SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-KSB
(Mark One)
[X]   Annual report pursuant to section 13 or 15 (d) of the Securities Exchange 
      Act of 1934 (Fee required)

      For the fiscal year ended   June 30, 1997
                                 ---------------

[ ]   Transition report pursuant to section 13 or 15(d) of the Securities 
      Exchange Act of 1934 (No fee required)
      For the transition period from              to             .
                                     ------------    ------------

Commission File No. 0-26510

                            NCF FINANCIAL CORPORATION
            ---------------------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

Delaware                                                     61-1285330
---------------------------------------------             ------------------
(State or Other Jurisdiction of Incorporation              I.R.S. Employer
or Organization)                                          Identification No.

106 A W. John Rowan Blvd., Bardstown, Kentucky                  40004
----------------------------------------------            -------------------
(Address of Principal Executive Offices                       (Zip Code)

Issuer's Telephone Number, Including Area Code:              (502) 348-9278
                                                            ---------------

Securities registered under to Section 12(b) of the Exchange Act:  None
                                                                  ------

Securities registered under to Section 12(g) of the Exchange Act:

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

      Check whether the issuer:  (1) has filed all reports  required to be filed
by  Section  13 or 15(d) of the  Exchange  Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.
YES  X   NO    .
   -----   ----

      Check if there is no disclosure  of delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

      State issuer's revenues for its most recent fiscal year.   $2,592,371
                                                                ------------

      The aggregate market value of the voting stock held by  non-affiliates  of
the  registrant,  based on the average  bid and asked price of the  registrant's
Common Stock on September 19, 1997 was $9.13 million ($14.375 per share based on
635,330 shares of Common Stock).

      As of September 19, 1997, there were issued and outstanding 792,609 shares
of the registrant's Common Stock.

      Transition Small Business Disclosure Format (check one):
YES      NO  X
    ---    ----

                       DOCUMENTS INCORPORATED BY REFERENCE

     1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal  Year
          ended June 30, 1997. (Part II)

     2.   Portions of the Proxy Statement for the Annual Meeting of Stockholders
          for the Fiscal Year ended June 30, 1997. (Part III)

                                        1
<PAGE>



                                     PART I

Item 1.  Business
-----------------

Business of the Company

      NCF  Financial  Corporation  (the  "Company")  is a bank  holding  company
incorporated  under  Delaware  law. The Company owns 100% of the common stock of
NCF Bank & Trust Co. (the  "Bank").  Organized in June 1995 at the  direction of
the predecessor of the Bank, the Company  acquired all of the capital stock that
the predecessor of the Bank issued in a conversion  during October 1995 from the
mutual to stock form of ownership (the "Conversion").  The principal business of
the Company is the  operation of the Bank and the Company does not engage in any
significant  unrelated  activities.   Accordingly,  references  throughout  this
document  to the  operation  of the  Bank  include,  unless  inappropriate,  the
operation of the Company.

Business of the Bank

      The Bank is a state  chartered  stock  commercial  bank  headquartered  in
Bardstown,  Kentucky.  The Bank is a wholly owned subsidiary of the Company. The
Bank was founded in 1925 under the name "Nelson County  Building and Loan Bank."
During the  Conversion,  the Bank,  then known as "Nelson County Federal Savings
and Loan  Association,"  converted  from a federally  chartered  mutual  savings
association to a federally chartered stock savings association. In July 1996 the
Bank changed its name to "Nelson  County  Federal  Savings Bank." In April 1997,
the Bank  changed  its charter to that of a  commercial  bank  chartered  by the
Commonwealth of Kentucky and changed its name to "NCF Bank & Trust Co."

      The Bank's deposits had been federally insured by the Savings  Association
Insurance  Fund  ("SAIF")  and its  predecessor,  the  Federal  Savings and Loan
Insurance Corporation, since 1973. The Bank is a member of the Federal Home Loan
Bank (the "FHLB") of  Cincinnati.  The Bank has one  subsidiary,  Nelson Service
Corporation ("NSC"),  which has no operating activity other than to own stock in
a third party service bureau.


      The Bank is  primarily  engaged in  attracting  deposits  from the general
public   and   using   those   funds  to   originate   real   estate   loans  on
one-to-four-family  residences and to a lesser extent, residential construction,
multi-family  real  estate  and  consumer  loans.  In  addition,  the Bank holds
interest  earning  deposits  in other  financial  institutions  and  invests  in
mortgage-backed  securities  and  investment  securities.  The Bank  offers  its
customers  adjustable-rate  mortgage loans as well as residential  construction,
multi-family  real  estate  and  consumer  loans.  The Bank  does not  typically
originate fixed-rate loans of any kind, relying instead on adjustable-rate loans
that annually reprice. For its mortgage loan portfolio,  the Bank originates and
retains adjustable-rate loans and does not purchase or sell mortgage loans.

      The  principal  sources of funds for the  Bank's  lending  activities  are
deposits  and the  amortization,  repayment  and  maturity  of  loans,  and FHLB
advances.  Principal  sources  of income  are  interest  on loans and  principal
expense is interest paid on deposits.

Market Area and Competition

      Nelson  County,  Kentucky is the Bank's  primary  market  area.  The local
economy is economically  diverse with a significant number of residents employed
by a greeting card company, alcohol distillers,  automotive parts factories, and
other manufactures and government offices. Although the surrounding

                                        2

<PAGE>



area is affected by  agriculture,  the Bank does not make loans  secured by farm
real estate or make farm operating loans.

      Economic growth in the Bank's market area remains dependent upon the local
economy. In addition, the deposit and loan activity of the Bank is significantly
affected by economic conditions in its market area.

      The Bank is one of five financial institutions serving its market area and
must also compete with  investment and mortgage  bankers.  The  competition  for
deposit  products comes from a savings  association  with a branch in the Bank's
market area,  local  independent  community  banks,  and credit unions.  Deposit
competition  also  includes a number of insurance  products sold by local agents
and investment  products such as mutual funds and other securities sold by local
and regional brokers.  Loan competition  varies depending upon market conditions
and includes a savings  association with a branch in the Bank's market area, two
local banks, and mortgage bankers who serve the area with a field sales staff.

Lending Activities

      General.   The   Bank's   loan   portfolio   predominantly   consists   of
adjustable-rate mortgage loans secured by one-to-four-family  residences and, to
a lesser extent, residential construction, multi-family real estate and consumer
loans. The Bank does not purchase or sell mortgage loans.

      Analysis of Loan  Portfolio.  Set forth below is selected data relating to
the  composition  of the  Company's  loan  portfolio by type of loan and type of
security on the dates indicated:

<TABLE>
<CAPTION>

                                                     June 30, 1997          June 30, 1996
                                                  ---------------------  --------------------
Type of Loan:                                        $            %         $            %
------------                                       -----        -----     -----        -----
                                                (Dollars in Thousands)
Real estate loans:
<S>                                               <C>           <C>      <C>           <C>   
  Construction (1) ............................   $ 3,673       13.58%   $ 3,314       11.48%
  One-to-four-family ..........................    23,438       86.66     25,662       88.92
  Multi-family residential ....................       460        1.70        151         .52

  Non-residential .............................       629        2.33        315        1.09
Consumer loans:
  Other .......................................        60         .22         --          --
  Share loans .................................       103         .38         69         .24
                                                  -------      ------    -------      ------ 
Gross loans ...................................    28,363      104.87     29,511      102.25
Less:
  Loans in process ............................     1,133        4.19        481        1.67
  Net deferred loan origination fees and costs.         7         .03          8         .03
  Allowance for loan losses ...................       177         .65        161         .55
                                                  -------      ------    -------      ------ 
Total loans, net ..............................   $27,046      100.00%   $28,861      100.00%
                                                  =======      ======    =======      ====== 
</TABLE>

-----------------
(1)  Consists only of loans secured by one-to-four-
      family residences




                                        3

<PAGE>



Average Balances, Interest, Yields and Rates

      The  following  table  sets  forth  certain  information  relating  to the
Company's  average  balance  sheet and reflects the average  yield on assets and
average cost of  liabilities  for the periods  indicated and the average  yields
earned and rates paid.  Such yields and costs are derived by dividing  income or
expense by the average balance of assets or liabilities,  respectively,  for the
periods  presented.  Average  balances  are  derived  from  month-end  balances.
Management does not believe that the use of month-end  balances instead of daily
average  balances  has  caused  any  material  differences  in  the  information
presented.  The table also presents  information for the periods and at the date
indicated  with respect to the  difference  between the average  yield earned on
interest-earning  assets and average rate paid on interest-bearing  liabilities,
or "interest rate spread," which savings institutions have traditionally used as
an  indicator  of  profitability.  Another  indicator  of an  institution's  net
interest  income is its "net interest  margin," which is its net interest income
divided by the average balance of  interest-earning  assets. Net interest income
is  affected  by  the  interest  rate  spread  and by the  relative  amounts  of
interest-earning assets and interest-bearing  liabilities. When interest-earning
assets approximate or exceed interest-bearing liabilities, any positive interest
rate spread will generate net interest income.

<TABLE>
<CAPTION>
                                                                           Year Ended June 30,
                                                 ------------------------------------------------------------------
                                                                1997                             1996
                                                 ----------------------------------  ------------------------------
                                                   Average                Average    Average               Average
                                                   Balance    Interest   Yield/Cost  Balance   Interest  Yield/Cost
                                                 ----------   --------   ----------  -------   --------  ----------
Interest-earning assets:                                               (Dollars in Thousands)
<S>                                              <C>          <C>         <C>        <C>       <C>         <C>  
  Loans receivable (1).........................  $   28,098   $  2,249      8.00%    $28,056   $ 2,245       8.00%
  Mortgage-backed securities...................         136         20     14.46         164        20      12.28
  Short-term investments and other interest-
    earning assets.............................       5,166(2)     274      5.30       4,494       230       5.12
  FHLB stock...................................         426         30      7.00         397        28       6.96
                                                     ------     ------                ------    ------

  Total interest-earning assets................      33,826    $ 2,573      7.61      33,111   $ 2,523       7.62
                                                                ======                          ======
Non-interest-earning assets....................       1,585                            1,232
                                                    -------                          -------
  Total assets.................................  $   35,411                          $34,343
                                                    =======                           ======

Interest-bearing liabilities:
  Deposits.....................................  $   22,271    $ 1,043      4.68     $23,073   $ 1,105       4.79
  Borrowings...................................          --         --        --         217        17       8.13
                                                    -------     ------               -------  --------
Total interest-bearing liabilities.............      22,271    $ 1,043      4.68      23,290   $ 1,122       4.82
                                                                ======                          ======

Non-interest-bearing liabilities...............       1,180                            1,592
                                                    -------                           ------
  Total liabilities............................      23,451                           24,882
Stockholder's equity...........................      11,960                            9,461
                                                    -------                           ------
  Total liabilities and stockholder's equity...  $   35,411                          $34,343
                                                    =======                           ======

Net interest income............................                $ 1,530                         $ 1,401
                                                                ======                          ======
Interest rate spread(3)........................                             2.93                             2.80
Net interest margin(4).........................                             4.52                             4.23
Average interest-earning assets as a percentage
  of average interest-bearing liabilities......                           151.89                           142.17

</TABLE>

     (Footnotes on following page.)

                                        4

<PAGE>



---------------------------------
(1) Average balances include non-accrual loans.
(2) Includes interest-earning deposits in other financial institutions.
(3) Interest-rate  spread represents the difference between the average yield on
    interest-earning   assets   and  the   average   cost  of   interest-bearing
    liabilities.
(4) Net  interest  margin  represents  net interest  income as a  percentage  of
    average interest-earning assets.

Rate/Volume Analysis

      The table  below  sets  forth  certain  information  regarding  changes in
interest income and interest  expense of the Company for the periods  indicated.
For each category of interest-earning  assets and interest-bearing  liabilities,
information  is  provided  on  changes  attributable  to (i)  changes  in volume
(changes  in  average  volume  multiplied  by old rate);  (ii)  changes in rates
(changes in rate multiplied by old average volume); (iii) changes in rate-volume
(changes in rate multiplied by the change in average volume).

<TABLE>
<CAPTION>
                                       Year Ended June 30,                  Year Ended June 30,
                                 --------------------------------     ---------------------------------
                                          1997 vs. 1996                        1996 vs. 1995
                                 --------------------------------     ---------------------------------
                                       Increase (Decrease)                 Increase (Decrease)
                                              Due to                              Due to
                                 --------------------------------     ---------------------------------
                                                    Rate/                               Rate/
                                 Volume    Rate     Volume    Net     Volume    Rate    Volume     Net
                                 ------    ----     ------    ---     ------    ----    ------     ---
                                                            (In Thousands)
Interest income:
<S>                              <C>      <C>        <C>     <C>       <C>     <C>      <C>      <C>  
 Loans receivable.............   $   3    $   --     $   1   $   4     $ 150   $ 185    $   14   $  349
 Mortgage-backed securities...      (3)        4       (1)      --       (7)     (1)        --      (8)
 Interest-earning assets......       34        8         2      44       160     (4)       (9)      147
 FHLB stock...................        2       --        --       2         2       2        --        4
                                 ------   ------     -----   -----     -----   -----    ------   ------
  Total.......................   $   36   $   12     $   2   $  50     $ 305   $ 182    $    5   $  492
                                 ======   ======     =====   =====     =====   =====    ======   ======


Interest expense:
 Savings accounts.............   $ (38)   $ (25)     $   1   $(62)     $  3     122     $ (1)    $ 124

 Other borrowings.............     (17)      --         --    (17)      (15)      13       (8)     (10)
                                 -----    -----      -----   ----      ----    ----     -----    -----
   Total......................   $ (55)   $ (25)     $   1   $(79)     $(12)   $ 135    $  (9)   $ 114
                                 ======   =====      =====   ====      ====    =====    =====    =====

Net change in net interest
  income......................   $  91    $  37      $   1   $129      $317    $ 47     $  14    $ 378
                                 ======   =====      =====   ====     =====   =====    ======   ======

</TABLE>




                                        5

<PAGE>



Asset/Liability Management

      The Company  monitors its interest  rate risk, or  sensitivity  of its net
interest income to changes in interest  rates,  since the level of such risk may
affect  certain  aspects of its  operating  strategies.  Net interest  income is
subject to  volatility  due to a mismatch in the timing of maturity or repricing
of interest-earning assets and interest-bearing liabilities.

      During  periods of increasing  interest  rates,  the Bank's  interest rate
sensitive  liabilities  would reprice  faster than its interest  rate  sensitive
assets  (repricing  periods on  adjustable-rate  loans  affect the  repricing of
interest rate  sensitive  assets,  with longer  repricing  periods  delaying the
repricing of such assets more than  shorter  repricing  periods  would delay the
repricing of such assets),  causing a decline in the Bank's interest rate spread
and margin.  This would result from an increase in the Bank's cost of funds that
would not be  immediately  offset  by an  increase  in its  yield on  funds.  An
increase  in the cost of funds  without a  equivalent  increase  in the yield on
funds would tend to reduce net interest  income.  However,  the Company feels it
has  implemented a strategy to partially  offset the  possibility  of increasing
rates by  establishing  a policy that  substantially  all loans carry a one-year
adjustable  rate. This helps to minimize the time period in which the Company is
exposed  to  short-term  interest  rate risk.  Also,  the  Company  and the Bank
maintain liquidity levels in excess of regulatory requirements, which allows for
alternative  investments  to  improve  interest  rate  sensitivity.  The Bank is
planning to increase the availability of non-interest bearing demand deposits to
its  customers in the future which the Bank  believes  will be beneficial to its
interest spread and interest margin.

Loan Maturity Tables

      The following  table sets forth the maturity of the Bank's loan  portfolio
at June 30, 1997, based on contractual maturities, including schedule repayments
of principal. Demand loans, loans having no stated schedule of repayments and no
stated maturity, and overdrafts are reported as due in one year or less.

<TABLE>
<CAPTION>
                                       Due after
                          Due within   1 through  Due after
                            1 year      5 years   5 years    Total
                          -----------  ---------  ---------  -----
                                         (In Thousands)

Real estate:
<S>                          <C>         <C>       <C>       <C>    
  One-to-four family .....   $   476     $ 1,330   $21,632   $23,438
  Construction ...........     2,748          --       925     3,673
  Multi-family residential        --           4       456       460
  Non-residential ........        --          63       566       629
Consumer .................       149          14        --       163
                             -------     -------   -------   -------
  Total ..................   $ 3,373     $ 1,411   $23,579   $28,363
                             =======     =======   =======   =======
</TABLE>




                                        6

<PAGE>



      The  following  table sets forth the dollar  amount of all loans due after
June 30,  1998 which have  predetermined  interest  rates and have  floating  or
adjustable interest rates.

<TABLE>
<CAPTION>
                                Predetermined     Floating or
                                    Rates       Adjustable Rates
                                -------------   ----------------
                                         (In Thousands)

<S>                                <C>              <C>    
Real estate one-to-four-family     $   826          $22,136
Real estate construction .......       480              445
Real estate multi-family .......        --              460
Non-residential ................       220              409
Consumer .......................        --               14
                                   -------          -------
  Total ........................   $ 1,526          $23,464
                                   =======          =======
</TABLE>


      One-to-Four-Family  Residential Loans. The Bank's primary lending activity
consists of the  origination of  one-to-four-family  residential  mortgage loans
secured  by  property  located  in the  Bank's  primary  market  area.  The Bank
generally originates one-to-four-family residential mortgage loans in amounts up
to 85% of the lesser of the  appraised  value or selling  price of the mortgaged
property. To a very limited extent, the Bank may originate a mortgage loan in an
amount  up to 90% of the  lesser  of the  appraised  value or  selling  price of
mortgaged   property  without  requiring  private  mortgage  insurance  for  the
borrower. The Bank originates and retains adjustable-rate loans. The Bank ceased
originating long term fixed-rate loans in 1979 although  fixed-rate loans remain
in the loan  portfolio  and the Bank may  occasionally  originate a shorter term
fixed-rate loan to an existing borrower.

      The Bank requires for all adjustable rate mortgage loans that the borrower
qualify at the fully indexed rate. The Bank's  adjustable rate loans provide for
periodic  interest rate  adjustments of 1% to 2% with a maximum  adjustment over
the term of the loan between 2% and 5%.  Adjustable rate loans typically reprice
every year, and provide for terms of up to 30 years with most loans having terms
of  between 20 and 25 years.  The Bank does not  originate  loans  with  initial
interest rates set below market rates ("teaser rates").

      The Bank offers  adjustable-rate  loans using a national  average contract
interest rate index, although other indices have been used in the past. Interest
rates  charged  on  mortgage  loans  are  competitively  priced  based on market
conditions  and the  Bank's  cost  of  funds.  Generally,  the  Bank's  standard
underwriting  guidelines for mortgage loans conform to FHLMC  guidelines.  It is
the current policy of the Bank to remain a portfolio  lender.  The Bank does not
charge  origination  fees. At June 30, 1997,  the Bank did not service loans for
others.

      Adjustable-rate  mortgage loans decrease the risks associated with changes
in interest rates by more closely  reflecting  these changes,  but involve other
risks  because as  interest  rates  increase,  the  underlying  payments  by the
borrower increase,  thus increasing the potential for default. At the same time,
the  marketability  of the underlying  collateral  may be adversely  affected by
higher interest  rates.  Upward  adjustment of the contractual  interest rate is
also limited by the adjustable-rate mortgage loan documents, thereby potentially
limiting their  effectiveness  during periods of rising  interest  rates.  These
risks have not had an adverse effect on the Bank during the past five years.


                                      7

<PAGE>



      Residential Construction Loans. Residential construction loans are made on
one-to-four-family  residential  property  to the  individuals  who  will be the
owners and occupants upon completion of construction.  These loans are made on a
long term basis and are classified as construction/permanent loans, usually with
no  principal  payments  required  during the first six months,  after which the
payments are set at an amount that will amortize over the terms of the loan. The
maximum loan to value ratio is 85%. Because  residential  construction loans are
not rewritten if permanent  financing is obtained from the Bank, these loans are
made on terms similar to those of the Bank's single family residential loans and
may be amortized over terms of up to 30 years.

      In addition to loans  originated for the  construction  of a residence for
which  the  ultimate   purchaser  has  been  identified,   the  Bank  originates
speculative  loans  to  residential   builders  who  have  established  business
relationships with the Bank. These speculative loans are typically made for a 12
month period and may not require any interest or principal  payments  during the
term of the loan. In underwriting  such loans,  the Bank considers the number of
units that the builder has on a speculative  bid basis that remain  unsold.  The
Bank's  experience during the past 24 years has been that most speculative loans
are  repaired  well  within  the  twelve  month  period.  Speculative  loans are
generally originated with a loan to value ratio that does not exceed 85%.

      Construction lending is generally considered to involve a higher degree of
credit risk than long term financing of residential properties.  The Bank's risk
of loss on a  construction  loan is  dependent  largely upon the accuracy of the
initial  estimate of the  property's  value at  completion  of  construction  or
development  and  the  estimated  cost  of  construction.  If  the  estimate  of
construction  cost and the  marketability of the property upon completion of the
project prove to be inaccurate,  the Bank may be compelled to advance additional
funds to complete the development.  Furthermore, if the estimate of value proves
to be inaccurate, the Bank may be confronted, at or prior to the maturity of the
loan,  with a  property  with a  value  that  is  insufficient  to  assure  full
repayment.  For  speculative  loans  originated to builders,  the ability of the
builder to sell  completed  dwelling units will depend,  among other things,  on
demand,  pricing  the  availability  of  comparable  properties,   and  economic
conditions.

      Non-Residential  Loans. At June 30, 1997, the non-residential  real estate
portfolio  consisted  of two  commercial  real estate  loans and  several  loans
secured by unimproved  real estate.  Loans secured by unimproved real estate are
originated in amounts up to 75% of the appraised  value and are originated  with
terms of up to five years.  Once repaid,  single,  family  residences  are often
constructed  on the lots securing  these loans.  The Bank has seldom  originated
commercial real estate loans and since the  Conversion,  it is the Bank's policy
not to originate commercial real estate loans.

      Multi-Family  Loans.  The Bank  also  makes  adjustable-rate  multi-family
loans,  including  loans on apartment  complexes.  Multi-family  loans generally
provide higher interest rates that can be obtained from  single-family  mortgage
loans.  Multi-family  lending,  however,  entails  significant  additional risks
compared with one-to-four-family  residential lending. For example, multi-family
loans  typically  involve larger loan balances to single  borrowers or groups of
related  borrowers,  the payment experience on such loans typically is dependent
on the successful  operation of the real estate project,  and these risks can be
significantly  impacted  by supply  and  demand  conditions  in the  market  for
multi-family  residential  units and  commercial  office,  retail and  warehouse
space.


                                      8

<PAGE>



      Consumer Loans. The Bank originates  automobile,  recreational vehicle and
share loans.  Automobile and  recreational  vehicle loans are issued using fixed
rate terms for  periods  of three to five  years,  depending  upon  whether  the
collateral is new or used. Generally,  the underlying collateral is valued based
on the dealer  sticker  price or the NADA loan value.  Share loans are only made
when secured by a savings  account in the Bank (share loans) and generally  have
rates that adjust  with the rate on the  underlying  account  and are  typically
between one and two percent above the rate on the  underlying  savings  account.
Share  loans  are  offered  subject  to a 90% loan to  collateral  value  limit.
Although the Bank also makes home equity loans, these loans are secured by liens
on primary residences and are categorized as single family residential loans.

      Loan  Commitments.  The Bank  issues  verbal  commitments  to  prospective
borrowers on all approved real estate loans. Generally,  the commitment requires
acceptance  within 30 days of the date of issuance.  At June 30, 1997,  the Bank
had $450,000 of commitments to cover  originations and $1,132,277 in undisbursed
funds for loans in process. Management believes that virtually all of the Bank's
commitments will be funded.

      Loans to One  Borrower.  Regulations  limit  loans-to-one  borrower  in an
amount equal to 20% of paid-in  capital and actual surplus of the Bank. The Bank
is  authorized  to lend up to an  additional  10% of paid-in  capital and actual
surplus if the loan is fully  secured by readily  marketable  collateral  with a
cash value  exceeding the amounts of the loan.  The Bank's  maximum  loan-to-one
borrower  limit at June 30, 1997 was  approximately  $1,721,000 at June 30, 1997
and approximately $2,582,000 for such fully secured loans.

      At June 30, 1997,  the Bank's largest amount of loans to one borrower were
all performing  residential real estate loans aggregating  $497,075,  secured by
single-family residential rental properties located in the Bank's market area.

Non-Performing and Problem Assets

      Loan  Delinquencies.  Loans  are  reviewed  on a  monthly  basis  and  are
generally  placed on a  non-accrual  status when the loans  becomes more than 90
days  delinquent  or when,  in the  opinion of  management,  the  collection  of
additional interest is doubtful.  Interest accrued and unpaid at the time a loan
is placed on non-accrual  status is charged against interest income.  Subsequent
interest  payments,  if any,  are either  applied to the  outstanding  principal
balance or recorded as  interest  income,  depending  on the  assessment  of the
ultimate collectibility of the loan.


                                        9

<PAGE>



      Non-Performing   Assets.   The  following  table  sets  forth  information
regarding  non-accrual  loans,  real estate owned, and certain other repossessed
assets and loans. As of the dates indicated,  the Bank had no loans  categorized
as troubled debt restructuring within the meaning of SFAS 15.

<TABLE>
<CAPTION>
                                                       At June 30,
                                                   -------------------
                                                     1997        1996
                                                   ---------   -------
Loans accounted for on a non-accrual basis: (1)
  Real Estate:
<S>                                                <C>          <C>   
  Construction .................................   $      --    $  704
  One-to-four-family ...........................         191       646
  Non-residential ..............................          --        --
                                                   ---------    ------
    Total ......................................   $     191    $1,350
                                                   =========    ======
Accruing loans which are contractually past due
 90 days or more:
  Real estate:
  Construction .................................   $      --    $   --
  One-to-four-family ...........................          --        --
  Non-residential ..............................          --        --
                                                   ---------    ------
    Total ......................................   $      --    $   --
                                                   =========    ======

    Total non-performing loans .................   $     191    $1,350
                                                                ======
Real estate owned (2) ..........................   $     724    $   --
                                                   =========    ======
    Total non-performing assets ................   $     915    $1,350
                                                   =========    ======
Non-performing loans to total loans ............         .67%     4.57%
                                                   =========    ======
Non-performing assets to total assets ..........        2.66%     3.87%
                                                   =========    ======
Loans modified in troubled debt restructuring...   $      --    $   --
                                                   =========    ======
</TABLE>

----------------------
(1)   Non-accrual  status denotes loans on which are  contractually  past due 90
      days or more.  It is  management's  policy to place all loans  past due 90
      days in non-accrual status.
(2)   Real  estate  owned  represents  property  acquired  by the  Bank  through
      foreclosure  or  repossession  or  loans  that  are  accounted  for  as an
      in-substance  foreclosure.  This  property  is carried at the lower of its
      fair market value or net realizable value.

      Interest  income that would have been recorded on loans accounted for on a
non-accrual  basis  under the  original  terms of such loans was $97,534 for the
year ended June 30, 1997. Amounts included in the Bank's interest income for the
year ended June 30, 1997 was $0.

      Classified Assets. The Bank maintains a classification  system for problem
assets of insured  institutions  which  covers all  problem  assets.  Under this
classification  system, problem assets of insured institutions are classified as
"substandard,"  "doubtful," or "loss." An asset is considered  substandard if it
is  inadequately  protected by the current net worth and paying  capacity of the
obligor or of the collateral pledged,  if any.  Substandard assets include those
characterized by the "distinct  possibility"  that the insured  institution will
sustain "some loss" if the deficiencies are not corrected.  Assets classified as
doubtful have all of the weaknesses  inherent in those  classified  substandard,
with the added  characteristic  that the weaknesses  present make "collection or
liquidation in full," on the basis of currently existing facts, conditions,  and
values,  "highly  questionable  and improbable."  Assets  classified as loss are
those

                                       10

<PAGE>



considered  "uncollectible"  and of such little value that their  continuance as
assets  without the  establishment  of a specific loss reserve is not warranted.
Assets may be designated "special mention" because of potential weakness that do
not currently warrant classification in one of the aforementioned categories.

      At June 30,  1997,  the Bank had $0 of assets  classified  as  doubtful or
loss,  $191,000  of  assets  classified  as  substandard  loans and $0 of assets
classified as special mention loans.

      Foreclosed  Real Estate.  Real estate  acquired by the Bank as a result of
foreclosure or by deed in lieu of foreclosure is classified as real estate owned
until it is sold.  When property is acquired it is recorded at the fair value at
the date of foreclosure less estimated costs of disposition.

      The Bank records loans as  in-substance  foreclosures  if the borrower has
little or no equity in the  property  based  upon its  documented  current  fair
value,  the Bank can only expect  repayment of the loan to come from the sale of
the  property  and if the  borrower  has  effectively  abandoned  control of the
collateral or has continued to retain  control of the  collateral but because of
the current  financial status of the borrower,  it is doubtful the borrower will
be able to repay the loan in the foreseeable future. In- substance  foreclosures
are accounted for as real estate acquired through foreclosure, however, title to
the collateral has not been acquired by the Bank. There may be significant other
expenses incurred such as legal and other extraordinary servicing costs involved
with in substance foreclosures.  The Bank had $306,736 of foreclosed real estate
and $417,750 of in-substance foreclosures at June 30, 1997.

      Allowances  for Loan  Losses.  It is  management's  policy to provide  for
losses on unidentified loans in its loan portfolio.  A provision for loan losses
is charged to  operations  based on  management's  evaluation  of the  potential
losses that may be incurred in the Bank's loan portfolio. Such evaluation, which
includes  a review of all loans of which full  collectibility  of  interest  and
principal  may not be  reasonably  assured,  considers the Bank's past loan loss
experience,  known and inherent risks in the portfolio,  adverse situations that
may affect the borrower's  ability to repay,  estimated  value of any underlying
collateral,  and current economic conditions.  During the fiscal year ended June
30,  1997,  the Bank  provided  $16,000  for loan losses  based on  management's
decision to expand consumer lending. The loan loss allowance at June 30, 1997 is
equal to .62%.  At June 30, 1997,  95.6% of total loans were  collateralized  by
one-to-four family dwellings on real estate located in the market area.




                                       11

<PAGE>



      The following tables sets forth  information with respect to the Company's
allowance for loan losses at the dates indicated:

<TABLE>
<CAPTION>
                                                          Year Ended June 30,
                                                         -----------------------
                                                           1997           1996
                                                         ---------      --------
                                                              (In Thousands)

<S>                                                      <C>              <C>  
Balance at beginning of period......................     $   161          $ 100
Loans charged off:
  Real estate -- one-to-four-family.................          --             --
  Real estate -- construction.......................          --             --
  Non-residential...................................          --             --
  Consumer (share loans)............................          --             --
                                                           -----         ------
Total charge-offs...................................          --             --
                                                           -----         ------

Recoveries:
  Real estate -- one-to-four-family.................          --             --
  Real estate -- construction.......................          --             --
  Non-residential...................................          --             --
  Consumer (share loans)............................          --             --
                                                           -----         ------
Total recoveries....................................          --             --
                                                           -----         ------

Net loans charged-off...............................          --             --
Provision for loan losses...........................          16             61
                                                           -----         ------
Balance at end of period............................      $  177          $ 161
                                                           =====         ======
Net charge-offs as a percentage of average
  loans outstanding during the period...............          --%            --%

</TABLE>


                                       12

<PAGE>



      The following table sets forth the allocation of the Bank's  allowance for
loan losses by loan  category and the percent of loans in each category to total
loans receivable at the dates indicated.  The portion of the loan loss allowance
allocated to each loan  category  does not  represent  the total  available  for
future  losses that may occur  within the loan  category  because the total loan
loss allowance is a valuation  reserve  applicable to the entire loan portfolio.
The  distribution  of the Bank's  allowance on losses at the dates  indicated is
summarized as follows:

<TABLE>
<CAPTION>
                                                        At June 30,
                                      -----------------------------------------------
                                              1997                    1996
                                      -----------------------  ----------------------

                                               % of Loans in            % of Loans in
                                               Each Category            Each Category
                                      Amount   to Total Loans  Amount   to Total Loans
                                      ------   --------------  ------   --------------

Real estate:
<S>                                   <C>          <C>          <C>          <C>   
  One-to-four-family...............   $   177      86.66%       $ 100        88.92%
  Construction.....................        --       13.58          61         11.48
  Multi-family residential.........        --        1.70          --          0.52
  Non-Residential..................        --        2.33          --          1.09
Consumer...........................        --        0.60          --          0.24
                                        -----                    ----
Total allowance for loan losses....   $   177                   $ 161
                                        =====                    ====
</TABLE>


Mortgage-Backed Securities and Investment Activities

      General. The investment policy of the Bank is to manage the utilization of
excess funds and to provide for liquidity needs of the Bank as loan demands. The
Bank has generally  maintained 90% of its investment portfolio in liquid assets.
At June  30,  1997,  the  Bank  had an  investment  portfolio  of  approximately
$5,568,818, consisting primarily of interest-earning accounts.

      The Financial  Accounting Standards Board ("FASB") has issued Statement of
Financial   Accounting  Standards  ("SFAS")  No.  115  "Accounting  for  Certain
Investments  in Debt and Equity  Securities.  SFAS No. 115  requires the Bank to
classify all of its  investments  in debt and equity  securities  ("securities")
into three categories.  Debt securities which management has the positive intent
and ability to hold until  maturity are to be  classified  as  held-to-maturity.
Securities that are bought and held  principally for the purpose of selling them
in  the  near  term  are to be  classified  as  trading  securities.  All  other
securities are to be classified as available-for-sale securities.

      Unrealized  holding  gains and losses  for  trading  securities  are to be
included  in  earnings.  Unrealized  gains  and  losses  for  available-for-sale
securities  are to be excluded  from  earnings  and  reported  net of income tax
effect  as  a  separate  component  of  shareholders'   equity  until  realized.
Investments  classified as held to maturity are to be accounted for at amortized
cost. The Bank adopted SFAS No. 115 effective  April 1, 1994, and designated its
investment  and  mortgage-backed  securities  portfolio  into the required three
categories.  As a result of SFAS No. 115, the Bank reviewed and  classified  its
securities as held for investment.

      SFAS No. 115  requires the Bank to account for a portion of its holding of
debt securities at market value (as opposed to amortized cost) and may result in
greater volatility in its earnings and capital position.  It also may discourage
investment in longer term debt securities, which tend to have higher

                                       13

<PAGE>



yields than short term debt  securities,  and hence  reduce the  earnings of the
Bank.  No  securities  can be moved from a  particular  category  without  Board
approval.

      The market value of investments  and  mortgage-backed  securities  held to
maturity at June 30,  1997,  was  $5,589,896.  The Bank  anticipates  having the
ability to fund all of its  investing  activities  from funds held on deposit at
the FHLB. The Bank will continue to seek high quality  investments with short to
intermediate maturities and duration from one to five years.

      The Revenue Reconciliation Act of 1993 added a Section 475 to the Internal
Revenue Code.  Section 475 is a  mark-to-market  tax provision that is different
from SFAS No. 115. The term  "securities"  in the tax statute  includes not just
traditional debt and equity  securities,  but mortgages as well. Section 475 and
the temporary  regulations issued thereunder apply to "dealer" institutions that
regularly  buy or sell more than a nominal  amount of securities in the ordinary
course  of a trade or  business.  Section  475  requires  the  Bank to  identify
securities  held for  sale  within  the  meaning  of the tax  code  and  include
unrealized gains or losses on related security  transactions with its fiscal tax
return.  The tax reporting of unrealized gains and losses on securities held for
sale as defined by Section 475 and the related  regulations,  if different  from
SFAS No. 115, is a temporary  difference  as defined  under SFAS No. 109 and the
recording of a related deferred tax liability or asset will not affect generally
accepted accounting  principles ("GAAP") basis net income. At June 30, 1997, the
Bank did not have any investments subject to Section 475.

Interest-Earning Accounts

      At June 30, 1997, the Company held $4,994,761 in  interest-earning  demand
deposits in other  financial  institutions,  principally the FHLB of Cincinnati.
The Company maintains these accounts in order to maintain  liquidity and improve
the interest-rate sensitivity of its assets.

Mortgage-Backed Securities

      To  supplement  lending  activities,   the  Bank  invests  in  residential
mortgage-backed  securities.  Mortgage-backed securities can serve as collateral
for  borrowings  (although  the  Bank has not used  them as such)  and,  through
repayments, as a source of liquidity.

      At June 30, 1997, the  mortgage-backed  securities  portfolio had a market
value  of  $153,435  and an  amortized  cost of  $132,357.  Because  the  entire
portfolio is  classified  as held to maturity  (the Bank had no  mortgage-backed
securities  classified as available for sale at June 30, 1997), the portfolio is
recorded at amortized cost.

      Mortgage-backed securities represent a participation interest in a pool of
single-family mortgages, the principal and interest payments on which are passed
from   the   mortgage    originators,    through    intermediaries    (generally
quasi-governmental agencies) that pool and repackage the participation interests
in  the   form  of   securities,   to   investors   such  as  the   Bank.   Such
quasi-governmental  agencies,  which  guarantee  the  payment of  principal  and
interest to investors, primarily include FHLMC, GNMA, and FNMA.

      GNMA is a government  agency  within HUD which is intended to help finance
government  assisted  housing  programs.  GNMA  guarantees the timely payment of
principal and  interest,  and GNMA  securities  are backed by the full faith and
credit of the United States Government.  Because GNMA was established to provide
support for low- and middle-income housing, there are limits to the maximum size
of loans that  qualify for this  program.  GNMA limits its maximum  loan size to
$114,000 for VA loans

                                       14

<PAGE>



and, on average,  $67,500 for FHA loans. To accommodate  larger-sized loans, and
loans that, for other reasons,  do not conform to the agency programs,  a number
of private  institutions  have established  their own home-loan  origination and
securitization programs.

      Mortgage-backed  securities  typically  are issued with  stated  principal
amounts,  and the  securities  are backed by pools of mortgages  that have loans
with  interest  rates that are within a range and have varying  maturities.  The
underlying pool of mortgages can be composed of either  fixed-rate  mortgages or
adjustable-rate  mortgage  loans.   Mortgage-backed   securities  are  generally
referred to as mortgage participation certificates or pass-through certificates.
As a result,  the interest rate risk  characteristics  of the underlying pool of
mortgages, (i.e., fixed rate or adjustable rate) as well as prepayment risk, are
passed on to the certificate holder. The life of a mortgage-backed  pass-through
security  is  equal  to the life of the  underlying  mortgages.  Mortgage-backed
securities  issued  by  FHLMC,  FNMA,  and  GNMA  make  up  a  majority  of  the
pass-through certificates market.

      Investment Portfolio. The following table sets forth the carrying value of
the Bank's short-term investments, FHLB stock, and mortgage-backed securities at
the dates indicated.

<TABLE>
<CAPTION>

                                          At June 30,
                                     -----------------------
                                       1997          1996
                                     ---------      -------
                                         (In Thousands)

<S>                                  <C>            <C>    
Interest-earning deposits.........   $  4,995       $ 4,968
FHLB stock........................        442           412
Mortgage-backed securities........        132           143
                                       ------        ------

      Total investments...........   $  5,569       $ 5,523
                                       ======         =====
</TABLE>


      The  following  table  sets  forth  information  regarding  the  scheduled
maturities,  amortized  costs,  market value and weighted average yields for the
Bank's  mortgage-backed  securities at June 30, 1997. The Bank's mortgage-backed
securities  are all  issued  by GNMA  and  mature  in the  year  2013.  Expected
maturities will differ from  contractual  maturities due to schedule  repayments
and because  borrowers may have the right to call or prepay  obligations with or
without prepayment penalties. The stated yield on mortgage-backed  securities at
June 30, 1997 was 11.5%.  The following  table does not take into  consideration
the effects of scheduled repayments or the effects of possible prepayments.

<TABLE>
<CAPTION>
                                              At June 30, 1997
                            -----------------------------------------------------
                            More than Ten Years      Total Investment Portfolio
                            -------------------     -----------------------------
                            Carrying    Average     Carrying     Fair     Average
                             Value       Yield       Value      Value      Yield
                            --------    -------     --------    ------    -------
                                            (Dollars in Thousands)

<S>                           <C>         <C>         <C>        <C>        <C>  
GNMA.....................     $ 132       11.5%       $ 132      $ 153      11.5%
                              =====       ====        =====      =====      ====

</TABLE>



                                       15

<PAGE>



Sources of Funds

      General.  Deposits are the major  external  source of the Bank's funds for
lending and other investment purposes.  The Bank derives funds from amortization
and prepayment of loans and, to a much lesser  extent,  maturities of investment
securities,  borrowings,  mortgage-backed  securities and operations.  Scheduled
loan principal repayments are a relatively stable source of funds, while deposit
inflows and  outflows  and loan  prepayments  are  significantly  influenced  by
general interest rates and market  conditions.  The Bank had $0 in FHLB advances
at June 30, 1997.

      Deposits.  Consumer and commercial deposits are attracted principally from
within the Bank's  primary  market area  through the  offering of a selection of
deposit instruments  including regular savings accounts,  money market accounts,
and term  certificate  accounts.  The Bank also  offers  IRA  accounts.  Deposit
account terms vary according to the minimum  balance  required,  the time period
the funds must remain on deposit, and the interest rate, among other factors. As
of June 30, 1997, the Bank had no brokered deposits.

      Jumbo Certificates of Deposit. The following table indicates the amount of
the Bank's  certificates  of deposit of $100,000 or more by time remaining until
maturity as of June 30, 1997.

<TABLE>
<CAPTION>
                                              Certificates
Maturity Period                                of Deposit
---------------                              --------------
                                             (In Thousands)
<S>                                            <C>     
Within three months.............               $    408
Three through six months........                    400
Six through twelve months.......                    300
Over twelve months..............                    330
                                                 ------
   Total........................               $  1,438
                                                 ======
</TABLE>


Borrowings

      The Bank may obtain advances from the FHLB of Cincinnati to supplement its
supply of lendable  funds.  Advances from the FHLB of  Cincinnati  are typically
secured by a pledge of the Bank's stock in the FHLB of Cincinnati  and a portion
of the Bank's first  mortgage  loans and certain other assets.  Each FHLB credit
program has its own interest rate, which may be fixed or variable,  and range of
maturities.  The Bank, if the need arises,  may also access the Federal  Reserve
Bank  discount  window to  supplement  its supply of lendable  funds and to meet
deposit  withdrawal  requirements.  At June 30, 1997, the Bank had no borrowings
from the FHLB of Cincinnati.

Employees

      Substantially  all of the activities of the Company are conducted  through
the Bank,  therefore,  at June 30,  1997,  the Company did not have any salaried
employees.

      As of June 30, 1997, the Bank had seven full-time  employees.  None of the
Bank's employees are represented by a collective bargaining group.


                                       16

<PAGE>



Regulation

      Set forth below is a brief  description  of certain laws which  related to
the regulation of the Company and the Bank. The description  does not purport to
be complete and is qualified in its entirety by reference to applicable laws and
regulations.

      Company Regulation.  As a registered bank holding company,  the Company is
regulated  under the Bank  Holding  Company  Act (the  "Act")  and is subject to
supervision  and regular  inspection  by the Board of  Governors  of the Federal
Reserve System ("Federal Reserve Board"). The Act requires,  among other things,
the prior  approval of the Federal  Reserve  Board in any case where the Company
proposes to (i) acquire all or substantially all of the assets of any bank, (ii)
acquire  direct or indirect  ownership  or control of more than 5 percent of the
voting  shares of any bank or (iii) merge or  consolidate  with any bank holding
company.

      Under the Act, the Company is prohibited,  with certain  exceptions,  from
acquiring  direct or indirect  ownership or control of more than 5% of any class
of voting shares of any non-banking  corporation.  Further,  the Company may not
engage in any business other than managing and  controlling  banks or furnishing
certain specified  services to subsidiaries,  and may not acquire voting control
of non-banking  corporations except those corporations  engaged in businesses or
furnishing  services  which the  Federal  Reserve  Board  deems to be so closely
related to banking as "to be a proper  incident  thereto."  The Federal  Reserve
Board has determined  that a number of activities  meet this standard  including
making and servicing loans; performing certain fiduciary functions; leasing real
and personal  property;  underwriting  an dealing in government  obligations and
certain money market instruments; underwriting and dealing, to a limited extent,
in corporate debt  obligations and other  securities that banks may not deal in;
providing  foreign exchange  advisory and  transactional  services;  and owning,
controlling  or  operating a savings  association,  if the  savings  association
engages only in deposit-taking  activities and lending and other activities that
are permissible for bank holding companies.

      Bank holding  companies and their subsidiary banks are also subject to the
provisions of the Community  Reinvestment Act of 1977, as amended ("CRA"). Under
the CRA,  each  subsidiary  bank's  record in meeting  the  credit  needs of the
community served by the bank, including low- and moderate- income neighborhoods,
is annually assessed by that bank's primary  regulatory  authority.  When a bank
holding  company  applies for  approval to acquire a bank or other bank  holding
company, the Federal Reserve Board will review the assessment of each subsidiary
bank of the applicant  bank holding  company,  and such records may be the basis
for denying the application.

      Under the Federal Reserve Board policy, a bank holding company is expected
to act as a source of financial  strength to each of its subsidiary banks and to
commit resources, including capital funds during periods of financial stress, to
support  each such bank.  Although  this  "source of  strength"  policy has been
challenged  in  litigation,  the Federal  Reserve  Board  continues  to take the
position that it has the authority to enforce it. Consistent with its "source of
strength"  policy for  subsidiary  banks,  the Federal  Reserve Board has stated
that, as a matter of prudent  banking,  a bank holding company  generally should
not maintain a rate of cash dividends  unless its net income available to common
shareholders  has  been  sufficient  to  fund  fully  the  dividends,   and  the
prospective  rate of  earnings  retention  appears  to be  consistent  with  the
company's capital needs, asset quality and overall financial condition.

      Bank Regulation. The Bank is subject to supervision and examination by the
Federal  Deposit  Insurance  Corporation  (the "FDIC") and the  Commonwealth  of
Kentucky.  The Bank is insured by, and therefore  subject to regulations of, the
Federal  Deposit  Insurance  Corporation  ("FDIC"),   and  is  also  subject  to
requirements   and   restrictions   under  federal  and  state  law,   including
requirements to maintain

                                       17

<PAGE>



reserves against  deposits,  restrictions on the types and amounts of loans that
may be granted and the interest that may be charged thereon,  and limitations on
the types of investments  that may be made and the types of services that may be
offered.  Numerous  consumer laws and regulations  also affect the operations of
the Bank including,  among others, disclosure requirements,  anti-discrimination
provisions,  and  substantive  contractual  limitations  with respect to deposit
accounts.  The banking  agencies,  together with the  Departments of Justice and
Housing  and  Urban   Development,   also  enforce   compliance  with  community
reinvestment,  anti-discrimination  and other fair lending laws and regulations.
In  addition  to  the  impact  of  regulation,  commercial  banks  are  affected
significantly  by the  actions of the  Federal  Reserve  Board as it attempts to
control money supply and credit availability in order to influence the economy.

      The FDIC has the  authority  to prohibit the Bank,  as a commercial  bank,
from engaging in an unsafe or unsound  practice in conducting its business.  The
payment of dividends,  depending upon the financial condition of the institution
in question,  could be deemed to constitute such an unsafe or unsound  practice,
and the regulatory agencies have indicated their view that it generally would be
an unsafe and unsound practice to pay dividends except out of current  operating
earnings.  The ability of the  institutions  to pay  dividends  in the future is
presently,  and could be further  influenced,  among other things, by applicable
capital guidelines or by bank regulatory and supervisory policies.

      The ability of a banking institution to make funds available to its parent
company is also subject to restrictions  imposed by federal law.  Generally,  no
bank  subsidiary  may  extend  credit to the  parent  company on terms and under
circumstances  which are not substantially the same as comparable  extensions of
credit to  non-affiliates.  No  extension  of credit  may be made to the  parent
company  which is in excess of 10 percent of the  capital  stock and  surplus of
such bank  subsidiary  or in excess of 20 percent of the  capital and surplus of
such bank subsidiary as to aggregate  extensions of credit to the parent company
and its subsidiaries.  In certain circumstances,  federal regulatory authorities
may impose more restrictive limitations. Such extensions of credit, with limited
exceptions, must be fully secured by collateral.

      The federal  banking  agencies  possess  broad  powers to take  corrective
action as deemed  appropriate  for an  insured  depository  institution  and its
holding company. The extent of these powers depends upon whether the institution
in  question  in  considered  "well  capitalized",   "adequately   capitalized",
"undercapitalized" or "critically undercapitalized".  At June 30, 1997, The Bank
exceeded  the  required  ratios  for   classification  as  "well   capitalized."
Generally,  as an institution is deemed to be less well  capitalized,  the scope
and severity of the agencies' powers increase.  The agencies'  corrective powers
can include,  among other things,  requiring an insured financial institution to
adopt a capital  restoration plan which cannot be approved unless  guaranteed by
the  institution's  parent holding  company;  placing limits on asset growth and
restrictions  on  activities;   placing   restrictions   on  transactions   with
affiliates;  restricting  the interest rate the institution may pay on deposits;
prohibiting the institution from accepting  deposits from  correspondent  banks;
prohibiting the payment of principal interest on subordinated debt;  prohibiting
the  holding  company  from  making  capital  distributions  without  regulatory
approval; and, ultimately,  appointing a receiver for the institution.  Business
activities may also be influenced by an  institution's  capital  classification.
For  instance,  only a "well  capitalized"  depository  institution  may  accept
brokered deposits without  regulatory  approval and an "adequately  capitalized"
depository  institution may accept brokered  deposits only with prior regulatory
approval.

      Prior to  obtaining  the  charter  of a  commercial  bank,  the Bank was a
federally  chartered savings  association  insured by the SAIF through the FDIC.
Although most commercial banks are insured by the Bank Insurance Fund ("BIF") of
the FDIC,  the Bank did not elect at the time of the change in charter to change
that form of insurance due to the costs involved.


                                       18

<PAGE>



      The  Bank's  deposit  accounts  are  insured  by the SAIF to a maximum  of
$100,000 for each insured member (as defined by law and  regulation).  Insurance
of deposits may be  terminated  by the FDIC upon a finding that the  institution
has engaged in unsafe or unsound practices, is in an unsafe or unsound condition
to continue  operations or has violated any applicable  law,  regulation,  rule,
order or condition imposed by the FDIC or the institution's  primary  regulator.
The FDIC may also prohibit an insured  depository  institution  from engaging in
any activity the FDIC determines to pose a serious threat to the SAIF.

      The FDIC charges an annual  assessment for the insurance of deposits based
on the risk a  particular  institution  poses  to its  deposit  insurance  fund,
depending upon the institution's risk  classification.  This risk classification
is based on an institution's  capital group and supervisory subgroup assignment.
In addition,  the FDIC is authorized to increase  deposit  insurance  rates on a
semi-annual  basis if it  determines  that such action is necessary to cause the
balance  in the  SAIF  to  reach  the  designated  reserve  ratio  of  1.25%  of
SAIF-insured  deposits  within a reasonable  period of time. The FDIC may impose
special  assessments  on SAIF members to repay  amounts  borrowed  from the U.S.
Treasury  or for any  other  reason  deemed  necessary  by the  FDIC.  Prior  to
September 30, 1996, the SAIF was substantially  underfunded.  Prior to September
30,  1996,  members of the SAIF paid  within a range of .23% to .31% of domestic
deposits and members of the BIF,  predominantly  commercial banks, were required
to pay substantially lower, or virtually no, federal deposit insurance premiums.

      Effective  September  30,  1996,  federal  law was  revised  to  mandate a
one-time  special  assessment on SAIF members such as the Bank of  approximately
 .657% of deposits held on March 31, 1995.  The Bank recorded a $153,000  pre-tax
expense for this  assessment at September 30, 1996.  Beginning  January 1, 1997,
deposit  insurance  assessments  for SAIF members were reduced to  approximately
 .064% of deposits on an annual basis;  this rate may continue through the end of
1999. During this same period,  BIF members are expected to be annually assessed
approximately  .013%  of  deposits.  Thereafter,  assessments  for BIF and  SAIF
members  should be the same and the SAIF and BIF may be merged.  It is  expected
that these continuing  assessments for both SAIF and BIF members will be used to
repay outstanding Financing  Corporation bond obligations.  As a result of these
changes,  beginning January 1, 1997, the rate of deposit insurance  assessed the
Bank substantially declined.

      Capital Guidelines.  Under the risk-based capital guidelines applicable to
the Company and the Bank,  the minimum  guideline for the ratio of total capital
to risk-weighted  assets (including certain off- balance-sheet  activities) is 8
percent.  At least half of the total  capital must be "Tier 1" or core  capital,
which primarily includes common  shareholders'  equity and qualifying  preferred
stock, less goodwill and other disallowed  tangibles.  "Tier 2" or supplementary
capital  includes,  among  other  items,  certain  cumulative  and  limited-life
preferred  stock,  qualifying  subordinated  debt and the  allowance  for credit
losses,  subject to certain limitations,  less required deductions as prescribed
by regulation.

      In addition,  the federal bank regulators established leverage ratio (Tier
1 capital to total adjusted average assets)  guidelines  providing for a minimum
leverage ratio of 3 percent for bank holding companies and banks meeting certain
specified criteria, including that such institutions have the highest regulatory
examination  rating and are not contemplating  significant  growth or expansion.
Institutions  not meeting these  criteria are expected to maintain a ratio which
exceeds the 3 percent  minimum by at least 100 to 200 basis points.  The federal
bank regulatory  agencies may,  however,  set higher capital  requirements  when
particular  circumstances  warrant.  Under the federal banking laws,  failure to
meet the  minimum  regulatory  capital  requirements  could  subject a bank to a
variety of enforcement remedies available to federal bank regulatory agencies.


                                       19

<PAGE>



      At June 30,  1997,  the  respective  total and Tier 1  risk-based  capital
ratios and  leverage  ratios of the Bank and the  Company  exceeded  the minimum
regulatory capital requirements.

      Federal  Home  Loan  Bank  System.  The  Bank is a  member  of the FHLB of
Cincinnati,  which  is  one  of 12  regional  FHLBs  in  the  FHLB  system  that
administers  the home financing  credit function of savings  associations.  Each
FHLB  serves as a reserve or central  bank for its members  within its  assigned
region.  It  is  funded  primarily  from  proceeds  derived  from  the  sale  of
consolidated  obligations  of the FHLB system.  It makes loans to members (i.e.,
advances) in accordance with policies and procedures established by the FHLB.

      As a member,  the Bank is required to purchase and  maintain  stock in the
FHLB of  Cincinnati  in an amount equal to at least 1% of its  aggregate  unpaid
residential  mortgage loans, home purchase  contracts or similar  obligations at
the beginning of each year.

      Federal Reserve System.  The Federal Reserve Board requires all depository
institutions  to maintain  non-interest  bearing  reserves at  specified  levels
against  their  transaction  accounts  (primarily  checking,  NOW, and Super NOW
checking  accounts) and non-personal  time deposits.  At June 30, 1997, the Bank
was in compliance with these Federal Reserve Board requirements.

Item 2. Description of Property
-------------------------------

(a)   Properties.

      Currently, the Company does not own real property but utilizes the offices
of the Bank.  The Bank  operates  from its new  office  located at 106 A W. John
Rowan Blvd., Bardstown,  Kentucky. The Bank owns this office facility;  however,
the land has been leased under a twenty year  operating  lease  agreement  since
February 1, 1996.  The lease  includes  options to extend the terms of the lease
for an additional ten years. The Bank completed construction of this office at a
cost of  approximately  $475,000  and moved into the  facility in May 1997.  The
former  location  of  119 E.  Stephen  Foster  Avenue,  Bardstown,  Kentucky  is
currently being used for storage until all operations  have been  implemented at
the new location.  The former  location is intended to be sold after the move is
completed.

(b)   Investment Policies.

      See  "Item 1.  Business"  above for a general  description  of the  Bank's
investment  policies and any  regulatory  or Board of  Directors'  percentage of
assets  limitations  regarding certain  investments.  The Bank's investments are
primarily acquired to produce income,  and to a lesser extent,  possible capital
gain.

      (1)   Investments in Real Estate or Interests in Real Estate. See "Item 1.
Business  - Lending  Activities  and -  Regulation  of the  Bank,"  and "Item 2.
Description of Property."

      (2)   Investments  in Real  Estate  Mortgages.  See  "Item 1.  Business  -
Lending Activities and - Regulation of the Bank."

      (3)   Investments  in  Securities  of or  Interests  in Persons  Primarily
Engaged in Real Estate  Activities.  See "Item 1. Business - Lending  Activities
and - Regulation of the Bank."

(c)   Description of Real Estate and Operating Data.

      Not Applicable.

                                       20

<PAGE>




Item 3. Legal Proceedings
-------------------------

      There are various claims and lawsuits in which the Company or the Bank are
periodically involved, such as claims to enforce liens, condemnation proceedings
on properties in which the Bank holds security  interests,  claims involving the
making and servicing of real property  loans,  and other issues  incident to the
Bank's business. In the opinion of management, no material loss is expected from
any of such pending claims or lawsuits.

Item  4.  Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------

      No matter was  submitted to a vote of security  holders  during the fourth
quarter of the fiscal year.

                                    PART II

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

      The information contained under the section captioned "Market Price of the
Registrant's  Common  Stock"  on  page  2 of  the  Company's  Annual  Report  to
Stockholders for the fiscal year ended June 30, 1997 (the "Annual  Report"),  is
incorporated herein by reference.

Item  6.  Management's Discussion and Analysis or Plan of Operation
-------------------------------------------------------------------

      The  information   contained  in  the  section   captioned   "Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations"  on
pages 4 to 6 of the Annual Report is incorporated herein by reference.

Item  7.  Financial Statements
------------------------------

      The   Registrant's   financial   statements   listed  under  Item  13  are
incorporated herein by reference.

Item 8.   Changes  in and  Disagreements  with  Accountants  On  Accounting  and
          ----------------------------------------------------------------------
          Financial Disclosure.
          --------------------

      The Company discontinued the engagement of Crisp Hughes & Co., LLP ("Crisp
Hughes"),  its independent auditors,  and notified Crisp Hughes of its action on
June 4, 1996. The Company's  Board of Directors  engaged Whelan,  Doerr,  Pike &
Pawley  as the  Company's  auditors  for the  year  ended  June  30,  1996.  The
determination  to  replace  Crisp  Hughes  was  approved  by the  full  Board of
Directors of the Company.

      The  report of Crisp  Hughes  for the  fiscal  year  ended  June 30,  1995
contained no adverse  opinion or  disclaimer of opinion and was not qualified or
modified as to  uncertainty,  audit scope or accounting  principles.  During the
fiscal year ended June 30, 1995 and during the period from June 30, 1995 to June
4, 1996,  there were no  disagreements  between  the  Company  and Crisp  Hughes
concerning accounting  principles or practices,  financial statement disclosure,
or auditing scope or procedure.


                                       21

<PAGE>



                                   PART III

Item 9.   Directors  Executive  Officers,  of  Promoters  and  Control  Persons:
          ----------------------------------------------------------------------
          Compliance with Section 16(b) of the Exchange Act.
          -------------------------------------------------

      The  information  contained  under the sections  captioned  "Section 16(a)
Beneficial Ownership Reporting  Compliance" and "I - Information with Respect to
Nominees for Director,  Directors Continuing in Office, and Executive Officers -
Election  of  Directors"  and  "  -  Biographical  Information"  in  the  "Proxy
Statement".

Item 10.  Executive Compensation
--------------------------------

      The information contained in the section captioned "Director and Executive
Officer   Compensation"  in  the  Proxy  Statement  is  incorporated  herein  by
reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

      (a)   Security Ownership of Certain Beneficial Owners

            Information   required  by  this  item  is  incorporated  herein  by
            reference  to  the  first  chart  in  the  section  captioned  "I  -
            Information  with  Respect  to  Nominees  for  Director,   Directors
            Continuing  in  Office,   and  Executive   Officers"  in  the  Proxy
            Statement.

      (b)   Security Ownership of Management

            Information   required  by  this  item  is  incorporated  herein  by
            reference  to  the  first  chart  in  the  section  captioned  "I  -
            Information  with  Respect  to  Nominees  for  Director,   Directors
            Continuing  in  Office,   and  Executive   Officers"  in  the  Proxy
            Statement.

      (c)   Management of the Registrant knows of no arrangements, including any
            pledge by any person of securities of the Registrant,  the operation
            of which may at a  subsequent  date result in a change in control of
            the Registrant.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

      The information  required by this item is incorporated herein by reference
to the section captioned "Certain Relationships and Related Transactions" in the
Proxy Statement.

Item 13. Exhibits, Lists, and Reports on Form 8-K
-------------------------------------------------

      (a) The following documents are filed as a part of this report:

            1. The following financial  statements and the report of independent
accountants  of the  Registrant  included in the  Registrant's  Annual Report to
Stockholders for the fiscal year ending June 30, 1997 are incorporated herein by
reference and also in Item 8 hereof.


                                       22

<PAGE>



     Report of Independent Auditors

     Consolidated  Statements  of  Financial  Condition  as of June 30, 1996 and
     1997.

     Consolidated  Statements of  Operations  for the Years Ended June 30, 1995,
     1996 and 1997.

     Consolidated  Statements of  Stockholders'  Equity for the Years Ended June
     30, 1995, 1996 and 1997.

     Consolidated  Statements  of Cash Flows for the Years Ended June 30,  1995,
     1996 and 1997.

     Notes to Consolidated Financial Statements.

            2. Other than as set forth below,  Financial Statement Schedules for
which  provision  is  made  in  the  applicable  accounting  regulations  of the
Securities  and Exchange  Commission  ("SEC") are not required under the related
instructions or are inapplicable and therefore have been omitted.

            3.  The   following   exhibits   are  included  in  this  Report  or
incorporated herein by reference:

            (a)   List of Exhibits:

             3(i) Certificate of Incorporation of NCF Financial Corporation*

             3(ii) Bylaws of NCF Financial Corporation*

            10.1  Employment Agreement with A.E. Bowling

            10.2  1995 Stock Option Plan

            10.3  Management Stock Bonus Plan and Trust Agreement

            10.4  Supplemental Retirement Plan for A.E. Bowling**

            10.5  Directors Consultation and Retirement Plan**

            13    Annual Report to  Stockholders  for the fiscal year ended June
                  30, 1997

            21    Subsidiaries of the Registrant

            27    Financial Data Schedule

            (b)   None.

---------------------
*    Incorporated by reference to the  registration  statement on Form S-1 (File
     No. 33-93614) declared effective by the SEC on August 14, 1995.
**   Previously  filed with or  incorporated by reference in the Form 10-KSB for
     the fiscal year ended June 30, 1996 filed on September 30, 1996.


                                       23

<PAGE>


                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly authorized  as  of September 26,
1997.



                                          NCF FINANCIAL CORPORATION


                                          By: /s/ A.E. Bowling
                                              ----------------------------------
                                                A.E. Bowling
                                                President, Chairman of the Board
                                                  and Director
                                                (Duly Authorized Representative)

      Pursuant to the  requirement of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated as of September 26, 1997.
                                                                    



/s/ A.E. Bowling                          /s/ Danny R. Biggs
--------------------------------------    --------------------------------------
A.E. Bowling                              Danny R. Biggs
President, Chairman of the Board          Vice President
 and Director (Principal Financial and    (Principal Accounting Officer)
Executive Officer)



/s/ John S. Tharp                         /s/ Paul Barnes
--------------------------------------    --------------------------------------
John S. Tharp                             Paul Barnes
Assistant Secretary and Director          Director



/s/ Robert C. Hurst
--------------------------------------
Robert C. Hurst
Director



/s/ Guthrie M. Wilson III
--------------------------------------
Guthrie M. Wilson III
Director