<PAGE>

IBS FINANCIAL CORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS 
(In thousands, except per share amounts) 

<TABLE>
<CAPTION>
                                                       September 30,
                                                 ------------------------
                                                 1996                1995
                                                 ----                ----
<S>                                          <C>                     <C>
EARNINGS PERFORMANCE FOR THE FISCAL YEAR:
Net interest income                          $24,733                 26,668
Net income                                     4,537(a)               9,920

PER SHARE:
Net income                                     $0.43(a)                0.84
Cash dividends declared                        0.234                  0.135
Book value                                     13.42                  13.03

FINANCIAL CONDITION AT FISCAL YEAR END:
Total assets                                $742,051                726,536
Investments                                   26,712                241,345
Securities available for sale                215,331                      0
Mortgage-backed securities                   285,267                311,753
Loans                                        185,031                141,781
Deposits                                     571,366                564,910
Stockholders' equity                         144,284                158,049

PERFORMANCE RATIOS:
Return on average assets                       0.94%(b)                1.36%
Return on average equity                       4.56%(b)                6.37%
Net interest margin                             3.44%                  3.77%
Operating expenses to average assets            1.92%(b)               1.68%
Efficiency ratio                               55.96%                 44.93%
</TABLE>

(a) Reflects a one-time assessment of $3.7 million or $2.4
million after tax ($.23 per share) incurred in the September
1996 quarter to recapitalize the Savings Association Insurance
Fund of the Federal Deposit Insurance Corporation.  See Note 18
of Notes to the Consolidated Financial Statements.

(b) Exclusive of one-time SAIF assessment.  Including the SAIF
assessment, return on average assets, return on average equity
and operating expenses to average assets were .61%, 2.96% and
2.42%, respectively.

<PAGE>

IBS FINANCIAL CORP.
SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                            (Dollars in Thousands, Except per Share Data) 
                                              As of or For the Year Ended September 30,
                            ---------------------------------------------------------------------------
                            1996       1995           1994           1993           1992           1991
                            ----       ----           ----           ----           ----           ----
<S>                       <C>         <C>            <C>            <C>            <C>            <C>
FINANCIAL CONDITION:                                                                
Total assets              $742,051    726,536        663,866        665,933        652,614        626,075
Loans                      185,031    141,781        140,618        157,030        185,188        199,027
Investments                 26,712    241,345        289,495        238,138        205,916         99,430
Mortgage-backed 
  securities               285,267    311,753        182,891        134,677        217,041        279,186
Cash and equivalents        12,466     12,542        32,586         119,014         24,392         30,912
Deposits                   571,366    564,910        603,080        609,805        603,722        583,292
Stockholders' equity       144,284    158,049        57,594          52,631         44,579         37,954
Nonperforming assets (1)       827        663         1,005           5,478          8,495          8,751
Full service offices             8          8             8               8              8              8

OPERATIONS:
Total interest income     $ 52,152     51,692        41,525          47,458         53,451         55,921
Total interest expense      27,419     25,024        25,674          28,093         34,916         42,851
Net interest income         24,733     26,668        15,851          19,365         18,535         13,070
Provision for loan losses       30         30           180             431          1,077            337
Other operating income         687        663           901           1,663            928            500
Operating expenses          14,231     12,215         9,015           8,738          8,342          8,387
Special SAIF 
  assessment (2)             3,700          0             0               0              0              0
Income before taxes          7,459     15,086         7,557          11,859         10,045          4,846
Income taxes                 2,922      5,166         2,594           3,807          3,527          1,676
Net income                $  4,537      9,920         4,963           8,052          6,518          3,169

PER COMMON SHARE:
Net income                $   0.43(2)    0.84           N/A             N/A            N/A            N/A
Cash dividends               0.234      0.135           N/A             N/A            N/A            N/A

OPERATING RATIOS (3):
Average yield earned on
  interest-earning assets    7.25%      7.30%         6.36%           7.29%          8.52%          9.33%
Average rate paid on 
  interest-bearing 
  liabilities                4.70%      4.39%         4.20%           4.60%          5.86%          7.47%
Average interest rate
  spread (4)                 2.55%      2.91%         2.16%           2.69%          2.66%          1.86%
Net interest margin          3.44%      3.77%         2.43%           2.98%          2.96%          2.18%
Ratio of interest-earning
  assets to 
  interest-bearing
  liabilities              123.38%    124.27%       106.74%         106.62%        102.30%        105.24%
Net interest income to
  operating expenses       173.80%    218.32%       175.83%         221.64%        222.19%        155.84%
Operating expenses as a
  percent of average
  assets                     1.92%      1.68%         1.34%           1.32%          1.30%          1.37%
Return on average assets     0.61%(2)   1.36%         0.74%           1.21%          1.02%          0.52%
Return on average equity     2.98%(2)   6.37%         8.98%          16.33%         15.58%          8.76%
Ratio of average equity
  to average assets         20.53%     21.18%         8.24%           7.43%          6.52%          5.90%
Dividend payout ratio       51.07%     17.06%          N/A             N/A            N/A            N/A

ASSET QUALITY RATIOS:
Nonperforming loans and
  troubled debt
  restructurings as a
  percent of total loans     0.45%      0.47%         3.62%           3.49%        4.59%            4.40%
Nonperforming assets and
  troubled debt
  restructurings as a
  percent of total assets    0.11%      0.09%         0.77%           0.82%        1.30%            1.40%
Allowance for loan losses
  as a percent of total
  loans                      0.55%      0.70%         0.38%           1.06%        0.67%            0.75%
Allowance for loan losses
  as a percent of
  nonperforming loans       123.8%     149.9%         52.7%           30.5%        17.9%            17.1%
Charge-offs to average
  loans receivable
  outstanding during
  the period                    --         --         0.89%              --        0.68%               --
</TABLE>

______________
(1) Nonperforming assets consist of nonperforming loans,
    troubled debt restructurings and real estate owned ("REO").
    Nonperforming loans consist of nonaccrual loans and accruing
    loans 90 days or more overdue, while REO consists of real estate
    acquired through foreclosure and real estate acquired by
    acceptance of a deed-in lieu of foreclosure.

(2) Without giving effect to the special SAIF assessment, net
    income per share would have been $.66 and return on average
    assets and return on average equity would have been .94% and
    4.56%, respectively.  See Note 18 of Notes to the Consolidated
    Financial Statements.

(3) Asset Quality Ratios are end of period ratios, except for
    charge-offs to average loans.  With the exception of end of
    period ratios, all ratios are based on monthly balances during
    the indicated periods.

(4) Interest rate spread represents the difference between the
    weighted average yield on average interest- earning assets and
    the weighted average cost of average interest-bearing
    liabilities, and net interest margin represents net interest
    income as a percent of average interest-earning assets.

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

IBS Financial Corp. (the "Company") is a New Jersey corporation organized in
June 1994 by the Association for the purpose of acquiring all of the capital
stock of Inter-Boro Savings and Loan Association issued in the conversion of the
Association to stock form, which was completed on October 13, 1994.  The only
significant assets of the Company are its investments in the capital stock of
the Association and IBSF Investment Corp., a wholly-owned investment subsidiary,
the Company's loan to an employee stock ownership plan, and  certain U.S.
Government Agency securities.  

The Association is a New Jersey chartered stock savings and loan association
which conducts business from ten offices located in Camden, Burlington and
Gloucester Counties, New Jersey.  Two of these offices were just recently opened
in Gloucester and Voorhees Townships, Camden County.  The Association's
operations date back to 1890.  The Association's deposits are insured by the
Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance
Corporation ("FDIC") to the maximum extent permitted by law.  

IBS Financial Corp.'s consolidated operating results depend primarily upon its
net interest income, which is determined by the difference between interest and
dividend income on interest-earning assets, principally investment securities
and other investments, mortgage-backed securities and loans, and interest
expense on interest-bearing liabilities, which consist of deposits and advances
from the Federal Home Loan Bank of New York.  The Company's net income is also
affected by its provision for loan losses, as well as the level of its other
income, including loan fees and late charges, gains on the sale of investments
and on the sale of real estate owned and other income and its general and
administrative expenses, such as compensation and employee benefits, net
occupancy and equipment expense, federal deposit insurance and miscellaneous
other expenses, and income taxes.

OPERATING STRATEGY
The Company has traditionally offered a variety of savings products to its
retail customers.  The Company invests its funds in U.S. Government, U.S.
Government agency and mortgage-backed securities, other short term investments
and has concentrated its lending activities on real estate loans secured by
single (i.e., "one-to-four") family residential properties.  In fiscal 1996 the
Company also expanded its investment in commercial real estate loans.  The
commercial real estate loans originated are collateralized by small professional
and medical office buildings, commercial retail establishments and religious
organizations in its market area.  In addition and to a lesser degree, 
construction loans are originated to construct primarily single family
residences.  In the past, the Company has also purchased whole residential
mortgage loans and participation interests in commercial real estate projects
located principally in New Jersey.


<PAGE>


The Company began to deemphasize its real estate lending in the late 1980's due
to, among other reasons, declining real estate values.  With the significant
decline in interest rates experienced during the early 1990s, the Company was
unwilling to actively originate long-term, fixed-rate residential mortgage loans
or purchase fixed-rate mortgage-backed securities.  During this period, the
Company elected to build its liquidity, investing in U.S. Government and U.S.
Government agency securities with short maturities and cash and cash
equivalents, particularly bankers' acceptances.  During the last half of 1994
,with a rising rate environment, the Board of Directors authorized the Company
to initiate a "tired" or laddered investment strategy under which it anticipated
investing $400 million over  approximately an 18 month time period in
mortgage-backed securities and U.S. Government securities with varying
maturities.

The Company successfully reinvested the approximately $400 million in
mortgage-backed securities and U.S. Government and agency securities during the
fiscal year ended September 30, 1995.  At September 30, 1995 mortgage-backed
securities amounted to $311.8 million or 42.9% of assets compared to $182.9
million or 27.5% of assets at September 30, 1994.  In addition, the Company's
net interest margin increased to 3.77% for the  year ended September 30, 1995
compared to 2.43% for the fiscal year ended September 30, 1994.

During fiscal 1996, the Company began emphasizing the origination of single
family residential loans and changed the mix of its originations to include more
commercial real estate loans in the local marketplace.  In addition, the Company
continued to reduce its liquid assets by reinvesting the proceeds of maturing
investments into mortgage-backed securities generally with maturities of five
and seven years.  This was designed to increase the Company's yield on its loan
portfolio.  However,  the Company experienced heavy repayments of higher
yielding residential loans and mortgage-backed securities that were reinvested
in lower yielding loan and mortgage-backed securities.  As a result, the
Company's net interest margin was pressured, decreasing to 3.44% for the year
ended September 30, 1996.

ASSET AND LIABILITY MANAGEMENT

The principal objective of the Company's asset liability management function is
to evaluate the interest-rate risk included in certain balance sheet accounts,
determine the level of risk appropriate given the Company's business focus,
operating environment, capital and liquidity requirements and performance
objectives, establish prudent asset concentration guidelines and manage the risk
consistent with Board approved guidelines.  The Company seeks to reduce the
vulnerability of its operations to changes in interest rates and to manage the
ratio of interest-rate sensitive assets to interest-rate sensitive liabilities
within specified maturities or repricing dates.  The Company's actions in this
regard are taken under the guidance of the Asset/Liability Management Committee
("ALCO"), which is chaired by the Chief Financial Officer and comprised
principally by members of the Company's senior management.  The ALCO reviews,
among other things, the sensitivity of the Company's assets and liabilities to
interest rate changes, the book and market values of assets and liabilities,
unrealized gains and losses, purchase activity and maturity of investments.  In
connection therewith, the ALCO generally reviews the Association's liquidity,
cash flow needs, maturities of investments, deposits and

<PAGE>

borrowings and current market conditions and interest rates.  The Chief 
Executive Officer has authority to adjust pricing weekly with respect to the 
Association's retail deposits.

The Company's primary ALCO monitoring tool is assets/liability simulation models
prepared on a quarterly basis and are designed to capture the dynamics of
balance sheet, rate and spread movements and to quantify variations in net
interest income under different interest rate environments.  The Company also
utilizes market-value analysis, which addresses the change in equity value
arising from movements in interest rates.  The market value of equity is
estimated on a market value basis.  Market value analysis is intended to
evaluate the impact of immediate and sustained interest-rate shifts of the
current yield curve upon the market value of the current balance sheet.

One measure of interest rate risk is the gap ratio, which is defined as the
difference between the dollar volume of interest-earning assets and
interest-bearing liabilities maturing or repricing within a specified period of
time as a percentage of total assets.  A positive gap results when the volume of
interest rate-sensitive assets exceeds that of interest rate-sensitive
liabilities within comparable time periods.  A negative gap results when the
volume of interest-bearing liabilities exceeds that of interest rate-sensitive
assets within comparable time periods.

As indicated in the table below, the Company's one year gap position at
September 30, 1996 was a negative 8.9%.   The one year time frame has been keyed
on because the majority of the Company's interest-earning assets and
interest-bearing liabilities are subject to repricing or maturity within this
period.  Generally, a financial institution with a negative gap position will
most likely experience increases in net interest income during periods of
falling interest rates and decreases in net interest income during periods of
rising interest rates.

The following rate sensitivity table sets forth certain information at September
30, 1996 relating to the Company's assets and liabilities based on scheduled
repricing for adjustable assets and liabilities, or by contractual maturity for
fixed-rate assets and liabilities.

RATE SENSITIVITY ANALYSIS

<PAGE>

IBS FINANCIAL CORP.
RATE SENSITIVITY ANALYSIS

<TABLE>
<CAPTION>
                                                               (DOLLARS IN THOUSANDS)
                                                                 SEPTEMBER 30, 1996
                                             --------------------------------------------------------------
                                               SIX                     OVER 1-3      OVER 3-5      OVER 5
                                              MONTHS      ONE YEAR       YEARS         YEARS       YEARS 
                                             --------     --------     ---------     ---------     -------
<S>                                          <C>          <C>          <C>           <C>           <C>
Interest-earning assets:                     $
  Loans                                        15,095      24,452       40,904        26,127        80,939
  Mortgage-backed securities                   50,130      65,252       88,069       213,994        34,320
  Investments                                  64,399      23,994            0             0             0
                                             --------     -------      -------       -------       --------
    Total                                     129,624     113,698      128,973       240,121       115,259
                                             --------     -------      -------       -------       --------

Interest-bearing liabilities:
  Maturing certificates of deposit            129,186     121,195      142,327        17,075         8,538
  MMDA and NOW accounts                        38,355       2,016        6,128        13,582             0
  Passbook balances                             7,872       7,872       31,488        33,722        13,885
  Borrowed funds                                1,490       1,536        6,618         6,495         2,652
                                             --------     -------      -------       -------       -------
    Total                                     176,903     132,619      186,561        70,874        25,075
                                             --------     -------      -------       -------       -------
GAP                                          $(47,279)    (18,921)     (57,588)      169,247        90,184
                                             ========    ========      =======       =======       =======

Cumulative GAP                               $(47,279)    (66,200)    (123,788)       45,459       135,643
                                             ========    ========      =======       =======       =======

Cumulative GAP to total assets                  -6.4%        -8.9%       -16.7%          6.1%         18.3%
                                             ========    ========      =======       =======       =======
</TABLE>

<PAGE>


RESULTS OF OPERATIONS

The Company's net income for the year ended September 30, 1996 amounted to 
$4.5 million or $.43 per share compared with $9.9 million or $.84 per share 
for fiscal 1995.   Net income, before the one-time special assessment by the 
Savings Association Insurance Fund ("SAIF"), for the year ended September 30, 
1996 amounted to $6.9 million or $.66 per share.  Per share amounts for prior 
periods have been restated to reflect the 10% stock dividend paid on March 
15, 1996.  In addition, the per share amount for the fiscal year ended 
September 30, 1995 includes earnings from the completion date of the initial 
public offering and conversion on October 13, 1994. The decrease in earnings, 
before the special SAIF assessment, was principally attributable to increased 
operating expenses as well as reductions in net interest income reflecting 
increased deposit and borrowing costs.

The Company reported net income of $9.9 million for the year ended September 30,
1995, an increase of $4.9 million or 98.0% from the $5.0 million earned in
fiscal 1994.  This significant increase was due to substantially increased
interest income, which was primarily attributable to the program of reinvesting
cash and cash equivalent assets.  Approximately $400 million, including the $104
million of net proceeds raised in the Company's initial public offering, was
reinvested in mortgage-backed securities and U.S. Government and agency
securities with a range of varying maturities.

NET INTEREST INCOME

Net interest income decreased by $1.9 million or 7.3% to $24.7 million for the
year ended September 30, 1996 from $26.7 million for the prior fiscal year.  The
decrease in net interest income for the  year ended September 30, 1996 resulted
from a decrease in average net interest-earning assets of $1.9 million or 1.4%,
as well as a decrease in the average interest rate spread of 36 basis points. 
For the year ended September 30, 1995 net interest income amounted to $26.7
million, a $10.8 million or 68.2% increase from fiscal 1994.  The increase in
net interest income for the year ended September 30, 1995 resulted from an
increase in average net interest-earning assets of $97.1 million or 235.4%,
principally mortgage-backed securities, as well as an increase in the average
interest rate spread of 75 basis points.

Total interest income increased by $.5 million  or .9% for the year ended
September 30, 1996 from $51.7 million for the comparable prior year.  This
increase was primarily the result of increases in average interest-earning
assets of $11.7 million or 1.7%, principally mortgage-backed securities, which
more than offset the 5 basis point decline in the average yield earned for the
year ended September 30, 1996.  For the year ended September 30, 1995, total
interest income increased by $10.2 million or 24.5% from $41.5 million for the
comparable prior period.  This $10.2 million increase in total interest income
was primarily the result of an increase in average interest-earning assets of
$55.3 million or 8.5% for the year ended September 30, 1995, principally
mortgage-backed securities.  The average balance of mortgage-backed securities
increased by $158.1 million or 130.5% which, despite a 157 basis

<PAGE>


point reduction in average yield earned, was more than sufficient to offset a 
$93.8 million or 24.4% decrease in the average balance of investment 
securities and a $9.1 million or 6.1% decrease in the average balance of 
loans.

Total interest expense increased by $2.4 million or 9.6% for the year ended
September 30, 1996 to $27.4 million from $25.0 million for the prior fiscal
year.  Increases in average deposit balances and increases in the rates paid for
the year ended September 30, 1996 were both contributing factors to the increase
in total interest expense.  Increases in average deposit and advance balances
amounted to $13.6 million  or 2.4% for the year ended September 30, 1996.  The
rate paid on average interest-bearing deposits and advances increased by 31
basis points during the year ended September 30, 1996.  For the year ended
September 30, 1995, total interest expense declined by $.7 million or 2.5% to
$25.0 million from the prior fiscal year.  The decrease in interest expense was
attributable to a decrease in average deposit balances of $41.8 million or 6.8%,
which more than offset a 19 basis point increase in the average rates paid for
the year ended September 30, 1995.  The decrease in average deposit balances
reflected higher market interest rates being available on other financial
instruments in the Company's marketplace as well as approximately $16.5 million
that reflected amounts charged against depositors accounts on October 13, 1994
for the purchase of the Company's stock in the initial public offering.

INTEREST YIELD/RATE SPREAD ANALYSIS

The following table sets forth for the periods indicated information regarding
(i) the Company's average balance sheet; (ii) the total dollar amounts of
interest income from interest-earning assets  and the resulting average yields
(no tax equivalent adjustments were made); (iii) the total dollar amounts of
interest expense on interest-bearing liabilities and the resulting average
costs; (iv) average interest rate spread; and (vi) net interest margin. 
Nonaccrual loan balances are included in total loans.  Loan fees are included in
interest on total loans; however, such fees for all years presented are nominal.

<PAGE>

IBS Financial Corp.
Spread Analysis

<TABLE>
<CAPTION>
                                                              (Dollars in Thgousands)  
                                                             Year Ended September 30,
                                      1996                               1995                                1994
                       ------------------------------   -----------------------------------     -------------------------------
                       Average                Yield/      Average                    Yield/      Average                 Yield/
                       Balance      Interest   Rate       Balance      Interest       Rate       Balance    Interest      Rate
                      ---------     --------  ------     ---------     --------      ------     ---------   --------     ------
<S>                   <C>           <C>        <C>       <C>           <C>         <C>           <C>         <C>         <C>

Interest-earning
 assets:
  Loans               $159,628      $12,758      7.99%    $138,619     $11,337        8.18%      $147,691    $11,809       8.00%
  Mortgage-backed 
   securities          380,677       28,226      7.41%     279,290      23,304        8.34%       121,176     12,005       9.91%
  Investments          179,420       11,168      6.22%     290,121      17,051        5.88%       383,874     17,711       4.61%

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

Total interest-
 earning  assets       719,725       52,152      7.25%     708,030      51,692        7.30%       652,741     41,525       6.36%
                                     -------      ----                 -------        ----

Noninterest-earning
 assets                 21,403                              19,600                                 17,555

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

Total assets          $741,128                            $727,630                               $670,296
                      ========                            ========                               ========

Interest-bearing
 liabilities:

 Deposits             $572,826       26,753      4.67%     569,738       25,024       4.39%      $611,514     25,674       4.20%

 Borrowings             10,491          666      6.35%           0            0                         0          0
                      --------      -------      ----      --------      -------      ----       --------    -------       ----

Total interest-
 bearing
 liabilities           583,317       27,419      4.70%     569,738       25,024       4.39%       611,514     25,674       4.20%
                                     -------     ----                    -------      ----                   -------       ----

Non-interest-
 bearing
 liabilities             5,655                               3,763                                  3,524

Equity                 152,156                             154,129                                 55,258
                      --------                            --------                               --------

Total liabilities
and equity             $741,128                           $727,630                               $670,296
                       ========                           ========                               ========

Net interest income
  and interest-rate
   spread                            $24,733     2.55%                  $26,668       2.91%                  $15,851       2.16%
                                     =======     ====                   =======       ====                   =======       ====
Net yield on
 interest-earning
 assets                                          3.44%                                3.77%                                2.43%
                                                 ====                                 ====                                 ==== 

Ratio of average 
 interest-earning
 assets  to average
 interest-bearing 
 liabilities                                   123.38%                              124.27%                              106.74%
                                               ======                               ======                               ======

</TABLE>

<PAGE>


VOLUME/RATE ANALYSIS

The following tables set forth, among other things, the extent which changes in
interest rates and changes in the average balances of interest-earnings assets
and interest-bearing liabilities have affected interest income and expense
during the years ended September 30, 1996 and 1995.

IBS FINANCIAL CORP.
RATE VOLUME ANALYSIS


<TABLE>
<CAPTION>
                                                                     (DOLLARS IN THOUSANDS)
                                             YEAR ENDED SEPTEMBER 30, 1996               YEAR ENDED SEPTEMBER 30, 1995
                                      ---------------------------------------------------------------------------------------------
                                                                RATE/                               RATE/
                                          RATE      VOLUME      VOLUME       TOTAL      RATE        VOLUME       VOLUME     TOTAL 
                                          ----      ------      ------       -----      -----       ------       ------     -----
<S>                                   <C>           <C>         <C>         <C>        <C>         <C>          <C>         <C>
Interest Income:                      
  Loans                               $    (263)     1,719          (35)      1,421       266        (726)         (12)       (472)
  Mortgage-backed securities             (2,597)     8,456         (937)      4,922    (1,902)     15,669       (2,468)     11,299
  Investments                              (841)    (7,207)       2,165      (5,883)    7,294      (4,322)      (3,632)       (660)
                                      ---------     ------        -----      ------    ------      ------       ------      ------
     Total                               (3,701)     2,968        1,193         460     5,658      10,621       (6,112)     10,167
                                      ---------     ------        -----      ------    ------      ------       ------      ------
Interest expense:
  Deposits                                1,595        136           (2)      1,729     1,162      (1,755)         (57)       (650)
  Borrowings                                  0          0          666         666         0           0            0           0
                                      ---------     ------        -----      ------    ------      ------       ------      ------
     Total                                1,595        136          664       2,395     1,162      (1,755)         (57)       (650)
                                      ---------     ------        -----      ------    ------      ------       ------      ------
Net change in net interest income     $  (5,296)     2,832          529      (1,935)    4,496      12,376       (6,055)     10,817
                                      =========     ======        =====      ======    ======      ======       ======      ======


<CAPTION>
                                             YEAR ENDED SEPTEMBER 30, 1994
                                      ------------------------------------------
                                                              RATE/              
                                        RATE      VOLUME      VOLUME       TOTAL 
                                        ----      ------      ------       -----
<S>                                   <C>        <C>          <C>         <C>
Interest Income:
  Loans                                 (425)     (2,443)        57       (2,811)
  Mortgage-backed securities            (792)     (5,271)       232       (5,831)
  Investments                           (519)      3,180         48        2,709
                                      ------      ------        ---       ------
     Total                            (1,736)     (4,534)       337       (5,933)
                                      ------      ------        ---       ------
Interest expense:                        
  Deposits                            (2,474)         60         (5)      (2,419)
  Borrowings                               0           0          0            0
                                      ------      ------        ---       ------
      Total                           (2,474)         60         (5)      (2,419)
                                      ------      ------        ---       ------
Net change in net interest income        738      (4,594)       342       (3,514)
                                      ======      ======        ===       ======
</TABLE>

PROVISION FOR LOAN LOSSES

The Company establishes provisions for loan losses, which are charged to
operations, in order to maintain the allowance for loan losses at a level which
is considered to be appropriate based upon loan and loss experience and an
evaluation of potential losses in the current loan portfolio, including the
evaluation of impaired loans under SFAS Nos. 114 and 118.  A loan is considered
to be impaired when, based upon current information and events, it is probable
that the Company will be unable to collect all amounts due according to the
contractual terms of the loan.  An insignificant delay or insignificant
shortfall in the amount of payments does not necessarily result in the loan
being identified as impaired.  For this purpose, delays less than 90 days are
considered to be insignificant.  As of September 30, 1996, 100% of the impaired
loan balance was measured for impairment based upon the fair value of the loan's
collateral.  Impairment losses are included in the provision for loan losses. 
SFAS 114 and 118 do not apply to large groups of smaller balance homogenous
loans that are collectively evaluated for impairment, except for those loans
restructured under a troubled debt restructuring.  Loans collectively evaluated
for impairment include consumer loans and residential real estate loans.  At
September 30, 1996, the Company's impaired loans consisted of smaller balance
residential mortgage loans.

For the years ended  September 30, 1996, 1995 and 1994, provisions for loan
losses were $30,000, $30,000 and $180,000, respectively.  The reduced provision
during the year ended September 30, 1995 compared to the previous fiscal year
reflects a $3.2 million reduction in troubled debt restructuring of a commercial
real estate participation as well as a reduction in nonperforming loans.  At
September 30, 1996, nonaccrual loans for which interest has been fully reserved
totaled approximately $827,000.  The Company's allowance for loan losses




<PAGE>


amounted to $1,204,000 or 145.6% of total nonperforming loans and troubled debt
restructurings and .55% of total loans receivable.

Although management utilizes its best judgment in providing for loan losses,
there can be no assurance that the Company will not have to increase its
provisions for loan losses in the future as a result of future increases in
nonperforming loans or for other reasons which could adversely affect the
Company's results of operations.  In addition, various regulatory agencies
periodically review the allowance for loan losses.  Such agencies may require
the Company to recognize additions to the allowance for loan losses based on
their judgments of information that is available to them at the time of their
examination.

OTHER OPERATING INCOME

Other operating income amounted to $687,000 for the year ended September 30,
1996, an increase of $24,000 or 3.6% over the comparable prior fiscal year.  The
increase reflected a $70,000 gain on the sale of an investment as well as
increased loan fees and service charges on automated teller machine transactions
that was only partially offset by $100,000 of rental income from real estate
owned recognized in the prior fiscal year.

For the year ended September 30, 1995, other operating income decreased by $.2
million or 26.4% to $.7 million compared to $.9 million for the prior year.  The
decline for the year ended September 30, 1995 reflects the absence of $.3
million of non-recurring income earned in fiscal 1994 associated with a troubled
debt restructuring, which was only partially offset by $.1 million of rental
income from real estate owned recognized in fiscal 1995.

OPERATING EXPENSES

Operating expenses amounted to $17.9 million for the year ended September 30,
1996, an increase of $5.7 million or 46.8% compared to $12.2 million for the
prior fiscal year. The SAIF special assessment amounted to $3.7 million of the
$5.7 million increase in operating expenses.  On September 30, 1996 ,as part of
the omnibus appropriations package signed by the President, the government
mandated a special assessment to recapitalize the SAIF, which is part of the
Federal Deposit Insurance Corporation.  The special assessment was levied
against all savings institutions in the country with deposits insured by the
SAIF.  The Bank's future deposit insurance premiums will be significantly
reduced as a result of this recapitalization legislation.  The annual deposit
insurance premiums will be reduced from $.23 for every $100 of deposits to $.064
for every $100 of deposits beginning January 1, 1997.  The Bank expects to pay
approximately $.9 million less in insurance premiums during fiscal 1997 or
approximately $.06 per share based on the level of insured deposits at September
30, 1996.

Excluding the $3.7 million SAIF special assessment, operating expenses amounted
to $14.2 million, an increase of $2.0 million or 16.5% compared to the prior
fiscal year.  Compensation and employee benefits increased $1.6 million or 21.8%
to $9.1 million from $7.5 million for the year ended September 30, 1995.  The
substantial portion of this increase resulted from additional expenses
associated with the Company's ESOP of $.6 million, MRP of $.3 million and
supplemental pension plan of $.6 million.  During fiscal 1996, the Company
terminated a defined benefit pension plan and the related supplemental pension
plan.  The termination




<PAGE>


resulted in an aggregate of $1.1 million of expense for these plans in fiscal 
1996, which costs will not be incurred in fiscal 1997.  As an additional cost 
savings measure, the Company also eliminated all bonuses to senior management 
in fiscal 1996.  Professional fees and other expenses increased $.4 million 
representing additional proxy contest expenses incurred in connection with 
the Company's annual meeting, costs associated with pending litigation, and 
additional professional fees incurred as a result of being a public reporting 
company.

For the year ended September 30, 1995, operating expenses amounted to $12.2
million, an increase of $3.2 million or 35.5% compared to $9.0 million for the
prior fiscal year.  Most of the increase was due to costs associated with the
implementation of the Company's ESOP and MRP.  In addition, professional fees
also increased during the 1995 fiscal year reflecting the additional costs
associated with being a public reporting company as well as the new ESOP and MRP
plans that were being implemented.  Advertising expenses also increased during
the year ended September 30, 1995 reflecting additional promotions regarding
mortgage loans and savings programs.

INCOME TAXES

For the years ended September 30, 1996, 1995 and 1994,  the Company incurred
income tax expense of $2.9 million, $5.2 million and $2.6 million, respectively.
The decrease in fiscal 1996 and the increase in fiscal 1995 compared to the
prior year, respectively,  in income tax expense generally follows the change in
income before income taxes as well as, for fiscal 1996, additional state income
tax expense.  For additional information regarding income tax expense, refer to
Note 11 of Notes to the Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

The Association's primary sources of funds are deposits, repayments and
maturities of outstanding loans and mortgage-backed securities, maturities of
investment securities and other short-term investments, as well as advances from
the Federal Home Loan Bank and funds provided from operations.  While scheduled
loan and mortgage-backed securities repayments and maturing investment
securities and short-term investments are relatively predictable sources of
funds, deposit flows and loan prepayments are greatly influenced by the movement
of interest rates in general, economic conditions and competition.  The
Association manages the pricing of its deposits to maintain a deposit balance
deemed appropriate and desirable.  In addition, the Association invests in
short-term interest-earning assets which provide liquidity to meet lending
requirements.  The Association  also utilizes other borrowing sources,
principally advances from the Federal Home Loan Bank of New York.  In the event
of the need for an additional source of funds, the Board of Directors of the
Association has provided management with the authority to borrow up to $10.0
million from the Federal Reserve Bank of Philadelphia, without the need for




<PAGE>


additional Board approval.  In addition, during the year ended September 30,
1996 the Association's Board of Directors also provided management with the
authority to borrow up to $50 million from the Federal Home Loan Bank of New
York.

Liquidity management is both a daily and long-term function.  Excess liquidity
is generally invested in short-term investments such as cash and cash
equivalents, U.S. Treasury, U.S. Government agencies and other qualified
investments.  On a longer-term basis, the Association maintains a strategy of
investing in various mortgage-backed securities and other investment securities
and lending products.  During the year ended September 30, 1996, the Association
used its sources of funds primarily to meet its ongoing commitments to pay
maturing savings certificates and savings withdrawals, fund loan and
mortgage-backed securities commitments and maintain an increasing portfolio of
mortgage-backed securities.  At September 30, 1996, the total approved loan
commitments outstanding amounted to $4.9 million.  Certificates of deposit
scheduled to mature in one year or less at September 30, 1996 totaled $242.8
million.  Management of the Association believes that the Association has
adequate resources, including principal prepayments and repayments of loans and
mortgage-backed securities and maturing investments, to fund all of its
commitments to the extent required.  Based upon its historical run-off
experience, management believes that a significant portion of maturing deposits
will remain with the Association.

The Association is required by the OTS to maintain average daily balances of
liquids assets and short-term liquid assets as defined in amounts equal to 5%
and 1%, respectively, of net withdrawable deposits and borrowings payable in one
year or less to assure its ability to meet demand for withdrawals and repayments
of short-term borrowings.  The liquidity requirements may vary from time to time
at the direction of the OTS depending upon economic conditions and deposit
flows.  The Association's average monthly liquidity  ratio and short-term liquid
assets for September 30, 1996 was 14.0% and 13.0%, respectively.  The
Association has substantially reduced its liquidity over the past two fiscal
years.

The Office of Thrift Supervision requires that the Company meet minimum
regulatory tangible, core and risk-based capital requirements.  The Company is
required to maintain tangible capital equal to at least 1.5% of its adjusted
total assets, core capital equal to at least 3% of its adjusted total assets and
total capital equal to at least 8% of its risk-weighted assets. At September 30,
1996 the Company exceeded all regulatory capital requirements.  At such date,
the Company had tangible capital equal to 19.3% of adjusted total assets, core
capital equal to 19.3% of adjusted total assets and total capital equal to 73.6%
of risk-weighted assets.

IMPACT OF INFLATION AND CHANGING PRICES

The consolidated financial statements of the Company and related notes presented
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 changes in the
relative purchasing power of money over time due to inflation.




<PAGE>


Unlike most industrial companies, substantially all of the assets and
liabilities of a financial institution are monetary in nature.  As a result,
interest rates have a more significant impact on a financial institution's
performance than the effects of general levels of inflation.  Interest rates do
not necessarily move in the same direction or in the same magnitude as the
prices of goods and services, since such prices are affected by inflation to a
larger extent than interest rates.  In the current interest rate environment,
liquidity and the maturity structure of the Association's assets and liabilities
are critical to the maintenance of acceptable performance levels.

RECENT ACCOUNTING PRONOUNCEMENTS

The Company adopted Statement of Financial Accounting Standards ("SFAS") Nos.
114 and 118, "Accounting by Creditors for Impairment of a Loan and Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures", as of
October 1, 1995.  This statement requires that certain impaired loans be
measured based on either the present value of expected future cash flows
discounted at the loan's effective interest rate, or the loan's observable
market price, or the fair value of the collateral if the loan is collateral
dependent.  The adoption of these statements did not result in any additional
provisions for loan losses primarily because 100% of impaired loan valuations
continue to be based on the fair value of collateral.

In October 1995, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123 "Accounting for Stock-Based Compensation" which provides companies with
a choice either to expense the fair value of employee stock options over the
vesting period (recognition method) or to continue the current practice but
disclose the pro forma effects on net income and earnings per share had the fair
value method been used (disclosure only method).  Companies electing the
disclosure only method will be required to include the pro forma effects of all
awards granted in fiscal years beginning after December 15, 1994.  IBS Financial
Corp. elected the disclosure only method during this fiscal year.

On November 15, 1995, the FASB issued a Special Report, "A Guide to
Implementation of Statement No. 115 on Accounting for Certain Investments in
Debt and Equity Securities".  On December 31, 1995, in accordance with the
provisions in the Special Report, the Company reclassified $307 million
of securities from held-to-maturity to available-for-sale.  This
reclassification resulted in a $3.8 million unrealized gain, net of tax, which
was included in stockholders' equity at December 31, 1995.  At September 30,
1996, this unrealized gain, net of tax, amounted to $1.0 million.

In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing
Rights and Excess Servicing Receivables and for Securitization of Mortgage
Loans", which is effective for years beginning after December 15, 1995.  This
statement will require the Company to recognize servicing rights as assets,
regardless of how such assets were acquired.  Additionally, the Company will be
required to assess the fair value of these assets at each reporting date to
determine any potential impairment.  Management of the Company has not completed
an analysis of the effects this pronouncement will have on its results of
operations or financial position.




<PAGE>


                                [LOGO]


INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
     IBS Financial Corp.:

We have audited the accompanying consolidated statements of financial 
condition of IBS Financial Corp. and subsidiaries (the "Company") as of 
September 30, 1996 and 1995, and the related consolidated statements of 
income, changes in stockholders' equity, and cash flows for each of the three 
years in the period ended September 30, 1996.  These financial statements are 
the responsibility of the Company's management.  Our responsibility is to 
express an opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all 
material respects, the financial position of IBS Financial Corp. and 
subsidiaries at September 30, 1996 and 1995, and the results of their 
operations and their cash flows for each of the three years in the period 
ended September 30, 1996 in conformity with generally accepted accounting 
principles.

/s/ Deloitte & Toche LLP
October 31, 1996


<PAGE>

IBS FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30, 1996 AND 1995
(Dollars in Thousands)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
ASSETS                                                                       1996           1995
                                                                         ----------      -----------

<S>                                                                        <C>          <C>        
Cash and cash equivalents                                                $ 12,466      $   12,542  
Investment securities held to maturity (estimated fair value 1996 - 
  $26,724;  1995 - $241,901)                                               26,712         241,345  
Investment securities available for sale (amortized cost 1996 - $48,194)   48,337         -       
Mortgage-backed securities held to maturity (estimated fair value 
  1996 - $285,831; 1995 - $323,630)                                        285,267        311,753  
Mortgage-backed securities available for sale (amortized cost 
  1996 - $165,485)                                                         166,994        -       
Loans receivable - (net of allowance for loan losses 1996 - 
  $1,024; 1995 - $994)                                                     185,031        141,781  
Accrued interest receivable:
  Loans                                                                        872            601  
  Mortgage-backed securities                                                 2,682          3,069  
  Investments                                                                  965          3,394  
Federal Home Loan Bank stock - at cost                                       4,590          3,672  
Office properties and equipment - net                                        6,084          6,245  
Prepaid expenses and other assets                                            2,051          2,134  
                                                                         ---------       --------
TOTAL ASSETS                                                              $742,051       $726,536  
                                                                         =========       ========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
  Deposits                                                                $571,366       $564,910  
  FHLB advances                                                             18,792         -       
  Advances from borrowers for taxes and insurance                            2,218          1,784  
  Accounts payable and accrued expenses                                      5,391          1,793  
                                                                         ---------       --------
           Total liabilities                                               597,767        568,487  
                                                                         ---------       --------
COMMITMENTS AND CONTINGENCIES (Notes 6 and 8)

STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value, authorized 25,000,000
    shares; issued, 11,609,723 shares                                          116            116  
  Additional paid-in capital                                               113,432        113,259  
  Common stock acquired by ESOP and MRP                                    (11,097)       (13,438) 
  Treasury stock  - at cost; 1996 - 855,256 shares; 1995 - 580,486 shares  (12,104)        (7,751) 
  Net unrealized gain on securities available for sale, net of taxes         1,045          -       
  Retained earnings - substantially restricted                              52,892         65,863  
                                                                         ---------      ---------
           Total stockholders' equity                                      144,284        158,049  
                                                                         ---------      ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $742,051       $726,536  
                                                                          ========       ========
</TABLE>


See notes to consolidated financial statements.

                                      -2-
<PAGE>

IBS FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(Dollars in Thousands Except Per Share Data)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                    1996      1995      1994
                                                    ----      ----      ----
<S>                                             <C>        <C>       <C>      
INTEREST INCOME:
  Interest on loans                             $  12,758  $  11,337 $  11,809
  Interest on mortgage-backed securities           28,226     23,304    12,005
  Interest and dividends on investments            11,168     17,051    17,711
                                                ---------  --------- ---------

           Total interest income                   52,152     51,692    41,525
                                                ---------  --------- ---------

INTEREST EXPENSE:
  Deposits                                         26,753     25,024    25,674
  Borrowings                                          666        -         -  
                                                ---------  --------- ---------

           Total interest expense                  27,419     25,024    25,674
                                                ---------  --------- ---------

NET INTEREST INCOME                                24,733     26,668    15,851

PROVISION FOR LOAN LOSSES                              30         30       180
                                                ---------  --------- ---------

NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES                                    24,703     26,638    15,671
                                                ---------  --------- ---------

OTHER OPERATING INCOME:
  Loan fees and late charges                          360        259       393
  Other income                                        327        404       508
                                                ---------  --------- ---------

           Total other operating income               687        663       901
                                                ---------  --------- ---------

OTHER EXPENSES:
  Compensation and employee benefits                9,116      7,483     4,926
  Federal insurance premiums                        1,300      1,346     1,397
  SAIF assessment                                   3,700       -          -  
  Occupancy and equipment - net                     1,134      1,141     1,078
  Professional fees                                   759        486       263
  Advertising and promotion                           425        467       291
  Data processing                                     442        430       415
  Other operating expenses                          1,055        862       645
                                                ---------  --------- ---------

           Total other expenses                    17,931     12,215     9,015
                                                ---------  --------- ---------

INCOME BEFORE INCOME TAXES                          7,459     15,086     7,557

INCOME TAXES                                        2,922      5,166     2,594
                                                ---------  --------- ---------

NET INCOME                                       $  4,537   $  9,920  $  4,963
                                                =========  ========= =========

EARNINGS PER SHARE                                $  0.43    $  0.84    $  -  
                                                =========  ========= =========
</TABLE>

See notes to consolidated financial statements.

                                      -3-

<PAGE>

IBS FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(Dollars in Thousands)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              Common                         Net                                  
                                                              Stock                       Unrealized
                                             Additional    Acquired by                  Gains (Losses)                   Total    
                                  Common       Paid-in         ESOP         Treasury        on AFS       Retained    Stockholders'
                                   Stock       Capital        and MRP         Stock      Securities      Earnings        Equity   
                                  -------    -----------   ------------     --------    --------------   ---------   ------------ 
<S>                               <C>        <C>           <C>              <C>          <C>             <C>         <C>          
BALANCE, OCTOBER 1, 1993          $  -       $    -        $  -             $  -         $  -            $  52,631   $  52,631    

  Net income                         -            -           -                -            -                4,963       4,963    
                                  -------    -----------   ------------     --------     -------------   ----------  ------------ 

BALANCE, SEPTEMBER 30, 1994          -            -           -                -            -               57,594      57,594    
  
  Sale of 11,609,723 shares
    of common stock, $.01 par value
    (net of cost of $2,919)          116      113,062         -                -            -                  -       113,178    

  ESOP debt                          -            -        (9,288)             -            -                  -        (9,288)   

  Payments on ESOP debt              -            -         1,063              -            -                  -         1,063    

  Market adjustment - ESOP shares
    released                         -            197         -                -            -                  -           197    

  Purchase of MRP stock              -            -        (6,085)             -            -                  -        (6,085)   

  MRP earned                         -            -           872              -            -                  -           872    

  Treasury stock purchased           -            -           -             (7,751)         -                  -        (7,751)   

  Cash dividends ($0.135 per share   -            -           -                -            -               (1,651)     (1,651)   

  Net income                         -            -           -                -            -                9,920       9,920    
                                  --------   ----------  -----------       --------      --------        ----------  ---------    

BALANCE, SEPTEMBER 30, 1995          116      113,259     (13,438)          (7,751)         -               65,863     158,049    

  Payments on ESOP debt              -            -         1,147              -            -                  -         1,147    

  Market adjustment - ESOP shares
    released                         -            388         -                -            -                  -           388    

  MRP earned                         -            -         1,194              -            -                  -         1,194    

  Treasury stock purchased           -            -           -            (19,830)         -                  -       (19,830)   

  Cash dividends ($0.234 per share)  -            -           -                -            -               (2,317)     (2,317)   

  10% stock dividend                 -           (180)        -             15,371          -              (15,191)        -      

  Unrealized gain on transfer of
     securities from held to
     maturity to available for
     sale, net of tax at December
     1995                            -            -           -                -          3,149               -          3,149    

  Unrealized loss, net of taxes      -            -           -                -         (2,104)              -         (2,104)   

  Stock option exercised             -            (35)        -                106          -                 -             71    

  Net income                         -            -           -                -            -               4,537        4,537    
                                  --------   ---------    ----------    -----------     -------         ---------   ----------    

BALANCE, SEPTEMBER 30, 1996       $  116     $113,432     $(11,097)     $  (12,104)     $ 1,045         $  52,892   $  144,284    
                                  ========   =========    ==========    ===========     =======         =========   ==========    
</TABLE>

See notes to consolidated financial statements.

                                      -4-

<PAGE>

IBS FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(Dollars in Thousands)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                    1996      1995      1994  
                                                    ----      ----      ---- 
<S>                                               <C>       <C>       <C>    
OPERATING ACTIVITIES:
  Net income                                      $  4,537  $  9,920  $  4,963
  Adjustments to reconcile net income to net
    cash provided by operating activities:
    Provision for depreciation and amortization        374       391       411
    Provision for loan loss                             30        30       180
    Market adjustment on ESOP                          388       197      -   
    MRP earned                                       1,194       872      -   
    Changes in assets and liabilities which
      provided (used) cash:
      Accrued interest receivable                    2,545    (1,823)     (733)
      Prepaid expenses and other assets                 83     1,385      (808)
      Accounts payable and accrued expenses          2,991       256      (150)
                                                   -------  --------  -------- 

           Net cash provided by operating
             activities                             12,142    11,228     3,863
                                                  --------  --------- --------

INVESTING ACTIVITIES:
  Principal repayments of:
    Loans receivable                                22,728    15,192    40,796
    Mortgage-backed securities held to maturity     44,862    35,710    57,873
    Mortgage-backed securities available for sale   33,916       -         -  
  Purchases of:
    Investments held to maturity                  (303,648) (640,701) (415,775)
    Investments available for sale                     (10)                    

    Mortgage-backed securities held to maturity   (217,777) (164,572) (106,087)
  Proceeds from:
    Maturity of investments held to maturity       455,099   688,851   364,418 
    Maturity of investments available for sale       5,000                     
  Loans originated or acquired                     (70,196)  (16,818)  (25,383)
  Proceeds from loans sold                           4,188       -         -   
  (Purchase) redemption of Federal Home Loan
     Bank stock                                       (918)   (1,068)    1,053 
  Proceeds from sale of real estate owned              -       1,252       -   
  Proceeds from sale of investments                  9,998       -         -   
  Purchase of property and equipment                  (213)     (543)     (182)
                                                  --------  --------- -------- 

           Net cash used in investing activities   (16,971)  (82,697)  (83,287)
                                                  --------  --------- -------- 

FINANCING ACTIVITIES:
  Net increase (decrease) in deposits                6,456   (38,170)   (6,725)
  Net increase (decrease) in advances from
    borrowers for taxes and insurance                  434       129      (279)
  Advances from FHLB                                20,000       -         -   
  Repayment of FHLB advances                        (1,208)      -         -   
  Cash dividends paid                               (2,317)   (1,651)      -   
  Proceeds from the sale of stock, net of ESOP
    shares acquired                                    -     103,890       -   
  Payments on ESOP debt                              1,147     1,063       -   
  Treasury stock acquired                          (19,830)   (7,751)      -   
  Unearned MRP shares acquired                         -      (6,085)      -   
  Stock options exercised                               71       -         -   
                                                  --------  --------  -------- 

           Net cash provided by (used in)
             financing activities                    4,753    51,425   (7,004) 
                                                  --------  --------  -------- 

DECREASE IN CASH AND CASH EQUIVALENTS                  (76)  (20,044) (86,428) 

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR        12,542    32,586  119,014  
                                                  --------  --------  -------- 

CASH AND CASH EQUIVALENTS, END OF YEAR           $  12,466 $  12,542 $ 32,586  
                                                 ========= ========= ========= 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash paid during the year for:
  Interest on deposits                           $  27,345 $  25,025 $ 25,808  
                                                 ========= ========= ========= 

  Income taxes                                    $  3,275  $  4,345  $ 2,843  
                                                 ========= ========= ========= 

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND 
  FINANCING ACTIVITIES - Transfers from loans to real 
estate owned                                         $  56     $  -  $  1,019  
                                                  ========  ======== ========= 
</TABLE>

See notes to consolidated financial statements.

                                      -5-

<PAGE>

IBS FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(Dollars in Thousands)
------------------------------------------------------------------------------
1.   NATURE OF OPERATIONS

     IBS Financial Corp. (the "Company") is a New Jersey Corporation 
     organized in June 1994 for the purpose of acquiring all the capital stock
     of Inter-Boro Savings and Loan Association (the "Association") issued in
     the conversion of the Association to stock form (the "Conversion") which
     was completed on October 13, 1994 (see Note 17). The Association is a New
     Jersey chartered stock savings bank with ten branch offices in Camden,
     Burlington and Gloucester counties.

     The Association is principally in the business of attracting deposits 
     through its branch offices and investing those deposits together with 
     funds from borrowings and operations primarily in single-family residential
     loans.  The Company and the Association are supervised and regulated by 
     the New Jersey Banking Department, the Office of Thrift Supervision, the
     Federal Reserve Bank, and the Federal Deposit Insurance Company.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION - The financial statements of the Company have been
     prepared on the basis of generally accepted accounting principles.  Due 
     to the Conversion, the financial statements for year ended September 30, 
     1994 have been previously reported upon as Inter-Boro Savings and Loan 
     Association.

     PRINCIPLES OF CONSOLIDATION - The consolidated financial statements 
     include the accounts of IBS Financial Corp. and its wholly owned 
     subsidiaries Inter-Boro Savings and Loan Association and IBS Investment
     Corporation.  All significant intercompany accounts and transactions have
     been eliminated.

     USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - 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 income and expenses 
     during the reporting period.  The most significant estimates and 
     assumptions in the Company's financial statements affect the allowance for
     loan losses.  Actual results could differ from those estimates.

     INVESTMENT AND MORTGAGE-BACKED SECURITIES - In May 1993, the Financial
     Accounting Standards Board ("FASB") issued Statement of Financial 
     Accounting Standards ("SFAS") No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS
     IN DEBT AND EQUITY SECURITIES.  The Company adopted SFAS No. 115 effective
     October 1, 1994.  There was no effect on stockholders' equity or net 
     income of initially applying the new standard.  The Company adopted the
     requirements of SFAS No. 115 to classify and account for debt and equity
     securities as follows:

        HELD TO MATURITY - Debt securities that management has the positive 
        intent and ability to hold until maturity are classified as held to 
        maturity and are carried at their remaining unpaid principal balance,
        net of unamortized premiums or unaccreted discount.  Premiums are 
        amortized and discounts are accreted using the interest method over the
        estimated remaining term of the underlying security.

                                      -6-
<PAGE>


        AVAILABLE FOR SALE - Debt and equity securities that will be held for an
        indefinite period of time, including securities that may be sold in 
        response to changes in market interest or prepayment rates, needs for 
        liquidity and changes in the availability of and the yield of 
        alternative investments are classified as available for sale.  These 
        assets are carried at their estimated fair value, which management has
        determined to be market value.  Market value is determined using 
        published quotes as of the close of business.
 
     During 1995, FASB issued a Special Report, A GUIDE TO IMPLEMENTATION OF 
     STATEMENT NO. 115 ON ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
     SECURITIES - QUESTIONS AND ANSWERS (the "Q&A Guide").  In December 1995, 
     in accordance with the provision of the Q&A Guide, the Company transferred
     certain securities with an aggregate amortized cost of $199,401 from the
     classification of held to maturity to available for sale.

     REAL ESTATE OWNED - Real estate owned is initially recorded at the lower 
     of carrying value of the loan or fair value at the date of foreclosure 
     less costs to dispose.  Costs relating to the development and improvement
     of property are capitalized, and those relating to holding the property 
     are charged to expense.

     OFFICE PROPERTIES AND EQUIPMENT - Office properties and equipment are 
     recorded at cost.  Depreciation is computed using the straight-line method
     over the expected useful lives (3-40 years) of the assets.  The costs of 
     maintenance and repairs are expensed as they are incurred, and renewals 
     and betterments are capitalized.
  
     ALLOWANCES FOR LOAN LOSSES - Allowances for loan losses primarily include 
     charges to reduce the recorded balances of mortgage loans receivable.  The
     charges can represent a general reserve on the entire mortgage portfolio 
     or specific reserves for individual loans.
  
     Allowances are provided for specific loans when losses are probable and 
     can be estimated.  When this occurs, management considers the remaining 
     principal balance and estimated net realizable value of the property 
     collateralizing the loan.  Current and future operating and/or sales 
     conditions are considered.  These estimates are susceptible to changes 
     that could result in material adjustments to results of operations.  
     Recovery of the carrying value of such loans is dependent, to a great 
     extent, on economic, operating and other conditions that may be beyond 
     management's control.
  
     Loan loss reserves are established as an allowance for losses based on the
     perceived risk of loss in the loan portfolio.  In assessing risk, 
     management considers historical experience, volume and composition of 
     lending conducted by the Company, industry standards, status of 
     nonperforming loans, general economic conditions as they relate to the 
     Company's market area, and other factors related to the collectibility of 
     the Association's loan portfolio.
  
     The Company adopted SFAS Nos. 114 and 118, ACCOUNTING BY CREDITORS FOR 
     IMPAIRMENT OF A LOAN and ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A 
     LOAN - INCOME RECOGNITION AND DISCLOSURES, as of October 1, 1995.  SFAS 
     No. 114 requires that certain impaired loans be measured based either on
     the present value of expected future cash flows discounted at the loan's 
     effective interest rate, the loan's observable market price, or the fair 
     value of the collateral if the loan is collateral dependent.  The adoption
     of SFAS Nos. 114 and 118 did not result in additional provisions for loan
     losses primarily because 100% of impaired loan valuations continue to be  
     based on the fair value of collateral.

                                      -7-
<PAGE>

     INCOME RECOGNITION ON LOANS - Interest on loans is credited to income when
     earned.  Accrual of loan interest is discontinued and a reserve established
     on existing accruals if management believes that after considering economic
     and business conditions and collection efforts, the borrowers' financial 
     condition is such that collection of interest is doubtful.

     DEFERRED LOAN FEES - The Company defers all loan origination fees net of 
     certain direct loan origination costs, and recognizes fees by accretion 
     into income as a yield adjustment over the life of the loan using the 
     interest method.

     EARNINGS PER SHARE- For the year ended September 30, 1996, earnings per
     share is based on income for the year ended September 30, 1996 divided by
     the weighted-average number of shares and equivalent shares outstanding 
     during the period of 10,478,884. For the year ended September 30, 1995, 
     earnings per share is based on income from October 13, 1994 (the date of 
     the initial public offering) through September 30, 1995 of $9,679 divided 
     by the weighted-average number of shares and equivalent shares outstanding
     during the period of 11,536,650 (restated for the stock dividend issued in
     March 1996).  Since the initial offering was completed on October 13, 1994,
     earnings per share information for prior years is not applicable.

     INCOME TAXES - The Company accounts for income taxes in accordance with 
     SFAS No. 109, ACCOUNTING FOR INCOME TAXES.  Under this method, deferred 
     income taxes are recognized for the tax consequences of "temporary 
     differences" by applying enacted statutory tax rates applicable to future 
     years to differences between the financial statement carrying amounts and 
     the tax bases of existing assets and liabilities.  Also under SFAS No. 109,
     the effect on deferred taxes of a change in tax rates is recognized in 
     income in the period that includes the enactment date.

     CASH AND CASH EQUIVALENTS - For purposes of reporting cash flows, cash and
     cash equivalents include cash and amounts due from depository institutions,
     and federal funds sold with original maturities of less than 90 days.

     STOCK OPTIONS - The Company accounts for stock options under Accounting 
     Principles Board Opinion No. 25 which measures compensation cost using the
     intrinsic value based method.  In October 1995, the FASB issued SFAS No. 
     123, ACCOUNTING FOR STOCK BASED COMPENSATION, establishing financial 
     accounting and reporting standards for stock-based employee compensation 
     plans.  This statement encourages all entities to adopt a new method of 
     accounting to measure compensation cost of all employee stock compensation
     plans based on the estimated fair value of the award at the date it is 
     granted.  Companies are, however, allowed to continue to measure 
     compensation cost for those plans using the INTRINSIC VALUE BASED METHOD
     of accounting, which generally does not result in compensation expense 
     recognition for most plans.  Companies that elect to remain with the 
     existing accounting are required to disclose in a footnote to the financial
     statements proforma net income and, if presented, earnings per share, as if
     this Statement had been adopted.  The accounting requirements of this 
     Statement are effective for transactions entered into fiscal years that 
     begin after December 15, 1995; however, companies are required to disclose
     information for awards granted in their first fiscal year beginning after
     December 15, 1994.  Proforma disclosures for awards granted in the first 
     fiscal year beginning after December 15, 1995 need not be included in 
     financial statements for that fiscal year but shall be presented 
     subsequently whenever financial statements for that fiscal year are 
     presented for comprehensive purposes with financial statements in a later
     fiscal year.  Management of the Company has not completed an analysis of 
     the potential effects of this Statement on its financial condition or 
     results of operations.

                                      -8-

<PAGE>

     ACCOUNTING FOR MORTGAGE SERVICING RIGHTS - In May 1995, the FASB issued 
     SFAS No. 122, ACCOUNTING FOR MORTGAGE SERVICING RIGHTS AND EXCESS SERVICING
     RECEIVABLES AND FOR SECURITIZATION OF MORTGAGE LOANS.  SFAS No. 122, which
     is effective for the years beginning after December 15, 1995, will require
     the Company to recognize servicing rights as assets, regardless of how such
     assets were acquired.  Additionally, the Company would be required to 
     assess the fair value of these assets at each reporting date to determine
     any potential impairment.  Management of the Company has not completed an 
     analysis of the effects this pronouncement would have on its results of 
     operations or financial position.  Although superseded, this standard is 
     applicable until the effective date of SFAS No. 125.

     ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND 
     EXTINGUISHMENTS OF LIABILITIES - In June 1996, FASB issued SFAS
     No. 125, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
     EXTINGUISHMENTS OF LIABILITIES.  SFAS No. 125 provides accounting and 
     reporting standards for transfers and servicing of financial assets and 
     extinguishments of liabilities.  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 requires that liabilities and derivatives incurred or 
     obtained by transferors as part of a transfer of financial assets be 
     initially measured at fair value, if practicable.  It also requires that
     servicing assets and other retained interests in the transferred assets 
     be measured by allocating the previous carrying amount between the assets
     sold, if any, and retained interests, if any, based on their relative fair
     values at the date of the transfer.

     This statement amends SFAS No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN 
     DEBT AND EQUITY SECURITIES, to clarify that a debt security may not be 
     classified as held-to-maturity if it can be prepaid or otherwise settled 
     in such a way that the holder of the security would not recover 
     substantially all of its recorded investment.  This statement amends and
     extends to all servicing assets and liabilities the accounting standards 
     for mortgage servicing rights now in SFAS No. 65, ACCOUNTING FOR CERTAIN
     MORTGAGE BANKING ACTIVITIES, and supersedes SFAS No. 122, ACCOUNTING FOR 
     MORTGAGE SERVICING RIGHTS.

     This statement is effective for transfers and servicing of financial assets
     and extinguishments of liabilities occurring after December 31, 1996, and 
     is to be applied prospectively.  Earlier or retroactive application is not
     permitted.  Management has not yet determined the effect of adopting this 
     standard.

3.   CASH AND CASH EQUIVALENTS

     Cash and cash equivalents at September 30, 1996 and 1995 consist of the 
     following:

                                                               1996      1995
                                                              -------   -------

     Cash and amounts due from banks                          $ 4,966   $ 6,192
     Federal funds sold - CoreStates   (Interest rate,
                                        1996 - 5.625%;
                                        1995 - 6.375%)          7,500     6,350
                                                              -------   -------

     Total                                                    $12,466   $12,542
                                                              =======   =======


                                      -9-
<PAGE>


4.   INVESTMENT SECURITIES

     A comparison of amortized cost and estimated fair value of investment 
     securities is as follows:

<TABLE>
<CAPTION>
                                                                   Held to Maturity
                                                                  September 30, 1996
                                                --------------------------------------------------------
                                                                                              Estimated
                                                Amortized      Unrealized      Unrealized        Fair
                                                   Cost            Gain           Loss          Value
                                                ---------      ----------      ----------     ----------
<S>                                             <C>              <C>              <C>          <C>
U.S. Government obligations                     $  26,366        $  12            $  -         $  26,378  
Term and other deposits in the Federal
  Home Loan Bank                                      346            -               -               346  
                                                ---------        -----            ----         ---------
Total                                           $  26,712        $  12            $  -         $  26,724
                                                =========        =====            ====         =========


                                                                  Available for Sale
                                                                  September 30, 1996
                                                --------------------------------------------------------
                                                                                              Estimated
                                                Amortized      Unrealized      Unrealized        Fair
                                                   Cost            Gain           Loss          Value
                                                ---------      ----------      ----------     ----------

U.S. Government obligations                     $  48,194        $ 143            $  -         $  48,337
                                                =========        ======           =====        =========


                                                                    Held to Maturity
                                                                   September 30, 1995
                                                --------------------------------------------------------
                                                                                              Estimated
                                                Amortized      Unrealized      Unrealized        Fair
                                                   Cost            Gain           Loss          Value
                                                ---------      ----------      ----------     ----------

U.S. Government obligations                     $ 164,971        $ 682           $ 126         $ 165,527
Term and other deposits in the Federal
  Home Loan Bank                                   76,374            -               -            76,374
                                                ---------        -----            ----         ---------
Total                                           $ 241,345        $ 682            $126         $ 241,901  
                                                =========        =====            ====         =========
</TABLE>

 
     The amortized cost and estimated fair value of debt securities by 
     contractual maturity at September 30, 1996 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.

                                                               Estimated
                                                 Amortized       Fair
                                                   Cost          Value
                                                 ---------     ---------

     Due in one year or less                      $ 74,906      $ 75,061
     Due after one year through 
        five years                                      -              -   
                                                  --------      --------
                                                  $ 74,906      $ 75,061
                                                  ========      ========

                                      -10-

<PAGE>


5.   MORTGAGE-BACKED SECURITIES
     Mortgage-backed securities at September 30, 1996 and 1995 consisted of the
     following:

<TABLE>
<CAPTION>

                                                           Held to Maturity
                                                          September 30, 1996
                                         ----------------------------------------------------
                                                                                    Estimated
                                         Amortized     Unrealized     Unrealized       Fair
                                            Cost           Gain          Loss         Value
                                         ---------     ----------     ----------    ---------
<S>                                      <C>            <C>              <C>         <C>
FNMA pass-through certificates            $ 29,082      $     -         $  832      $ 28,250
GNMA pass-through certificates             115,903        5,718             63       121,558
FHLMC pass-through certificates            139,556          227          4,465       135,318
Private pass-through certificates
  (noninsured)                                 726            -             21           705
                                          --------      -------         ------      --------
Total                                     $285,267      $ 5,945         $5,381      $285,831
                                          ========      =======         ======      ========

                                                          Available for Sale
                                                          September 30, 1996
                                         ----------------------------------------------------
                                                                                    Estimated
                                         Amortized     Unrealized     Unrealized       Fair
                                            Cost           Gain          Loss         Value
                                         ---------     ----------     ----------    ---------

FNMA pass-through certificates            $ 12,043      $   343         $    -      $ 12,386
GNMA pass-through certificates              15,509          220              -        15,729 
FHLMC pass-through certificates            137,933        1,325            379       138,879 
                                          --------      -------         ------      --------
Total                                     $165,485      $ 1,888         $  379      $166,994
                                          ========      =======         ======      ========

                                                           Held to Maturity
                                                          September 30, 1995
                                         ----------------------------------------------------
                                                                                    Estimated
                                         Amortized     Unrealized     Unrealized       Fair
                                            Cost           Gain          Loss         Value
                                         ---------     ----------     ----------    ---------

FNMA pass-through certificates            $ 17,280      $   491         $    -      $ 17,771  
GNMA pass-through certificates             142,054        8,488              -       150,542  
FHLMC pass-through certificates            151,549        2,925              -       154,474  
Private pass-through certificates
  (noninsured)                                 870            -             27           843
                                          --------      -------         ------      --------
Total                                     $311,753      $11,904         $   27      $323,630  
                                          ========      =======         ======      ========

</TABLE>

                                        -11-

<PAGE>

6.   LOANS RECEIVABLE

     Loans receivable consist of the following:

                                                           September 30,
                                                       ----------------------
                                                         1996          1995
                                                       --------      --------
     Mortgage loans (1-4 residential loans)            $164,717      $132,251
     Construction loan                                    1,256         1,889
     Loans on savings accounts                            2,472         2,616
     Commercial real estate loans                        19,548         8,548
     Consumer loans                                         813           125
                                                       --------      --------
          Total                                         188,806       145,429

     Less:
       Deferred loan fees                                (1,572)         (982)
       Allowance for loan losses                         (1,024)         (994)
       Loans in process                                  (1,179)       (1,672)
                                                       --------      --------
          Total                                        $185,031      $141,781
                                                       ========      ========


     At September 30, 1996 and 1995, the Company had outstanding commitments to
     purchase and originate fixed rate (ranging from 6.5% to 8.0%) mortgage 
     loans totaling $6,554 and $5,049, respectively.  All commitments are 
     expected to be funded within 12 months.  The Company uses the same credit
     policies in extending commitments as it does for loans.

     The Company originates and purchases both adjustable and fixed interest 
     rate loans and mortgage-backed securities.  At September 30, 1996, the 
     composition of these loans and mortgage-backed securities are $552,748 at
     fixed interest rates and $83,035 at adjustable interest rates.

     The adjustable rate loans and mortgage-backed securities have interest 
     rate adjustment limitations and are generally indexed to the one-year U.S.
     Treasury Note rate.  Future market factors may affect the correlation of 
     the interest rate adjustment with the rates the Association pays on the 
     short-term deposits that have been primarily utilized to fund these loans.

     Certain directors and executive officers of the Company have loans with the
     Company.  Such loans were made in the ordinary course of business at the 
     Company's normal credit terms, including interest rate and 
     collateralization, and do not represent more than a normal risk of 
     collection.  Total loans to these individuals are summarized as follows:

                                              September 30,
                                              --------------
                                               1996     1995
                                              -----    -----
     Balance, beginning of year               $ 216    $ 223
     New loans made during year                   3        -
     Repayments                                  (7)      (7) 
                                              -----    -----
     Balance, end of year                     $ 212    $ 216  
                                              =====    =====
                                      -12-

<PAGE>


     Most of the Company's activity is with customers located within the state 
     of New Jersey; therefore, the Company is lending subject to a concentration
     of credit risk as it relates to this economic sector.

     Changes in the allowance for loan losses were as follows:


                                             Year Ended September 30,
                                             -------------------------
                                               1996     1995     1994
                                             -------    ----   -------
     Balance, beginning of year               $  994    $530   $ 1,669
     Provision for loan losses                    30      30       180
     Charge-offs                                   -       -    (1,319)
     Recoveries                                    -     434         -
                                              ------    ----    ------
     Balance, end of year                     $1,024    $994    $  530
                                              ======    ====    ======


     The provision for loan losses charged to expense is based upon past loan
     and loss experience and an evaluation of potential losses in the current 
     loan and lease portfolio, including the evaluation of impaired loans under
     SFAS No. 114.  A loan is considered to be impaired when, based upon 
     current information and events, it is probable that the Association will 
     be unable to collect all amounts due according to the contractual terms 
     of the loan.  An insignificant delay or insignificant shortfall in amounts
     of payments does not necessarily result in the loan being identified as 
     impaired.  For this purpose, delays less than 90 days are considered to 
     be insignificant.  SFAS No. 114 does not apply to large groups of smaller
     balance homogeneous loans that are collectively evaluated for impairment,
     except for those loans restructured under a troubled debt restructuring.  
     At September 30, 1996, the Association has no loans considered impaired 
     under SFAS No. 114.

     Nonperforming loans (which include loans in excess of 90-day delinquency) 
     at September 30, 1996, 1995 and 1994 amounted to approximately $827, $663
     and $1,005, respectively.  The reserve for delinquent interest on loans 
     totaled $58, $49 and $49 at September 30, 1996, 1995 and 1994, 
     respectively.

7.   MORTGAGE BANKING ACTIVITIES

     At September 30, 1996, 1995 and 1994, the Company was servicing loans for
     others amounting to approximately $1,718, $5,045 and $4,336, respectively.
     Servicing loans for others generally consists of collecting mortgage 
     payments, maintaining escrow accounts, disbursing payments to investors 
     and foreclosure processing.  Loan servicing income is recorded on the 
     accrual basis and includes servicing fees from investors and certain 
     charges collected from borrowers, such as late payment fees.

                                      -13-

<PAGE>


8.   OFFICE PROPERTIES AND EQUIPMENT

     Office properties and equipment at September 30, 1996 and 1995 are 
     summarized as follows:

                                                          1996       1995
                                                         -------   -------
     Land and buildings                                  $ 9,009   $ 8,841  
     Furniture and equipment                               1,990     1,947  
     Leasehold improvements                                  110       110  
                                                         -------   -------
         Total                                            11,109    10,898  
     Accumulated depreciation and amortization            (5,025)   (4,653) 
                                                         -------   -------
     Net                                                 $ 6,084   $ 6,245
                                                         =======   =======


     Rental expense under operating leases for certain branch offices amounted 
     to $105, $92 and $98 for the years ended September 30, 1996, 1995 and 1994,
     respectively. The following is a summary of future minimum lease payments
     required under the leases:

          Year Ending                                    Minimum
         September 30,                                Lease Payments
                                                      --------------

            1997                                           $  83  
            1998                                              66  
            1999                                              45  
            2000                                              30  
            2001                                               - 
                                                           -----
            Total                                          $  224
                                                           ======



                                     -14-




<PAGE>

9.   DEPOSITS

     The major types of savings deposits by weighted interest rates, amounts 
     and the percentages of such types to total savings deposits at 
     September 30, 1996 and 1995 were as follows:

<TABLE>
<CAPTION>
                                                     1996                              1995
                                    -------------------------------------   -------------------------------------
                                                               Weighted                                Weighted
                                               Percentage      Interest                 Percentage     Interest
                                      Amount    of Total         Rate         Amount     of Total        Rate
                                    ---------  ----------    ------------   ----------  ----------    -----------
<S>                                 <C>        <C>           <C>            <C>         <C>           <C>
Balances by interest rate:
  NOW accounts                      $  23,886      4.2 %        1.82 %      $  22,909       4.1 %        2.07 %
  Money market deposit accounts        70,023     12.2          2.86           74,933      13.3          3.16  
  Passbook and club accounts           59,323     10.4          2.74           62,950      11.1          2.99  

                                                               Interest                                Interest
                                                                 Rate                                    Rate
                                                                 Range                                   Range
                                                               --------                                --------

Certificates by maturity:
  Within 1 year                       242,804     42.5 %     3.50 - 6.65      218,024      38.6       3.05 - 6.25
  1 to 3 years                        144,369     25.3       5.00 - 7.10      116,835      20.7       4.35 - 7.10
  Beyond 3 years                       30,600      5.3       5.25 - 9.00       68,877      12.1       5.00 - 9.00
                                    ---------     ----                      ---------      ----

  Total certificates                  417,773     73.1                        403,736      71.4
                                    ---------     ----                      ---------      ----

  Accrued interest on savings             361      0.1                            382       0.1
                                    ---------     ----                      ---------      ----

  Total deposits                    $ 571,366    100.0 %                    $ 564,910     100.0 %
                                    =========    =====                      =========     =====
</TABLE>


     A summary of interest expense on deposits is as follows:

                                      Year Ended September 30,
                                    ----------------------------
                                      1996       1995      1994
                                    -------    -------    ------
NOW                                 $   460    $   492    $   521  
MMDA                                  2,113      2,586      2,941  
Passbook and club                     1,717      1,992      2,095  
Certificates                         22,463     19,954     20,117  
                                    -------    -------    ------

Total                               $26,753    $25,024    $25,674  
                                    =======    =======    =======

10.  ADVANCES FROM FEDERAL HOME LOAN BANK OF NEW YORK

     Advances from the Federal Home Loan Bank of New York which are amortizing 
     are as follows:

                             Interest      September 30,
           Due                 Rate            1996
           ----              --------      -------------
           2001               5.918 %        $  9,275  
           2003               6.164 %           9,517  
                                             --------
                                             $ 18,792  
                                             ========

                                      -15-

<PAGE>


     The advances are collateralized by Federal Home Loan Bank stock and 
     substantially all first mortgage loans.

11.  INCOME TAXES

     The income tax provision consists of the following:

                                     1996       1995       1994
                                   -------     -------    -------
       Current:
           Federal                 $ 3,439     $ 4,888    $ 2,694  
           State                       261         550        199  
                                   -------     -------    -------
              Total current          3,700       5,438      2,893  
                                   -------     -------    -------

      Deferred:
           Federal                    (752)       (267)      (293) 
           State                       (26)         (5)        (6) 
                                   -------     -------    -------
              Total deferred          (778)       (272)      (299) 
                                   -------     -------    -------

      Total income tax provision   $ 2,922     $ 5,166    $ 2,594  
                                   =======     =======    =======

     The Company's provision for income taxes differs from the amounts 
     determined by applying the statutory federal income tax rate to income 
     taxes for the following reasons:


<TABLE>

<CAPTION>

                                  1996                1995                  1994
                           -----------------    ----------------     ----------------
                           Amount    Percent    Amount    Percent    Amount    Percent
                           ------    -------    ------    -------    ------    ------- 
<S>                        <C>       <C>        <C>       <C>        <C>       <C> 

Tax at federal rate        $2,611     35.0%     $5,280     35.0%     $2,645      35.0%

Surtax exemption              (75)    (1.0)       (100)     (0.7)       (76)     (1.0) 
State taxes                   155      2.0         360       2.4        127       1.7  
Other                         231      3.0        (374)     (2.5)      (102)     (1.4) 
                           ------     ----      ------     -----     ------      ----

Total                      $2,922     39.0%     $5,166      34.2%    $2,594      34.3% 
                           ======     ====      ======      ====     ======      ====
</TABLE>

                                      -16-

<PAGE>


     Items that gave rise to significant portions of the deferred tax 
     accounts, which are included in prepaid expenses and other assets at 
     September 30, 1996 and 1995, are as follows:



                                                     1996             1995
                                                    -------          ------- 
Deferred tax assets:
  SAIF special assessment                           $ 1,258          $     - 
  Deferred loan fees                                    293              353 
  Deferred loan costs                                     9               38 
  Supplemental pension                                  514              235 
  Deferred compensation                                   -              360 
  Accrued interest expense on CDs                        77               96 
  Deferred income                                       445              223 
  Other                                                  93              269 
                                                    -------          ------- 

           Total                                      2,689            1,574 
                                                    -------          ------- 

Deferred tax liabilities:
  Unrealized gain on investments                       (596)               - 
  Allowance for loan loss                              (753)            (296) 
  Depreciation on office property and equipment        (762)            (882) 
                                                    -------          ------- 

           Total                                     (2,111)          (1,178) 
                                                    -------          ------- 

Net deferred tax assets                             $   578          $   396 
                                                    =======          =======

     The Company is permitted under the Internal Revenue Code (the "Code") to 
     deduct an annual addition to the reserve for bad debts in determining 
     taxable income, subject to certain limitations.  The Company's deduction 
     is based upon the percentage of taxable income method as defined by the 
     Code.  The bad debt deduction allowable under this method equals 8% of 
     taxable income determined without regard to that deduction and with 
     certain adjustments.  This addition differs from the bad debt experience 
     used for financing accounting purposes.

     In August 1996, the Small Business Job Protection Act (the "Act") was 
     signed into law.  The Act repealed the percentage of taxable income 
     method of accounting for bad debts for thrift institutions effective for 
     years beginning after December 31, 1995. The Act required the Company as 
     of October 1, 1996 to change its method of computing reserves for bad 
     debts to the specific charge-off method.  The bad debt deduction 
     allowable under this method is available to large banks with assets 
     greater than $500 million.  Generally, this method will allow the 
     Company to deduct an annual addition to the reserve for bad debts equal 
     to the Association's charge-offs.

     A thrift institution required to change its method of computing reserves 
     for bad debts will treat such change as a change in a method of 
     accounting determined solely with respect to the "applicable excess 
     reserves" of the institution.  The amount of the applicable excess 
     reserves will be taken into account ratably over a six-taxable year 
     period, beginning with the first taxable year beginning after December 
     31, 1995.  The timing of this recapture may be delayed for a two-year 
     period provided certain residential loan requirements are met.  For 
     financial reporting purposes, the Company will not incur any additional 
     tax expense. Amounts which had previously been deferred will be reversed 
     for financial reporting purposes and will be included in the income tax 
     return of the Company, increasing income tax payable.  At

                                     -17-

<PAGE>

     September 30, 1996, under SFAS No. 109, deferred taxes totaling 
     approximately $800 were provided relating to such difference.

12.  REGULATORY CAPITAL REQUIREMENTS

     The Association is subject to various regulatory capital requirements 
     administered by the federal and state 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 Association's 
     financial statements.  Under capital adequacy guidelines and the 
     regulatory framework for prompt corrective action, the Association must 
     meet specific capital guidelines that involve quantitative measurers of 
     the Association's assets, liabilities and certain off-balance-sheet 
     items as calculated under regulatory accounting practices.  The 
     Association'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 Association to maintain minimum amounts and ratios 
     (set forth in the table below) of tangible and core capital (as defined 
     in the regulations) to total adjusted assets (as defined), and of 
     risk-based capital (as defined) to risk-weighted assets (as defined).  
     Management believes, as of September 30, 1996, that the Association 
     meets all capital adequacy requirements to which it is subject.


     As of September 30, 1996, the most recent notification from the Office 
     of Thrift Supervision categorized the Association as well capitalized 
     under the regulatory framework for prompt corrective action.  To be 
     categorized as well capitalized, the Association must maintain minimum 
     tangible, core and risk-based ratios as set forth in the table.  There 
     are no conditions or events since that notification that management 
     believes have changed the Association's category.

AT SEPTEMBER 30, 1996:

<TABLE>

<CAPTION>

                                                                                            Well Capitalized
                                                                Required for                  Under Prompt
                                                              Capital Adequacy              Corrective Action
                                         Actual                   Purposes                     Provisions
                                  --------------------       -------------------       ----------------------
                                  Amount        Ratio        Amount        Ratio        Amount         Ratio

  <S>                            <C>            <C>         <C>            <C>          <C>            <C>

  Tangible                       $143,239       19.31%      $11,126        1.5%          N/A            N/A
  Core (Leverage)                 143,239       19.31%       22,252        3.0%         37,086          5.0%
  Tier 1 risk-based               143,239       73.11         7,837        4.0          11,756          6.0
  Total risk-based                143,263       73.63        15,675        8.0          19,594         10.0

</TABLE>

AT SEPTEMBER 30, 1995:

<TABLE>

<CAPTION>

                                                                                           Well Capitalized
                                                                Required for                  Under Prompt
                                                              Capital Adequacy              Corrective Action
                                         Actual                   Purposes                     Provisions
                                  --------------------       -------------------       ----------------------
                                  Amount        Ratio        Amount        Ratio        Amount         Ratio

  <S>                            <C>            <C>         <C>            <C>          <C>            <C>



  Tangible                       $124,015       17.90%      $10,390        1.5%          N/A            N/A
  Leverage                        124,015       17.90%       20,779        3.0%         41,558          5.0%
  Tier 1 risk -based              124,015       78.30         6,332        4.0           9,498          6.0 
  Total risk-based                125,009       79.00        12,664        8.0          15,830         10.0 

</TABLE>


13.  PENSION PLAN

     The Company terminated the defined benefit retirement plan effective 
     September 1, 1996.  Pending regulatory approval, the remaining net 
     assets, if any, will be distributed to participants on a pro rata basis. 
     Total pension expense for the year ending September 30, 1996 was $334.

                                    -18-

<PAGE>

     The net periodic pension costs for the years ended September 30, 1995 
     and 1994 included the following components:


                                                             1995      1994
                                                            ------     -----

       Service cost, benefits earned during the year         $195      $ 185 
       Interest cost on projected benefit obligation          266        173 
       Actual return on plan assets                          (226)      (220)
       Amortization of unrecognized net assets and  
        other deferred amounts, net                            16         13 
                                                             ----      -----
       Net periodic pension cost                             $251      $ 151 
                                                             ====      =====


     The following table sets forth the plan's funded status as of September 
     30, 1995:

                                                                       1995

      Actuarial present value of benefit obligation
       (including vested benefit obligation $3,087)                    $3,151 
                                                                       ======

      Projected benefit obligation                                     $3,996  
      Market value of plan assets                                       3,554  
                                                                       ------ 

     Plan assets less than projected benefit obligation                  (442) 
     Unrecognized net loss                                                839  
     Unrecognized net transition obligation being 
      amortized over fifteen years                                         75  
                                                                       ------ 

     Net pension asset                                                 $  472 
                                                                       ====== 


     In determining the projected benefit obligation, the assumed discount 
     rate for each of the two years ended September 30, 1995 was 7.5%.  The 
     weighted average rate of increase in compensation was 5%.  The expected 
     long-term rate of return on assets used in determining net periodic 
     pension cost was 7.5%.


     The Company also terminated a Supplemental Executive Retirement Plan 
     effective September 1, 1996.  Total expense for the year ending 
     September 30, 1996 was $824.

                                     -19-

<PAGE>

14.  EMPLOYEE STOCK OWNERSHIP PLAN AND RECOGNITION AND RETENTION PLAN


     In connection with the Conversion, the Company established an ESOP for 
     the benefit of eligible employees.  The Company purchased 928,777 shares 
     (1,021,654 shares restated for the stock dividend issued in March 1996) 
     of common stock on behalf of the ESOP in the Conversion.  At September 
     30, 1996 and 1995, 77,994 and 78,657 shares of the total ESOP shares 
     were committed to be released with 142,408 and 23,219 shares allocated 
     to participants, respectively.  The Company accounts for its ESOP in 
     accordance with Statement of Position 93-6, EMPLOYERS' ACCOUNTING FOR 
     EMPLOYEE STOCK OWNERSHIP PLANS, which requires the Company to recognize 
     compensation expense equal to the fair value of the ESOP shares during 
     the periods in which they become committed to be released.  To the 
     extent that the fair value of the ESOP shares differs from the cost of 
     such shares, this differential will be charged or credited to equity as 
     additional paid-in capital.  During 1996 and 1995, the differential 
     aggregated $388 and $197, respectively.  Management expects the recorded 
     amount of expense to fluctuate as continuing adjustments are made to 
     reflect changes in the fair value of the ESOP shares.  Employers with 
     internally leveraged ESOP's, such as the Company, do not report the loan 
     receivable from the ESOP as an asset, and do not report the ESOP debt 
     from the employer as a liability.  The Company recorded compensation and 
     employee benefit expense related to the ESOP of $1,901 and $1,345, 
     respectively for the years ended September 30, 1996 and 1995.


     At the Company's annual meeting of stockholders held on January 19, 
     1995, the Recognition and Retention Plan and Trust (the "MRP") was 
     approved by the Company's stockholders.  The MRP purchased 510,827 
     shares in the open market at an aggregate cost of $6,085 and all shares 
     available under the MRP have been awarded to the Company's Board of 
     Directors and the Association's executive officers and other key 
     employees.

     At September 30, 1996 and 1995, respectively, the net deferred cost of 
     the unearned MRP shares amounted to $4,891 and $5,213 and is recorded as 
     a charge against stockholders' equity.  Compensation expense will be 
     recognized over the five year vesting period for shares awarded.  The 
     Company recorded compensation and employee benefit expense related to 
     the MRP of $1,194 and $872 for the years ended September 30, 1996 and 
     1995, respectively.

15.  STOCK OPTION PLAN

     The Company has a stock option plan which was established and approved 
     by the stockholders at the annual stockholders' meeting held on January 
     19, 1995.  The 1995 Plan is for executive officers and selected 
     full-time employees and directors. 

     Under this plan, compensatory options were granted to non-employee 
     directors and incentive options were granted to selected officers 
     and employees.  The option price per share for options granted may 
     not be less than the fair market value of the common stock on the 
     date of grant.

     The compensatory options are exercisable six months after issuance in 
     increments of 85% with 7.5% exercisable in each of the two years 
     thereafter.  The incentive options are exercisable one year after 
     issuance in increments of 20% a year.  All options expire in 10 years.

                                     -20-

<PAGE>

     A summary of transactions under the Plan at September 30, 1996 and 1995 
     follows.  All amounts are restated for the stock dividend issued in 
     March 1996.


<TABLE>

<CAPTION>

                                       September 30, 1996                                         September 30, 1995

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

<S>                 <C>            <C>          <C>          <C>          <C>          <C>        <C>        <C>         <C> 
Exercise price      $    9.432     $12.955      $13.864      $14.500      Total        $9.432     $12.955    $13.864     Total
                    ==========     =======      =======      =======     =======       ======     =======    =======    =======

Outstanding, 
  beginning of 
  year               1,119,656      24,750       28,736       -       1,173,142         -         --           -            -  

Options:
  Granted                 -           -           -         2,000         2,000    1,119,656    24,750      28,736     1,173,142
  Exercised             (7,547)       -           -           -         (7,547)         -         -           -             -    
  Forfeited               -           -           -           -           -             -         -           -             -    
                    ----------     -------      -------      ------    ----------   ----------   --------    -------    ---------- 


Outstanding,
  end of year        1,112,109      24,750       28,736     2,000    1,167,595     1,119,656    24,750      28,736     1,173,142

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

Options exercisable    478,702       4,950       28,736      -         512,388       325,644      -          -           325,644


                    ==========     =======      =======     ======   ==========   ==========   ========   =======    ==========

</TABLE>


16.  FAIR VALUE OF FINANCIAL INSTRUMENTS


     The following disclosure of the estimated fair value of financial 
     instruments is made in accordance with the requirements of SFAS No. 107, 
     DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS.  The estimated 
     fair value amounts have been determined by the Company using available 
     market information and appropriate valuation methodologies.  However, 
     considerable judgment is necessarily required to interpret market data 
     to develop the estimates of fair value.  Accordingly, the estimates 
     presented herein are not necessarily indicative of the amounts the 
     Company could realize in a current market exchange.  The use of 
     different market assumptions and/or estimation methodologies may have a 
     material effect on the estimated fair value amounts.


<TABLE>

<CAPTION>


                                              September 30, 1996        September 30, 1995
                                           -----------------------    -----------------------
                                                         Estimated                  Estimated
                                            Carrying       Fair       Carrying         Fair
                                             Amount        Value       Amount         Value
                                           ---------     ---------   ---------     ----------
     <S>                                   <C>           <C>         <C>           <C>       
     Assets:
       Cash and cash equivalents            $ 12,466     $ 12,466     $ 12,542     $ 12,542  
       Investment securities held 
        to maturity                           26,712       26,724      241,345      241,901  
       Investment securities available 
        for sale                              48,337       48,337          -            -    
       Mortgage-backed securities held 
        to maturity                          285,267      285,831      311,753      323,630  
       Mortgage-backed securities 
        available for sale                   166,994      166,994          -             -   
       Loans receivable, net                 185,031      188,799      141,781      142,978  
       Federal Home Loan Bank stock            4,590        4,590        3,672        3,672  

     Liabilities:
       NOW accounts                           23,886       23,886       22,909       22,909  
       Money market deposit accounts          70,023       70,023       74,933       74,933  
       Passbook and club accounts             59,323       59,323       62,950       62,950  
       Savings certificates                  417,773      410,192      403,736      400,434  
       Advances from FHLB                     18,792       18,792  

       Off-balance sheet commitments              -         6,554          -          5,049  

</TABLE>


                                     -21-

<PAGE>


     CASH AND CASH EQUIVALENTS - For cash and cash equivalents, the carrying 
amount is a reasonable estimate of fair value.

     INVESTMENTS AND MORTGAGE-BACKED SECURITIES - The fair value of 
investment securities and mortgage-backed securities is based on quoted 
market prices, dealer quotes, and prices obtained from independent pricing 
services.

     LOAN RECEIVABLE - The fair value of loans is estimated based on present 
value using approximately current entry-value interest rates applicable 
to each category of such financial instruments.

     FEDERAL HOME LOAN BANK STOCK - Although FHLB stock is an equity interest 
in an FHLB, it is carried at cost because it does not have a readily 
determinable fair value and it lacks a market.

     NOW ACCOUNTS, MONEY MARKET DEPOSIT ACCOUNTS, PASSBOOK AND CLUB ACCOUNTS 
AND SAVINGS CERTIFICATES - The fair value of NOW accounts, Money Market 
Deposit accounts and passbook and club accounts is the amount reported in the 
consolidated financial statements.  The fair value of savings 
certificates is based on a present value estimate using rates currently 
offered for deposits of similar remaining maturity.

     ADVANCES FROM FEDERAL HOME LOAN BANK - The fair value is the amount 
payable on demand at the reporting date.

     OFF-BALANCE SHEET COMMITMENTS - For commitments expiring within 90 days 
or with a variable rate, the settlement amount is a reasonable estimate 
of fair value.  For commitments expiring beyond 90 days or with a fixed rate, 
the fair value is the present value of the fees based on current loan 
rates.

     The fair value estimates presented herein are based on pertinent 
information available to management as of September 30, 1996 and 1995.  
Although management is not aware of any factors that would significantly 
affect the estimated fair value amounts, such amounts have not been 
comprehensively revalued for purposes of these consolidated financial 
statements since those dates and, therefore, current estimates of fair 
value may differ significantly from the amounts presented herein.

17.  STOCK CONVERSION

     On October 13, 1994, the Association completed its Conversion from a New 
Jersey chartered mutual savings and loan association to a New Jersey 
chartered stock savings and loan association through the sale of 11,609,723 
shares of common stock (par value $.01) of IBS Financial Corp., a New 
Jersey corporation organized in June 1994 by the Association for the purpose 
of acquiring all of the capital stock of the Association upon 
consummation of the Conversion.  Total proceeds of $116,097 were reduced by 
Conversion expenses of approximately $2,919 and the excess of proceeds 
over the par value of the stock was credited to paid-in capital in      
excess of par.  As a result of this Conversion, $56,600 of additional capital 
was contributed to the Association from this newly formed holding 
company in exchange for all of the outstanding capital stock of the 
Association.

     At the time of the Conversion, the Association established a liquidation 
account in an amount equal to the Association's net worth as reflected 
in the latest consolidated statement of financial condition of the 
Association contained in the offering circular utilized in the 
Conversion.  The function of the liquidation account is to establish a 
priority on liquidation and, except with respect to the payment of cash 
dividends on, or the repurchase of, any of the common stock by the 
Association, the existence of the liquidation account will not operate 
to restrict the use or application of any of the net worth accounts of the 


                                      -22-


<PAGE>


Association.  In the event of a complete liquidation of the Association 
(and only in such event), each eligible account holder will be entitled 
to receive a pro rata distribution from the liquidation account, based on 
such holder's proportionate amount of the total current adjusted balance 
from deposit accounts then held by all eligible account holders, before any 
liquidation distribution may be made with respect to stockholders.

18.  SAVINGS ASSOCIATION INSURANCE FUND ASSESSMENT

     On September 30, 1996, an omnibus appropriations bill for fiscal year 
1997, which includes the recapitalization of the Savings Association 
Insurance Fund (SAIF) became law.  Accordingly, all SAIF insured depository 
institutions will be charged a one-time special assessment on their 
SAIF-accessible deposits as of March 31, 1995 at the rate of 65.7 basis 
points, payable on November 27, 1996.  The Bank accrued $3,700 for this 
special assessment at September 30, 1996.

19.  PARENT COMPANY FINANCIAL INFORMATION

     The financial statements of IBS Financial Corp. (Parent only) as of and 
for the periods ended September 30,1996 and 1995 are presented below:


STATEMENT OF FINANCIAL CONDITION
SEPTEMBER 30, 1996 AND 1995
(Dollars in Thousands)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

ASSETS                                                     1996         1995
                                                         --------      --------
<S>                                                      <C>           <C>

Cash                                                     $    122      $     74
Investment in subsidiary                                  144,242       124,018
Investment securities held to maturity                        354        34,000
Other assets                                                    5           702
                                                         --------      --------

TOTAL ASSETS                                             $144,723      $158,794
                                                         ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES - Accrued expenses and other liabilities     $    439      $    745
                                                         --------      --------

STOCKHOLDERS' EQUITY:
  Common stock                                                116           116
  Additional paid-in capital                              113,432       113,259
  Common stock acquired by ESOP and MRP                   (11,097)      (13,438)
  Treasury stock                                          (12,104)       (7,751)
  Retained earnings                                        53,937        65,863
                                                         --------      --------

           Total stockholders' equity                     144,284       158,049
                                                         --------      --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $144,723      $158,794
                                                         ========      ========


</TABLE>

                                      -23-


<PAGE>


STATEMENT OF INCOME
PERIODS ENDED SEPTEMBER 30, 1996 and 1995
(Dollars in Thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                           1996          1995
                                                         --------      --------
<S>                                                      <C>           <C>

Interest income:
  Interest on ESOP loan                                    $  701        $  746
  Interest and dividends on investments                     1,109         2,762
                                                           ------        ------

           Total interest income                            1,810         3,508
                                                           ------        ------

Other operating income                                        -              29
                                                           ------        ------

Other expenses:

   Management fee                                             980         1,132
   Salaries and employee benefits                              24           -
   Professional services                                      451           139
   Other operating expenses                                   350           224

           Total other expenses                             1,805         1,495
                                                           ------        ------

Income before income taxes and equity in undistributed
  earnings of subsidiaries                                      5         2,042

Income taxes                                                   (6)          827
                                                           ------        ------

Income before equity in undistributed earnings of
  subsidiaries                                                 11         1,215

Equity in undistributed earnings of subsidiaries            4,526         8,705
                                                           ------        ------

Net income                                                 $4,537        $9,920
                                                           ======        ======
</TABLE>


                                      -24-


<PAGE>


STATEMENT OF CASH FLOWS
PERIODS ENDED SEPTEMBER 30, 1996 and 1995
(Dollars in Thousands)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                           1996          1995
                                                         --------      --------
<S>                                                      <C>           <C>

Operating activities:
  Net income                                             $  4,537      $  9,920
  Changes in assets and liabilities which
    provided (used) cash:
    Other assets                                              697          (702)
    Accrued expenses and other liabilities                   (306)          745
    Equity in undistributed earnings of subsidiaries       (4,526)       (8,705)
                                                         --------      --------

         Net cash provided by operating activities            402         1,258
                                                         --------      --------
Investing activities:
  Proceeds from maturity of investments                    18,993            -
  Purchase of investments                                     -         (34,000)
  Investment in subsidiary                                    -         (57,719)
                                                         --------      --------

          Net cash provided by (used in) investing
            activities                                     18,993        (91,719)
                                                         --------      --------
Financial activities:
  Cash dividends paid                                      (2,317)        (1,651)
  Payments on ESOP debt, net                                1,535          1,260
  Treasury stock acquired                                 (19,830)        (7,751)
  Amortization of MRP shares                                1,194            -
  Stock options exercised                                      71            -
  Proceeds from the sale of stock, net of ESOP
    shares acquired                                           -          103,890
  Unearned MRP shares acquired, net                           -            5,213
                                                         --------      --------

          Net cash (used in) provided by financing
            activities                                    (19,347)        90,535
                                                         --------      --------

Increase in cash and cash equivalents                          48             74
Cash and cash equivalents, beginning of period                 74            -
                                                         --------      --------

Cash and cash equivalents, end of period                 $    122       $     74
                                                         ========       ========

Supplemental noncash investing activity:
  Transfer of investment securities to subsidiaries      $ 12,100       $    -
                                                         ========       ========
</TABLE>


                                      -25-


<PAGE>


20.  SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following table presents summarized quarterly data for each of the
last two years:

<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                           --------------------------------------------------------------------------------------
                                           Sept. 30    June 30    Mar. 31    Dec. 31    Sept. 30    June 30    Mar. 31    Dec. 31
                                             1996        1996       1996       1995       1995        1995       1995       1994
                                            -------    -------    -------    -------    -------     -------    -------    -------
<S>                                        <C>         <C>        <C>        <C>        <C>         <C>        <C>        <C>
Interest income                             $13,113    $13,090    $12,847    $13,102    $13,073     $13,355    $12,905    $12,359
Interest expense                              6,930      6,896      6,750      6,843      6,649       6,426      6,044      5,905
                                            -------    -------    -------    -------    -------     -------    -------    -------

Net interest income                           6,183      6,194      6,097      6,259      6,424       6,929      6,861      6,454
Provision for loan losses                        10         10         10        -           10          10         10        -
Other operating income                          151        247        154        135        141         138        123        261

Other expenses                                7,601      3,407      3,299      3,624      3,288       3,360      2,990      2,577
                                            -------    -------    -------    -------    -------     -------    -------    -------

Income before income taxes                   (1,277)     3,024      2,942      2,770      3,267       3,697      3,984      4,138
Income taxes                                   (413)     1,174      1,133      1,028        951       1,452      1,366      1,397
                                            -------    -------    -------    -------    -------     -------    -------    -------

Net income                                  $  (864)   $ 1,850    $ 1,809    $ 1,742    $ 2,316     $ 2,245    $ 2,618    $ 2,741
                                            =======    =======    =======    =======    =======     =======    =======    =======

Earnings per share                          $ (0.08)   $  0.18    $  0.17    $  0.16    $  0.21     $  0.20    $  0.22    $  0.21
                                            =======    =======    =======    =======    =======     =======    =======    =======

Dividends per share                         $ 0.060    $ 0.060    $ 0.060    $ 0.054    $ 0.045     $ 0.045    $   -      $ 0.045
                                            =======    =======    =======    =======    =======     =======    =======    =======




Earnings per share is computed independently for each of the quarters 
presented.  Consequently, the sum of quarters may not equal the earnings 
per share.

Prices of common stock:

  High                                      $ 15.13    $ 14.50    $ 14.88    $ 15.45    $ 15.57     $ 12.73   $ 11.25    $  9.55
  Low                                         12.63      12.50      13.30      13.18      12.39       10.91      8.88       8.18

</TABLE>

                                                                 ******


                                      26


<PAGE>

IBS FINANCIAL CORP.
SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                    AS OF OR FOR THE YEAR ENDED SEPTEMBER 30,
                                                        -------------------------------------------------------------------
                                                          1996           1995       1994       1993       1992       1991
                                                        --------        ------     ------     ------     ------     ------
<S>                                                     <C>            <C>        <C>        <C>        <C>        <C>
FINANCIAL CONDITION:
Total assets                                            $742,051       726,536    663,866    665,933    652,614    626,075
Loans                                                    185,031       141,781    140,618    157,030    185,188    199,027
Investments                                               26,712       241,345    289,495    238,138    205,916     99,430
Mortgage-backed securities                               285,267       311,753    182,891    134,677    217,041    279,186
Cash and equivalents                                      12,466        12,542     32,586    119,014     24,392     30,912
Deposits                                                 571,366       564,910    603,080    609,805    603,722    583,292
Stockholders' equity                                     144,284       158,049     57,594     52,631     44,579     37,954
Nonperforming assets (1)                                     827           663      1,005      5,478      8,495      8,751
Full service offices                                           8             8          8          8          8          8

OPERATIONS:
Total interest income                                   $ 52,152        51,692     41,525     47,458     53,451     55,921
Total interest expense                                    27,419        25,024     25,674     28,093     34,916     42,851
Net interest income                                       24,733        26,668     15,851     19,365     18,535     13,070
Provision for loan losses                                     30            30        180        431      1,077        337
Other operating income                                       687           663        901      1,663        928        500
Operating expenses                                        14,231        12,215      9,015      8,738      8,342      8,387
Special SAIF assessment (2)                                3,700             0          0          0          0          0
Income before taxes                                        7,459        15,086      7,557     11,859     10,045      4,846
Income taxes                                               2,922         5,166      2,594      3,807      3,527      1,676
Net income                                              $  4,537         9,920      4,963      8,052      6,518      3,169

PER COMMON SHARE:
Net income                                              $   0.43(2)       0.84        N/A        N/A        N/A        N/A
Cash dividends                                             0.234         0.135        N/A        N/A        N/A        N/A

OPERATING RATIOS (3):
Average yield earned on interest-earning assets             7.25%         7.30%      6.36%      7.29%      8.52%      9.33%
Average rate paid on interest-bearing liabilities           4.70%         4.39%      4.20%      4.60%      5.86%      7.47%
Average interest rate spread (4)                            2.55%         2.91%      2.16%      2.69%      2.66%      1.86%
Net interest margin                                         3.44%         3.77%      2.43%      2.98%      2.96%      2.18%
Ratio of interest-earning assets to interest-bearing
  liabilities                                             123.38%       124.27%    106.74%    106.62%    102.30%    105.24%
Net interest income to operating expenses                 173.80%       218.32%    175.83%    221.64%    222.19%    155.84%
Operating expenses as a percent of average assets           1.92%         1.68%      1.34%      1.32%      1.30%      1.37%
Return on average assets                                    0.61%(2)      1.36%      0.74%      1.21%      1.02%      0.52%
Return on average equity                                    2.98%(2)      6.37%      8.98%     16.33%     15.58%      8.76%
Ratio of average equity to average assets                  20.53%        21.18%      8.24%      7.43%      6.52%      5.90%
Dividend payout ratio                                      51.07%        17.06%       N/A        N/A        N/A        N/A

ASSET QUALITY RATIOS:
Nonperforming loans and troubled debt restructurings
  as a percent of total loans                               0.45%         0.47%      3.62%      3.49%      4.59%      4.40%
Nonperforming assets and troubled debt
  restructurings as a percent of total assets               0.11%         0.09%      0.77%      0.82%      1.30%      1.40%
Allowance for loan losses as a percent of total
  loans                                                     0.55%         0.70%      0.38%      1.06%      0.67%      0.75%
Allowance for loan losses as a percent of
  nonperforming loans                                      123.8%        149.9%      52.7%      30.5%      17.9%      17.1%
Charge-offs to average loans receivable
  outstanding during the period                              --            --        0.89%      --         0.68%      --
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(1)  Nonperforming assets consist of nonperforming loans, troubled debt 
     restructurings and real estate owned ("REO"). Nonperforming loans 
     consist of nonaccrual loans and accruing loans 90 days or more overdue, 
     while REO consists of real estate acquired through foreclosure and real 
     estate acquired by acceptance of a deed-in lieu of foreclosure.

(2)  Without giving effect to the special SAIF assessment, net income 
     per share would have been $.66 and return on average assets and return on 
     average equity would have been .94% and 4.56%, respectively. See Note 
     18 of Notes to the Consolidated Financial Statements.

(3)  Asset Quality Ratios are end of period ratios, except for 
     charge-offs to average loans. With the exception of end of period 
     ratios, all ratios are based on monthly balances during the indicated 
     periods.

(4)  Interest rate spread represents the difference between the 
     weighted average yield on average interest-earning assets and the 
     weighted average cost of average interest-bearing liabilities, and net 
     interest margin represents net interest income as a percent of average 
     interest-earning assets.