EXHIBIT 13
<PAGE>




                                  [** LOGO **]

                              Guthrie Savings, Inc.

                              Annual Report - 1997



<PAGE>








                              Guthrie Savings, Inc.
                              ANNUAL REPORT - 1997


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Table of Contents

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

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

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

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

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

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

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

Corporate
Information..............................................................   17





<PAGE>


To Our Stockholders:

It is our  pleasure  to present to you the annual  report of Guthrie  Savings,
Inc. for the year ending March 31, 1997.

Net income for the year ended  March 31,  1997 was  $380,380 or $0.89 per share.
This  represents a 34.97% decrease in income from the year ended March 31, 1996.
This decrease is the direct result of a special assessment of SAIF insurance.

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  institutions  deposit base measured as of March 31, 1995.
The total amount of the special  assessment for Guthrie Federal Savings Bank was
$225,433,  which was accrued as of September  30, 1996.  The after tax effect of
the assessment was to reduce net income by approximately $149,000 for the twelve
months ended March 31,  1997.  Without the effect of the  assessment  net income
would have been  approximately  $530,000  for the twelve  months ended March 31,
1997.  Earnings per share without the effect of the  assessment  would have been
approximately $1.24 for the year ended March 31, 1997.

Total  assets  increased  4.76% to $49.0  million  during the year  while  total
deposits decreased 5.56% to $34.3 million. Stockholders' equity was $8.0 million
at March 31, 1996  compared to $7.8 million at March 31, 1997.  This decrease is
the result of an approved repurchase of 34,268 shares of outstanding stock.

In January the Board of Directors declared a $0.50 per share dividend payable to
stockholders  of record  January 31, 1997.  This dividend was the third dividend
declared by the Bank since the issuance of our stock in October  1994.  The cash
dividend was paid as a result of the continued  profitability of the Company and
its wholly owned subsidiary, Guthrie Federal Savings Bank.

The Company was approved to repurchase  an  additional  15 % of our  outstanding
shares  before  October 11, 1997. If this  repurchase  is  completed,  the total
amount of stock repurchased will be 25% of the original outstanding shares.

As always,  we will concentrate our efforts on building  shareholder value while
maintaining and building on our financial strength.

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

Sincerely,


/s/ William L. Cunningham
William L. Cunningham
President and Chief Executive Officer

                                    - 1 -


<PAGE>

Guthrie Savings, Inc..

Corporate Profile and Related Information

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

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

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

Stock Market Information

There were  450,359  shares of common  stock (net of treasury  stock) of Guthrie
Savings,  Inc.  outstanding  on  March  31,  1997,  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,    
                         ----------------------------------------- 
                               1997                   1996    
                         ----------------     --------------------
                          HIGH       LOW       HIGH          LOW
                         -------   ------     --------     -------
                                                                  
First Quarter            13 1/2       13         13         10 1/4
Second Quarter           13 1/2       13       13 1/2       12 1/2
Third Quarter              14         13       13 3/8       13 1/4
Fourth Quarter           14 1/2       14       13 1/2       13 3/8


During the year ended March 31, 1997 the Board of Directors  declared and paid a
dividend  of $0.50 per share.  During the year ended  March 31, 1996 the Company
declared a  dividend  of $0.50 per share  that was paid on April 10,  1996.  The
Company's ability to pay dividends to shareholders is largely dependent upon the
dividends  it  receives  from  the  Bank.  The  Bank is  subject  to  regulatory
limitations on the amount of cash dividends it may pay. The Bank may not declare
or pay a cash dividend on any of its stock if the effect thereof would cause the
Bank's  regulatory  capital to be reduced below (1) the amount  required for the
liquidation  account  established in connection with the Bank's  conversion from
mutual to stock form, or (2) the regulatory capital  requirements imposed by the
Office of Thrift Supervision ("OTS").

                                    - 2 -

<PAGE>

<TABLE>
<CAPTION>

Guthrie Savings, Inc. 
=========================================================================================================                
FIVE-YEAR FINANCIAL SUMMARY                                                                             
                                                                                
Selected Financial Condition Data (Dollars in Thousands) (*) 
=========================================================================================================
At March 31,                                         1997       1996         1995      1994       1993
---------------------------------------------------------------------------------------------------------
<S>                                                <C>        <C>         <C>        <C>        <C>     
Total assets                                       $ 49,047   $ 46,820    $ 44,727   $ 42,839   $ 44,723
Loans receivable                                     23,461     22,972      23,182     21,630     23,867
Investment securities held-to-maturity                8,700      9,751       8,366      5,485      3,281
Investment securities available-for-sale              2,062      2,133         929        659          0
Mortgage-backed securities held-to-maturity          13,273      9,428       9,869     11,145     14,025
Cash and cash equivalents                               523      1,402       1,090      2,392      2,226
Deposits                                             34,293     36,311      34,543     39,084     41,194
Borrowed money                                        6,700      2,000       1,700          -          -
Stockholders' equity                                  7,805      8,049       8,236      3,410      2,746

</TABLE>

<TABLE>
<CAPTION>

Summary of Operations (Dollars in Thousands) (*)
---------------------------------------------------------------------------------------------------------
Year Ended March 31,                                  1997      1996         1995       1994      1993
---------------------------------------------------------------------------------------------------------
<S>                                                <C>        <C>         <C>        <C>        <C>     
Interest income                                    $  3,632   $  3,416    $  3,198   $  3,274   $  3,695
Interest expense                                      1,833      1,761       1,489      1,512      1,950
                                                   --------   --------    --------   --------   --------
  Net interest income                                 1,799      1,655       1,709      1,762      1,745
Provision for loan losses                                 1       (132)         12         70        247
                                                   --------   --------    --------   --------   --------
  Net interest income after
     provision for loan losses                        1,798      1,787       1,697      1,692      1,498

Non-interest income                                     251        336         193        215        243
Non-interest expense (1)                              1,416      1,229       1,095      1,093        967
                                                   --------   --------    --------   --------   --------
Income before income taxes and
     cumulative effect of accounting change             633        894         795        814        774
Provision for income taxes                              253        309         250        278        264
                                                   --------   --------    --------   --------   --------
Income before cumulative effect of
     accounting change                                  380        585         545        536        510
Cumulative effect of accounting change                    -          -           -        128          0
                                                   --------   --------    --------   --------   --------
Net income                                         $    380   $    585    $    545   $    664   $    510
                                                   ========   ========    ========   ========   ========

Earnings per share* (2)                            $   0.89   $   1.25    $   0.48   $      -   $      -
                                                   ========   ========    ========   ========   ========

Dividends per share (2)                            $   0.50   $   0.50    $   0.20   $      -   $      -
                                                   ========   ========    ========   ========   ========

Book value per common share
  outstanding at March 31                          $  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) For 1997,  includes  $225,000 for a special  assessment to recapitalize  the
    federal  deposit  insurance fund to which Guthrie  Federal Savings Bank pays
    premiums.  
(2) For periods  following  conversion  from mutual to stock on October 11, 1994
    (1995 - October 11, 1994 through March 31, 1995).

                                      - 3 -

<PAGE>

 
<TABLE>
<CAPTION>

Guthrie Savings, Inc.
========================================================================================================
FIVE-YEAR FINANCIAL SUMMARY

Selected Ratios and Other Data (*)
========================================================================================================
Year Ended March 31,                                  1997        1996      1995        1994       1993
--------------------------------------------------------------------------------------------------------

<S>                                                 <C>         <C>        <C>        <C>        <C> 
Return on average assets                              0.79%       1.30%      1.24%      1.51%      1.10
Return on average equity                              4.89        7.12      10.39      22.53      20.49
Average equity to average assets                     16.13       18.18      11.93       6.71       5.38
Equity to assets at period end                       15.91       17.19      18.41       7.96       6.14
Net interest spread                                   3.14        2.98       3.59       3.95       3.77
Net yield on average interest earning assets          3.81        3.78       4.02       4.15       3.92
Non-performing loans to total assets                  0.85        1.33       1.80       1.35       3.07
Non-performing loans to net loans                     1.79        2.72       3.46       2.68       5.75
Non-performing assets to total assets                 0.85        1.33       1.94       1.80       3.55
Allowance for loan losses to total loans              1.61        1.70       2.33       2.58       2.68
Dividend payout                                      55.32       38.08      17.38
Number of:
  Real estate loans outstanding                        550         576        621        633        738
  Deposit accounts                                   4,538       4,772      4,744      5,133      5,335
</TABLE>


[GRAPHIC OMITTED - Net Income using data from chart on prior page] 

[GRAPHIC OMITTED - Non-performing Assets/Total Assets, using data from chart 
                   above]

[GRAPHIC OMITTED - Total Assets, using data from chart on prior page] 

[GRAPHIC OMITTED - Stockholders' Equity, using data from chart on prior page]


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

                                      - 4 -

<PAGE>


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


General

On October 11, 1994, Guthrie Federal Savings and Loan Association  completed its
conversion from a federally  chartered mutual savings association to a federally
chartered  mutual savings bank and changed its name to Guthrie  Federal  Savings
Bank.  The  Bank  was  simultaneously  acquired  by  Guthrie  Savings,  Inc.,  a
corporation  which was formed to act as the holding  company of the Bank. At the
date of conversion,  the Company  completed the sale of 515,125 shares of common
stock, $0.01 par value, through concurrent  Subscription and Community Offerings
at $10.00 per share.  The $5,151,250  raised in the stock offering was comprised
of  approximately  $4,291,250  in  cash  and  $860,000  of  funds  withdrawn  by
depositors  from  existing  accounts.  Net  proceeds  from the  Conversion  were
$4,356,175,  after  recognizing  Conversion  expenses and underwriting  costs of
$382,975 and the stock acquired by the Employees' Stock Ownership Plan ("ESOP").

Guthrie Federal  Savings 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  Oklahoma  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 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.  Earnings  of the Bank are also  affected
significantly  by general  economic  and  competitive  conditions,  particularly
changes in market interest rates,  government policies and actions of regulatory
authorities.


Financial Condition

Consolidated  total assets increased  $2,227,625,  or 4.76%, from $46,819,631 at
March  31,  1996  to  $49,047,256  at  March  31,  1997.  The  principal  factor
contributing  to the  growth  in  assets  was  an  increase  in  mortgage-backed
securities funded largely through additional Federal Home Loan Bank advances.

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 $1,121,897, or 9.44% from $11,883,624 at March 31,
1996 to $10,761,727 at March 31, 1997. This decrease is directly  related to the
increase  in the  mortgage-backed  securities  portfolio  discussed  in the next
paragraph;   as  securities   matured,   excess  funds  were  used  to  purchase
mortgage-backed securities.


                                      - 5 -

<PAGE>

Mortgage-backed securities:
Mortgage-backed  securities increased $3,845,032,  or 40.78%, from $9,428,366 at
March 31, 1996 to $13,273,398  at March 31, 1997. The Bank purchased  $5,227,289
of  mortgage-backed  securities during the year ended March 31, 1997 compared to
purchases of $1,000,965  and $257,050  during the years ended March 31, 1996 and
1995,  respectively.  The Bank has been  focusing  on using its excess  funds to
increase its  mortgage-backed  securities  portfolio during the year ended March
31, 1997,  contributing to the decrease in investment securities.  As investment
securities   matured  during  the  year  the  proceeds  were  used  to  purchase
mortgage-backed securities. The Bank also used funds provided by FHLB adjustable
rate advances to purchase  mortgage-backed  securities.  Collateralized mortgage
obligations  ("CMO's") were purchased in conjunction  with FHLB  adjustable-rate
advances with the intent to match the interest rate base and repricing  dates to
establish  a  desired  interest  rate  spread.   The  yield  on  mortgage-backed
securities  at  March  31,  1997 was  6.81%  compared  to a yield on  investment
securities  of 6.49%.  Mortgage-backed  securities  generally  provide for lower
returns than loans originated by the Bank and are utilized when investable funds
exceed loan demand.

The Company had net unrealized losses on investment securities held-to-maturity,
not reflected on the consolidated financial statements,  of $120,894 and $56,136
at March 31, 1997 and 1996, respectively.  The Company had net unrealized losses
on   mortgage-backed   securities   held-to-maturity,   not   reflected  on  the
consolidated financial statements,  of $87,596 and $55,366 at March 31, 1997 and
1996,  respectively.  This  overall  decline  in fair  market  value  below  the
amortized cost of these securities  held-to-maturity  at March 31, 1997 and 1996
is deemed to be due to temporary changes in the interest rate  environment.  The
Bank has capital  sufficient to support these net unrealized losses. The Company
has  experienced  increases  in the net  unrealized  losses on  investments  and
mortgage-backed  securities  held-to-maturity  due to the current  interest rate
environment.

Loans receivable:
Net loans receivable increased $489,692, or 2.13%, from $22,971,565 at March 31,
1996 to  $23,461,257  at March 31,  1997.  This growth in the loan  portfolio is
attributed to increased  lending  activity as a result of increased loan demand.
This  increase was  primarily  due to an increase in consumer and other loans of
$486,003 from $2,371,097 at March 31, 1996 to $2,857,100 at March 31, 1997.

The Bank has recognized  impaired loans having recorded  investments of $366,316
at March 31, 1997 and $348,895 at March 31, 1996. A loan is impaired when, based
on management's  evaluation of current and historical information and events, it
is probable that all amounts due according to the contractual  terms of the loan
agreement  will not be  collected.  Loans which are  classified  as impaired are
typically collateral dependent; therefore, impairment is measured based upon the
fair  value of the  collateral  less  estimated  costs to  sell.  Impairment  is
recognized  by creating a valuation  allowance  with a  corresponding  charge to
provision for loss on loans.

Management,  as a part of the monitoring and evaluation of non-performing loans,
classifies loans in accordance with regulatory  provisions as loss,  doubtful or
substandard.  Total loans classified as of March 31, 1997 and 1996,  amounted to
$673,647 and $920,663,  respectively,  including  loans  recognized as impaired.
Those loans  classified which are not recognized as impaired include loans which
are  currently  past due 60 days or more or have a past history of  delinquency.
The level of classified loans has continued to decline  primarily as a result of
improving economic conditions and real estate values. Classified loans have been
considered by management in the  evaluation of the adequacy of the allowance for
loan loss.  Management is unaware of any trends which it reasonably expects will
materially impact future operating results, liquidity, or capital resources.


                                      - 6 -

<PAGE>

Foreclosed real estate:
There was no foreclosed  real estate ("REO") at March 31, 1997 and 1996. REO has
been steadily decreasing during the last five years.

Deposits:
Deposits  decreased  from  $36,310,860 at March 31, 1996 to $34,293,278 at March
31, 1997, a decrease of $2,017,582,  or 5.56%. This decrease resulted,  in part,
from  higher  interest  rates  being paid by the Bank on a  promotional  account
offered in April of 1995 for six month and one year  certificates  which matured
prior to March 31, 1997.  Many of these deposits from  customers  other than the
Bank's local  customer base were withdrawn  after the promotion  ended or within
the next deposit  maturity cycle.  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 4.81% for the year ended March 31, 1996
to 4.42% for the year ended March 31, 1997.

Of the  $23,202,273  in  certificates  of deposit  held by the Bank at March 31,
1997,  $18,517,517 of these deposits will mature during the year ended March 31,
1998. 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  $6,000,000  and  $2,000,000 at March 31,1997 and
1996,  respectively.  Of the fixed term  advances at March 31, 1997,  $2,000,000
were fixed rate advances and  $4,000,000  were  adjustable  rate  advances.  The
advance  outstanding  at March 31, 1996 was at a fixed  interest rate. The funds
provided  by the  adjustable  rate  advances  were used  primarily  to  purchase
mortgage-backed  securities.  The advances and related mortgage-backed  security
purchases  were  initiated  together and are intended to match the interest rate
base and repricing dates.

The Bank also has a line of credit with the FHLB with an outstanding  balance of
$700,000 and $0 at March 31,1997 and 1996,  respectively.  The funds provided by
the line of credit are used to fund lending and for regular operations.

These  borrowings  resulted  in a  $4,700,000  increase  in  advances  and other
borrowings  from the FHLB from March 31, 1996 to March 31,  1997.  The  weighted
average  cost of  theses  borrowings  from the FHLB was  5.50% and 5.46% for the
years ended March 31, 1997 and 1996,  respectively.  Of the  advances  and other
borrowings  outstanding  at March 31, 1997,  $6,004,000  matures during the year
ended March 31, 1998.

Asset and Liability Management

The  ability to  maximize  net  interest  income is largely  dependent  upon the
achievement  of a positive  interest  rate spread that can be  sustained  during
fluctuations  in  prevailing  interest  rates.  Interest rate  sensitivity  is a
measure  of the  difference  between  amounts  of  interest-earning  assets  and
interest-bearing  liabilities  which  either  reprice  or mature  within a given
period of time. The difference,  or the interest rate repricing  "gap," provides
an indication of the extent to which an institution's  interest rate spread will
be affected by changes


                                      - 7 -

<PAGE>

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.  The following  tables present the Bank's NPV as well as other data
as of March 31, 1997, as calculated by the OTS, based on information provided to
the OTS by the Bank.

<TABLE>
<CAPTION>

     Change in Interest
     Rates in Basis                                                  NPV as % of Present
     Points (Rate Shock)               Net Portfolio Value             Value of Assets
------------------------- -----------------------------------------  --------------------             

                           $ Amount         $ Change      Change %    NPV Ratio   Change
                          ------------    -------------  ----------  ----------- --------
                                       (Dollars in Thousands)
<S>                         <C>               <C>           <C>        <C>         <C>           
         +400 bp            $   4,856        (3,137)        (39)  %     10.48%     -543 bp
         +300 bp            $   5,744        (2,250)        (28)  %     12.11%     -380 bp
         +200 bp (1)        $   6,637        (1,356)        (17)  %     13.69%     -222 bp
         +100 bp            $   7,399          (594)         (7)  %     14.96%      -95 bp
            0 bp            $   7,993                                   15.91%
         -100 bp            $   8,361           368           5  %      16.46%      +55 bp
         -200 bp            $   8,398           404           5  %      16.45%      +54 bp
         -300 bp            $   8,400           407           5  %      16.39%      +48 bp
         -400 bp            $   8,550           557           7  %      16.57%      +66 bp
</TABLE>

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


                                      - 8 -

<PAGE>

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

Risk  Measures (200 Basis Point Rate Shock):

<S>                                                                              <C>    
       Pre-Shock NPV Ratio:  NPV as % of Present Value of Assets                 15.91 %
       Exposure Measure:  Post-Shock NPV Ratio                                   13.69 %
       Sensitivity Measure:  Change in NPV Ratio                                  -222 bp

Calculation of Capital Component:

       Change in NPV as % of Present Value of Assets                              2.70 %

</TABLE>

Utilizing the data above, the Bank, at March 31,1997, would have been considered
by the OTS to have been  subject  to  "above  normal"  interest  rate risk and a
deduction from risk-based capital would have been required.

Set forth below is a breakout, by basis points of the Bank's NPV as of March 31,
1997 by assets, liabilities and off-balance sheet items.

<TABLE>
<CAPTION>

Net Portfolio Value    -400 bp     -300 bp     -200 bp     -100 bp      Change     +100 bp     +200 bp     +300 bp     +400 bp
------------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------------------

<S>                  <C>        <C>         <C>          <C>        <C>         <C>         <C>         <C>           <C>       
Assets               $   51,614 $    51,253 $    51,044  $   50,804   $  50,238   $  49,447   $  48,494   $   47,413  $  46,341
-Liabilities             43,080      42,866      42,657      42,450      42,249      42,050      41,856       41,665     41,478
+Off Balance Sheet           16          13          11           7           4           2          (1)          (4)        (7)
                    ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ---------
Net Portfolio Value  $    8,550 $     8,400  $    8,398  $    8,361 $     7,993 $     7,399 $     6,637 $      5,744  $   4,856
                    =========== =========== =========== =========== =========== =========== =========== ============= =========
</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  will not change as a
result of changes in interest rates although there can be no assurance that this
will be the case. Even if interest rates change in the designated amounts, there
can be no assurance that the Bank's assets and liabilities  would perform as set
forth above.

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

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





                                      - 9 -

<PAGE>

Average Balances, Interest and Average Yields and Rates

The  following  table  sets forth  certain  information  relating  to the Bank's
average  balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated and the average yields earned and rates
paid.  Such yields and costs are  derived by  dividing  income or expense by the
average  balance  of  assets  or  liabilities,  respectively,  for  the  periods
presented. Average balances are derived from month-end balances. Management does
not believe that the use of month-end balances instead of daily average balances
has  caused any  material  difference  in the  information  presented.  

<TABLE>
<CAPTION>
                                                                             Years Ended March 31,
                                                         --------------------------------------------------------------
                                             At March 31,
                                                 1997                1997                            1996               
                                             ----------- ------------------------------ ------------------------------- 
                                                          Average             Average    Average              Average   
                                                          Balance  Interest  Yield/Cost  Balance   Interest  Yield/Cost 
                                                         --------  --------  ---------- ---------  --------  ---------- 
                                                (Dollars in Thousands)
Interest-earning assets:
<S>                                               <C>    <C>       <C>       <C>        <C>        <C>        <C>       
  Loans receivable (1)                            8.74%  $ 22,895  $ 2,087     9.12%    $ 22,729   $ 2,087      9.19%   
  Mortgage-backed securities                      6.81%    12,146      775     6.38%       9,507       599      6.31%   
  Investment securities (2)                       6.49%    11,224      735     6.55%       9,385       616      6.57%   
 Other interest-earning assets                    5.72%       866       35     4.04%       2,170       114      5.27%   
                                                  ----   --------  -------   ------     --------   -------     -----    
     Total interest-earning assets                7.68%  $ 47,131  $ 3,632     7.71%    $ 43,791   $ 3,416      7.80%   
                                                  ====   ========  =======     ====     ========   =======      ====    

Non-interest-earning assets:                                1,151                          1,376                        
                                                         --------                       --------                        
     Total assets                                        $ 48,282                       $ 45,167                        
                                                         ========                       ========                        

Interest-bearing liabilities:
  Savings accounts                                2.60%  $  3,136  $    81     2.58%    $  3,481   $    102     2.94%   
  Demand deposits                                 2.44%     8,249      201     2.44%       8,083        235     2.90%   
  Certificates of deposit                         5.42%    23,187    1,247     5.38%      24,653      1,405     5.69%   
Other borrowed funds                              5.70%     5,545      305     5.50%         348         19     5.46%   
                                                  ----   --------  -------   ------     --------   -------    ------    
     Total interest-bearing liabilities           4.67%    40,117  $ 1,834     4.57%      36,565   $  1,761     4.82%   
                                                  ====   ========  =======   ======     ========   ========   ======    
Non-interest bearing liabilities                              379                            394                        
                                                         --------                       --------                        
     Total liabilities                                     40,496                       $ 36,959                        
                                                         ========                       ========                        
Stockholder's equity                                        7,786                          8,208                        
                                                         --------                       --------                        
     Total liabilities and stockholders' 
        equity                                             48,282                       $ 45,167                        
                                                         ========                       ========                        
Net interest income                                                $ 1,798                         $ 1,655              
                                                                   =======                         =======              

Interest rate spread (3)                          3.01%                        3.14%                            2.98%   
                                                  ====                       ======                           ======    

Net yield on interest-earning assets (4)                                       3.81%                            3.78%   
                                                                             ======                           ======    

Ratio of average interest-earning assets
    to average interest-bearing liabilities                                  117.48%                          119.79%   
                                                                             ======                           ======    
</TABLE>

<TABLE>
<CAPTION>
                                                    Years Ended March 31,
                                               -------------------------------
                                                            1995
                                               --------------------------------
                                                Average              Average
                                                Balance   Interest  Yield/Cost
                                               ---------  --------- -----------
                                             
Interest-earning assets:
<S>                                            <C>        <C>        <C>  
  Loans receivable (1)                         $ 22,316   $  2,036     9.12%
  Mortgage-backed securities                     10,341        584     5.65%
  Investment securities (2)                       7,975        498     6.24%
 Other interest-earning assets                    1,853         81     4.37%
                                               --------   --------   ------ 
     Total interest-earning assets             $ 42,485   $  3,199     7.53%
                                               ========   ========     ==== 

Non-interest-earning assets:                      1,513
                                               --------
     Total assets                              $ 43,998
                                               ========

Interest-bearing liabilities:
  Savings accounts                             $  3,772   $    113     3.00%
  Demand deposits                                 9,426        278     2.95%
  Certificates of deposit                        23,736      1,039     4.38%
Other borrowed funds                                916         59     6.44%
                                               --------   --------   ------ 
     Total interest-bearing liabilities        $ 37,850   $  1,489     3.93%
                                               ========   ========   ====== 
Non-interest bearing liabilities                    898
                                               --------
     Total liabilities                         $ 38,748
                                               ========
Stockholder's equity                              5,250
                                               --------
     Total liabilities and stockholders' 
       equity                                  $ 43,998
                                               ========
Net interest income                                       $  1,710
                                                          ========

Interest rate spread (3)                                               3.60%
                                                                     ====== 

Net yield on interest-earning assets (4)                               4.03%
                                                                     ====== 

Ratio of average interest-earning assets
    to average interest-bearing liabilities                          112.25%
                                                                     ====== 
</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.

                                      -10 -

<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,
                                           ---------------------------------------------------------------------
                                                   1997 vs. 1996                       1996 vs. 1995
                                           ----------------------------------  ---------------------------------
                                              Increase (Decrease) Due to          Increase (Decrease) Due to
                                           ----------------------------------  ---------------------------------
                                                              Rate/                               Rate/
                                           Volume    Rate    Volume     Net     Volume   Rate    Volume     Net
                                           ------   ------   ------   -------  -------  ------   ------   ------
                                                                        (In Thousands)

Interest income:
<S>                                        <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>  
    Loans receivable                       $  15    $ (15)   $  --    $  --    $  38    $  16    $  (3)   $  51
    Mortgage-backed securities               167        7        2      176      (47)      68       (6)      15
    Investment securities                    121       (1)      (1)     119       88       26        4      118
    Other interest-earning assets            (69)     (26)      16      (79)      14       17        2       33
                                           -----    -----    -----    -----    -----     ----    -----    ----- 
      Total interest-earning assets        $ 234    $ (35)   $  17    $ 216    $  93      127    $  (3)     217
                                           =====    =====    =====    =====    =====     ====    =====    =====
Interest expense:
    Savings accounts                       $ (10)   $ (13)   $   2    $ (21)   $  (9)   $  (2)   $  --      (11)
    Demand deposits                            4      (37)      (1)     (34)     (40)      (5)       2      (43)
    Certificates of deposits                 (84)     (77)       3     (158)      40       311      15      366
    Other borrowed funds                     283       --        3      286      (37)      (9)       6      (40)
                                           -----    -----    -----    -----    -----     ----    -----    ----- 
      Total interest-bearing liabilities   $ 193    $(127)   $   7    $  73    $ (46)   $ 295    $  23    $ 272
                                           =====    =====    =====    =====    =====     ====    =====    =====
Net change in interest income              $  41    $  92    $  10    $ 143    $ 139     (168)   $ (26)   $ (55)
                                           =====    =====    =====    =====    =====     ====    =====    ===== 

</TABLE>

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

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

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.  The  after  tax  effect of the
assessment was to reduce net income by approximately $149,000 for the year ended
March 31, 1997.  Without the effect of the assessment net income would have been
approximately  $530,000  for the year ended March 31,  1997.  Earnings per share
without the effect of the assessment would have been approximately $1.24 for the
year ended March 31, 1997.

Beginning January 1, 1997,  deposit insurance  assessments for 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

                                     - 11 -

<PAGE>


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.

The disparity in insurance  premiums between those required for the Bank and BIF
members  could  allow BIF  members to  attract  and  retain  deposits  at higher
interest  rates and at a lower  effective  cost than the  Bank.  This  could put
competitive  pressure on the Bank to raise its interest  rates paid on deposits,
thus  increasing  its cost of funds and possibly  reducing net interest  income.
Although  the Bank has other  sources of funds,  these  other  sources  may have
higher costs than those of deposits.

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

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

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

Provision for losses on loans:
The  Bank   currently   maintains  an  allowance  for  loan  losses  based  upon
management's  periodic  evaluation  of  known  and  inherent  risks  in the loan
portfolio,  the Bank's past loss experience,  adverse situations that may affect
the  borrowers'  ability  to repay  loans,  estimated  value  of the  underlying
collateral and current and expected market conditions.  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.



                                     - 12 -


<PAGE>


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

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

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

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

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

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

Comparison of Operating Results for the Years Ended March 31, 1996 and 1995

General:
Net income increased  $39,680,  or 7.28%, from $545,278 for the year ended March
31,  1995 to $584,958  for the year ended  March 31,  1996.  This  increase  was
primarily  the  result of a  decrease  in the  provision  for losses on loans of
$143,576 and gain from real estate operations of $134,788. These items, which



                                     - 13 -


<PAGE>


have  contributed  to income,  would not be expected to be  recurring  in future
years.  Income  before  income  taxes,  excluding  these  items  would have been
$627,305 at March 31,  1996,  compared to $794,934  for the year ended March 31,
1995.  Partially due to a negative gap and a rising  interest rate  environment,
net interest  income  declined from  $1,709,142 for 1995 to $1,655,297 for 1996.
Additionally,  exclusive  of the  gain  from  real  estate  operations  in 1996,
non-interest expense increased from $1,111,816 for 1995 to $1,229,369 for 1996.

Total interest income:
Total interest income increased $217,754, or 6.81%, from $3,198,633 for the year
ended  March 31, 1995 to  $3,416,387  for the year ended  March 31,  1996.  This
increase is primarily the result of an increase in investment  securities during
the year ended  March 31,  1996,  this is  reflected  in the Bank's  rate/volume
analysis  as the  increase  in  interest  income  resulting  from the  volume of
investment securities was $88,000.

Interest expense:
Total interest  expense  increased  $271,599 or 18.23%,  from $1,489,491 for the
year ended March 31, 1995 to $1,761,090 for the year ended March 31, 1996.  This
increase  is  primarily  due to an  increase  in market  interest  rates paid on
deposits  and the  relatively  rapid  repricing  of the  deposit  base.  This is
reflected in the Bank's  rate/volume  analysis as approximately  $295,000 of the
increase in interest  expense was due to interest  rate  changes.  Although this
results in an increase in interest  expense,  there was a $46,000  reduction  in
interest  expense  resulting  from a decrease in the volume of  interest-bearing
liabilities.

Net interest income:
As a result of rising  interest  rates during the year ended March 31, 1996, net
interest  income  declined from  $1,709,142 for the year ended March 31, 1995 to
$1,655,297  for the year ended March 31,  1996.  Net  interest  income  declined
$168,000 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 $139,000.

Provision for losses on loans:
The  provision  for loan losses was  ($131,875)  and $11,701 for the years ended
March 31, 1996 and 1995,  respectively.  The provision for loan losses decreased
$143,576  for the  year  ended  March  31,  1996  as a  result  of  management's
evaluation  of  the  adequacy  of  the  allowance  for  losses  on  loans  after
considering  the loan portfolio in conjunction  with current and expected market
conditions.  The allowance for loan losses as a percent of non-performing assets
was 62.7% at March 31, 1996 compared to 63.1% at March 31, 1995.

Non-interest income:
Non-interest  income  increased  $143,270 from $192,895 for the year ended March
31, 1995 to $336,165  for the year ended March 31,  1996.  This  increase is the
result in a gain from real estate operations.  The Company experienced  $134,788
income from real estate operations during the year ended March 31, 1996 compared
to a $16,418 loss from real estate operations for the year ended March 31, 1995.
The  increase in income was the result of a gain on the sale of a parcel of land
that the bank obtained through foreclosure of a participation loan.

Non-interest expense:
Total non-interest expense increased $133,971 from $1,095,398 for the year ended
March 31, 1995 to $1,229,369 for the year ended March 31, 1996. Compensation and
related expenses increased $67,263 or

                                     - 14 -


<PAGE>


13.08% from  $514,244 for the year ended March 31, 1995 to $581,507 for the year
ended March 31, 1996,  this  primarily  resulted  from  additional  compensation
expense  related to the ESOP and the  Management  Stock Bonus Plan (the  "MSBP")
which were in place  throughout  all or most of the year.  Compensation  expense
included eight months of amortization expense relating to the MSBP. Professional
fees also  increased  $62,961  during the year from  $71,783  for the year ended
March 31, 1995 to  $134,744  for the year ended March 31,  1996,  this  increase
relates  to  additional  professional  services  required  as a  result  of  the
conversion.

Income tax expense:
Income tax expense  increased  23.77% from $249,660 for the year ended March 31,
1995 to $309,010 for the year ended March 31, 1996. This increase  relates to an
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 the year ended March 31,  1997,  cash and cash  equivalents  decreased by
$879,280 as compared to March 31, 1996. The decrease was the result of cash used
in investing  activities of $3,237,915  off set by cash generated from operating
activities of $588,693 and financing  activities of $1,769,942.  The increase in
cash and cash equivalents used by investing  activities  resulted primarily from
the acquisition of held-to-maturity  mortgage-backed securities. The increase in
cash provided by financing activities was largely attributable to an increase in
Federal Home Loan Bank ("FHLB")  advances and  borrowings of  $4,700,000.  As of
March  31,  1997,  the  Bank had an  existing  line of  credit  with the FHLB of
$2,500,000  against which the Bank had an  outstanding  balance of $700,000 that
could serve as an additional source of liquidity.

During 1996,  cash and cash  equivalents  increased by $311,636,  primarily as a
result of an  increase  in  deposits  of  $1,764,923  resulting  in total  funds
provided by financing  activities of  $1,383,266.  The Company also had net cash
provided by operating activities of $603,234. The cash provided by financing and
operating  activities were partially offset by cash used by investing activities
of $1,674,864.  Cash and cash equivalents used by investing  activities resulted
primarily  form  the  acquisition  of  held-to-maturity  and  available-for-sale
investment securities.

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 5% of its average daily balance of net  withdrawable  deposit  accounts and
borrowings  payable in one year or less, of which short-term  liquid assets must
consist  of not less  than 1%.  At March 31,  1997,  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, 1997 the Bank
exceeded all of the minimum capital  requirements as currently required.  Please
refer to Note 11 of the accompanying Notes to Consolidated  Financial Statements
for more information  regarding the Bank's regulatory  capital position at March
31, 1997.

                                     - 15 -


<PAGE>


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.

Impact of New Accounting Standards

Please  refer  to Note 1 of the  accompanying  Notes to  Consolidated  Financial
Statements  for  more  information   regarding  the  impact  of  new  accounting
standards.








                                     - 16 -

<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, 1997 and 1996 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,  1997.
These  financial   statements  are  the   responsibility  of  the  Corporation'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, 1997 and 1996,  and the results of their  operations
and cash flows for each of the three years in the period ended March 31, 1997 in
conformity with generally accepted accounting principles.



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





April 26, 1997
Wichita, Kansas

                                      F - 1

<PAGE>

                              Guthrie Savings, Inc.

                 Consolidated Statements of Financial Condition
                             March 31, 1997 and 1996

<TABLE>
<CAPTION>


ASSETS                                                             1997            1996
                                                              ------------    ------------
Cash and cash equivalents:
<S>                                                           <C>             <C>         
        Interest bearing                                      $    311,624    $    989,674
        Non-interest bearing                                       211,205         412,435
                                                              ------------    ------------
            Total cash and cash equivalents                        522,829       1,402,109
Investment securities held-to-maturity (estimated market
        value of $8,579,106 and 9,694,395 at March 31,
        1997 and 1996, respectively)                             8,700,000       9,750,531
Investment securities available-for-sale                         2,061,727       2,133,093
Mortgage-backed securities held-to-maturity (estimated
        market value of $13,185,802 and $9,373,000 at
        March 31, 1997 and 1996, respectively)                  13,273,398       9,428,366
Loans receivable, net                                           23,461,257      22,971,565
Accrued income receivable                                          330,277         363,528
Real estate owned and other repossessed assets, net
Office properties and equipment, net                               598,633         627,836
Income taxes receivable, current                                                    31,758
Prepaid expenses and other assets                                   99,135         110,845
                                                              ------------    ------------
             Total assets                                     $ 49,047,256    $ 46,819,631
                                                              ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
        Deposits                                              $ 34,293,278    $ 36,310,860
        Advances and other borrowings from
            Federal Home Loan Bank                               6,700,000       2,000,000
        Advances from borrowers for taxes and insurance             32,830          40,298
        Dividend payable                                                           222,740
        Other liabilities and accrued expense                       60,805          78,784
        Deferred income                                             57,956          61,143
        Income taxes payable, current                               17,816
        Deferred income taxes                                       79,531          57,151
                                                              ------------    ------------
             Total liabilities                                  41,242,216      38,770,976
                                                              ------------    ------------

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                               4,779,668       4,765,516
        Retained income, substantially restricted                4,392,507       4,222,553
        Unrealized loss on available-for-sale securities           (46,379)         (9,916)
        Unamortized stock acquired by Employee Stock
          Ownership Plan                                          (309,075)       (350,285)
        Unamortized compensation related to Management
          Stock Bonus Plan                                        (134,836)       (175,286)
        Treasury stock, at cost, 64,766 and 30,498 shares
          at March 31, 1997 and 1996, respectively                (881,996)       (409,078)
                                                              ------------    ------------
             Total stockholders' equity                          7,805,040       8,048,655
                                                              ------------    ------------
             Total liabilities and stockholders' equity       $ 49,047,256    $ 46,819,631
                                                              ============    ============
</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, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                                              1997          1996            1995
                                                          -----------   -----------    -----------
                                                        
Interest income:
<S>                                                       <C>           <C>            <C>        
        Interest on loans                                 $ 2,087,179   $ 2,087,326    $ 2,036,441
        Interest on mortgage-backed securities                774,790       599,074        584,158
        Interest and dividends on investment securities       770,018       729,987        578,034
                                                          -----------   -----------    -----------
             Total interest income                          3,631,987     3,416,387      3,198,633
                                                          -----------   -----------    -----------
Interest expense:
        Deposits                                            1,528,658     1,741,666      1,429,948
        Borrowed funds                                        304,925        19,424         59,543
                                                          -----------   -----------    -----------
             Total interest expense                         1,833,583     1,761,090      1,489,491
                                                          -----------   -----------    -----------
             Net interest income                            1,798,404     1,655,297      1,709,142
Provision for losses on loans                                     763      (131,875)        11,701
                                                          -----------   -----------    -----------
        Net interest income after loan loss
          provision                                         1,797,641     1,787,172      1,697,441
                                                          -----------   -----------    -----------
Non-interest income:
        Service charges                                       164,561       166,907        176,076
        Net gain on sale of investments                        46,528
        Gain (loss) from real estate operations                    12       134,788        (16,418)
        Other                                                  40,176        34,470         33,237
                                                          -----------   -----------    -----------
             Total non-interest income                        251,277       336,165        192,895
                                                          -----------   -----------    -----------
Non-interest expense:
        Compensation and related expenses                     589,319       581,507        514,244
        Occupancy expense                                      63,368        62,947         66,001
        Professional fees                                     118,628       134,744         71,783
        Federal insurance premium                              62,913        82,267         87,970
        SAIF special assessment                               225,433
        Data processing                                        83,210        93,594         88,305
        Bank charges                                           57,922        52,438         53,326
        Other expense                                         215,082       221,872        213,769
                                                          -----------   -----------    -----------
             Total non-interest expense                     1,415,875     1,229,369      1,095,398
                                                          -----------   -----------    -----------
             Income before income taxes                       633,043       893,968        794,938
                                                          -----------   -----------    -----------
Income taxes:
        Currently payable                                     211,499       205,832        237,504
        Deferred tax expense (benefit)                         41,164       103,178         12,156
                                                          -----------   -----------    -----------
                                                              252,663       309,010        249,660
                                                          -----------   -----------    -----------

             Net income                                   $   380,380   $   584,958    $   545,278
                                                          ===========   ===========    ===========

Earnings per share (period subsequent to
  initial issuance of common stock on
  October 11, 1994 for 1995)                              $      0.89   $      1.25    $      0.48
                                                          ===========   ===========    ===========
Weighted average common shares outstanding                    425,222       467,697        473,915
                                                          ===========   ===========    ===========
</TABLE>

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

                                      F-3


<PAGE>
                              Guthrie Savings, Inc.

           Consolidated Statements of Changes in Stockholders' Equity
                    Years Ended March 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                              Unamortized          
                                                                Unrealized       Common      Unamortized 
                                                              Gain (Loss) on      Stock     Compensation                   Total
                           Common      Paid-In     Retained    Available-for-   Acquired by   Related to     Treasury  Stockholders'
                           Stock       Capital     Earnings   Sale Securities      ESOP          MSBP         Stock       Equity
                          ---------  ----------- -----------  ---------------  ------------  ------------  ---------- --------------
<S>                       <C>        <C>         <C>               <C>         <C>           <C>           <C>          <C>        
Balance, March 31, 1994   $      -   $        -  $ 3,409,840       $      -    $        -    $         -   $        -   $ 3,409,840
Net proceeds on common 
  stock issued in stock 
  conversion                 5,151    4,763,124                                  (412,100)                                4,356,175
Allocation of shares 
  by Employees' Stock  
  Ownership Plan                            169                                    20,605                                    20,774
Net income for the year
  ended March 31, 1995                               545,278                                                                545,278
Cash dividend paid ($0.20 
  per share)                                         (94,783)                                                               (94,783)
Net change in unrealized 
  loss on available-for-
  sale securities                                                      (915)                                                   (915)
                          --------  -----------  -----------       --------    ----------    -----------   ----------   -----------
Balance, March 31, 1995      5,151    4,763,293    3,860,335           (915)     (391,495)             -            -     8,236,369
Acquisition of 20,605 
  shares of common stock 
  by Management Stock
  Bonus Plan, 15,863 
  shares awarded, 4,742
  held in treasury                       (9,518)                                                (202,253)     (63,312)     (275,083)
Allocation of shares by
  Employees' Stock 
  Ownership Plan                         11,741                                    41,210                                    52,951
Amortization of 
  compensation related
  to Management Stock
  Bonus Plan                                                                                      26,967                     26,967
Net income for the year
  ended March 31, 1996                               584,958                                                                584,958
Cash dividend paid 
  ($0.50 per share)                                 (222,740)                                                              (222,740)
Net change in unrealized 
  loss on available-for-
  sale securities                                                    (9,001)                                                 (9,001)
Purchase of 25,756 
  treasury shares                                                                                            (345,766)     (345,766)
                          --------  -----------  -----------       --------    ----------    -----------   ----------   -----------
Balance, March 31, 1996      5,151    4,765,516    4,222,553         (9,916)     (350,285)      (175,286)    (409,078)    8,048,655
Allocation of shares by 
  Employees' Stock 
  Ownership Plan                         14,152                                    41,210                                    55,362
Amortization of 
  compensation related 
  to Management Stock
  Bonus Plan                                                                                      40,450                     40,450
Net income for the year
  ended March 31, 1997                               380,380                                                                380,380
Cash dividend paid 
  ($0.50 per share)                                 (210,426)                                                              (210,426)
Net change in unrealized 
  loss on available-for-
  sale securities                                                   (36,463)                                                (36,463)
Purchase of 34,268 
  treasury shares                                                                                            (472,918)     (472,918)
                          --------  -----------  -----------       --------    ----------    -----------   ----------   -----------
Balance, March 31, 1997   $  5,151  $ 4,779,668  $ 4,392,507       $(46,379)   $ (309,075)   ($  134,836)  $ (881,996)  $ 7,805,040
                          ========  ===========  ===========       ========    ==========    ===========   ==========   ===========
</TABLE>
The Notes to  Consolidated  Financial  Statements  are an integral part of these
statements.
                                       F-4

<PAGE>
                              Guthrie Savings, Inc.

                      Consolidated Statements of Cash Flows
                    Years Ended March 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                                                          1997           1996           1995
                                                                      -----------    ------------   ------------
                                                                        
CASH FLOWS FROM OPERATING ACTIVITIES                                                                    
<S>                                                                   <C>            <C>            <C>        
        Net income                                                    $   380,380    $   584,958    $   545,278
        Adjustments to reconcile net income to net cash
                provided by operating activities:
                        Gain on sale of investments                       (46,528)
                        (Gain) loss on sale of real estate acquired
                          in settlement of loans                            1,698       (114,611)        (5,344)
                        Depreciation                                       37,027         48,245         54,918
                        Amortization of premiums and
                          discounts on investments and loans                3,660         24,535         29,156
                        Provision for losses on loans and real
                          estate owned                                        763       (131,875)        39,214
                        (Increase) decrease in accrued interest
                          receivable                                       33,251         (7,506)       (58,552)
                        (Increase) decrease in other assets                11,710          3,368         (1,674)
                        Increase (decrease ) in accrued expenses          (17,979)        18,332        (72,974)
                        Increase (decrease) in accrued and deferred
                          income taxes                                     90,738        123,516        (58,196)
                        Amortization related to ESOP and MSBP              95,812         79,918         20,774
                        Other non-cash items, net                          (1,839)       (25,646)        (8,419)
                                                                      -----------    ------------   ------------
        Net cash provided by operating activities                         588,693        603,234        484,181
                                                                      -----------    ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
        Loan originations and principal payments
          on loans held-for-investment                                   (485,968)       254,832     (1,465,163)
        Proceeds from maturity of time deposits                                                         200,000
        Proceeds from maturities and calls of investment
          securities held-to-maturity                                   1,550,000      2,850,000
        Proceeds from sales of investment securities
          available-for-sale                                              102,347
        Proceeds from maturities and calls of investment
          securities available-for-sale                                                  300,000
        Acquisition of investment securities held-to-maturity            (500,000)    (4,250,000)    (2,899,531)
        Acquisition of investment securities available-for-sale           (39,700)    (1,518,100)      (300,000)
        Repayment of mortgage-backed securities                         1,357,171      1,415,997      1,501,042
        Acquisition of mortgage-backed securities
          held-to-maturity                                             (5,227,289)    (1,000,965)      (257,050)
        Acquisition of fixed assets                                        (7,824)       (12,800)       (16,922)
        Proceeds from sale of real estate acquired in settlement
          of loans                                                         13,348        286,122         39,604
        Other investing activities                                                            50        (25,287)
                                                                      -----------    ------------   ------------
        Net cash used by investing activities                          (3,237,915)    (1,674,864)    (3,223,307)

</TABLE>

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

                                      F-5
<PAGE>

                              Guthrie Savings, Inc.

                Consolidated Statements of Cash Flows (Continued)
                    Years Ended March 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                  1997             1996            1995
                                                              ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES                                                            
<S>                                                           <C>             <C>             <C>          
        Net increase (decrease) in deposits                   $ (2,016,506)   $  1,764,923    $ (4,542,902)
        Net decrease in escrow accounts                             (7,468)        (60,808)         (1,161)
        Proceeds from FHLB advance and other borrowings         12,000,000       2,300,000       2,700,000
        Repayment of FHLB advance and other borrowings          (7,300,000)     (2,000,000)     (1,000,000)
        Proceeds from stock issuance, net of conversion
                costs and stock acquired by ESOP                                                 4,376,238
        Purchase of treasury stock                                (472,918)       (345,766)
        Purchase of company stock by MSBP  held in treasury                        (63,312)
        Purchase of company stock by MSBP
                awarded to participants                                           (211,771)
        Cash dividends paid                                       (433,166)                        (94,783)
                                                              ------------    ------------    ------------
Net cash provided by financing activities                        1,769,942       1,383,266       1,437,392
                                                              ------------    ------------    ------------
Net increase (decrease) in cash and cash equivalents              (879,280)        311,636      (1,301,734)

Cash and cash equivalents at beginning of year                   1,402,109       1,090,473       2,392,207
                                                              ------------    ------------    ------------
Cash and cash equivalents at end of year                      $    522,829    $  1,402,109    $  1,090,473
                                                              ============    ============    ============

SUPPLEMENTAL DISCLOSURES
        Cash paid during the year for:
                Interest on deposits, advances and other
                  borrowings                                  $  1,835,422    $  1,760,621    $  1,488,215
                                                              ============    ============    ============

                Income taxes                                  $    189,059    $    226,170    $    307,856
                                                              ============    ============    ============

        Transfers from loans to real estate acquired
          through foreclosure                                 $     54,446    $    107,333    $     57,786
                                                              ============    ============    ============

        Transfers to (from) real estate acquired through
          foreclosure from deferred income                    $          -    $      (351)    $   (11,398)
                                                              ============    ===========    ============ 

        Loans to finance sale of real estate
          through foreclosure                                 $     39,400    $     32,500    $    136,038
                                                              ============    ============    ============

        Dividend declared and payable                         $          -    $    222,740    $          -
                                                              ============    ============    ============
</TABLE>

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

                                      F-6
<PAGE>


                              Guthrie Savings, Inc.

                   Notes to Consolidated Financial Statements
                          March 31, 1997, 1996 and 1995


1.     Summary of Significant Accounting Policies

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

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

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

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

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

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

                                      F-7
<PAGE>



1.     Summary of Significant Accounting Policies (Continued)

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

       Investment and mortgage-backed securities:
       Investments,  including  mortgage-backed  securities,  are  classified as
       either held-to-maturity, trading, or available-for-sale. Held-to-maturity
       securities are securities for which the Bank has the positive  intent and
       ability to hold to maturity and are reported at amortized  cost.  Trading
       securities are  securities  held  principally  for resale 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 equity.

       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.

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

                                      F-8
<PAGE>



1.     Summary of Significant Accounting Policies (Continued)

       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,
       commitments under credit card arrangements, commercial letters of credit,
       and standby letters of credit. Such financial instruments are recorded in
       the  financial  statements  when  they are  funded  or  related  fees are
       incurred or received.

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

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

       Stock-based compensation:
       In  October,   1995,  the  FASB  issued  SFAS  No.  123,  Accounting  for
       Stock-Based  Compensation.  This Statement establishes a fair-value-based
       method of  accounting  for stock  compensation  plans with  employees and
       others.  It applies to all  arrangements  under which  employees  receive
       shares  of stock or other  equity  instruments  of the  employer,  or the
       employer incurs liabilities to employees in amounts based on the price of
       the  employer's  stock.  Although  encouraged to do so,  entities are not
       required to adopt the  recognition  and  measurement  aspects of SFAS No.
       123, and may continue to account for  stock-based  compensation  plans in
       accordance  with APB Opinion 25. The Company has adopted the  recognition
       and measurement  provisions of SFAS No. 123 effective for the fiscal year
       beginning  April 1, 1996.  SFAS No. 123 will effect the  Company's  stock
       options granted after April 1, 1996. These options will be recognized and
       measured in accordance with the fair-value-based method of accounting.

       Impact of new accounting standards:
       In June, 1996, the FASB issued SFAS No. 125, Accounting for Transfers and
       Servicing of Financial Assets and  Extinguishments  of Liabilities.  This
       Statement established revised standards for recognition, measurement, and
       disclosure   of  transfers   and   servicing  of  financial   assets  and
       extinguishment   of  debt.   Those  standards  are  based  on  consistent
       application of a  financial-components  approach that focuses on control.
       Under that  approach,  after a transfer of  financial  assets,  an entity
       recognizes  the  financial  and  servicing  assets  it  controls  and the
       liabilities it has incurred,  derecognizes  financial assets when control
       has been  surrendered,  and derecognizes  liabilities when  extinguished.
       This Statement provides consistent standards for distinguishing transfers
       of  financial  assets  that are sales  from  transfers  that are  secured
       borrowings.  A  transfer  of  financial  assets in which  the  transferor
       surrenders  control over those  assets is accounted  for as a sale to the
       extent  that  consideration  other  than  beneficial   interests  in  the
       transferred assets is received in exchange. As issued,  Statement No. 125
       is  effective  for  transfers  and  servicing  of  financial  assets  and
       extinguishment  of liabilities  occurring after December 31, 1996, and is
       to be applied  prospectively.  FASB issued  SFAS No. 127 in January  1997
       titled  "Deferral of the  Effective  Date of Certain  Provisions  of FASB
       Statement  No.  125",  an  amendment  of FASB  Statement  No.  125.  This
       statement postpones the effective date for certain provisions of SFAS No.

                                      F-9
<PAGE>



1.     Summary of Significant Accounting Policies (Continued)

       125 for one year.  Specifically,  all transfers of secured borrowings and
       collateral are deferred until after December 31, 1997.  Also,  accounting
       for transfers of repurchase agreements, dollar-rolls, securities lending,
       and similar  transactions  are  deferred  until after  December 31, 1997.
       Earlier  application  of the  Statement is not allowed.  The  statement's
       impact on the  Company  will be based on future  transfers  of  financial
       assets.

       In February 1997, the FASB issued SFAS No. 128,  Earnings Per Share. This
       Statement establishes standards for computing and presenting earnings per
       share (EPS) and applies to entities  with  publicly  held common stock or
       potential  common  stock.  This  Statement  simplifies  the standards for
       computing  earnings per share and makes them comparable to  international
       EPS  standards.  It  replaces  the  presentation  of  primary  EPS with a
       presentation  of basic EPS. It also requires dual  presentation  of basic
       and diluted EPS 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.  This Statement is effective
       for financial  statements  issued for periods  ending after  December 15,
       1997,  including interim periods;  earlier  application is not permitted.
       This  Statement  requires   restatement  of  all  prior-period  EPS  data
       presented.  This  statement is not expected to have a material  effect on
       the Company's financial statements.

       The FASB issued SFAS No. 129,  Disclosure  of  Information  about Capital
       Structure,  in February,  1997. This Statement  establishes standards for
       disclosing information about an entity's capital structure and applies to
       all entities.  SFAS 129 codifies  certain existing  disclosures  about an
       entity's  capital  structure.  This  Statement is effective for financial
       statement  periods ending after December 15, 1997.  This Statement is not
       expected to have a material effect on the Company's financial statements.

       Earnings per share:
       Earnings per share of common stock has been  computed on the basis of the
       weighted  average number of shares  outstanding  adjusted for unallocated
       Employee Stock  Ownership Plan (ESOP) shares and for  incremental  shares
       related to outstanding options to purchase common stock.

       Earnings  per share of common stock for 1995 was computed by dividing net
       income  subsequent to conversion by the weighted average number of common
       and common equivalent shares outstanding  subsequent to conversion,  less
       unallocated shares acquired by the ESOP.

       Financial statement presentation:
       Certain items in prior year financial  statements have been  reclassified
       to conform to the 1997 presentation.

                                      F-10
<PAGE>



2.     Investment Securities

       The amortized cost and estimated  market values of investment  securities
       at March 31 are summarized as follows:


<TABLE>
<CAPTION>
                                                            March 31, 1997                                          
                                          --------------------------------------------------
                                                          Gross        Gross      Estimated
                                          Amortized     Unrealized   Unrealized     Market
                                             Cost         Gains        Losses       Value
                                          -----------   ----------   ----------  -----------
                                                                        
Held-to-maturity:
<S>                                        <C>          <C>          <C>          <C>       
        Government Agency Securities       $8,700,000   $   18,323   $  139,217   $8,579,106
                                          -----------   ----------   ----------  -----------
            Total held-to-maturity         $8,700,000   $   18,323   $  139,217   $8,579,106
                                           ==========   ==========   ==========   ==========

Available-for-sale:
        Government Agency Securities       $1,500,000   $        -   $   70,273   $1,429,727
        Stock in Federal Home Loan Bank,
          at cost                             632,000                                632,000
                                          -----------   ----------   ----------  -----------
             Total available-for-sale      $2,132,000   $        -   $   70,273   $2,061,727
                                           ==========   ==========   ==========   ==========
</TABLE>

<TABLE>
<CAPTION>
                                                             March 31, 1996                                          
                                            --------------------------------------------------
                                                           Gross         Gross      Estimated
                                            Amortized    Unrealized    Unrealized     Market
                                               Cost        Gains         Losses       Value
                                            ----------   ----------   -----------  ----------

Held-to-maturity:
<S>                                         <C>          <C>          <C>          <C>       
        United States Treasury Securities   $1,550,531   $    6,898   $        0   $1,557,429
        Government Agency Securities         8,200,000       47,500      110,534    8,136,966
                                            ----------   ----------   -----------  ----------
            Total held-to-maturity          $9,750,531   $   54,398   $  110,534   $9,694,395
                                            ==========   ==========   ==========   ==========

Available-for-sale:
        Government Agency Securities        $1,500,000   $        -   $   55,065   $1,444,935
        Stock in U.S. Savings League            55,000       40,040                    95,040
        Stock in Federal Home Loan Bank,
          at cost                              592,300                                592,300
        Other, at fair value                       818                                    818
                                            ----------   ----------   -----------  ----------
             Total available-for-sale       $2,148,118   $   40,040   $   55,065   $2,133,093
                                            ==========   ==========   ==========   ==========

</TABLE>

       Other equity securities include a limited  partnership  investment in the
       former data processor of the Bank. The  partnership was in the process of
       liquidation  at  March  31,  1996  and the  investment  was  adjusted  to
       represent the  Association's  interest in the  estimated  net  realizable
       value of partnership  assets.  This  partnership  was dissolved  prior to
       March 31, 1997.

       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,  1997  and  1996  include
       $1,000,000 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.

                                      F-11
<PAGE>

2.     Investment Securities (Continued)

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

       The amortized cost and estimated market value of debt securities at March
       31, 1997, 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.


<TABLE>
<CAPTION>


                                           Amortized     Estimated
                                              Cost      Market Value
                                           ----------   ------------
Held-to-maturity:

<S>                                        <C>          <C>       
  Due in one year or less                  $  500,000   $  497,500
  Due after one year through five years     5,200,000    5,159,376
  Due after five years through ten years    3,000,000    2,922,230
                                           ----------   ------------
     Total held-to-maturity                $8,700,000   $8,579,106
                                           ==========   ==========

Available-for-sale:

  Due after one year through five years       500,000      481,917
  Due after five years through ten years    1,000,000      947,810
                                           ----------   ------------
     Total available-for-sale              $1,500,000   $1,429,727
                                           ==========   ==========

</TABLE>


       There   were   realized   gains  on  sales   of   investment   securities
       available-for-sale  during  the year  ended  March 31,  1997 of  $46,528.
       Proceeds from sales during the year ended March 31, 1997 totaled $102,347
       and consisted of equity  securities  and an interest in an entity related
       to the Bank's  prior data  processor,  discussed  earlier.  There were no
       realized  gains or losses on sales of  investment  securities  during the
       years ended March 31, 1996 and 1995.

3.     Mortgage-Backed Securities

       As of March  31,  1997 and  1996,  all  mortgage-backed  securities  were
       classified as held-to-maturity. Mortgage-backed securities consist of the
       following:

<TABLE>
<CAPTION>
                                                  March 31,               
                                       ----------------------------
                                            1997            1996
                                       ------------    ------------
<S>                                    <C>             <C>         
FHLMC - fixed rate                     $  1,380,450    $  1,554,924
FHLMC - ARM's                             1,376,203       1,561,354
GNMA - ARM's                              3,114,748       3,669,165
FNMA - ARM's                                825,458         937,910
GNMA - fixed rate                           388,642         454,441
FNMA - fixed rate                           684,623         905,840
Collateralized mortgage obligations-
  government agency issue                 5,383,306         200,897
                                       ------------    ------------
                                         13,153,430       9,284,531
Unamortized premiums                        127,799         155,454
Unamortized discounts                        (7,831)        (11,619)
                                       ------------    ------------
                                       $ 13,273,398    $  9,428,366
                                       ============    ============
</TABLE>

                                      F-12
<PAGE>

3.     Mortgage-Backed Securities (Continued)

       As of March  31,  1997 and 1996,  gross  unrealized  gains and  losses on
mortgage-backed securities are as follows:


<TABLE>
<CAPTION>
                                                        March 31, 1997                  
                                       -----------------------------------------------------
                                                         Gross         Gross       Estimated
                                        Amortized     Unrealized    Unrealized       Market
                                           Cost          Gains        Losses         Value
                                       -----------   -----------   -----------   -----------
<S>                                    <C>           <C>           <C>           <C>        
FHLMC - fixed rate                     $ 1,374,266   $     5,320   $    28,561   $ 1,351,025
FHLMC - ARM's                            1,420,037                      48,564     1,371,473
GNMA - ARM's                             3,163,609        10,285        27,539     3,146,355
FNMA - ARM's                               847,681                      31,481       816,200
GNMA - fixed rate                          388,256         8,020                     396,276
FNMA - fixed rate                          695,621                      29,167       666,454
Collateralized mortgage obligations-
  government agency issue                5,383,928        54,091                   5,438,019
                                       -----------   -----------   -----------   -----------
                                       $13,273,398   $    77,716   $   165,312   $13,185,802
                                       ===========   ===========   ===========   ===========
</TABLE>

<TABLE>
<CAPTION>

                                                        March 31, 1996                  
                                       -------------------------------------------------
                                                       Gross       Gross       Estimated
                                        Amortized   Unrealized   Unrealized      Market
                                          Cost         Gains       Losses        Value
                                       ----------   ----------   ----------   ----------
<S>                                    <C>          <C>          <C>          <C>       
FHLMC - fixed rate                     $1,547,901   $   20,350   $   15,267   $1,552,984
FHLMC - ARM's                           1,612,398          860       25,556    1,587,702
GNMA - ARM's                            3,728,225       11,641       18,200    3,721,666
FNMA - ARM's                              963,478                    21,453      942,025
GNMA - fixed rate                         453,901       17,267                   471,168
FNMA - fixed rate                         922,293                    25,798      896,495
Collateralized mortgage obligations-
  government agency issue                 200,170          790                   200,960
                                       ----------   ----------   ----------   ----------
                                       $9,428,366   $   50,908   $  106,274   $9,373,000
                                       ==========   ==========   ==========   ==========
</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, 1997, 1996 and 1995.

       There were no mortgage-backed securities classified as available-for-sale
       as of March 31, 1997 and 1996.

                                      F-13
<PAGE>



4.     Loans Receivable

       Loans receivable at March 31 are summarized as follows:

<TABLE>
<CAPTION>
                                                         March 31,               
                                               ----------------------------
                                                    1997            1996
                                               ------------    ------------
First mortgage loans:
<S>                                            <C>             <C>         
  Secured by one to four family residences     $ 17,273,266    $ 17,905,894
  Secured by other properties                     1,958,081       1,495,642
  Construction loans                              1,790,945       1,490,250
  Other                                             579,276         578,004
                                               ------------    ------------
                                                 21,601,568      21,469,790

  Less:  Undisbursed loan proceeds                 (641,971)       (506,148)
            Unearned discounts and loan fees        (72,996)        (76,607)
            Allowance for loan losses              (282,444)       (286,567)
                                               ------------    ------------
  Total first mortgage loans                     20,604,157      20,600,468
                                               ------------    ------------

Consumer and other loans:
  Home equity and second mortgage                 1,222,531         895,782
  Loans on deposits                                 403,099         507,757
  Other                                           1,325,718       1,072,203
                                               ------------    ------------
                                                  2,951,348       2,475,742

  Less:  Undisbursed loan proceeds                                      (23)
             Allowance for loan losses              (94,248)       (104,622)
                                               ------------    ------------
  Total consumer and other loans                  2,857,100       2,371,097
                                               ------------    ------------
  Net loans receivable                         $ 23,461,257    $ 22,971,565
                                               ============    ============
</TABLE>

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

<TABLE>
<CAPTION>

                                                       March 31,                               
                                          -----------------------------------
                                             1997         1996         1995
                                          ---------    ---------    ---------
<S>                                       <C>          <C>          <C>      
Balance, beginning of year                $ 391,189    $ 539,436    $ 557,545
        Provision charged to operations         763     (131,875)      11,701
        Loans charged off                   (29,056)     (30,113)     (36,270)
        Recoveries                           13,796       13,741        6,460
                                          ---------    ---------    ---------
Balance, end of year                      $ 376,692    $ 391,189    $ 539,436
                                          =========    =========    =========
</TABLE>

       Impairment of loans having recorded  investments of $366,316 at March 31,
       1997 and  $348,895 at March 31, 1996 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, 1997 and 1996,  was $357,606 and  $372,401,  respectively.  The
       total  allowance for loan losses related to theses loans was $109,397 and
       $115,420 at March 31, 1997 and 1996. Interest income on impaired loans of
       $45,964 and $36,239 was  recognized  for cash  payments  received for the
       years ended March 31, 1997 and 1996, 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 16 for disclosure of loans to related parties.

                                      F-14
<PAGE>

5.     Accrued Income Receivable

       Accrued interest receivable at March 31 is summarized as follows:

                               1997       1996
                             --------   --------
Mortgage-backed securities   $ 62,345   $ 65,059
Loans receivable              127,419    134,589
Investments                   140,513    163,880
                             --------   --------
                             $330,277   $363,528
                             ========   ========

6.     Foreclosed Real Estate

       The Bank did not have any real  estate  owned or in  judgment  and  other
       repossessed assets at March 31, 1997 and 1996.

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

                                             1997        1996        1995
                                           ---------   --------    --------
Balance at beginning of year               $      -    $  7,888    $ 33,354
  Provision charged (credited) to income          -          -       27,513
  Losses charged to allowance                     -      (7,888)    (52,979)
                                           ---------   --------    --------
Balance at end of year                     $      -    $      -    $  7,888
                                           ========    ========    ========


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

                                       1997         1996        1995
                                    ---------    ---------    ---------
Gain on sale of real estate owned   $   1,439    $ 139,158    $  21,356
Provision                                                       (27,513)
Rental income                                          500          150
Operating expenses                     (1,427)      (4,870)     (10,411)
                                    ---------    ---------    ---------
                                    $      12    $ 134,788    ($ 16,418)
                                    =========    =========    ========= 


7.     Office Properties and Equipment

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

                                                 March 31,       
                                        --------------------------   
                                            1997            1996
                                        -----------    -----------
Land                                    $   398,332    $   398,332
Building and improvements                   622,292        622,292
Furniture and equipment                     245,791        239,036
Automobiles                                  13,103         13,103
                                        -----------    -----------
                                          1,279,518      1,272,763
Less accumulated depreciation              (680,885)      (644,927)
                                        -----------    -----------
                                        $   598,633    $   627,836
                                        ===========    ===========
Depreciation expense (1995 - $54,918)   $    37,027    $    48,245
                                        ===========    ===========

                                      F-15
<PAGE>

8.     Deposits

       Deposits at March 31 are summarized as follows:


                              1997          1996
                          -----------   -----------
Demand deposits           $ 8,099,082   $ 8,271,818
Savings deposits            2,991,923     3,475,710
Certificates of deposit    23,202,273    24,563,332
                          -----------   -----------
                          $34,293,278   $36,310,860
                          ===========   ===========

       The  aggregate  amount of jumbo  certificates  of deposit  with a minimum
       denomination  of $100,000 was $1,918,481 and $1,623,692 at March 31, 1997
       and 1996, respectively.

       At March 31, 1997, scheduled maturities of certificates of deposit are as
       follows:


Year Ending March 31, 
---------------------                          
       1998                       $18,517,517
       1999                         2,891,863
       2000                         1,053,227
       2001                           317,981
       2002                           421,685
                                  -----------
                                  $23,202,273
                                  ===========

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:

                    1997         1996
                 ----------   ----------
Advances         $6,000,000   $2,000,000
Line of credit      700,000
                 ----------   ----------
                 $6,700,000   $2,000,000
                 ==========   ==========


       At March 31, 1997, the Bank had $700,000  outstanding  under a $2,500,000
       line of credit  with the Federal  Home Loan Bank.  The  existing  line of
       credit  expires  August 15, 1997 and bears interest at the line of credit
       rate  established  by the Federal  Home Loan Bank.  This rate is adjusted
       from time to time, the rate as of March 31, 1997 was 6.90%.  At March 31,
       1996 the Bank had $0 outstanding  under a $2,500,000 line of credit,  due
       August 15, 1996.

                                      F-16
<PAGE>


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

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

                         1997                                 1996              
Fiscal         --------------------------       --------------------------------
 Year                         Weighted                               Weighted  
Maturity          Amount     Average Rate           Amount          Average Rate
--------       -----------   ------------       -------------       ------------
1998           $5,304,000        5.55  %        $   2,000,000           5.47%
1999              696,000        5.69
               ----------        ----           -------------           ---- 
               $6,000,000        5.56  %        $   2,000,000           5.47%
               ==========        ====           =============           ==== 


       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:

                                                     March 31,        
                                          -----------------------------------
                                           1997          1996           1995    
                                          ------        ------         ------
Statutory federal income tax               34.0 %        34.0  %        34.0 %
Increase (reductions) resulting from:
  Adjust tax bad debt reserves              5.4
  Non-deductible items                      0.3           0.1            0.1
  Other                                     0.2           0.5           (2.7)
                                           ----          ----           ----  
                                           39.9 %        34.6  %        31.4 %
                                           ====          ====           ====  

                                      F-17
<PAGE>

10.    Income Taxes (Continued)

       Deferred  taxes are included in the  accompanying  Statement of Financial
       Condition at March 31, 1997 and 1996 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, 1997 and
       1996 was comprised of the following:

                                                        1997         1996
                                                     ---------    ---------
Deferred tax assets:                            
  Deferred loan fees and costs                       $  11,184    $  15,192
  Allowance for loan losses                             90,880       93,761
  Unrealized loss on available-for-sale securities      23,893        5,109
  Accrued compensation                                  13,275       12,956
                                                     ---------    ---------
    Total deferred tax assets                          139,232      127,018
                                                     ---------    ---------
Deferred tax liabilities:
  Accumulated depreciation                              (9,402)      (4,930)
  Special bad debt deduction                           (87,267)     (76,552)
  FHLB stock dividends                                (122,094)    (102,442)
  Equity earnings                                                      (245)
                                                     ---------    ---------
     Total deferred tax liabilities                   (218,763)    (184,169)
                                                     ---------    ---------
     Net asset (liability)                           $(79,531)    $ (57,151)
                                                     ========     ========= 


        No valuation allowance was recorded against deferred tax assets at March
        31, 1997 or 1996.

        Prior to the year ended March 31,  1997,  the Bank was allowed a special
        bad debt  deduction  based on a percentage of taxable  income (8%) or on
        specified experience formulas, subject to certain limitations based upon
        aggregate  loan  balances  at the end of the  year.  The  Bank  used the
        percentage-of-taxable income method in 1996 and 1995.

        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 the year ended
        March 31,  1997.  The  reserves  to be  recaptured  consist  of bad debt
        deductions  after  December 31, 1987. If the amounts  deducted  prior to
        December 31, 1987 are used for purposes other than for loan losses, such
        as in a distribution in liquidation or otherwise,  the amounts  deducted
        would be subject to federal income tax at the then current corporate tax
        rate.  The Bank  had  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   $333,000   related  to
        approximately  $979,000 of cumulative  special bad debt deductions prior
        to December 31, 1987.

       At March 31,1997, the Corporation has net operating loss carryforward for
       state income tax purposes of $624,126, which will expire March 31, 2006.

                                      F-18
<PAGE>


11.     Regulatory and Capital Matters

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

        Quantitative  measures  established  by  regulation  to  ensure  capital
        adequacy  require the Bank to maintain  minimum  amounts and ratios (set
        forth in the table  below) of core and  tangible  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,
        1997, that the Bank meets all capital adequacy  requirements to which it
        is subject.

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

As of March 31, 1996:
Tangible Capital (to Assets)         6,302     13.5%      701     1.5%           N/A
Total (Risk-Based) Capital
        (to Risk Weighted Assets)    6,544     33.8%    1,548     8.0%         1,935      10.0%
Core (Tier I) Capital
        (to Risk Weighted Assets)    6,302     32.6%      N/A                  1,161       6.0%
Core (Tier I) Capital - leveraged
        (to Assets)                  6,302     13.5%    1,402     3.0%         2,338       5.0%
</TABLE>

                                      F-19
<PAGE>



11.    Regulatory and Capital Matters (continued)

       The following is a reconciliation  of net worth to regulatory  capital as
       reported in the March 31,  1997 and 1996  reports to the Office of Thrift
       Supervision:

                                                              March 31,       
                                                      -------------------------
                                                          1997          1996
                                                      -----------   -----------
Bank net worth per report
  to Office of Thrift Supervision                     $ 6,540,000   $ 6,312,000

Rounding                                                      251            50
                                                      -----------   -----------
Net worth as reported in accompanying
  financial statements (Bank only)                      6,540,251     6,312,050
Adjustments to arrive at Core (Tier I)
  and Tangible Capital:
          Unrealized losses (gains) on certain
                available-for-sale securities              46,000       (10,000)
                                                      -----------   -----------
Core (Tier I) and Tangible Capital                      6,586,251     6,302,050
Adjustments to arrive at Total Capital:
           Allowable portion of general
                allowance for loan losses                 253,000       242,000
                                                      -----------   -----------
Total Capital                                         $ 6,839,251   $ 6,544,050
                                                      ===========   ===========


12.    Employee Benefits Plans

       Defined benefit plan:
       The Bank had a noncontributory defined benefit, insurance-related pension
       plan  for  all  eligible  employees.  Benefits  were  based  on  employee
       compensation  and years of service  (not to exceed 37 years).  The Bank's
       funding policy was to contribute annually the minimum amount necessary to
       fund the  plan.  Contributions  were  intended  to  provide  not only for
       benefits  attributed to service to date but also for those expected to be
       earned in the  future.  During the year ended  March 31,  1994,  the Bank
       terminated the defined benefit pension plan.  During the year ended March
       31, 1995, an additional $8,826 was expended to fully fund the accumulated
       benefit obligation of the terminated plan.

       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, 1997 were $6,221, 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

                                      F-20
<PAGE>



12.    Employee Benefits Plans (Continued)

       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, 1997,  the balance of
       indebtedness from the ESOP to the Company was $309,075, which is shown as
       a deduction from  stockholders'  equity on the consolidated  statement of
       financial condition. As shares are released from collateral,  the Company
       reports  compensation  expense  equal to the current  market price of the
       shares,  and the shares become  outstanding  for earnings per share (EPS)
       computations.  Dividends  on  allocated  ESOP  shares are  recorded  as a
       reduction of retained earnings;  dividends on unallocated ESOP shares are
       recorded as compensation  expense. ESOP compensation expense was $29,606,
       72,526 and  $8,197 for the years  ended  March 31,  1997,  1996 and 1995,
       respectively. As of March 31, 1997, of the 41,210 shares of Company stock
       acquired by the ESOP, 10,302 shares were allocated and 30,908 shares were
       unallocated.  The 30,908 unallocated shares had an estimated market value
       of $463,620 at March 31, 1997.

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

       The MSBP has purchased 20,605 shares of the Company's stock for $275,083.
       Of these  shares,  15,863  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 4,742 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.

13.    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 Option Plan provides for a term of ten years,  after
       which no awards may be made,  unless  earlier  terminated by the Board of
       Directors pursuant to the Option Plan.

                                      F-21
<PAGE>



13.    Stock Option Plan (Continued)

       The Option Plan will be  administered  by a  committee  of at least three
       non-employee  directors  designated by the Board of Directors (the Option
       Committee).  The  Option  Committee  will  select the  employees  to whom
       options  are to be granted  and the number of shares to be  granted.  The
       option  price may not be less than 100% of the fair  market  value of the
       shares on the date of the grant, and no option shall be exercisable after
       the  expiration  of ten  years  from the grant  date.  In the case of any
       employee  who owns more than 10% of the  outstanding  common stock at the
       time the option is granted, the option price may not be less than 110% of
       the fair  market  value of the shares on the date of the  grant,  and the
       option shall not be  exercisable  after the expiration of five years from
       the grant date.  The  exercise  price may be paid in cash,  shares of the
       common stock, or a combination of both.

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

       Notwithstanding  anything  herein to the contrary,  in no event shall any
       options  granted be exercisable  for a period of six months from the date
       of grant,  except in the event of the death or  disability  of the option
       holder.  Options  shall be  immediately  exercisable  in the event of the
       retirement  following  not  less  than 10  years  of  service,  death  or
       disability of the option holder, or upon change of control in the Company
       as  provided  in the plan.  As of March 31,  1997,  no options  have been
       exercised and all options granted remain outstanding.

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

       The Company 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
       and  commitments  to sell  investments.  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 Company's  exposure to credit loss in the event of non-performance by
       the other  party to the  financial  instrument  for loan  commitments  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, 1997 and 1996, the Bank had outstanding  commitments to fund
       real  estate  loans  of $0 and  $94,500,  respectively.  All  commitments
       outstanding  at March 31,  1996 were for fixed  rate  loans at rates of 7
       3/4% to 9 1/2%.

       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

                                      F-22
<PAGE>



14.    Financial Instruments with Off-Balance-Sheet Risk/Commitments (Continued)

       represent future cash requirements. The Company 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 purchase  mortgage-backed  securities or
       investment securities at March 31, 1997 and 1996.

15.    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.

       As of March 31, 1997,  the Bank had a net  investment of  $23,461,257  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.

16.    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,  1997 and 1996,  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. Principal officers, directors,  employees and
       companies in which they have partial  ownership were indebted to the Bank
       in the aggregate amount of  approximately  $312,023 and $365,709 at March
       31, 1997 and 1996,  respectively.  The aggregate  amount of deposits with
       related  parties at March 31, 1997 and 1996 were  $280,805 and  $264,519,
       respectively.

                                      F-23
<PAGE>



16.    Related Party Transactions (Continued)

       The  following  analysis  is of  loans  made to  principal  officers  and
       directors which  individually  exceed $60,000 in the aggregate during the
       year ended March 31, 1997 and 1996:

Balance March 31, 1995                $ 330,940

New loans                                13,015
Repayments                             (195,135)
Other changes                           (13,956)
                                      ---------
Balance March 31, 1996                $ 134,864
                                      ---------

New loans                                46,550
Repayments                              (59,733)
Other changes                           (45,403)
                                      ---------
Balance March 31, 1997                $  76,278
                                      =========


17.    Conversion to Stock Form of Ownership

       On February 8, 1994, the Board of Directors of the Bank adopted a Plan of
       Conversion  to convert  from a state  chartered  mutual  savings and loan
       association  to  a  federally  chartered  stock  savings  bank  with  the
       concurrent formation of Guthrie Savings, Inc. to act as a holding company
       of the Bank (the Conversion).

       At the date of conversion,  October 11, 1994,  the Company  completed the
       sale of  515,125  shares  of  common  stock,  $0.01  par  value,  through
       concurrent  subscription  and  community  offerings  at $10.00 per share.
       Included in the total  shares  outstanding  are 41,210  shares which were
       purchased by the Bank's ESOP at $10.00 per share.  Net proceeds  from the
       conversion,  after recognizing conversion expenses and underwriting costs
       of $382,975  were  $4,768,275.  From the net  proceeds,  the Company used
       $2,384,138  to purchase all of the capital stock of the Bank and $412,100
       to fund the  purchase of 41,210  shares of the Company  stock by the ESOP
       (Note 12).

       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.

       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.

                                      F-24
<PAGE>



18.    Disclosures about Fair Value of Financial Instruments

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

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

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

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

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

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

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

                                      F-25
<PAGE>



18.    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, 1997      March 31, 1996  
                                                ------------------- -------------------
                                                Carrying            Carrying                
                                                 Amount  Fair Value  Amount  Fair Value
                                                -------- ---------- -------- ----------
                                                   (In Thousands)     (In Thousands)  
                                                                
Financial assets:                                                               
  Cash and cash equivalents:
<S>                                             <C>       <C>       <C>       <C>    
    Interest bearing                            $   312   $   312   $   990   $   990
    Non-interest bearing                            211       211       412       412

  Investment securities held-to-maturity          8,700     8,579     9,751     9,694
  Investment securities available-for-sale        2,062     2,062     2,133     2,133
  Mortgage-backed securities held-to-maturity    13,273    13,186     9,428     9,373
  Loans receivable                               23,461    23,874    22,972    23,454

Financial liabilities:
    Deposits                                     34,293    34,203    36,311    36,358
    Advances and other borrowings from
       Federal Home Loan Bank                     6,700     6,677     2,000     1,981

</TABLE>

<TABLE>
<CAPTION>
                                        Par Value        Fair Value     Par Value       Fair Value
                                        ---------        ----------     ---------       ----------
                                               (In Thousands)                 (In Thousands)  
Unrecognized financial instruments:                                                             
<S>                                     <C>               <C>            <C>              <C>    
  Commitments to extend credit          $       -         $     -        $     95         $     1
</TABLE>


                                      F-26
<PAGE>

19.    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, 1997 and 1996
                                 (In Thousands)

<TABLE>
<CAPTION>

Assets                                                            1997        1996
                                                                 -------    -------
<S>                                                              <C>        <C>    
        Cash and cash equivalents                                $    82    $    74
        Investment in subsidiary                                   2,859      2,630
        Loans receivable (subsidiary and ESOP)                     1,139      1,900
        Other                                                         44          5
                                                                 -------    -------
             Total assets                                        $ 4,124    $ 4,609
                                                                 =======    =======

Liabilities and stockholders' equity
        Liabilities:
          Dividend payable                                       $     -    $   222
          Other                                                                  20
                                                                 -------    -------
             Total liabilities                                         -        242
                                                                 -------    -------
        Stockholders' equity:
          Common stock                                                 5          5
          Additional paid-in capital                               4,779      4,765
          Retained income                                            712        542
          Net unrealized loss on available-for-sale securities       (46)       (10)
          Unamortized amounts related to ESOP and MSBP              (444)      (526)
          Treasury stock                                            (882)      (409)
                                                                 -------    -------
             Total stockholders' equity                            4,124      4,367
                                                                 -------    -------
             Total liabilities and stockholders' equity          $ 4,124    $ 4,609
                                                                 =======    =======

</TABLE>

                        Condensed Statement of Operations
                    Year Ended March 31, 1997, 1996 and 1995
                                 (In Thousands)

                                  1997      1996   1995
                                  -----    -----   -----
Equity earnings of subsidiary     $ 419    $ 598   $ 245
Interest income                      77      130      67
                                  -----    -----   -----
             Total income           496      728     312
                                  -----    -----   -----
Other expenses                      128      140      20
                                  -----    -----   -----
     Income before income taxes     368      588     292

Income tax expense                  (12)       3      18
                                  -----    -----   -----
             Net income           $ 380    $ 585   $ 274
                                  =====    =====   =====

                                      F-27
<PAGE>

19.    Parent Company Financial Information (Continued)

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

<TABLE>
<CAPTION>

                                                            1997        1996      1995
                                                           -------    -------    -------
Cash flows from operating activities                                                                            
<S>                                                        <C>        <C>        <C>    
        Net income                                         $   380    $   585    $   274
        Adjustments to reconcile net income to net cash
          provided (used for) operating activities:
                Equity in net income of subsidiary            (419)      (598)      (245)
                Increase in other assets                       (39)        (5)
                (Decrease) increase in other liabilities      (242)         2         18
                                                           -------    -------    -------
Net cash provided (used) by operating activities              (320)       (16)        47
                                                           -------    -------    -------
Cash flow from investing activities:
        Increase in investment in subsidiary                                      (2,384)
        Reduction of investment in subsidiary                  250
        Loans to subsidiary and ESOP, net                      761        367     (2,267)
                                                           -------    -------    -------
Net cash provided (used) by investing activities             1,011        367     (4,651)
                                                           -------    -------    -------
Cash flows from financing activities:
        Issuance of common stock, net                                              4,768
        Cash dividends paid                                   (210)                  (95)
        Purchase of treasury stock                            (473)      (346)
                                                           -------    -------    -------
Net cash provided (used) by financing activities              (683)      (346)     4,673
                                                           -------    -------    -------
Increase in cash and cash equivalents                            8          5         69

Cash at beginning of year                                       74         69          -
                                                           -------    -------    -------
Cash at end of year                                        $    82    $    74    $    69
                                                           =======    =======    =======

</TABLE>
                                                                                
20.    Recent Developments

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

        Effective  September  30,  1996,  federal  law was  revised to mandate a
        one-time  special  assessment  of  SAIF  members  such  as the  Bank  of
        approximately  .657% of deposits  held on March 31,  1995.  The Bank has
        reflected a $225,433  pre-tax  expense for this  assessment for the year
        ended  March 31,  1997.  Beginning  January 1, 1997,  deposit  insurance
        assessments  for SAIF  members were  reduced to  approximately  .064% of
        deposits  on an  annual  basis and are  expected  to remain at that rate
        through  the end of 1999.  During  this same  period,  BIF  members  are
        expected to be assessed  approximately  .013% of  deposits.  Thereafter,
        assessments for BIF and SAIF members should be the same and SAIF and BIF
        may be merged.  It is expected that theses  continuing  assessments  for
        both SAIF and BIF members  will be used to repay  outstanding  Financing
        Corporation bond obligations. Based on this reduction, beginning January
        1, 1997,  the rate of deposit  insurance  assessed the Bank  declined by
        approximately 70%.

                                      F-28
<PAGE>
                            OFFICE LOCATION

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

                   Board of Directors of Guthrie Savings, Inc.

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

   Keith Camerer                             James V. Seamans
   Co-Owner, Jelsma Abstract Company         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                       Deborah  K. Bozarth
   Vice President                            Secretary

   Kimberly D. Walker                        Colleen T. Freeman
   Treasurer                                 Assistant Secretary

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

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

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

The  Company's  Annual  Report for the Year Ended  March 31, 1997 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 22,  1997 at 5:00  p.m.  at  Guthrie  Federal
Savings Bank, located on 120 N. Division , Guthrie, Oklahoma.



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