE>

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.

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
has developed a plan to evaluate and test critical systems as they relate to the
Year 2000 issues and the Bank's  service  center.  The Bank is evaluating  their
internal data processing applications and has updated all computer terminals and
installed 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. As of March 31, 1999 the
Bank has expended $40,000 for upgraded computer equipment.  This expenditure has
been  capitalized  and  will  be  depreciated  over a  three-year  period.  Data
processing  costs and  conversion  costs of  $22,730  associated  with Year 2000
expenses  have been  expensed  as of March  31,  1999 and $600 per month of data
processing  costs will continue  through the end of 1999.  Expenses  relating to
training  costs for the Year 2000 have  been  $3,500 as of March 31,  1999.  The
Bank's data service center  currently has started  external and internal testing
of  modifications  to  critical  systems.   This  testing  includes  testing  of
interfaces between the Bank computer network, installed in October 1998, and the
data  service  center.  The Bank has also been  evaluating  its  non-information
technology systems (vault timers, electronic door lock and heating,  ventilation
and  air  conditioning  controls,  etc.).  The  Bank  has  examined  all  of its
non-information  technology  systems and have either received  certifications of
Year  2000  compliance  for  systems  controlled  by third  party  providers  or
determined  that the systems  should not be impacted by the Year 2000.  The Bank
expects  to further  test the  systems  it  controls  and  receive  third  party
certification,  where  appropriate,  that they will function.  The Bank does not
expect any material costs to address the non-information  technology systems and
has not had any  material  costs to  date.  The  Bank  has  determined  that the
information  technology  systems it uses have  substantially more Year 2000 risk
than non-information technology systems it uses.

The Bank has evaluated  most of its borrowers and does not believe that the Year
2000  problem  should,  on an  aggregate  basis,  impact  their  ability to make
payments to the Bank. Most of the Bank's residential borrowers are not dependent
on their home computers for income and none of the  commercial  borrowers are so
large that a Year 2000 problem  would  render them unable to collect  revenue or
rent and, in turn,  continue to make loan payments to the Bank. As a result, the
Bank has not contacted  residential borrowers concerning this issue and does not
consider this issue in the residential loan underwriting  process.  The Bank has
contacted all commercial  borrowers and considered this issue during  commercial
loan  underwriting.  The Bank does not expect any material costs to address this
risk area.

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. If the Bank's service bureau would fail,  which is not anticipated,
the Bank would enter deposit and loan transactions by hand in the general ledger
and compute loan  payments and deposit  balances and interest  with the existing
computer  system.  The Bank could do this because of the relatively small number
of loan and deposit accounts and it's internal  bookkeeping system. The computer
systems are  independently  able to generate  label and  mailings for all of the
Bank's  customers  and the Bank  periodically  tests this  system and prints and
stores this  material.  If this  labor-intensive  approach  would be  necessary,
management and the employees would become much less efficient. However, the Bank
believes that it would be able to operate in this manner indefinitely, until the
Bank's  existing  service bureau would be able to again provide data  processing
services.


                                     - 18 -

<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, 1999 and 1998 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,  1999.
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, 1999 and 1998,  and the results of their  operations
and cash flows for each of the three years in the period ended March 31, 1999 in
conformity with generally accepted accounting principles.



                                             /s/Regier Carr & Monroe, L.L.P
                                             Regier Carr & Monroe, L.L.P.


April  23,  1999
(except  for Note 23,  as to
which  the date is May 26,  1999)
Wichita, Kansas

                                      F-1
<PAGE>
                              Guthrie Savings, Inc.

                 Consolidated Statements of Financial Condition
                             March 31, 1999 and 1998


<TABLE>
<CAPTION>
ASSETS                                                                           1999                   1998
                                                                          --------------------   -------------------
<S>                                                                             <C>                   <C>
Cash and cash equivalents:
        Interest bearing                                                          $ 6,778,318           $ 2,995,502
        Non-interest bearing                                                          407,796               311,917
                                                                          --------------------   -------------------
            Total cash and cash equivalents                                         7,186,114             3,307,419
Time deposits in other financial institutions                                         500,000
Investment securities held-to-maturity (estimated market
        value of $999,380 and $3,893,119 at March 31,
        1999 and 1998, respectively)                                                1,000,000             3,900,000
Investment securities available-for-sale                                              648,400             2,174,751
Mortgage-backed securities held-to-maturity (estimated
        market value of $11,507,649 and $12,744,277 at
        March 31, 1999 and 1998, respectively)                                     11,460,461            12,615,162
Loans receivable, net                                                              23,802,225            25,573,437
Loans held-for-sale                                                                                          81,757
Accrued income receivable                                                             229,454               262,853
Real estate owned and other repossessed assets, net                                                          10,500
Office properties and equipment, net                                                  716,549               569,093
Income taxes receivable, current                                                       89,231
Prepaid expenses and other assets                                                     135,967               131,926
                                                                          --------------------   -------------------
             Total assets                                                        $ 45,768,401          $ 48,626,898
                                                                          ====================   ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
        Deposits                                                                 $ 35,078,760          $ 35,537,831
        Advances and other borrowings from
            Federal Home Loan Bank                                                  3,000,000             5,196,000
        Advances from borrowers for taxes and insurance                                57,312                48,988
        Other liabilities and accrued expenses                                         70,940               109,081
        Deferred income                                                                43,153                50,824
        Income taxes payable, current                                                                        26,840
        Deferred income taxes                                                         125,142               121,206
                                                                          --------------------   -------------------

             Total liabilities                                                     38,375,307            41,090,770
                                                                          --------------------   -------------------
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                                                  4,845,752             4,811,997
        Retained income, substantially restricted                                   4,580,402             4,541,553
        Accumulated other comprehensive income                                                               (3,443)
        Unamortized stock acquired by Employee Stock
          Ownership Plan                                                             (226,655)             (267,865)
        Unamortized compensation related to Management
          Stock Bonus Plan                                                            (60,938)             (103,490)
        Treasury stock, at cost, 112,868 and 97,668 shares
          at March 31, 1999 and 1998, respectively                                 (1,750,618)           (1,447,775)
                                                                          --------------------   -------------------

             Total stockholders' equity                                             7,393,094             7,536,128
                                                                          --------------------   -------------------

             Total liabilities and stockholders' equity                          $ 45,768,401          $ 48,626,898
                                                                          ====================   ===================
</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, 1999, 1998 and 1997
<TABLE>
<CAPTION>
                                                               1999               1998                1997
                                                          ----------------   ----------------    ----------------
<S>                                                          <C>                <C>                 <C>
Interest income:
    Interest on loans                                          $2,207,776         $2,217,831          $2,087,179
    Interest on mortgage-backed securities                        771,864            800,182             774,790
    Interest and dividends on investment securities               461,894            649,745             770,018
                                                          ----------------   ----------------    ----------------

         Total interest income                                  3,441,534          3,667,758           3,631,987
                                                          ----------------   ----------------    ----------------
Interest expense:
    Deposits                                                    1,501,653          1,538,585           1,528,658
    Borrowed funds                                                219,349            338,369             304,925
                                                          ----------------   ----------------    ----------------

         Total interest expense                                 1,721,002          1,876,954           1,833,583
                                                          ----------------   ----------------    ----------------
         Net interest income                                    1,720,532          1,790,804           1,798,404

Provision for losses on loans                                       6,511              3,186                 763
                                                          ----------------   ----------------    ----------------
    Net interest income after provision for
      losses on loans                                           1,714,021          1,787,618           1,797,641
                                                          ----------------   ----------------    ----------------
Non-interest income:
    Service charges                                               172,449            183,331             164,561
    Gain on sale of loans                                          24,102              4,813
    Net gain on sale of investments                                                                       46,528
    Gain from real estate operations                                5,730              4,289                  12
    Other                                                          55,407             50,003              40,176
                                                          ----------------   ----------------    ----------------
         Total non-interest income                                257,688            242,436             251,277
                                                          ----------------   ----------------    ----------------

Non-interest expense:
    Compensation and related expenses                             636,463            624,197             589,319
    Occupancy expense                                              84,093             63,715              63,368
    Professional fees                                             144,669            110,740             118,628
    Federal insurance premium                                      21,182             21,572              62,913
    SAIF special assessment                                                                              225,433
    Data processing                                               108,669             82,873              83,210
    Bank charges                                                   59,401             52,534              57,922
    Other expense                                                 240,866            223,493             215,082
                                                          ----------------   ----------------    ----------------
         Total non-interest expense                             1,295,343          1,179,124           1,415,875
                                                          ----------------   ----------------    ----------------
         Income before income taxes                               676,366            850,930             633,043
                                                          ----------------   ----------------    ----------------
Income taxes:
    Currently payable                                             260,216            295,447             211,499
    Deferred tax expense                                            1,830             19,888              41,164
                                                          ----------------   ----------------    ----------------
         Total income taxes                                       262,046            315,335             252,663
                                                          ----------------   ----------------    ----------------

         Net income                                             $ 414,320          $ 535,595           $ 380,380
                                                          ================   ================    ================
Basic:
    Earnings per share                                             $ 1.10             $ 1.41              $ 0.92
                                                          ================   ================    ================

    Weighted average common shares outstanding                    374,994            380,544             413,112
                                                          ================   ================    ================
Diluted:
    Earnings per share                                             $ 1.06             $ 1.36              $ 0.91
                                                          ================   ================    ================

    Weighted average common shares outstanding                    389,234            392,522             417,485
                                                          ================   ================    ================
</TABLE>

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

                                      F-3
<PAGE>

                              Guthrie Savings, Inc.

                 Consolidated Statements of Comprehensive Income
                    Years Ended March 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                                         1999              1998              1997
                                                      -------------   ---------------   ---------------
<S>                                                    <C>               <C>               <C>
     Net income                                          $ 414,320         $ 535,595         $ 380,380
                                                      -------------   ---------------   ---------------

     Other comprehensive income, net of tax:
         Unrealized gains (losses) on securities:
            Unrealized holding gains (losses) arising
               during period                                 3,443            42,936            (5,755)

            Less:  reclassification adjustment for
               gains included in net income                                                    (30,708)
                                                      -------------   ---------------   ---------------

         Total other comprehensive income                    3,443            42,936           (36,463)
                                                      -------------   ---------------   ---------------

     Comprehensive income                                $ 417,763         $ 578,531          $343,917
                                                      =============   ===============   ===============
</TABLE>

                                      F-4
<PAGE>
                              Guthrie Savings, Inc.

               Consolidated Statements of Changes in Stockholders'
                   Equity Years Ended March 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                       Unamortized  Unamoritzed
                                                                          Accumulated    Common     Compensation
                                                    Additional              Other         Stock       Related             Total
                                            Common   Paid-In    Retained Comprehensive  Acquired by    to     Treasury Stockholders'
                                             Stock   Capital    Earnings    Income        ESOP        MSBP     Stock     Equity
                                             ------  --------- ---------- ----------   -----------  -------   -------   ----------
<S>                                         <C>    <C>        <C>        <C>         <C>        <C>          <C>        <C>
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
Allocation of shares by Employees' Stock
     Ownership Plan                                     24,329                           41,210                              65,539
Amortization of compensation related to
     Management Stock Bonus Plan                         9,426                                       42,552                  51,978
Net income for the year ended March 31, 1999                      414,320                                                   414,320
Cash dividend paid ($1.00 per share)                             (375,471)                                                 (375,471)
Net change in unrealized loss
     on available-for-sale securities                                        3,443                                            3,443
Purchase of 15,200 treasury shares                                                                             (302,843)   (302,843)
                                             ------ ---------- ---------- --------   ----------- ----------- ----------- ----------
Balance, March 31, 1999                      $5,151 $4,845,752 $4,580,402      $ -   $ (226,655)  $ (60,938)$(1,750,618) $7,393,094
                                             ====== ========== ========== ========  ============ =========== =========== ==========
</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
                    Years Ended March 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
                                                                        1999              1998              1997
                                                                   ---------------   ---------------   ---------------
<S>                                                                  <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                         $ 414,320         $ 535,595         $ 380,380
     Adjustments to reconcile net income to net cash
         provided by operating activities:
            Gain on sale of investments                                                                       (46,528)
            Loss on sale of real estate acquired in
              settlement of loans                                           1,848                               1,698
            Depreciation                                                   38,162            31,593            37,027
            Amortization of premiums and discounts
              on investments and loans                                     (7,721)           (3,437)            3,660
            Provision for losses on loans and real
              estate owned                                                  6,511             3,186               763
            Origination of loans held-for-sale                         (2,932,925)         (755,957)
            Sale of loans held-for-sale                                 3,038,784           679,013
            Gain on sale of loans held-for-sale                           (24,102)           (4,813)
            Decrease in accrued interest receivable                        33,399            67,424            33,251
            (Increase) decrease in other assets                            (4,041)          (32,791)           11,710
            Increase (decrease) in accrued expenses                       (38,141)           48,276           (17,979)
            (Decrease) increase in accrued and deferred
              income taxes                                               (104,815)           28,911            90,738
            Amortization related to ESOP and MSBP                         108,091           110,046            95,812
            Other non-cash items, net                                          48             3,090            (1,839)
                                                                   ---------------   ---------------   ---------------

     Net cash provided by operating activities                            529,418           710,136           588,693
                                                                   ---------------   ---------------   ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Loan originations and principal payments on loans
       held-for-investment                                              1,757,425        (2,102,303)         (485,968)
     Proceeds from maturities and calls of investment
       securities held-to-maturity                                      3,400,000         5,300,000         1,550,000
     Proceeds from sales of investment securities
       available-for-sale                                                  81,800                             102,347
     Proceeds from maturities and calls of investment
       securities available-for-sale                                    1,500,000
     Acquisition of investment securities held-to-maturity             (1,000,000)         (500,000)         (500,000)
     Acquisition of investment securities available-for-sale              (49,900)          (48,300)          (39,700)
     Repayment of mortgage-backed securities
       held-to-maturity                                                 3,647,283         2,340,044         1,357,171
     Acquisition of mortgage-backed securities
       held-to-maturity                                                (2,523,109)       (1,705,880)       (5,227,289)
     Acquisition of fixed assets                                         (186,278)           (2,053)           (7,824)
     Proceeds from sale of foreclosed real estate                          53,016                              13,348
     Other investing activities, net                                          612
                                                                   ---------------   ---------------   ---------------

     Net cash provided (used) by investing activities                   6,680,849         3,281,508        (3,237,915)
                                                                  ---------------   ---------------   ---------------
</TABLE>
The Notes to  Consolidated  Financial  Statements  are an integral part of these
statements.

                                      F-6
<PAGE>

                              Guthrie Savings, Inc.

                Consolidated Statements of Cash Flows (Continued)
                    Years Ended March 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                                                1999             1998             1997
                                                            -------------    ------------    -------------
<S>                                                        <C>             <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase (decrease) in deposits                      $   (465,582)   $  1,241,367    $ (2,016,506)
    Net increase (decrease) in escrow accounts                      8,324          16,158          (7,468)
    Proceeds from FHLB advance and other borrowings                            11,300,000      12,000,000
    Repayment of FHLB advance and other borrowings             (2,196,000)    (12,804,000)     (7,300,000)
    Purchase of treasury stock                                   (302,843)       (574,030)       (472,918)
    Cash dividends paid                                          (375,471)       (386,549)       (433,166)
                                                             ------------    ------------    ------------

Net cash provided (used) by financing activities               (3,331,572)     (1,207,054)      1,769,942
                                                             ------------    ------------    ------------

Net increase (decrease) in cash and cash equivalents            3,878,695       2,784,590        (879,280)

Cash and cash equivalents at beginning of year                  3,307,419         522,829       1,402,109
                                                             ------------    ------------    ------------

Cash and cash equivalents at end of year                     $  7,186,114    $  3,307,419    $    522,829
                                                             ============    ============    ============

SUPPLEMENTAL DISCLOSURES
    Cash paid during the year for:
      Interest on deposits, advances and other
        borrowings                                           $  1,716,966    $  1,873,167    $  1,835,422
                                                             ============    ============    ============

      Income taxes                                           $    410,410    $    237,703    $    189,059
                                                             ============    ============    ============

    Transfers from loans to foreclosed real estate           $     51,776    $     19,690    $     54,446
                                                             ============    ============    ============

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

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

                                      F-7
<PAGE>

                              Guthrie Savings, Inc.

                   Notes to Consolidated Financial Statements
                          March 31, 1999, 1998 and 1997


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-8
<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:
     Regulations  require  the Bank to  maintain  liquidity  for  maturities  of
     deposits and other short-term borrowings in cash, U.S. Government and other
     approved 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-9
<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 six months.

     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, 1999, 1998 and 1997.

     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.

     Advertising costs:
     Advertising   costs  are   expensed  as  incurred  and  included  in  other
     non-interest  expense.  Advertising  expenses totaled $22,181,  $24,382 and
     $25,425 for the years ended March 31, 1999, 1998 and 1997, respectively.

     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-10

<PAGE>

1. Summary of Significant Accounting Policies (Continued)

     Comprehensive income:
     Effective  April  1,  1998,  the  Corporation  adopted  the  provisions  of
     Statement  of  Financial  Accounting  Standards  (SFAS)  No.  130  entitled
     Reporting  Comprehensive Income. This statement requires disclosures of the
     components of  comprehensive  income and the  accumulated  balance of other
     comprehensive income with consolidated  stockholders'  equity. The adoption
     of the provisions of SFAS No. 130,  which are only of a disclosure  nature,
     did not effect the Corporation's  consolidated financial position,  results
     of operations or liquidity.

     Earnings per share:
     Effective  for the year ended  March 31,  1998,  the  Company  adopted  the
     provisions of SFAS No. 128,  entitled  Earnings Per Share, and accordingly,
     restated all prior period  earnings per share to conform with SFAS No. 128.
     This statement  requires dual  presentation  with equal prominence of basic
     and diluted earnings per share (EPS) for income from continuing  operations
     and for net income on the face of the  income  statement  for all  entities
     with  complex  capital  structures  and  requires a  reconciliation  of the
     numerator and denominator of the basic EPS computation to the numerator and
     denominator of the diluted EPS computation. 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 entity. See Note 12 for additional information.

     Impact of new accounting standards:

     In June 1998,  FASB issued SFAS No. 133 entitled  Accounting for Derivative
     Instruments and Hedging Activities. This statement requires the recognition
     of all derivative financial  instruments as either assets or liabilities in
     the statement of financial position and measurement of those instruments at
     fair value. The accounting for gains and losses  associated with changes in
     the fair value of a derivative and the effect on the consolidated financial
     statements  will depend on its hedge  designation  and whether the hedge is
     highly effective in achieving  offsetting changes in the fair value or cash
     flows of the asset or liability  hedged.  Under the  provisions of SFAS No.
     133,  the method that will be used for  assessing  the  effectiveness  of a
     hedging derivative, as well as the measurement approach for determining the
     ineffective  aspects of the hedge,  must be established at the inception of
     the hedge.  The methods must be  consistent  with the entity's  approach to
     managing risk.

     SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
     after June 15, 1999,  with initial  application  as of the  beginning of an
     entity's  fiscal  quarter;  on that  date,  hedging  relationships  must be
     designated  anew  and  documented   pursuant  to  the  provisions  of  this
     Statement.  Earlier application is encouraged,  but is permitted only as of
     the  beginning  of any  fiscal  quarter  beginning  after  June  15,  1999.
     Retroactive  application  to  financial  statements  of  prior  periods  is
     prohibited.  Management  of the Company has not  determined  the quarter in
     which to adopt the  provisions of this  statement and does not believe that
     such  adoption  will  have a  material  effect on the  Company's  financial
     position, liquidity or results of operations.

     The Financial  Accounting  Standards Board has issued a proposed SFAS that,
     if issued,  would  defer the  effective  date of SFAS No. 133 to all fiscal
     years beginning after June 15, 2000.

                                      F-11
<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, 1999
                                           -------------------------------------------------------------------
                                                                  Gross          Gross          Estimated
                                               Amortized       Unrealized      Unrealized         Market
                                                 Cost             Gains          Losses           Value
                                           -----------------  -------------- --------------  -----------------
<S>                                           <C>                  <C>          <C>              <C>
Held-to-maturity:
     Government Agency Securities                $1,000,000           $ 953        $ 1,573          $ 999,380
                                           -----------------  -------------- --------------  -----------------
         Total held-to-maturity                  $1,000,000           $ 953        $ 1,573          $ 999,380
                                           =================  ============== ==============  =================

Available-for-sale:
     Stock in Federal Home Loan Bank,
       at cost                                    $ 648,400                                           648,400
                                           -----------------  -------------- --------------  -----------------

          Total available-for-sale                $ 648,400             $ -            $ -          $ 648,400
                                           =================  ============== ==============  =================
</TABLE>

<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>

       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  included  $500,000 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.

       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.

                                      F-12
<PAGE>
2.     Investment Securities (Continued)

       The amortized cost and estimated market value of debt securities at March
       31, 1999, 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 after one year through five years        $ 500,000        $ 498,882
     Due after five years through ten years         500,000          500,498
                                            ---------------- ----------------

        Total held-to-maturity                   $1,000,000        $ 999,380
                                            ================ ================

     There were no sales of investment securities  available-for-sale during the
     years ended March 31, 1999 and 1998.  During the year ended March 31, 1997,
     there   were   realized   gains   on   sales   of   investment   securities
     available-for-sale of $46,528.

       Investment  securities  with a carrying  amount of $500,000  and $0 as of
       March 31, 1999 and 1998,  respectively,  were pledged as  collateral  for
       public funds as discussed in Note 8.

3.     Mortgage-Backed Securities

       Mortgage-backed   securities,   all   of   which   were   classified   as
       held-to-maturity at March 31, 1999 and 1998, consist of the following:

<TABLE>
<CAPTION>
                                                                                    March 31, 1999
                                                  ---------------------------------------------------------------------
                                                                          Gross          Gross           Estimated
                                                      Amortized        Unrealized     Unrealized           Market
                                                        Cost              Gains         Losses             Value
                                                  ------------------  -------------  --------------  ------------------

<S>                                                    <C>             <C>               <C>            <C>
              FHLMC - fixed rate                           $ 885,819       $ 17,628                       $    903,447
              FHLMC - ARM's                                1,029,788                          32,712           997,076
              GNMA - ARM's                                 2,589,492         12,792            5,776         2,596,508
              FNMA - ARM's                                 1,593,211         18,290           16,703         1,594,798
              GNMA - fixed rate                              161,296          8,638                            169,934
              FNMA - fixed rate                            1,690,175            694           12,230         1,678,639
              Collateralized mortgage obligations-
                government agency issue                    3,510,680         56,849              282         3,567,247
                                                  ------------------  -------------   --------------  -----------------

                                                        $ 11,460,461       $114,891         $ 67,703      $ 11,507,649
                                                  ==================  =============   ==============  =================
</TABLE>
                                      F-13
<PAGE>

3.     Mortgage-Backed Securities (Continued)
<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>

     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, 1999, 1998 and 1997.

     There were no mortgage-backed  securities  classified as available-for-sale
     as of March 31, 1999 and 1998.

4.     Loans Receivable

       Loans receivable at March 31 are summarized as follows:

<TABLE>
<CAPTION>
                                                              March 31,
                                                  ------------------------------------
                                                      1999                 1998
                                                  ---------------    -----------------
        Real estate loans:
<S>                                                <C>                  <C>
          Residential                                $18,644,037          $19,486,296
          Construction                                 1,630,000            2,097,800
          Non-residential                              1,721,601            1,763,895
          Second mortgage and other equity             1,120,530            1,267,008
          Consumer                                     2,412,920            2,483,123
                                                  ---------------    -----------------
        Gross loans                                   25,529,088           27,098,122

          Less:  Loans in process                     (1,331,517)          (1,098,775)
                    Deferred loan fees and costs         (56,056)             (72,674)
                    Allowance for loan losses           (339,290)            (353,236)
                                                  ---------------    -----------------
          Net loans receivable                       $23,802,225          $25,573,437
                                                  ===============    =================
</TABLE>

                                      F-14
<PAGE>
4.     Loans Receivable (Continued)

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

<TABLE>
<CAPTION>
                                                        March 31,
                                    ----------------------------------------------------
                                       1999               1998                1997
                                    --------------   ----------------    ---------------
<S>                                    <C>                <C>                <C>
Balance, beginning of year              $ 353,236          $ 376,692          $ 391,189
     Provision charged to operations        6,511              3,186                763
     Loans charged off                    (23,475)           (33,844)           (29,056)
     Recoveries                             3,018              7,202             13,796
                                    --------------   ----------------    ---------------

Balance, end of year                    $ 339,290          $ 353,236          $ 376,692
                                    ==============   ================    ===============
</TABLE>
       Impairment of loans having recorded  investments of $511,042 at March 31,
       1999 and  $440,137 at March 31, 1998 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, 1999 and 1998,  was $475,590 and  $403,227,  respectively.  The
       total  allowance for loan losses  related to these loans was $111,258 and
       $106,625 at March 31, 1999 and 1998.  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 $48,484  and  $46,105 was
       recognized for cash payments  received for the years ended March 31, 1999
       and 1998, 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 18 for disclosure of loans to related parties.

5.     Accrued Income Receivable

       Accrued interest receivable at March 31 is summarized as follows:

                                         1999                 1998
                                   -----------------    -----------------

    Mortgage-backed securities             $ 53,224             $ 61,121
    Loans receivable                        151,107              144,236
    Investments                              25,123               57,496
                                   -----------------    -----------------

                                          $ 229,454            $ 262,853
                                   =================    =================

6.     Foreclosed Real Estate

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

                                                 1999                1998
                                           -----------------   -----------------
    Real estate acquired by foreclosure                 $ -            $ 10,500
                                           =================   =================

       There was no activity  in the  allowance  for loss  account for the years
ended March 31, 1999, 1998 and 1997.

                                      F-15
<PAGE>
6.     Foreclosed Real Estate (Continued)

       Income (loss) from real estate operations for the years ended March 31 is
as follows:
<TABLE>
<CAPTION>
                                                    1999                1998                1997
                                              -----------------   -----------------   -----------------
<S>                                                   <C>                 <C>                 <C>
      Net gain on sale of real estate owned            $ 5,823             $ 7,131             $ 1,439
      Operating expenses                                   (93)             (2,842)             (1,427)
                                              -----------------   -----------------   -----------------

                                                       $ 5,730             $ 4,289                $ 12
                                              =================   =================   =================
</TABLE>

7.     Office Properties and Equipment

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

                                                              March 31,
                                                --------------------------------
                                                      1999           1998
                                                -----------------  -------------
        Land                                           $ 398,332      $ 398,332
        Building and improvements                        680,285        622,292
        Furniture and equipment                          264,434        246,501
        Automobiles                                       13,103         13,103
                                                -----------------  -------------
                                                       1,356,154      1,280,228
        Less accumulated depreciation                   (639,605)      (711,135)
                                                -----------------  -------------
                                                       $ 716,549      $ 569,093
                                                =================  =============
        Depreciation expense (1997 - $37,027)           $ 38,162       $ 31,593
                                                =================  =============

8.     Deposits

       Deposits at March 31 are summarized as follows:

                                       1999                 1998
                                 -----------------    -----------------
     Demand deposits                   $9,156,846           $8,862,808
     Savings deposits                   3,011,701            2,926,724
     Certificates of deposit           22,910,213           23,748,299
                                 -----------------    -----------------
                                      $35,078,760          $35,537,831
                                 =================    =================

     The  aggregate  amount  of jumbo  certificates  of  deposit  with a minimum
     denomination  of $100,000 was  $1,675,829  and $1,420,654 at March 31, 1999
     and 1998,  respectively.  Deposit  accounts  as of March 31,  1999 and 1998
     included public funds of $400,000 and $0,  respectively.  Public funds were
     collateralized by investment securities as discussed in Note 2.

     At March 31, 1999,  scheduled  maturities of certificates of deposit are as
     follows:

Year Ending March 31,
----------------------------
        2000                  $19,604,566
        2001                    2,425,957
        2002                      498,830
        2003                      221,029
        2004                      159,831
                          -----------------

                              $22,910,213
                          =================

                                      F-16
<PAGE>

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:

                               1999                1998
                          ----------------    ---------------
          Advances             $3,000,000         $5,196,000
                          ================    ===============

       At March 31, 1999 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 13, 1999. At March 31, 1998,  the Bank had $0 outstanding
       under a  $3,000,000  line of credit,  due August  15,  1998.  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:

<TABLE>
<CAPTION>
   Fiscal                        1999                                     1998
                 -------------------------------------    -------------------------------------
    Year                                 Weighted                                Weighted
  Maturity           Amount            Average Rate           Amount           Average Rate
--------------   ----------------    -----------------    ---------------    ------------------
<S><C>                <C>                    <C>              <C>                    <C>
    1999                     $ -                   %          $2,196,000              5.64 %
    2008               3,000,000              4.78             3,000,000              4.78
                 ----------------    -----------------    ---------------    ------------------

                      $3,000,000              4.78 %          $5,196,000              5.14 %
                 ================    =================    ===============    ==================
</TABLE>

       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,
                                      ---------------------------------------------------------------
                                              1999                  1998                  1997
                                      ------------------- --------------------- ---------------------
<S>                                          <C>                  <C>                    <C>
     Statutory federal income tax              34.0    %            34.0     %             34.0    %
     Increase resulting from:
       Oklahoma income tax                      3.9                  1.5
       Adjust tax bad debt reserves                                  0.8                    5.4
       Non-deductible items                     0.8                  0.4                    0.3
       Other                                                         0.4                    0.2
                                      ------------------- --------------------- ---------------------
                                               38.7    %            37.1     %             39.9    %
                                      =================== ===================== =====================
</TABLE>
                                      F-17

<PAGE>

10.    Income Taxes (Continued)

     Deferred  taxes are  included in the  accompanying  Statement  of Financial
     Condition at March 31, 1999 and 1998 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,  1999 and 1998 was
     comprised of the following:
<TABLE>
<CAPTION>
                                                                    1999            1998
                                                              -------------   -------------
<S>                                                            <C>             <C>
        Deferred tax assets:
          Deferred loan fees and costs                             $ 6,119         $ 9,319
          Allowance for loan losses                                 86,560          93,614
          Unrealized loss on available-for-sale securities                           2,106
          Accrued compensation                                      17,186          15,911
                                                              -------------   -------------
            Total deferred tax assets                              109,865         120,950
                                                              -------------   -------------

        Deferred tax liabilities:
          Accumulated depreciation                                 (15,028)        (11,155)
          Special bad debt deduction                               (55,353)        (76,353)
          Increase in value of insurance contract                  (10,294)
          FHLB stock dividends                                    (154,332)       (154,648)
                                                              -------------   -------------
             Total deferred tax liabilities                       (235,007)       (242,156)
                                                              -------------   -------------

             Net liability                                      $ (125,142)     $ (121,206)
                                                              =============   =============
</TABLE>

     No valuation  allowance was recorded  against  deferred tax assets at March
     31, 1999 and 1998.

     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, 1999 and 1998. 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.

                                      F-18

<PAGE>
11.    Comprehensive Income

        Accumulated  comprehensive  income as of March 31,  1999,  1998 and 1997
        consists   of   unrealized   gains  and  losses  on   available-for-sale
        securities.  Classification  of  comprehensive  income  and the  related
        income tax (expense) or benefit for the years ended March 31, 1999, 1998
        and 1997 is as follows:
<TABLE>
<CAPTION>
                                                                                  Tax
                                                           Before-Tax          (Expense)        Net-of-Tax
                                                             Amount           or Benefit          Amount
                                                         ---------------    ---------------   ---------------
<S>                                                           <C>               <C>                <C>
Year Ended March 31, 1999

    Unrealized gains (losses) on securities:
         Unrealized holding gains (losses)
          arising during period                                 $ 5,549           $ (2,106)          $ 3,443
         Less: reclassification adjustment
          for gains included in net income                            -                  -                 -
                                                         ---------------    ---------------   ---------------
             Total other comprehensive
               income                                           $ 5,549           $ (2,106)          $ 3,443
                                                         ===============    ===============   ===============
Year Ended March 31, 1998

    Unrealized gains (losses) on securities:
         Unrealized holding gains (losses)
          arising during period                                $ 64,724          $ (21,788)         $ 42,936
         Less: reclassification adjustment
          for gains included in net income                            -                  -                 -
                                                         ---------------    ---------------   ---------------
             Total other comprehensive
               income                                          $ 64,724          $ (21,788)         $ 42,936
                                                         ===============    ===============   ===============
Year Ended March 31, 1997

    Unrealized gains (losses) on securities:
         Unrealized holding gains (losses)
          arising during period                                $ (8,719)           $ 2,964          $ (5,755)
         Less: reclassification adjustment
          for gains included in net income                      (46,528)            15,820           (30,708)
                                                         ---------------    ---------------   ---------------
             Total other comprehensive
               income                                         $ (55,247)          $ 18,784          $(36,463)
                                                         ===============    ===============   ===============
</TABLE>
                                      F-19
<PAGE>

12.    Earnings Per Share

       The following is a  reconciliation  of the numerators and denominators of
       the basic and diluted per share computations for income:
<TABLE>
<CAPTION>
                                                        Income                 Shares            Per Share
                                                     (Numerator)           (Denominator)          Amount
                                                  -------------------    -------------------    ------------
<S>                                                      <C>                      <C>              <C>
Year ended March 31, 1999:
Basic EPS
     Income available to common stockholders               $ 414,320                374,994          $ 1.10
                                                                                                ============

Effect of dilutive securities
     MSBP shares                                                                      1,168
     Stock options                                                                   13,072
                                                  -------------------    -------------------
Diluted EPS                                                $ 414,320                389,234          $ 1.06
                                                  ===================    ===================    ============

Year ended March 31, 1998:
Basic EPS
     Income available to common stockholders               $ 535,595                380,544          $ 1.41
                                                                                                ============

Effect of dilutive securities
     MSBP shares                                                                      1,446
     Stock options                                                                   10,532
                                                  -------------------    -------------------
Diluted EPS                                                $ 535,595                392,522          $ 1.36
                                                  ===================    ===================    ============

Year ended March 31, 1997:
Basic EPS
     Income available to common stockholders               $ 380,380                413,112          $ 0.92
                                                                                                ============

Effect of dilutive securities
     MSBP shares                                                                        624
     Stock options                                                                    3,749
                                                  -------------------    -------------------
Diluted EPS                                                $ 380,380                417,485          $ 0.91
                                                  ===================    ===================    ============

</TABLE>

13.    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.

                                      F-20
<PAGE>

13.  Regulatory and Capital Matters (Continued)

     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, 1999, that the Bank meets all capital
     adequacy requirements to which it is subject.

     As of March 31,  1999,  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, 1999:
Total (Risk-Based) Capital
     (to Risk Weighted Assets)               $ 7,217      35.3%       $ 1,632      8.0%       $ 2,042     10.0%
Core (Tier I) Capital
     (to Risk Weighted Assets)                 6,989      34.2%           N/A                   1,225      6.0%
Core (Tier I) Capital - leverage
     (to Assets)                               6,989      15.3%         1,825      4.0%         2,282      5.0%

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%

</TABLE>
                                      F-21
<PAGE>

13.    Regulatory and Capital Matters (Continued)

       The following is a reconciliation  of net worth to regulatory  capital as
       reported in the March 31,  1999 and 1998  reports to the Office of Thrift
       Supervision:
<TABLE>
<CAPTION>
                                                                       March 31,
                                                         ---------------------------------------
                                                               1999                 1998
                                                         ------------------   ------------------
<S>                                                           <C>                  <C>
        Bank net worth per report
          to Office of Thrift Supervision                      $ 6,989,000          $ 6,830,000

        Rounding                                                      (339)                (584)
                                                         ------------------   ------------------
        Net worth as reported in accompanying
          financial statements (Bank only)                       6,988,661            6,829,416
        Adjustments to arrive at Core (Tier I)
          and Tangible Capital:
                  Unrealized losses on certain
                        available-for-sale securities                                     3,000
                                                         ------------------   ------------------
        Core (Tier I) and Tangible Capital                       6,988,661            6,832,416
        Adjustments to arrive at Total Capital:
                   Allowable portion of general
                        allowance for loan losses                  228,000              247,000
                                                         ------------------   ------------------
        Total Capital                                          $ 7,216,661          $ 7,079,416
                                                         ==================   ==================
        Risk weight assets                                     $20,422,000          $21,202,000
                                                         ==================   ==================
</TABLE>

14.    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, 1999 and 1998 were $10,184 and $9,748,  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, 1999,  the balance of
       indebtedness from the ESOP to the Company was $226,655, 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


                                      F-22
<PAGE>

14.    Employee Benefits Plans (Continued)

       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  reduction  of  retained
       earnings;   dividends  on   unallocated   ESOP  shares  are  recorded  as
       compensation expense. ESOP compensation expense was $51,370,  $52,721 and
       $29,606 for the years ended March 31, 1999, 1998 and 1997,  respectively.
       As of March 31,  1999,  of the 40,589  ESOP  shares,  17,924  shares were
       allocated  and 22,665  shares were  unallocated.  The 22,665  unallocated
       shares had an estimated market value of $419,303 at March 31, 1999.

       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 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.

15.    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  is  administered  by a  committee  of at  least  three
       non-employee  directors  designated by the Board of Directors (the Option
       Committee).  The Option  Committee  selects 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-23
<PAGE>
15.    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.  Generally,  options  are  exercisable  at the  rate of 20% on the
       one-year  anniversary  and 20%  annually  thereafter.  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, 1999, 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  $0 and  $3,090  for  the  years  ended  March  31,  1999  and  1998,
       respectively.

       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. The Company did not grant any
       stock options during the year ended March 31, 1999.  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, 1999 and 1998 relative to
     stock options are as follows:
<TABLE>
<CAPTION>
                                                                            March 31,
                                             -------------------------------------------------------------------

                                                          1999                                1998
                                             --------------------------------     ------------------------------

                                                               Weighted-Average                    Weighted-Average
Fixed Options                                    Shares         Exercise Price       Shares         Exercise Price
                                             --------------    --------------     -------------    ----------------
<S>                                               <C>              <C>                <C>             <C>
Outstanding at beginning of year                    41,206           $ 12.79            39,661          $ 12.63
    Granted                                                                              1,545            17.00
    Canceled
    Exercised
                                             --------------    --------------     -------------    -------------

Outstanding at end of year                          41,206           $ 12.79            41,206          $ 12.79
                                             ==============    ==============     =============    =============

Exercisable at end of year                          41,206                              41,206
                                             ==============                       =============

Number of shares available for future grant:
    Beginning of year                               10,306                              11,851
                                             ==============                       =============

    End of year                                     10,306                              10,306
                                             ==============                       =============
</TABLE>
                                      F-24

<PAGE>

16.    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, 1999 and 1998, the Bank had outstanding  commitments to fund
       real estate  loans of $209,835  and  $220,500,  respectively.  All of the
       commitments  outstanding at March 31, 1999 were for fixed rate loans with
       rates of 7.25% to 7.75%.

       The Bank had no standby letters of credit  outstanding at March 31, 1999.
       At March 31, 1998, the Bank had outstanding a standby letter of credit of
       $150,000 with a fixed interest rate of 8.00%.

       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 no commitments to sell loans at March 31, 1999. 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.

       At March  31,  1999  and  1998,  loans  with a  carrying  value of $0 and
       $81,757,   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, 1999 and 1998.

       The Bank had no  commitments  to purchase  mortgage-backed  securities or
       investment securities at March 31, 1999 and 1998.

17.    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-25
<PAGE>
17.    Significant Concentrations of Credit Risk (Continued)

       As of March 31, 1999,  the Bank had a net  investment of  $23,802,225  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.

18.    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,  1999 and 1998,  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, 1999:

Balance, March 31, 1998                               $ 91,334

New loans                                               14,055
Repayments                                             (77,169)
Adjust for balances less than $60,000                  (28,220)
                                                    ----------
Balance, March 31, 1999                               $      -
                                                    ==========

19.    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-26
<PAGE>

20.  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.

     Time deposits in financial institutions:
     The fair value of fixed  maturity  certificates  of deposit  are  estimated
     using the  rates  currently  offered  for  deposits  of  similar  remaining
     maturities.

     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.

                                      F-27

<PAGE>

20.    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, 1999               March 31, 1998
                                                        ---------------------------   ---------------------------
                                                          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                                      $6,785         $6,785         $2,996         $2,996
       Non-interest bearing                                     408            408            312            312

    Time deposits in other financial institutions               500            500
     Investment securities held-to-maturity                   1,000            999          3,900          3,893
     Investment securities available-for-sale                   649            649          2,175          2,175
     Mortgage-backed securities held-to-maturity             11,460         11,508         12,615         12,744
     Loans receivable                                        23,802         24,319         25,573         26,249
     Loans held-for-sale                                                                       82             82

   Financial liabilities:
       Deposits                                              35,078         35,123         35,538         35,541
       Advances and borrowings from FHLB                      3,000          2,925          5,196          5,161

                                                         Par Value      Fair Value     Par Value      Fair Value
                                                        ------------   ------------   ------------   ------------
                                                                     (In Thousands)                (In Thousands)
   Unrecognized financial instruments:
     Commitments to extend credit                             $ 210          $ 218          $ 221          $ 228

</TABLE>

21.    Deposit Insurance

        The Deposit Insurance Funds Act of 1996 authorized the  recapitalization
        of the Savings Associations Insurance Fund (SAIF) by imposing a one time
        special assessment on institutions with SAIF assessable  deposits.  Such
        assessment  was at the  rate of  0.657%  and was  imposed  in  order  to
        increase the reserve levels of the SAIF to 1.25% of insured deposits. On
        September  30,  1996,  the Bank  recorded  a  pre-tax  expense  for this
        assessment of $225,433.  The Bank's  annual  deposit  insurance  rate in
        effect  prior to this  recapitalization  was 0.23% of insured  deposits,
        declining to 0.064% of insured deposits effective January 1, 1997.

                                      F-28
<PAGE>
22.  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, 1999 and 1998
                                 (In Thousands)
<TABLE>
<CAPTION>
Assets                                                                       1999                 1998
                                                                       -----------------    -----------------
<S>                                                                           <C>                  <C>
        Cash and cash equivalents                                               $    86              $    86
        Investment in subsidiary                                                  6,988                6,829
        Loans receivable (subsidiary and ESOP)                                      227                  548
        Other                                                                        92                   73
                                                                       -----------------    -----------------
             Total assets                                                       $ 7,393              $ 7,536
                                                                       =================    =================
Stockholders' equity

          Common stock                                                          $     5              $     5
          Additional paid-in capital                                              4,846                4,812
          Retained income                                                         4,580                4,542
          Net unrealized loss on available-for-sale securities                                            (4)
          Unamortized amounts related to ESOP and MSBP                             (287)                (371)
          Treasury stock                                                         (1,751)              (1,448)
                                                                       -----------------    -----------------
             Total stockholders' equity                                         $ 7,393              $ 7,536
                                                                       =================    =================
</TABLE>
                        Condensed Statement of Operations
                    Year Ended March 31, 1999, 1998 and 1997
                                 (In Thousands)
<TABLE>
<CAPTION>
                                               1999                 1998                1997
                                         -----------------    -----------------   -----------------
<S>                                               <C>                  <C>                 <C>
         Equity earnings of subsidiary              $ 511                $ 605               $ 419
         Interest income                               34                   48                  77
                                         -----------------    -----------------   -----------------
                    Total income                      545                  653                 496
                                         -----------------    -----------------   -----------------
         Other expenses                               185                  147                 128
                                         -----------------    -----------------   -----------------
              Income before income taxes              360                  506                 368

         Income tax expense (benefit)                 (54)                 (30)                (12)
                                         -----------------    -----------------   -----------------
                    Net income                      $ 414                $ 536               $ 380
                                         =================    =================   =================
</TABLE>

                                      F-29
<PAGE>

22.  Parent Company Financial Information (Continued)

                        Condensed Statement of Cash Flows
                    Year Ended March 31, 1999, 1998 and 1997
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                                    1999               1998               1997
                                                               ---------------    ---------------    ---------------
<S>                                                                   <C>                <C>                <C>
      Cash flows from operating activities
          Net income                                                   $  414             $  536             $  380
          Adjustments to reconcile net income to net cash
            provided (used for) operating activities:
              Equity in net income of subsidiary                         (511)              (605)              (419)
              Increase in other assets                                    (19)               (29)               (39)
              Decrease in other liabilities                                                                    (242)
              Other non-cash items, net                                    23                 22
                                                               ---------------    ---------------    ---------------
      Net cash used by operating activities                               (93)               (76)              (320)
                                                               ---------------    ---------------    ---------------

      Cash flow from investing activities:
          Reduction of investment in subsidiary                           450                450                250
          Loans to subsidiary and ESOP, net                               321                591                761
                                                               ---------------    ---------------    ---------------
      Net cash provided by investing activities                           771              1,041              1,011
                                                               ---------------    ---------------    ---------------

      Cash flows from financing activities:
          Cash dividends paid                                            (375)              (387)              (210)
          Purchase of treasury stock                                     (303)              (574)              (473)
                                                               ---------------    ---------------    ---------------
      Net cash provided used by financing activities                     (678)              (961)              (683)
                                                               ---------------    ---------------    ---------------

      Increase in cash and cash equivalents                                 -                  4                  8

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

23.     Subsequent Event

        The Company and the Bank have signed a stock purchase agreement, subject
        to  stockholder   approval,   with  Local   Oklahoma  Bank,   N.A.  Upon
        consummation of the agreement, the Company and the Bank will be acquired
        by Local Oklahoma Bank through a share  acquisition of all of the shares
        of  common  stock of the  Company  and the  Bank  will be owned by Local
        Oklahoma Bank and all current stockholders of the Company will receive a
        cash payment for their shares.

                                      F-30



<PAGE>



                                 OFFICE LOCATION

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

<TABLE>
<CAPTION>
                 <S>                                                           <C>
                  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


-------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
   <S>                                                                 <C>
    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 & Fisch, PC                                           American Securities Transfer
    One Franklin Square                                                    &
    1301 K Street, N.W., Suite 700 East                                     Trust, Inc.
    Washington, D.C. 20005                                              1825 Lawrence Street, Suite 444
                                                                        Denver, Colorado  80202-1817

</TABLE>

The  Company's  Annual  Report for the year ended  March 31, 1999 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 20,  1999 at 5:00  p.m.  at  Guthrie  Federal
Savings Bank, located on 120 N. Division , Guthrie, Oklahoma.