[COMPANY LOGO]
                            Tri-County Bancorp, Inc.
                               1998 Annual Report
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       TABLE OF CONTENTS
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            Selected Financial Data                             1
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            Letter to Stockholders                              2
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            Management's Discussion and Analysis                3
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            Report of Independent Auditors                     10
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            Consolidated Statements of Financial Condition     11
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            Consolidated Statements of Operations              12
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            Consolidated Statements of Stockholders' Equity    13
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            Consolidated Statements of Cash Flows              14
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            Notes to Consolidated Financial Statements         16
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            Corporate and Stockholders' Information            33
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<PAGE>
SELECTED FINANCIAL DATA
                                              At December 31,
                                   1998     1997     1996    1995    1994
                                 -------------------------------------------
                                               (In Thousands)
 BALANCE SHEET DATA 
   Total amount of:
   Assets                         $81,308   $89,961 $85,888 $65,766 $59,583
   Loans receivable, net           42,054    40,425  35,265  25,514  24,439
   Mortgage-backed & investment
     securities - Available for   
     sale                          28,727    36,526  35,140  18,097  15,621
   Mortgage-backed & investment
     securities    -   Held   to    
     maturity                       5,336     7,987  10,320  18,264  15,407
   Deposits                        45,974    45,405  48,533  44,583  45,589
   FHLB advances                   23,799    29,697  23,460   7,000   1,000
   Stockholders' equity            10,421    13,827  13,146  13,496  12,705

                                          Year Ended December 31,
                                   1998     1997     1996    1995    1994
                                 -------------------------------------------
                                               (In Thousands)
 STATEMENT OF OPERATIONS
 DATA
   Interest income                 $6,173    $6,466 $5,494   $4,600  $4,100
   Net interest income              2,627     2,744  2,468    2,266   2,396
   Provision for loan losses           --        --     --       --      --
   Non-interest income                291       105    159      171      71
   Non-interest expenses            1,564     1,623  1,811(1) 1,458   1,416
   Net income                         938       901    540(1)   649     764

                                     At or For Year Ended December 31,
                                   1998     1997       1996    1995    1994
                                 -------------------------------------------
 FINANCIAL RATIOS & OTHER
 DATA
   Return on average assets        1.09%    1.02%     0.71%(1) 1.04%   1.28%
   Return on average   
   stockholders' equity            6.72%    6.68%     4.05%(1) 4.96%   5.89%
   Average interest rate spread    2.39%    2.48%     2.68%    2.69%   3.30%
   Net yield on average  earning   
   assets                          3.14%    3.19%     3.35%    3.62%   4.12%
   Non-interest expense to   
   total assets                    1.92%    1.80%     2.11%(1) 2.22%   2.38%
   Average  equity/average total  
   assets                         16.03%   15.20%    16.82%   20.47%  22.14%
   Non-performing    loans/total   
   assets                          0.00%    0.00%     0.04%    0.03%   0.39%

                                     At or For Year Ended December 31,
                                   1998     1997     1996    1995    1994
                                 -------------------------------------------
 PER SHARE INFORMATION(2)
   Earnings per share - diluted   $0.78     $.071   $0.41(1) $0.47   $0.53
   Dividends per share             0.43      0.33    0.25     0.19    0.11
   Book value per share           11.86     11.84   10.80    10.53    9.42

_____________________________
(1)  Includes the effect of a one-time  special  assessment to recapitalize  the
     SAIF.
(2)  Restated to reflect 100% stock split effect by a 100% stock  dividend  paid
     December 8, 1997.

                                       1
<PAGE>







      To Our Stockholders:

      Tri-County  Bancorp,  Inc.  achieved a second  year of record  earnings in
      1998. Earnings for the Company were $938,063,  which exceeded the previous
      year by 4.1%.  Earnings per share also  increased to record levels of $.78
      per share on a fully diluted basis and exceeded 1997 by 9.9%.  The Company
      paid  dividends of $.43 per share in 1998 as compared to $.33 in 1997,  an
      increase of 30.3%.

      In December of last year, we completed a very successful  tender offer for
      our shares that reduced the shares  outstanding  by 24.7%.  As a result of
      the tender  offer,  314,125  shares were  purchased  for $14.00 per share.
      Including all associated expenses, the tender offer cost the Company close
      to $4.5 million.  This  reduction in capital will help to produce a higher
      return on equity and increase  earnings per share. The reduction in shares
      outstanding  from  the  tender  offer  will  also  make it  necessary  for
      Tri-County  Bancorp,  Inc. to delist from the Nasdaq Small Cap market.  We
      plan  to list  our  stock  on the  OTC  electronic  bulletin  board  as an
      alternative place to buy and sell our common stock.

      Assets of the Company  declined $8.7 million due to  maturities,  calls of
      callable  securities,  and prepayments of mortgage backed  securities that
      were not totally  offset by loan  growth.  The  offsetting  decline on the
      liability  side  of  the  ledger  occurred  in  reduced  borrowings  and a
      reduction  in  capital  from the  tender  offer.  We  allowed  the Bank to
      decrease  in size  because low  interest  rates in 1998 did not make it as
      attractive  to  continue  to invest  in  additional  securities  that were
      financed with borrowings.

      In March of 1999,  the Bank  announced  plans to open a branch,  our third
      office,  on the northwest side of Cheyenne,  Wyoming.  Management plans to
      have the new branch open by late summer this year. Cheyenne is the largest
      city in the State of Wyoming and offers an excellent  opportunity  for the
      Bank.

      As always,  thank you for your  continued  support,  and please contact us
      with your questions about Tri-County Bancorp, Inc.

      Sincerely,



      /s/Robert L. Savage                       /s/Larry C. Goddard
      President and Chief Executive Officer     Chairman of the Board

                                       2
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

THE COMPANY'S BUSINESS

Tri-County  Bancorp,  Inc. (the "Company") is a unitary savings and loan holding
company which, under existing laws,  generally is not restricted in the types of
business  activities  in which it may engage  provided that  Tri-County  Federal
Savings  Bank  ("the  Bank")  retains  a  specified  amount  of  its  assets  in
housing-related  investments. At the present time, since it does not conduct any
active  business,  the Company does not intend to employ any persons  other than
officers,  using the  support  staff from the Bank from time to time to meet its
administrative needs.

The  Bank  is  a  federally   chartered  stock  savings  bank  headquartered  in
Torrington, Wyoming with one additional branch office in Wheatland, Wyoming. The
Bank was founded in 1935 as a federally  chartered  savings and loan association
under the name  Tri-County  Federal  Savings  and Loan  Association.  The Bank's
deposits  are  federally  insured  by the  Savings  Association  Insurance  Fund
("SAIF"). The Bank converted from mutual to stock form in September 1993.

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,  consumer  loans,  commercial  real estate
loans, and commercial business loans. The Bank's market area is primarily Goshen
and Platte Counties,  Wyoming and Scottsbluff  County in western  Nebraska.  The
Bank expects to expand into the Cheyenne,  Wyoming area with a new branch in the
third  quarter of 1999. In addition,  the Bank invests in investment  securities
and mortgage-backed  securities.  The Bank offers its customers several types of
real estate loans, including  adjustable-rate and fixed-rate mortgage loans. The
Bank has also been an  originator of  multi-family  and  commercial  real estate
loans, and consumer loans,  including automobile and home equity loans. The Bank
also purchases loans and participates in loans with other financial and mortgage
banking  institutions on a case by case basis. These activities are conducted in
Wyoming and other Rocky Mountain States.

CAPITAL STOCK

Since its issuance in September 1993, the Company's common stock has been traded
over-the-counter on the Nasdaq Stock MarketSM appearing under the symbol "TRIC."
The  following  table  reflects  the  stock  price as  published  by the  Nasdaq
statistical  report.  Prices are adjusted to reflect a 2 for 1 stock dividend on
December 8, 1998.

                                                          DIVIDEND
      1997                         LOW        HIGH         PAID
      First Quarter--03/31/97       $9.00     $9.50        $.075
      Second Quarter--06/30/97      $9.50    $10.63        $.075
      Third Quarter--09/30/97      $10.75    $12.25        $.075
      Fourth Quarter--12/31/97     $11.50    $15.00        $.100

      1998
      First Quarter--03/31/98      $13.13    $15.00        $.100
      Second Quarter--06/30/98     $12.50    $16.50        $.110
      Third Quarter--09/30/98      $11.50    $13.00        $.110
      Fourth Quarter--12/31/98     $11.25    $14.00        $.110

                                        3
<PAGE>
The number of shareholders  of record as of December 31, 1998 was  approximately
169.  This does not reflect the number of persons or entities  who held stock in
nominee or "street" name through various  brokerage firms. At December 31, 1998,
there were 878,798 shares outstanding.  The Company completed a tender offer for
stock in December of 1998 whereby  314,125  shares were  purchased at a price of
$14.00 per share.  Additionally,  25,425  options were  exercised in December of
1998.

The Company's  ability to pay dividends to  stockholders  is dependent  upon the
dividends  it  receives  from the Bank.  The Bank may not  declare or pay a cash
dividend  on any of its stock if the  effect  thereof  would  cause  the  Bank's
regulatory  capital  to be  reduced  below  (1)  the  amount  required  for  the
liquidation  account  established in connection with the Bank's  conversion from
mutual to stock form, or (2) the regulatory capital  requirements imposed by the
Office of Thrift  Supervision  ("OTS"),  the  Bank's  chartering  authority  and
primary federal regulator.

FINANCIAL CONDITION

ASSETS

The total assets of the Bank  decreased  by $8.65  million or 9.62% during 1998.
The  decrease is  primarily  the result of the sale or  maturity  of  investment
securities.  These funds were used to repay  Federal Home Loan Bank advances and
to repurchase Tri-County Bancorp stock.

Interest earning deposits increased $.93 million during the period. The increase
was the  result  of a  decision  by the  Management  of the  Bank  to hold  more
short-term deposits in the existing interest rate environment.

Securities available for sale decreased by $7.80 million during 1998. Securities
totaling $12.00 million matured,  were either redeemed by the issuing agency, or
were sold. Furthermore, principal payments and prepayments of $6.22 million were
received from mortgage-backed securities during the period. These decreases were
partially  offset by purchases  totaling  $12.91  million and an increase in the
market value of the portfolio of $.44 million.

Securities  held to maturity  decreased by $2.65  million.  The decrease was the
result of principal  payments  and  prepayments  of $2.84  million on the Bank's
portfolio of  mortgage-backed  securities which more than offset the purchase of
tax-exempt bonds in the amount of $177,000.

Loans receivable  increased $1.63 million during 1998.  During this period,  the
Bank  originated or purchased  portfolio  residential  mortgage  loans  totaling
$10.49 million,  non-residential mortgage loans totaling $1.73 million, consumer
loans  totaling  $3.17  million,  and  commercial  loans in the  amount  of $.21
million.  During the same period, the Bank received scheduled principal payments
and  prepayments  totaling  $13.89 million on its loan  portfolio.  Of the total
mortgage  loans  originated  or purchased  during the year,  $6.45  million were
adjustable-rate  and $5.77 million were fixed-rate  loans.  Because of a lack of
demand for certain types of loans in the Bank's primary lending area,  purchased
loans  totaled  51% of  mortgage  lending  during the  period.  The  majority of
purchased  loans  are  residential  and  non-residential  real  estate  loans in
Colorado and Idaho mountain-resort communities. Purchased loans are subjected to
the same  underwriting  standards and loan terms as those originated by the Bank
for its  portfolio.  Bank property and equipment is expected to increase in 1999
due to the  purchase  of  property  for  the  construction  of a new  branch  in
Cheyenne, Wyoming.

                                     4
<PAGE>
LIABILITIES

Deposit  balances  increased  by $.56  million or 1.25% from  $45.41  million at
December 31, 1997 to $45.97 million at December 31, 1998. The increase consisted
of an increase of $3.58  million in demand and NOW  deposits  and  decreases  of
$1.43 million and $1.59 million in savings and time deposits,  respectively. The
decrease in time  deposits  was due,  in part,  to the  scheduled  maturity of a
deposit  held by a local  school  district  which was  originally  issued in the
previous year.

Advances  from FHLB  decreased by $5.89  million  during the twelve months ended
December 31, 1998. The change was caused by a decrease in the amount of advances
obtained or renewed to purchase or carry securities  classified as available for
sale.

Deferred  income taxes  increased by $126,000 during the year and was mainly the
result of the application of SFAS No. 115, Accounting for Certain Investments in
Debt and  Equity  Securities,  which  requires  unrealized  gains and  losses on
available for sale securities to be reported, net of deferred income taxes, as a
separate component of stockholders' equity. The market value of these securities
increased $438,000 during the period,  which resulted in an increase in deferred
income taxes.

STOCKHOLDERS' EQUITY

The  increase  in  additional  paid-in  capital  of  $219,000  was caused by the
application of an accounting  standard which requires  charging  current expense
for the fair value of shares of stock  committed  to be  released  by the Bank's
Employee  Stock  Ownership  Plan and crediting the  difference  between the fair
value and the cost of the shares to paid-in capital.

The increase in retained  earnings was the result of net earnings  totaling $.94
million which more than offset the decrease in retained  earnings  caused by the
payments of dividends of $0.43 per share totaling $.47 million.

As  discussed  earlier,  SFAS No. 115  requires  unrealized  gains and losses on
securities  classified available for sale to be shown as a separate component of
stockholders'  equity in an amount which is net of deferred  income  taxes.  The
market value of securities  classified as available  for sale  increased  during
1998 and resulted in an increase, net of deferred income tax, of $.29 million in
stockholder's equity.

The increase in treasury stock of $4.49 million was the result of the repurchase
of 314,125 shares  pursuant to the Company's  tender offer completed in December
of 1998. The shares were repurchased at a price of $14.00 per share which,  when
added to the costs of legal,  consulting,  printing and other fees,  brought the
average cost of repurchase to $14.31 per share.

AVERAGE BALANCE SHEET

The following table sets forth certain  information  relating to average balance
sheets 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  instead of daily average  balances has caused
any material difference in the information presented.

                                       5
<PAGE>
<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                      -----------------------
                                                 1998                        1997
                                                 ----                        ----
                                       Average           Average   Average           Average
                                       Balance Interest Yield/Cost Balance Interest Yield/Cost
                                       ------- -------- ---------- ------- -------- ----------
<S>                                    <C>     <C>      <C>        <C>     <C>      <C>
                                           (Dollars in thousands)
Interest-earning assets:
   Loans receivable                    $41,782   $3,465    8.29%   $37,581   $3,145    8.37%
   Securities-Available for sale        32,914    2,099    6.38%    38,213    2,576    6.74%
   Securities-Held to maturity           6,697      504    7.53%     8,964      684    7.63%
   Other interest-earning assets         2,331      105    4.50%     1,165       61    5.24%
                                       -------   ------            -------   ------      
        Total interest-earning assets  $83,724   $6,173    7.37%   $85,923   $6,466    7.53%
Non-interest earning assets              1,948   ------              2,278   ------
                                       -------                     -------
        Total Assets                   $85,672                     $88,201
                                       =======                     =======
Interest-bearing liabilities:
   Deposits                            $45,203   $2,052    4.54%   $47,111   $2,188    4.64%
   Other borrowings                     25,954    1,494    5.76%    26,625    1,534    5.76%
                                       -------   ------            -------   ------
        Total interest-bearing
        liabilities                     71,157   $3,546    4.98%    73,736   $3,722    5.05%
Non-interest bearing liabilities         1,558   ------              1,057   ------
                                       -------                     -------
        Total liabilities               72,715                      74,793
        Retained earnings               12,957                      13,408
                                       -------                     -------
        Total liabilities and
        Retained earnings              $85,672                     $88,201
                                       =======                     =======
Net interest income                              $2,627                      $2,744
                                                 ======                      ======
Interest rate spread                                       2.39%                       2.48%
Net yield on interest earning assets                       3.14%                       3.19%
Ratio of average interest-earning
  assets to interest-bearing
  liabilities                                            117.66%                     116.53%
</TABLE>

                                       6
<PAGE>
RATE/VOLUME ANALYSIS

The table below sets forth  certain  information  regarding  changes in interest
income and  interest  expense of the Bank for the  periods  indicated.  For each
category of interest-earning asset and interest-bearing  liability,  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 December 31,            Year Ended December 31,
                                          1998 vs. 1997                      1997 vs. 1996
                                --------------------------------   ---------------------------------
                                   Increase (Decrease) Due To         Increase (Decrease) Due To
                                --------------------------------   ---------------------------------
                                Volume  Rate  Rate/Volume  Net     Volume   Rate  Rate/Volume  Net
                                ------  ----  -----------  -----   ------   ----  -----------  -----
                                          (Dollars in thousands)
<S>                             <C>     <C>   <C>          <C>     <C>      <C>   <C>          <C>
Interest-earning assets:
  Loans receivable                 352   (28)        (4)    320       478    29          5      512
  Securities-Available for sale   (356) (173)        52    (477)      625    50         17      692
  Securities-Held to maturity     (173)   (9)         2    (180)     (276)   23         (7)    (260)
  Other interest-earning assets     61    (9)        (8)     44        54   (10)       (15)      29
                                  ----- -----        ---   -----     -----  ----       ----    -----
  Total interest-earning assets   (116) (219)        42    (293)      881    92          0      973

Interest-bearing liabilities:
  Deposit accounts                 (88)  (49)         1    (136)       65    41          0      106
  Other liabilities                (39)   (1)         0     (40)      480    73         37      590
                                  ----- -----        ---   -----     -----  ----       ----    -----
  Total interest-bearing
  liabilities                     (127)  (50)         1    (176)      545   114         37      696
Net change in interest income       11  (169)        41    (117)      336   (22)       (37)     277
                                  ===== =====        ===   =====     =====  ====       ====    =====
</TABLE>
RESULTS OF OPERATIONS

NET INCOME

Net  income  increased  $37,000  during the year ended  December  31,  1998 when
compared to the same period of 1997. Net interest income  decreased by $117,000,
non-interest income increased by $185,000 and non-interest  expense decreased by
$59,000. The provision for income taxes increased by $90,000.

INTEREST INCOME

Interest  income  from  loans  increased  $320,000  or 10.18% for the year ended
December  31,  1998.  The  increase was the result of an increase in the average
balance of loans  outstanding of $4.20 million which more than offset a decrease
in yield on the loans from 8.37% to 8.29%.

                                       7
<PAGE>
The decrease of $478,000 in interest on  securities  available  for sale was the
result of a decrease in the average balance of securities of $5.30 million and a
decrease in the average yield on the portfolio from 6.74% to 6.38%. The decrease
in yield was the result of the purchase of securities,  which, on average, had a
lower yield than the yield on the existing portfolio.

Interest  on  securities  held to  maturity  decreased  $180,000  and was caused
primarily by a decrease in the average balance of the portfolio of $2.28 million
and a decrease in the yield on the portfolio  from 7.63% to 7.53%.  The decrease
in yield was the  result of the higher  level of  principal  prepayments  on the
higher yielding mortgage-backed securities in the portfolio.

The  increase  in income  from  other  interest-earning  assets of  $44,000  was
primarily  caused by an increase in the average  balance of these  assets.  This
category of assets consists primarily of  interest-earning  demand deposits held
at FHLB.

INTEREST EXPENSE

Interest expense on deposits  decreased  $136,000 during 1998. This decrease was
the result of a decrease of $1.91 million in the average balance of deposits and
a decrease in the average cost of deposits from 4.64% to 4.54%.

The Bank took advantage of a relatively  inexpensive source of funding available
through the FHLB to purchase financial  instruments that yield a slightly higher
return  than the rate  charged on the  advances.  The  average  balance of these
borrowings  was $.67 million less during 1998 than during 1997 while the average
cost of the borrowings  remained unchanged at 5.76% which resulted in a decrease
of $41,000 in interest expense.

PROVISION FOR LOAN LOSSES

No provision for loan losses was made during the year of 1998. The allowance for
loan losses is based on Management's evaluation of the risk inherent in its loan
portfolio  after  giving due  consideration  to the  changes  in general  market
conditions  and in the nature and volume of the Bank's loan  activity.  The Bank
intends to continue to provide for loan losses based on its  periodic  review of
the loan portfolio and general market conditions.  The allowance for loan losses
amounted  to  $410,000  at  December  31,  1998,  which was 0.96% of total loans
outstanding.  While the Bank  maintains its allowance for loan losses at a level
which it considers  adequate to provide for  potential  losses,  there can be no
assurances  that further  additions  will not be made to the loss  allowance and
that such losses will not exceed the estimated amounts.

NON-INTEREST INCOME

Non-interest income increased $185,000 during 1998.

The  increase  in the gain on sale of  loans of  $35,000  was the  result  of an
increase in the dollar amount of loans sold.  Gain on sale of available for sale
securities increased $152,000 during 1998. In 1997, shares of a mutual fund were
redeemed at a loss of $71,000 whereas the sales and redemptions of securities in
the current year netted a $81,000 gain.

NON-INTEREST EXPENSE

Overall,  non-interest  expense decreased $59,000 during the year ended December
31, 1998.

Compensation and benefits  increased by $21,000 in 1998 and was primarily caused
by an increase in overall salaries and pension costs.

Occupancy and equipment  expense  decreased  $12,000 and was primarily caused by
decreases in data processing costs and equipment depreciation.

                                       8
<PAGE>
Other,  net expenses  decreased by $65,000 and was  primarily  the result of the
Company's  abandonment of its efforts to establish a de novo bank in Colorado in
1997 and the charging of those costs to expense.

In March of 1999, the Bank announced its intention to open an additional  branch
in Cheyenne,  Wyoming.  The Company has a contract to purchase 4.4 acres of land
for  approximately  $725,000.  Planning for the construction of the building and
other  plans  for the site have  just  begun.  Costs  associated  with  opening,
staffing and equipping the branch will result in increased  expenses and reduced
net income  until we can achieve  certain  levels of deposit and loan  activity.
This  situation is expected to continue  for at least the next 18 months.  We do
not believe the  decrease in earnings  will be  prolonged  and in the long term,
this expansion of markets,  personnel,  and products and services should enhance
shareholder  value.  However,  as  with  any  expansion,  if the new  branch  or
additional  personnel do not  ultimately  result in  increased  deposit and loan
activity and increased net interest  income,  these  expenses  would continue to
have an adverse affect on net income.

INCOME TAXES

The provision for income taxes increased $90,000 for the year ended December 31,
1998.  The  increase  was  due  to an  increase  in  taxable  income  and to the
establishment,  in the prior year,  of a deferred tax asset  resulting  from the
difference  between  financial  and tax  accounting  for  losses  incurred  from
mortgage loan foreclosure and disposition.

YEAR 2000 READINESS

For a  discussion  of the  Company's  effort  to  address  the  computer  issues
regarding the year 2000, see Note 14 to the Consolidated Financial Statements.

IMPACT OF INFLATION AND CHANGING PRICES

The financial  statements  of the Bank and notes  thereto,  presented  elsewhere
herein,  have been prepared in accordance  with  generally  accepted  accounting
principles,  which require the  measurement of financial  position and operating
results in terms of historical  dollars  without  considering  the change in the
relative purchasing power of money over time and due to inflation. The impact of
inflation is reflected in the increased cost of the Bank's operations.

Unlike most  industrial  companies,  nearly all of the assets and liabilities of
the Bank are monetary. As a result,  interest rates have a greater impact on the
Bank's performance than do the effects of general levels of inflation.  Interest
rates do not necessary  move in the same  direction or to the same extent as the
price of goods and service.

                                       9
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                                       9
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Board of Directors
Tri-County Bancorp, Inc. and Subsidiaries


REPORT OF INDEPENDENT AUDITORS

We have audited the accompanying  consolidated statements of financial condition
of Tri-County  Bancorp,  Inc. and  Subsidiaries  (Tri-County) as of December 31,
1998  and  1997,  and  the  related   consolidated   statements  of  operations,
stockholders' equity and cash flows for the years then ended. These consolidated
financial  statements are the  responsibility  of Tri-County's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  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 audits to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  condition of
Tri-County Bancorp,  Inc. and Subsidiaries as of December 31, 1998 and 1997, and
the consolidated  results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting principles.




/s/ DALBY, WENDLAND & CO., P.C.

Grand Junction, Colorado
February 5, 1999

                                       10
<PAGE>
<TABLE>
<CAPTION>
                         TRI-COUNTY BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                                                            December 31,
                            ASSETS                                     1998         1997
                                                                -----------  -----------
<S>                                                             <C>          <C>     
Cash and due from banks                                           $ 385,804    $ 588,114
Interest-bearing deposits with banks                              2,979,241    2,050,691
Securities available for sale, at fair value                     28,727,466   36,526,012
Securities held to maturity                                       5,335,700    7,987,250
Loans held for sale, at market value                                435,721      117,111
Loans  receivable,   net  of  allowance  for  loan  losses  of
   $409,984 (1998) and  $412,456 (1997)                          42,054,222   40,425,290
Accrued interest receivable                                         450,017      655,339
Bank property and equipment                                         801,141      886,879
Other assets                                                        138,685      725,541
                                                                    -------      -------
                                                 Total Assets   $81,307,997  $89,962,227
                                                                ===========  ===========

             LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Demand deposits                                                $ 690,177    $ 541,509
   Now accounts                                                   5,776,145    2,341,052
   Savings accounts                                               8,737,500   10,162,896
   Other time deposits                                           30,770,264   32,359,696
                                                                 ----------  -----------
                                                Total Deposits   45,974,086   45,405,153

Advances from Federal Home Loan Bank                             23,799,117   29,696,617
Accounts payable and accrued expenses                               216,841      270,882
Advances by borrowers for taxes and insurance                       110,167      101,266
Deferred income taxes                                               787,119      661,125
                                                                    -------      -------
                                             Total Liabilities   70,887,330   76,135,043
                                                                 ----------   ----------
Stockholders' Equity
   Preferred  stock,  $.10  par  value,  authorized  5,000,000
      shares,  none issued or outstanding                                 -            -
   Common stock, $.10 par value, authorized 10,000,000 shares,                                                       
      1,520,425 (1998) and 1,495,000 (1997) shares issued           152,043      149,500
   Additional paid-in capital                                     7,319,578    7,100,600
   Retained earnings - substantially restricted                   9,260,742    8,792,947
   Unearned compensation relating to Employee
   Stock Ownership Plan                                            (284,050)    (343,850)
   Unearned compensating relating to Management Stock 
   Bonus Plan                                                             -      (44,175)
   Unrealized gain on securities available for sale, net of tax   1,106,701      817,476
   Treasury stock-641,627(1998) and 
   327,502(1997) shares, at cost                                 (7,134,347)  (2,645,314)
                                                                 ----------   ----------
                                    Total Stockholders' Equity   10,420,667   13,827,184
                                                                 ----------   ----------
                    Total Liabilities and Stockholders' Equity  $81,307,997  $89,962,227
                                                                ===========  ===========
</TABLE>






                                  See accompanying notes.

                                       11
<PAGE>

<TABLE>
<CAPTION>
                         TRI-COUNTY BANCORP, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                 Year ended December 31,
                                                                       1998         1997
                                                                -----------  -----------

<S>                                                              <C>          <C>                   
INTEREST INCOME
   Interest and fees on loans                                    $3,465,184   $3,144,917
   Interest and dividends on available for sale securities
      Taxable interest                                            1,957,415    2,459,395
      Dividends                                                     141,048      117,050
   Interest on held to maturity securities
      Taxable interest                                              498,712      683,848
      Nontaxable interest                                             5,611            -
   Other interest earning assets                                    105,045       61,236
                                                                    -------       ------  
                                         Total Interest Income    6,173,015    6,466,446
                                                                  =========    =========
INTEREST EXPENSE
   Deposits                                                       2,052,506    2,188,492
   Advances                                                       1,493,513    1,534,093
                                                                  ---------    ---------
                                        Total Interest Expense    3,546,019    3,722,585
                                                                  ---------    ---------
                                           Net Interest Income    2,626,996    2,743,861
PROVISION FOR LOAN LOSSES                                                 -            -
                                                                  ---------    ---------
                                     Net Interest Income After
                                     Provision for Loan Losses    2,626,996    2,743,861
                                                                  ---------    ---------
NONINTEREST INCOME
   Service charges on deposits                                      119,371      112,449
   Gain on sale of loans                                             65,085       35,420
   Gain (loss) on sale of investments available for sale             80,940     (71,421)
   Other income                                                      25,296       28,973
                                                                     ------       ------
                                      Total Noninterest Income      290,692      105,421
                                                                    =======      =======
NONINTEREST EXPENSE
   Compensation and benefits                                        911,667      891,096
   Occupancy and equipment                                          318,803      330,726
   Federal insurance premiums                                        27,921       30,518
   Other expenses                                                   305,620      370,476
                                     Total Noninterest Expense    1,564,011    1,622,816
                                                                  ---------    ---------
                                    Income Before Income Taxes    1,353,677    1,226,466
PROVISION FOR INCOME TAXES                                          415,614      325,462
                                                                    -------      -------
                                                    Net Income    $ 938,063    $ 901,004
                                                                  =========    =========
EARNINGS PER SHARE
   Basic                                                            $   .83      $   .75
                                                                    =======      =======
   Diluted                                                          $   .78      $   .71
                                                                    =======      =======
</TABLE>




                                  See accompanying notes.

                                       12
<PAGE>
<TABLE>
,CAPTION>
                                        TRI-COUNTY BANCORP, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                     For the years ended December 31, 1998 and 1997
                   
                                                                                        Unrealized Gain            
                                                             Comprehensive  Retained    on Securities      Common 
                                                   Total         Income     Earning    Available for Sale    Stock 
                                                -----------  ------------- ---------   ------------------  --------
<S>                                             <C>          <C>           <C>         <C>                 <C>      
Balance - January 1, 1997                       $13,145,564                $8,353,630           $ 239,619   $74,750
   Comprehensive income
    Net earnings                                    901,004      $ 901,004    901,004                   -         -
    Other comprehensive income, net of tax
      Unrealized gain on securities, net of
        reclassification                            577,857        577,857          -             577,857         -
                                                                 ---------
                      Comprehensive income                      $1,478,861
                                                                ==========
   Repayment of ESOP debt                            59,800                         -                   -         -
   Allocation of ESOP shares                         70,996                         -                   -         -
   Amortization  of  deferred compensation           58,900                         -                   -         -
   Dividends paid - cash                           (386,937)                 (386,937)                  -         -
   Two for one stock split effected as a                   
    stock dividend                                        -                   (74,750)                  -    74,750
   Treasury stock purchased                        (600,000)                        -                   -         -
                                                    -------                    ------             -------    ------
Balance - December 31, 1997                      13,827,184                 8,792,947             817,476   149,500
   Comprehensive income
   Net earnings                                     938,063      $ 938,063    938,063                   -         -
   Other comprehensive income, net of tax
    Unrealized gain on securities, net of
      reclassification adjustment                   289,225        289,225          -             289,225         -
                                                                   -------                                         
                      Comprehensive income                      $1,227,288
                                                                ========== 
   Repayment of ESOP debt                            59,800                         -                   -         -
   Allocation of ESOP shares                         94,395                         -                   -         -
   Amortization  of  deferred compensation           44,175                         -                   -         -
   Stock options exercised                          127,126                         -                   -     2,543
   Dividends paid - cash                           (470,268)                 (470,268)                  -         -
   Treasury stock purchased                      (4,489,033)                        -                   -         -
                                                  ---------                   -------          ----------  --------
Balance - December 31, 1998                      $10,420,667               $9,260,742          $1,106,701  $152,043
                                                 ===========               ==========          ==========  ========
</TABLE>
                                                 See accompanying notes.

                                       13
<PAGE>
<TABLE>
<CAPTION>
                                                 Additional                                  MSBP 
                                                  Paid-In     Treasury   Employee Stock    Unearned
                                                  Capital       Stock    Ownership Plan  Compensation
                                                 ----------  ----------  --------------  ------------
<S>                                              <C>        <C>          <C>             <C>   
Balance - January 1, 1997                        $7,029,604 $(2,045,314)     $(403,650)    $(103,075)
   Comprehensive income
    Net earnings                                          -           -              -             -
    Other comprehensive income, net of tax
      Unrealized gain on securities, net of
        reclassification                                  -           -              -             -

                      Comprehensive income

   Repayment of ESOP debt                                 -           -         59,800             -
   Allocation of ESOP shares                         70,996           -              -             -
   Amortization  of  deferred compensation                -           -              -        58,900
   Dividends paid - cash                                  -           -              -             -
   Two for one stock split effected as a                   
    stock dividend                                        -           -              -             -
   Treasury stock purchased                               -    (600,000)             -             -
                                                    -------    --------         ------       -------

Balance - December 31, 1997                       7,100,600  (2,645,314)      (343,850)      (44,175)
   Comprehensive income
   Net earnings                                           -           -              -             -
   Other comprehensive income, net of tax
    Unrealized gain on securities, net of
      reclassification adjustment                         -           -              -             -       

                      Comprehensive income 

   Repayment of ESOP debt                                 -           -         59,800             -
   Allocation of ESOP shares                         94,395           -              -             -
   Amortization  of  deferred compensation                -           -              -        44,175
   Stock options exercised                          124,583           -              -             -
   Dividends paid - cash                                  -           -              -             -
   Treasury stock purchased                               -  (4,489,033)             -             -
                                                 ---------- -----------       ---------         -----  
Balance - December 31, 1998                      $7,319,578 $(7,134,347)      $(284,050)        $  -
                                                 ========== ===========       =========         ===== 
</TABLE>
                                       
<PAGE>
<TABLE>
<CAPTION>
                    TRI-COUNTY BANCORP, INC. AND SUBSIDIARIES
                           
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                        Year ended December 31,
                                                                           1998        1997
                                                                        ----------  -----------
<S>                                                                     <C>         <C>
OPERATING ACTIVITIES
Net income                                                               $ 938,063    $ 901,004
Adjustments to reconcile net income to net cash provided by operations
   Depreciation and amortization                                           134,794       89,258
   Provision for deferred taxes                                            (23,000)     (47,000)
   (Gain) loss on sale of securities available for sale                    (80,940)      71,421
   Gain on sale of loans                                                   (65,085)     (35,420)
   FHLB stock dividends received                                          (128,500)    (106,400)
   Unvested forfeitable stock awarded                                       44,175       58,900
   Changes in assets and liabilities
    Origination of loans held for sale                                  (3,862,039)  (1,603,145)
    Proceeds from sale of loans held for sale                            3,608,514    1,611,454
    (Increase) decrease in accrued interest receivable                     205,322     (129,260)
    Other assets, net                                                      556,952     (652,080)
    Other liabilities, net                                                  70,254       76,061
                                                                            ------       ------
                                     Net Cash Provided By Operations     1,398,510      234,793
                                                                         ---------      -------
INVESTING ACTIVITIES
Net loan origination and principal repayments on loans                   4,594,499      697,364
Purchase of loans                                                       (6,210,552)  (5,869,928)
Activity in available for sale securities
   Sale proceeds                                                         3,129,251    5,227,850
   Maturities, prepayments and calls                                    18,164,932    3,321,899
   Purchases                                                           (12,906,090)  (7,765,700)
Activity in held to maturity securities
   Maturities, prepayments and calls                                     2,830,392    2,339,685
   Purchases                                                              (177,000)           -
Proceeds from sale of real estate owned                                     23,966       75,786
Investment in property, equipment and real estate owned                    (29,627)     (89,574)
                                                                           -------      -------
                    Net Cash Provided (Used) By Investing Activities    $9,419,771  $(2,062,618)
                                                                        ----------  ----------- 
</TABLE>
                            See accompanying notes.

                                       14

<PAGE>
<TABLE>
<CAPTION>
                                                                        Year ended December 31,
                                                                           1998        1997
                                                                        ----------  -----------
<S>                                                                     <C>         <C>
FINANCING ACTIVITIES
Net change in noninterest bearing demand, savings and NOW deposits      $2,158,365    $ 478,820
Net change in time deposits                                             (1,589,432)  (3,606,649)
Advances from Federal Home Loan Bank                                    12,500,000   53,218,250
Repayment of Federal Home Loan Bank advances                           (18,397,500) (46,982,125)
Net change in advances by borrowers for taxes and insurance                  8,901       (3,121)
Dividends paid                                                            (470,268)    (386,937)
Exercise of stock options                                                  127,126            -
ESOP payments received                                                      59,800       59,800
Purchase of treasury stock                                              (4,489,033)    (600,000)
                                                                        ----------     --------
                    Net Cash Provided (Used) by Financing Activities   (10,092,041)   2,178,038
                                                                       -----------    ---------
                               Increase in Cash and Cash Equivalents       726,240      350,213
Cash and cash equivalents - beginning of period                          2,638,805    2,288,592
                                                                         ---------    ---------
Cash and cash equivalents - end of period                               $3,365,045   $2,638,805
                                                                        ==========   ==========

Cash and due from banks                                                  $ 385,804    $ 588,114
Interest-bearing deposits with banks                                     2,979,241    2,050,691
                                                                         ---------    ---------
                                                                        $3,365,045   $2,638,805
                                                                        ==========   ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid for:
    Income taxes                                                         $ 438,600    $ 367,300
                                                                         =========    =========
    Interest expense                                                    $3,565,230   $3,729,293
                                                                        ==========   ==========
   Noncash transactions
    Loans transferred to real estate owned                               $  23,966    $  34,367
                                                                         =========    =========
</TABLE>
                            

                                       15

<PAGE>


                    TRI-COUNTY BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1998 and 1997


NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Tri-County Bancorp,  Inc. (Tri-County) is a bank holding company organized under
Wyoming  law in 1993 and  headquartered  in  Torrington,  Wyoming.  Through  its
subsidiaries,  Tri-County provides a variety of banking services to customers in
its primary market area of eastern Wyoming.

Basis of Presentation The consolidated financial statements include the accounts
of Tri-County,  its wholly-owned  subsidiaries,  Tri-County Federal Savings Bank
(the  Bank)  and  First  Tri-County   Services,   Inc.  The  investment  in  the
subsidiaries  is  accounted  for using the  equity  method  of  accounting.  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.  Certain prior period amounts have been  reclassified  to conform
with the current year's presentation.

The preparation of financial  statements in conformity  with generally  accepted
accounting   principles  (GAAP)  requires   management  to  make  estimates  and
assumptions  that  affect  amounts   reported  in  the  consolidated   financial
statements. Actual results could differ from those estimates.

Cash and Cash Equivalents For the purpose of reporting cash flows, cash and cash
equivalents   include  cash  on  hand,   demand   deposits  at  other  financial
institutions and overnight deposits.

Securities  Securities  that Tri-County has both the positive intent and ability
to hold to maturity  are  classified  as  securities  held to  maturity  and are
carried at amortized cost,  adjusted for amortization of premium or accretion of
discount  using  the  interest  method.  Securities  that  may be sold  prior to
maturity  for  asset/liability  management  purposes,  or  that  may be  sold in
response  to changes in  interest  rates,  to changes  in  prepayment  risk,  to
increase  regulatory  capital  or  other  similar  factors,  are  classified  as
securities  available for sale and carried at fair value with any adjustments to
fair value, after tax, reported as a separate component of stockholders' equity.
Declines in the fair value of individual held to maturity and available for sale
securities  below their cost that are other than temporary result in write-downs
of the individual  securities to their fair value.  The related  write-downs are
included  in  earnings  as realized  losses.  Securities  purchased  for trading
purposes are held in the trading  portfolio at fair value,  with changes in fair
value included in noninterest  income.  Tri-County had no trading  securities at
December 31, 1998 or 1997, or during the years then ended.

Interest and dividends on securities, including the amortization of premiums and
the accretion of discounts, are reported in interest and dividends on securities
using the  interest  method.  Gains and  losses  on the sale of  securities  are
recorded on the trade date and are calculated using the  specific-identification
method.


                                       16
<PAGE>
Federal Home Loan Bank Stock
The Bank,  as a member of the  Federal  Home Loan Bank  (FHLB),  is  required to
maintain an  investment in capital stock of the FHLB. No ready market exists for
the FHLB stock,  and it has no quoted market value. The stock is carried at cost
and is  assumed  to have a market  value  which is equal to cost.  The  stock is
included  in  securities  available  for sale in the  accompanying  consolidated
financial statements.

Mortgage Banking Operations
Mortgage  loans  originated  and intended for sale in the  secondary  market are
carried at the lower of cost or  estimated  market value in the  aggregate.  Net
unrealized losses are recognized in a valuation allowance by a charge to income.
The cost of loans held for sale at December 31, 1998 and 1997 approximated their
estimated market value.

In 1998 the Bank began  selling  certain loans to the Federal Home Loan Mortgage
Corporation  (FHLMC) with  servicing  retained.  The cost of mortgage  servicing
rights is  amortized  in  proportion  to, and over the period of  estimated  net
servicing  revenue.  Impairment of mortgage servicing rights is assessed at each
reporting  date  based  on the  fair  value of those  rights.  Fair  values  are
estimated  using  discounted cash flows based on a current market interest rate.
For purposes of measuring impairment, the rights are stratified by loan type and
interest  rate.  The  amount  of  impairment  recognized,  through  a  valuation
allowance,  is the amount by which the capitalized mortgage servicing rights for
a stratum exceed their fair value.

Loans
Loans that  management  has the intent and  ability to hold for the  foreseeable
future or until  maturity or pay-off  generally  are  reported at the  principal
amount outstanding,  net of deferred loan fees, discounts, and the allowance for
loan losses. Interest on loans is calculated by using the simple interest method
on the balance of the principal  amount  outstanding.  Interest  income on loans
receivable  is accrued as earned  based on the  principal  balance  outstanding.
Tri-County discontinues the accrual of interest when the related loan is 90 days
delinquent. Net direct loan origination costs/fees,  when material, are deferred
and amortized over the term of the loan as a yield adjustment.

The accrual of interest on impaired loans is discontinued  when, in management's
opinion,  the borrower may be unable to meet  payments as they become due.  When
interest accrual is discontinued,  all unpaid accrued interest is reversed.  For
impaired loans,  cash receipts are applied entirely against  principal until the
loan has been collected in full,  after which time any additional  cash receipts
are  recognized  as  interest  income.   Tri-County  had  no  significant  loans
considered impaired or on non-accrual status at December 31, 1998 or 1997.

Allowance for Loan Losses
The allowance  for loan losses  reflects  management's  judgment as to the level
considered  adequate to absorb  potential losses inherent in the loan portfolio.
This  judgment  is  based on a  review  of  individual  loans,  historical  loss
experience, economic conditions,  portfolio trends and other factors. Allowances
for impaired loans are generally  determined  based on collateral  values or the
present value of estimated cash flows.  The allowance is increased by provisions
charged to earnings and reduced by  charge-offs,  net of recoveries.  Changes in
the  allowance  relating  to  impaired  loans are  charged  or  credited  to the
provision for loan losses.  Because of uncertainties  inherent in the estimation
process,  management's  estimate of credit losses inherent in the loan portfolio
and the related allowance may change in the near term.

                                       17

<PAGE>
Property and Equipment
Property and equipment are recorded at cost.  Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets.

Impairment of Long-Lived Assets
Statement  of  Financial  Accounting  Standards  No.  121,  Accounting  for  the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of,
(SFAS 121)  establishes  accounting  standards  for  determining  and  measuring
impairment of certain long-lived assets. Under provision of SFAS 121, impairment
losses are recognized  when expected future cash flows are less than the asset's
carrying value. No assets were considered impaired at December 31, 1998 or 1997.

Other Real Estate
Other real estate,  acquired through partial or total  satisfaction of loans, is
included  in other  assets  and  carried at the lower of cost or fair value less
estimated  costs of  disposition.  At the date of  acquisition,  any  losses are
charged to the allowance for loan losses. Subsequent write-downs are included in
noninterest  expense.  Realized  losses from  disposition  of the  property  and
declines in fair value that are considered  permanent are charged to the reserve
for other real estate, as applicable.

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

Stock Options
SFAS No.  123,  Accounting  for  Stock-Based  Compensation  (SFAS 123) allows an
entity to choose to compute  compensation expense related to stock options using
a fair value  method or  continue  to use the  intrinsic  value  method.  If the
intrinsic  value method is chosen,  then  Tri-County will be required to present
pro forma data for all awards granted in future fiscal years.  If the fair value
method is selected, SFAS 123 would be effective.

Tri-County   had  no  stock   option   transactions   that  would   require  the
implementation  of SFAS 123 in the years ended December 31, 1998 and 1997. It is
currently  anticipated  that Tri-County will continue to account for stock-based
compensation plans under the intrinsic value method.  Final determination of the
method selected will be done in the year Tri-County has transactions  covered by
this accounting pronouncement.

Earnings Per Share
Earnings per share are calculated in accordance with SFAS No. 128,  Earnings per
Share.  Basic  earnings  per share is the  amount  of  earnings  for the  period
available to each share of common stock outstanding during the reporting period.
Diluted earnings per share is the amount of earnings  available to each share of
common stock outstanding  during the reporting period adjusted for the potential
issuance of common shares for stock options.

                                       18

<PAGE>
The  calculation  of basic and  diluted  earnings  per share for the years ended
December 31 is as follows:
                                                             1998         1997
                                                             ----         ----
     Net income                                           $ 938,063    $ 901,004
                                                          =========    =========

     Average common shares outstanding                    1,127,425    1,194,347
     Dilutive effect of stock options                        74,227       79,678
                                                             ------       ------
                                                         $1,201,652   $1,274,025
                                                         ==========   ==========
     Earnings per share
        Basic                                               $   .83      $   .75
        Diluted                                             $   .78      $   .71

Average common shares  outstanding and the dilutive effect of stock options have
been adjusted for Tri-County's December 8, 1997 two-for-one stock split effected
as a dividend.

New Accounting Standards
In October 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133,  Accounting for Derivative  Instruments  and Hedging  Activities.  SFAS 133
establishes  accounting  and  reporting  standards for  derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging activities.  SFAS 133 is effective for fiscal years beginning after June
15, 1999.

In  November  1998,  FASB  issued  SFAS  134,   Accounting  for  Mortgage-Backed
Securities  Retained after the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking  Enterprise.  SFAS 134 is an amendment to SFAS 65, Accounting
for Certain Mortgage Banking Activities,  and conforms the subsequent accounting
for securities retained after the securitization of mortgage loans by a mortgage
banking enterprise with the subsequent  accounting for securities retained after
the securitization of other types of assets by a nonmortgage banking enterprise.

The  adoption of SFAS 133 and 134 is not  expected to have a material  effect on
Tri-County's financial statements.


NOTE 2 -   SECURITIES
<TABLE>
<CAPTION> 
                                                  
                                                         Amortized  Unrealized Unrealized    Fair
     Securities Available for Sale                          Cost        Gains     Losses     Value
                                                        ----------- ---------- ---------- -----------
<S>                                                     <C>         <C>        <C>        <C>       
        December 31, 1998
        -----------------
        Debt Securities
          U.S. Agency securities                        $ 5,497,441  $ 104,134       $ -  $ 5,601,575
          U.S. Agency mortgage-backed securities         15,803,325     70,322    (5,140)  15,868,507
                                                         ----------     ------    ------   ----------
                                  Total Debt Securities  21,300,766    174,456    (5,140)  21,470,082
                                                         ----------    -------    ------   ----------
        Equity Securities
          FHLMC stock                                        23,459  1,520,335         -    1,543,794
          Mutual funds
            ARM portfolio                                 1,036,085        505    (5,305)   1,031,285
            Mortgage securities performance portfolio     2,936,437          -    (8,032)   2,928,405
          FHLB stock                                      1,753,900          -         -    1,753,900
                                                          ---------      -----     -----    ---------
                                Total Equity Securities   5,749,881  1,520,840   (13,337)   7,257,384
                                                          ---------  ---------   -------    ---------
                                                        $27,050,647 $1,695,296  $(18,477) $28,727,466
                                                        =========== ==========  ========  ===========
</TABLE>
                                       19

<PAGE>
<TABLE>
<CAPTION>
                                                         Amortized  Unrealized Unrealized    Fair
     Securities Available for Sale                          Cost        Gains     Losses     Value
                                                        ----------- ---------- ---------- -----------
<S>                                                     <C>         <C>        <C>        <C>      
        December 31, 1997
        -----------------
        Debt Securities
          U.S. Agency securities                        $13,496,353  $ 108,732 $ (20,000) $13,585,085
          U.S. Agency mortgage-backed securities         13,621,365    190,988   (23,240)  13,789,113
                                                         ----------    -------   -------   ----------
                                  Total Debt Securities  27,117,718    299,720   (43,240)  27,374,198
                                                         ----------    -------   -------   ----------
        Equity Securities
          FHLMC stock                                        25,662  1,073,436         -    1,099,098
          Mutual funds
            ARM portfolio                                   536,085          -    (2,095)     533,990
            Mortgage securities performance portfolio     5,982,545          -   (89,219)   5,893,326
          FHLB stock                                      1,625,400          -         -    1,625,400
                                                          ---------   --------  --------    ---------
                                Total Equity Securities   8,169,692  1,073,436   (91,314)   9,151,814
                                                          ---------  ---------   -------    ---------
                                                        $35,287,410 $1,373,156 $(134,554) $36,526,012
                                                        =========== ========== =========  ===========
     Securities Held to Maturity
        December 31, 1998
        -----------------
        U.S. Agency securities                            $ 501,286    $13,089       $ -    $ 514,375
        State and other political subdivisions              175,949          -         -      175,949
        U.S. Agency mortgage-backed securities            4,658,465    125,433         -    4,783,898
                                                          ---------    -------    -------   ---------
                                                         $5,335,700   $138,522       $ -   $5,474,222
                                                         ==========   ========    =======  ==========
        December 31, 1997
        -----------------
        U.S. Agency securities                            $ 503,321    $18,394       $ -    $ 521,715
        U.S. Agency mortgage-backed securities            7,483,929    264,543    (9,196)   7,739,276
                                                          ---------    -------    ------    ---------
                                                         $7,987,250   $282,937   $(9,196)  $8,260,991
                                                         ==========   ========   =======   ==========
</TABLE>  
The  amortized  cost and fair value of debt  securities at December 31, 1998, by
contractual  maturity,  are shown below.  Expected  maturities  will differ from
contractual  maturities  because  borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>                                              
                                                           Held to Maturity      Available for Sale
                                                         --------------------- -----------------------
                                                         Amortized    Fair      Amortized     Fair
                                                            Cost      Value       Cost        Value
                                                         ---------- ---------- ----------- -----------
   
<S>                                                      <C>        <C>        <C>         <C>       
     Due in one year or less                              $ 501,286  $ 514,375       $   -       $   -
     Due after one year through five years                        -          -   2,500,000   2,540,535
     Due after five years through ten years                  75,000     75,000   2,997,441   3,061,040
     Due after ten years                                    100,949    100,949           -           -
                                                            -------    -------       -----       -----
                                                            677,235    690,324   5,497,441   5,601,575

     Mortgage-backed securities                           4,658,465  4,783,898  15,803,325  15,868,507
                                                          ---------  ---------  ----------  ----------
                                                         $5,335,700 $5,474,222 $21,300,766 $21,470,082
                                                         ========== ========== =========== ===========
</TABLE>
                                       20
    
<PAGE>
Sales of  securities  available  for sale  during the years  ended  December  31
follows:
                                         Proceeds   Gross Gains   Gross Losses
                                         --------   -----------   ------------
     1998                              $3,129,251      $127,048      $(46,108)
     1997                              $5,227,850       $ 1,173      $(72,594)
   
Tri-County  pledges  investments  for public deposits held in excess of $100,000
(see Note 5).  The  carrying  and fair  values  of the  pledged  investments  at
December 31 follows:
                                                     Carrying          Fair
                                                       Value           Value
                                                    -----------     ----------
     1998                                            $9,769,442     $9,830,029
     1997                                            $9,085,820     $9,119,775


NOTE 3 -   LOANS RECEIVABLE

                                                          December 31,
                                                       1998           1997
                                                   ------------  -------------
     Real estate - mortgage                         $32,403,370    $31,395,063
     Real estate - commercial                         6,141,006      4,623,723
     Real estate - construction                         237,402      1,537,295
     Commercial                                         449,949        472,418
     Installment loans to individuals                 3,310,068      2,911,036
                                                      ---------      ---------
                                                     42,541,795     40,939,535
     Less:
        Allowance for loan losses                       409,984)      (412,456)
        Deferred loan fees                              (77,589)      (101,789)
                                                        -------       -------- 
                                                    $42,054,222    $40,425,290
                                                    ===========    ===========
  
A summary of the changes in the allowance for loan losses is as follows:
  
                                                    Year Ended December 31,
                                                       1998           1997
                                                    -----------   ------------
     Beginning of the period                           $412,456       $415,447
     Provision for losses                                     -              -
     Loan charge-offs                                    (2,738)        (3,637)
     Recoveries                                             266            646
                                                            ---            ---
                                                       $409,984       $412,456
                                                       ========       ========
   
Loans  serviced  by  Tri-County  for the  benefit of others at  December 31 were
approximately $586,000 (1998) and $164,000 (1997).

                                       21

<PAGE>
NOTE 4 -   PROPERTY AND EQUIPMENT 
                                                            December 31,
                                                       1998            1997
                                                    -----------    -----------
   
     Land                                              $ 65,776       $ 65,776
     Building and improvements                        1,115,984      1,102,357
     Furniture, fixtures and equipment                  614,764        598,764
                                                        -------        -------
                                                      1,796,524      1,766,897
     Less accumulated depreciation                     (995,383)      (880,018)
                                                       --------       -------- 
                                                      $ 801,141      $ 886,879
                                                      =========      =========
                             
Depreciation  expense for the years ended  December 31 was  $115,365  (1998) and
$124,426 (1997).


NOTE 5 -   DEPOSITS

At December 31, 1998,  scheduled  maturities of  certificates of deposit were as
follows:
  
     Year
     ----
     1999                                                          $23,759,940
     2000                                                            4,548,066
     2001                                                            1,975,997
     2002                                                              486,261
                                                                       -------
                                                            Total  $30,770,264
                                                                   ===========
  
The  Federal  Deposit  Insurance  Corporation  (FDIC),  an  agency  of the  U.S.
Government,  insures all depositors up to $100,000 in accordance  with the rules
and regulations of the FDIC.  Deposits in excess of $100,000 at December 31 were
$5,200,407 (1998) and $5,207,027 (1997) (see Note 2).


NOTE 6 -   ADVANCES FROM FEDERAL HOME LOAN BANK

Advances from the FHLB at December 31 were  $23,799,117  (1998) and  $29,696,617
(1997). The following table summarizes the maturities of the FHLB advances:
    
     Year
     1999                                            5.92% - 6.07%  $5,168,250
     2000                                            4.71% - 6.08%   2,800,000
     2001                                            4.65% - 5.83%   4,000,000
     2002                                            5.39% - 5.62%   8,000,000
     2003                                            4.88% - 5.10%   3,000,000
     2016                                                    5.96%     830,867
                                                                    ----------  
                                                                   $23,799,117
                                                                   ===========
   
Pursuant to a blanket  pledge  agreement with the FHLB, the advances are secured
by the FHLB stock, real estate loans and other securities not otherwise pledged.

                                       22

<PAGE>
NOTE 7 -   INCOME TAXES

The provisions for federal income taxes are as follows:

                                                      Year ended December 31,
                                                       1998           1997
                                                    -----------    -----------
     Current                                           $438,614       $372,462
     Deferred                                           (23,000)       (47,000)
                                                        -------        ------- 
                                                       $415,614       $325,462
                                                       ========       ========
  
Deferred  income taxes and benefits  are  provided  for  significant  income and
expense  items  recognized in different  years for tax and  financial  reporting
purposes.  Temporary  differences  which give rise to  significant  deferred tax
assets (liabilities) follow:
 
                                                           December 31,  
                                                        1998          1997
                                                    -----------    -----------
     Joint Venture income                              $ 32,000       $ 20,000
     Loan origination fees                                4,000          5,000
     Bad debt reserve                                   139,000         88,000
     Net unrealized loss on available for sale        
        securities                                        4,300              -
     Less: valuation allowance                                -              -
                                                         ------         ------
                         Total Deferred Assets          179,300        113,000
                                                        -------        -------
     Federal Home Loan Bank stock dividends            (366,900)      (323,000)
     Net unrealized gain on available for sale
        securities                                     (574,482)      (421,125)
     Accelerated depreciation                           (25,037)       (30,000)
                                                        -------        ------- 
                     Total Deferred Liabilities        (966,419)      (774,125)
                                                       --------       -------- 
                       Net Deferred Liabilities       $(787,119)     $(661,125)
                                                      =========      ========= 
   
Total income tax expense differed from the amounts computed by applying the U.S.
federal  income tax rate of 34 percent in 1998 and 1997 to income  before income
taxes as a result of the following:
                                                     Year ended December 31,
                                                       1998            1997
                                                    -----------    -----------
     Normal "expected" corporate taxes                 $460,250       $417,000
     Change in tax provision resulting from
        Income tax refunds                              (15,500)       (62,690)
        Other                                           (29,136)       (28,848)
                                                        -------        ------- 
                                                       $415,614       $325,462
                                                       ========       ========
   
Tri-County and its subsidiaries file a consolidated income tax return. Excess of
bad debt reserves for income tax purposes over book  provisions  for the Bank at
December  31,  1998  were  approximately  $1,400,000.  No  deferred  income  tax
liability  has been provided for these  reserves.  If such reserves are used for
purposes  other than to absorb the Bank's bad debts,  the amount used is subject
to the then current federal corporate tax rates. Tri-County and its subsidiaries
are not subject to state income taxes.

                                       23

<PAGE>
NOTE 8 -   RELATED PARTY TRANSACTIONS

Tri-County  has  had,  and may be  expected  to have  in the  future,  financial
transactions  in the  ordinary  course of  business  with  directors,  principal
officers,  their immediate  families and affiliated  companies in which they are
principal  stockholders  (commonly referred to as related parties), all of which
have been made in compliance with federal regulations.

Activity  in loans to related  parties  for the years  ended  December  31 is as
follows:
                                                        1998           1997
                                                    -----------    -----------
     Balance, beginning of year                        $147,593       $209,739
        New loans                                        91,420         10,300
        Repayments                                      (79,519)       (72,446)
                                                        -------        ------- 
     Balance, end of year                              $159,494       $147,593
                                                       ========       ========
                                                   
Terms and rates of interest on deposit  accounts of  directors  and officers are
substantially the same as those extended to unrelated Tri-County  customers.  At
December 31 deposits of related  parties  totaled  $436,815  (1998) and $458,941
(1997).


NOTE 9 -   EMPLOYEE RETIREMENT PLAN

Tri-County  sponsors  a 401(k)  plan  where  Tri-County  matches up to 3% of the
employees qualifying  compensation.  Employees may contribute up to 12% of their
qualifying  compensation.  Tri-County's  expense was $18,489  (1998) and $17,054
(1997).


NOTE 10 -  STOCK REPURCHASE PLAN

On October 16, 1998,  the Board of Directors  of  Tri-County  authorized a stock
repurchase  plan (the Plan).  The Plan  provided  for the purchase of up to $4.5
million (including  expenses) of the shares of its common stock, $0.10 par value
(the  Shares)  for cash.  On  December  9, 1998,  the Plan  culminated  with the
purchase of 314,125 shares at $14 per share. Including expenses,  $4,489,033 was
recorded in the accompanying  consolidated  statement of stockholders' equity as
an addition to Treasury Stock.


NOTE 11 -  STOCK BENEFIT PLANS

Stock Option Plan
Tri-County  adopted a stock option plan (Option  Plan)  whereby stock options of
149,500  common  shares may be granted to  directors  and  officers of the Bank.
Options  granted  under the Option Plan may be either  options  that  qualify as
Incentive  Stock Options as defined in Section 422 of the Internal  Revenue Code
of 1986, as amended, or options that do not qualify. In the event of a change in
control, as defined, all options are immediately exercisable.

On September 28, 1993,  qualified stock options were granted for the purchase of
143,522  shares  exercisable  at the market price at the date of grant of $5 per
share.  All  options  expire ten years from the date of the grant.  The  options
vested over a 5 year period.

                                       24

<PAGE>
A summary of Tri-County's Option Plan as of December 31 follows:
<TABLE>
<CAPTION>
                                              
                                                       1998                  1997 
                                              --------------------------------------------
                                                          Exercise                Exercise                  
                                              Shares        Price      Shares       Price
                                              -------     --------     -------    --------
<S>                                           <C>         <C>          <C>        <C>      
Outstanding, beginning of the year            143,522        $5.00     143,522       $5.00
Granted                                             -                        -
Exercised                                      25,425        $5.00           -
Canceled                                            -                        -
                                              -------                  -------
Outstanding, end of the year                  118,097        $5.00     143,522       $5.00
                                              =======        =====     =======       =====
Options exercisable at the end year           118,097        $5.00     138,138       $5.00
                                              =======        =====     =======       =====
</TABLE>   
Employee Stock Ownership Plan
Tri-County  sponsors an employee stock ownership plan (ESOP).  Tri-County issued
stock for a note receivable from the ESOP, which is  unconditionally  guaranteed
by the Bank. The note is at prime (determined at the beginning of each quarter),
payable  quarterly  through  2003.  The ESOP's loan payments are provided by the
Bank's contributions to the ESOP and dividends on Tri-County's stock held by the
ESOP's Trustee.

Since the Bank  guarantees  the note, the receivable is reflected as a reduction
of stockholders' equity in the consolidated financial statements. At December 31
the balance was $284,050 (1998) and $343,850 (1997).

The ESOP covers  substantially all employees.  The Bank's ESOP contributions are
based  on  the  note's  scheduled  principal  and  interest  payments,   net  of
Tri-County's  cash  dividends  paid to the ESOP. The released stock is allocated
based upon the ratio of each participating  employee's eligible  compensation to
total  eligible  compensation.  The shares held by the ESOP are  released in the
proportion each year's principal  payment bears to the total principal  payments
due. This is currently scheduled at 11,960 shares per year.

The Bank's ESOP  contributions are recorded as compensation  expense and totaled
$133,524  (1998) and $126,553  (1997).  Dividends  used to satisfy note payments
were $50,663 (1998) and $38,292  (1997).  As of December 31 the ESOP held 55,030
(1998) and 66,990 (1997) unallocated  shares. The unallocated shares' fair value
at December 31 (based on NASDAQ) was $682,372 (1998) and $913,744 (1997).

Management Stock Bonus Plan
Tri-County  and the Bank adopted a management  stock bonus plan (MSBP) to enable
the  Bank to  attract  and  retain  experienced  and  capable  personnel  in key
positions of  responsibility.  A total of 59,800 shares of restricted stock were
awarded on September 28, 1993,  the  conversion  date, in the form of restricted
stock payable over a five-year vesting period, at 20 percent per year, beginning
September 28, 1994. Tri-County recognized  compensation expense in the amount of
the fair market  value of the common  stock at the grant date,  prorata over the
years during which the shares were payable. The unvested shares were entitled to
all  voting  and  other  stockholder  rights,  except  that  the  shares,  while
restricted,  cannot be sold,  pledged or otherwise disposed of, and are required
to be held in escrow.

Through December 31, 1997, unamortized deferred compensation related to the MSBP
is deducted from stockholders'  equity. As of December 31, 1998, all MSBP shares
were distributed and all deferred compensation expense recognized.

                                       25

<PAGE>
NOTE 12 -  REGULATORY CAPITAL

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies.  Failure to meet minimum capital  requirements can
initiate  certain  mandatory and possibly  additional  discretionary  actions by
regulators. These actions, if undertaken, could have a direct material effect on
the Bank's  financial  statements.  Under capital  adequacy  guidelines  and the
regulatory  framework  for prompt  corrective  action,  banks must meet specific
capital  guidelines  that involve  quantitative  measures of the Bank's  assets,
liabilities,  and certain off-balance sheet items as calculated under regulatory
accounting  practices.  Bank's  capital  amounts  and  classifications  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 banks to maintain minimum amounts and ratios of total and Tier 1 capital
(as defined in the regulations) to risk-weighted assets (as defined). Management
believes  that,  as of December  31, 1998,  the Bank meets all capital  adequacy
requirements to which it is subject.

As of December 31, 1998, the most recent notification from applicable regulatory
agencies  categorize  the Bank as adequately  capitalized  under the  regulatory
framework  for  prompt  corrective  action.  To  be  categorized  as  adequately
capitalized, the Bank must maintain minimum ratios as set forth in the following
table (amounts in thousands):
                                                                         
                                                                           
                                                                      
<TABLE>                                                                  
<CAPTION>
                                                          
                                                                                      To Be Well
                                                                                   Capitalized Under
                                                                For Capital        Prompt Corrective                
                                                 Actual       Adequacy Purposes    Action Provisions
                                            ---------------   -----------------    -----------------
                                            Dollars   Ratio    Dollars   Ratio      Dollars   Ratio
                                            -------   -----    -------   -----      -------   -----
<S>                                         <C>       <C>      <C>       <C>        <C>       <C>
December 31, 1998
Total Capital (to risk-weighted assets)      $8,717   25.1%     $2,783    8.0%       $3,479    10.0%
Tier 1 Capital (to risk-weighted assets)     $8,307   23.9%     $1,392    4.0%       $2,087     6.0%
Tier 1 Capital (to total adjusted assets)    $8,307   10.4%     $3,195    4.0%       $3,993     5.0%
                
December 31, 1997
Total Capital (to risk-weighted assets)     $12,185   34.0%     $2,784    8.0%       $3,480    10.0%
Tier 1 Capital (to risk-weighted assets)    $11,842   34.0%     $1,392    4.0%       $2,088     6.0%
Tier 1 Capital (to adjusted total assets)   $11,842   13.3%     $2,664    4.0%       $4,438     5.0%
            total assets)
</TABLE>      

NOTE 13 -  CONCENTRATION OF CREDIT RISK

In the normal course of business,  Tri-County  enters into commitments to extend
credit with off-balance-sheet risk to meet the financing needs of its customers.
Commitments  to extend  credit are  agreements  to lend to a customer as long as
there  is  no  violation  of  any  condition   established  in  the  commitment.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. As some  commitments  normally expire without
being drawn upon, the total  commitment  amount does not  necessarily  represent
future cash requirements.

                                       26

<PAGE>
Tri-County  evaluates each customer's credit worthiness on a case-by-case basis,
using the same credit policies in making commitments and conditional obligations
as it does for on-balance-sheet  instruments.  The amount and type of collateral
obtained,  if deemed necessary by Tri-County upon extension of credit,  is based
upon management's  credit  evaluation.  Tri-County's  underwriting  policies for
mortgage  loans  generally  require  a  maximum  loan-to-value  of 80% for owner
occupied  residential  loans and 75% on non-owner  occupied  one-to-four  family
loans. Owner occupied  residential loans in excess of 80% are generally required
to obtain private mortgage insurance.

Tri-County had the following commitments at December 31, 1998:
             
     Loan commitments                                     $994,350
     Lines of credit                                      $632,850
     Available overdraft protection                       $171,600
 
The loan commitments  ($476,850 fixed rate and $517,500  adjustable rate) are at
interest rates ranging from 6.5% to 8.0%.

Tri-County's loan commitments  include  commitments to purchase loans in western
Colorado  ($517,500)  as well as  commitments  to extend  credit to customers in
Tri-County's market area. The market area primarily consists of eastern Wyoming.
Agriculture  and related  support  industries  are a  significant  factor in the
primary market area's economy.

The loans purchased in Colorado,  through a mortgage banking  relationship,  are
located in  various  resort  areas and  comprise  approximately  35% of the loan
portfolio.


NOTE 14 -  CONTINGENCIES

Self-Insured Health Plan
The Bank sponsors a self-insured  health plan for eligible  employees.  The Plan
provides  for  payment by the Bank of health  claims up to $3,000  per  eligible
employee,  with  reinsurance  coverage for all claims  greater  than $3,000.  An
estimate of claims  incurred but not reported and claims reported but not funded
is included in accounts payable at December 31, 1998 and 1997.

Year 2000 Compliance
The year 2000 problem  exists  because many computer  programs use only the last
two  digits to refer to a year.  This  convention  could  affect  date-sensitive
calculations  that treat "00" as the year 1900 rather than 2000.  An  additional
issue is that 1900 was not a leap  year,  whereas  the year 2000 is.  Therefore,
some programs may not properly provide for February 29, 2000. This anomaly could
result in miscalculations  when processing critical  date-sensitive  information
after December 31, 1999.

                                       27

<PAGE>
The  following  discussion  of the  implications  of the year 2000  problem  for
Tri-County  contains  numerous  forward-looking  statements  based on inherently
uncertain information.  The cost of the project and the date on which Tri-County
plans to complete the internal year 2000 modifications are based on management's
best estimates,  which were derived  utilizing a number of assumptions of future
events including the continued  availability of internal and external resources,
third party modifications and other factors.  However, there can be no guarantee
that these estimates will be achieved and actual results could differ. Moreover,
although management believes it will be able to make the necessary modifications
in advance,  there can be no guarantee  that failure to modify the systems would
not have a material adverse affect on Tri-County.

In  addition,  Tri-County  places a high  degree of  reliance on its third party
processor  and  computer  systems  of  other  financial  institutions.  Although
Tri-County  is  assessing  the  readiness of these other  parties and  preparing
contingency  plans,  there can be no  guarantee  that the failure of these other
parties to modify their systems in advance of December 31, 1999 would not have a
material adverse affect on Tri-County.

During  1998,  Tri-County  adopted  a Year  2000  Action  Plan  (the  Plan)  and
established a Year 2000  Committee (the  Committee).  The objectives of the Plan
and  the  Committee  are to  prepare  Tri-County  for  the  new  millennium.  As
recommended by the Federal Financial  Institutions  Examination Council (FFIEC),
the Plan encompasses the following phases:  Awareness,  Assessment,  Renovation,
Validation and  Implementation.  These phases will enable Tri-County to identify
risks,   develop  an  action  plan,   perform   adequate  testing  and  complete
certification that its processing systems will be year 2000 ready.  Execution of
the Plan is on target.  Tri-County is currently in the Renovation and Validation
phases, which include program changes, hardware and software upgrades and system
replacements, if necessary.  Concurrently,  Tri-County is addressing some issues
related to the subsequent phases.

Prioritization of the most critical applications has been addressed,  along with
contract and service  agreements.  The primary operating software for Tri-County
is obtained and maintained by an external  service center (the Service  Center).
The Service Center has completed its  Renovation  phase and is in the Validation
phase.  Tri-County  successfully  completed extensive  validation testing of the
Service Center's  renovated  system in September 1998.  Tri-County has contacted
all other  major  vendors  and  suppliers  regarding  their  year 2000  state of
readiness.  Each of these  third  parties has  delivered  written  assurance  to
Tri-County  that they expect to be year 2000  compliant  prior to the year 2000.
These  third  parties  also  supply,  at least  quarterly,  an  update  of their
progress.  Tri-County has contacted all material  customers and  non-information
technology  suppliers  (i.e.  utility  systems,  telephone  systems and security
systems) regarding their year 2000 state of readiness.

Tri-County  is  unable  to test  the  Year  2000  readiness  of its  significant
suppliers  of  utilities,  and is relying  on the  utility  companies'  internal
testing and representations to provide the required services that drive its data
systems.

As a practical  matter,  individual  mortgage  loan,  consumer  loan and smaller
commercial  loan  customers  were  not  contacted   regarding  their  Year  2000
readiness.  It was  deemed  to be  beyond  the  scope  of  Tri-County's  testing
parameters to contact these  borrowers.  Further,  most of these are individuals
with adequate collateral for their loans.

                                       28

<PAGE>
The  Renovation  phase is  targeted  for  completion  by  March  31,  1999.  The
Validation  phase,  which involves  testing of changes to hardware and software,
accompanied by monitoring  and testing with vendors,  is targeted for completion
by June 30, 1999.  The  Implementation  phase,  to certify that systems are year
2000 ready and to assure any new systems are compliant on a going-forward basis,
is targeted for completion by September 30, 1999.

Costs  will  be  incurred  to  replace  noncompliant   computers  and  software.
Tri-County  does not anticipate  that the related overall costs will be material
in  any  single  year.  Tri-County  estimated  its  cost  for  compliance  to be
approximately  $25,000  over the three year period  from 1998 to 2000,  of which
none was incurred as of December 31, 1998.  Tri-County does not separately track
the internal personnel costs incurred for the year 2000 compliance.

No assurance  can be given that the Plan will be completed  successfully  by the
year 2000,  in which event  Tri-County  could incur  significant  costs.  If the
Service  Center is unable to resolve the potential  problem in time,  Tri-County
would  likely  experience  significant  data  processing  delays,   mistakes  or
failures.  These delays,  mistakes or failures could have a significant  adverse
impact on the consolidated financial statements of Tri-County.

The FFIEC has provided  guidelines for  establishing a Contingency  Plan for all
possible  year  2000  failures.   Tri-County  began   formulating  a  Year  2000
Contingency  Plan in 1998. The objective of the  Contingency  Plan is to prepare
for any year 2000 failure that could result from internal software and hardware,
the Service Center, and/or third parties (utilities,  telephone,  suppliers, and
other  banks).  The  Contingency  Plan  is  updated  continually  based  on  new
information from third parties and other vendors on their year 2000 conversions.

Tri-County will attempt to monitor these  uncertainties by continuing to request
an update on all critical and  important  vendors  throughout  the  remainder of
1999. If Tri-County  identifies any concern related to any critical or important
vendor,  the  contingency  plans  will  be  implemented  immediately  to  assure
continued service to its customers.

Other
In the normal  course of  business,  Tri-County  is  involved  in various  legal
actions  arising from its lending and collection  activities.  In the opinion of
management, the outcome of these legal actions will not significantly affect the
consolidated financial position of Tri-County.


NOTE 15 -  STOCKHOLDERS' EQUITY

In 1993,  Tri-County was formed when the Bank converted from a mutual to a stock
form of ownership.  A  "liquidation  account" was  established  that restricts a
portion of net worth for the benefit of deposit accounts at the Bank at the time
of the  conversion.  Eligible  account  holders who close their accounts cause a
corresponding reduction in the liquidation account. Except for the repurchase of
stock,  payment of dividends  and  complete  liquidation,  the  existence of the
account does not restrict the use of the Bank's net worth. At December 31, 1998,
the liquidation account was $1,538,019 as compared to $6,432,095 at inception.

Payment  of  dividends  to  Tri-County  by the Bank  are  subject  to the  above
restriction as well as various other regulatory restrictions and approvals.

                                       29

<PAGE>
NOTE 16 -   COMPREHENSIVE INCOME

Effective  January  1,  1998,   Tri-County   adopted  SFAS  No.  130,  Reporting
Comprehensive Income. SFAS 130 requires that an enterprise (a) classify items of
other  comprehensive  income by their  nature in a financial  statement  and (b)
display the accumulated  balance of other  comprehensive  income separately from
retained  earnings and  additional  paid-in  capital in the equity  section of a
statement of financial condition.  Tri-County's only item of other comprehensive
income is the unrealized gain (loss) on securities  available for sale, which is
reported net of tax effect.  The  following  schedule  reflects  the  unrealized
holding gains arising during the years ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>

                                                       Before-Tax Tax (Expense) Net-of-Tax
                                                         Amount     or Benefit    Amount
                                                         ------     ----------    ------
<S>                                                     <C>        <C>           <C>      
For the year ended December 31, 1998
Unrealized holding gains arising during the period      $519,159   $(176,514)    $342,645
Less reclassification adjustment for gains
     realized in  net earnings                           (80,940)     27,520      (53,420)
                                                         -------      ------      ------- 
                              Net Unrealized Gains      $438,219   $(148,994)    $289,225
                                                        ========   =========     ========
For the year ended December 31, 1997
Unrealized holding gains arising during the period      $804,120   $(273,401)    $530,719
Less  reclassification adjustment for losses
     realized in net earnings                             71,421     (24,283)      47,138
                                                          ------     -------       ------                  
                              Net Unrealized Gains      $875,541   $(297,684)    $577,857
                                                        ========   =========     ========
</TABLE>
   
NOTE 17 -   FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the amount at which a financial instrument could be exchanged in a
current  transaction  between  willing  parties,  other than in a forced sale or
liquidation, and is best evidenced by a quoted market price, if one exists.

Fair  value  estimates  are made as of a  specific  point  in time  based on the
characteristics  of the financial  instruments and relevant market  information.
Where available,  quoted market prices are used. In other cases, fair values are
based on estimates  using present  value or other  valuation  techniques.  These
techniques  involve   uncertainties  and  are  significantly   affected  by  the
assumptions  used and judgments made regarding risk  characteristics  of various
financial  instruments,  discount rates,  estimates of future cash flows, future
expected  loss  experience  and other  factors.  Changes  in  assumptions  could
significantly affect these estimates and the resulting fair values. Derived fair
value estimates  cannot be  substantiated  by comparison to independent  markets
and,  in  many  cases,  could  not  be  realized  in an  immediate  sale  of the
instrument.  Also,  because of differences in methodologies and assumptions used
to estimate  fair  values,  Tri-County's  fair values  should not be compared to
those of other financial institutions.

Fair  value  estimates  are  based on  existing  financial  instruments  without
attempting to estimate the value of anticipated future business and the value of
assets  and  liabilities   that  are  not  considered   financial   instruments.
Accordingly,  the  aggregate  fair value  amounts  presented  do not  purport to
represent the underlying market of Tri-County.

The  following  summary  presents  the  methodologies  and  assumptions  used to
estimate the fair value of Tri-County's financial instruments.

                                       30

<PAGE>
Assets for Which  Fair  Value  Approximates  Carrying  Value:  The fair value of
certain  financial  assets  carried at cost,  including cash and due from banks,
deposits  with  banks,  and  accrued  interest   receivable  are  considered  to
approximate their respective  carrying values due to their short-term nature and
negligible credit losses. In addition, as discussed in Note 1, Tri-County valued
loans held for sale at fair value.

Federal  Home Loan Bank Stock:  As  discussed  in Note 1, the stock's fair value
approximates carrying value due to the limited marketability.

Securities:  Held  to  maturity  securities  are  carried  at  amortized  costs.
Available for sale securities are carried at fair value.  Fair value of actively
traded securities is determined by the secondary market, while the fair value of
nonactively traded securities is based on independent broker quotations.

Loans:  Loans are  valued  using  methodologies  suitable  for each  loan  type.
Variable rate loans that reprice  frequently and have no  significant  change in
credit risk, fair value is assumed to approximate carrying amount. Fair value of
other loans is estimated using a discounted cash flow analysis based on interest
rates currently offered for similar loan products.

Liabilities for Which Fair Value Approximates  Carrying Value: The fair value of
accounts payable, accrued liabilities and accrued interest payable is considered
to approximate  their respective book values due to their short-term  nature. By
definition,  fair values of deposits with no stated  maturities,  such as demand
deposits,  savings and NOW accounts and money market deposit  accounts are equal
to the amounts payable on demand at the reporting date.

Time Deposits:  The fair value of time deposits is estimated by discounting cash
flows based on  contractual  maturities  at current  interest  rates offered for
similar products.

Long-Term Debt: The valuation of long-term debt with floating rates is estimated
to be the same as carrying value.  Fair value of long-term debt with fixed rates
is  estimated  based on quoted  market  prices for similar  issues,  or by using
current rates offered to Tri-County for debt of the same remaining maturity.

Unused  Commitments  and Lines of Credit:  Tri-County  has reviewed the unfunded
portion of commitments to extend credit as well as lines of credit and available
overdraft protection. The fair value of such financial instruments is considered
to equal the amounts payable on demand at the reporting date.

Following are the estimated fair values of Tri-County's financial instruments:
<TABLE>
<CAPTION>                                                        
                                                                    December 31, 1998        December 31, 1997
                                                                 ------------------------  ------------------------
                                                                   Carrying      Fair       Carrying      Fair
                                                                    Amount      Value        Amount       Value
                                                                 -----------  -----------  -----------  -----------
<S>                                                              <C>          <C>          <C>          <C>      
Financial assets
     Assets for which fair value approximates book value          $4,250,486   $4,250,486   $5,021,975   $5,021,975
     Securities                                                  $32,309,266  $32,448,838  $44,513,262  $44,787,003
     Loans                                                       $42,054,222  $42,667,077  $40,425,288  $41,149,803
Financial liabilities
     Liabilities for which fair value approximates book value    $15,660,721  $15,660,721  $14,077,029  $14,077,029
     Time deposits                                               $30,770,264  $30,892,273  $32,359,696  $32,436,396
     Long-term debt                                              $23,799,117  $23,862,484  $29,696,616  $29,573,248
Off-balance sheet commitments                                     $1,798,800   $1,798,800   $2,066,900   $2,066,900
</TABLE>


                                       31

<PAGE>
NOTE 18 -  PARENT COMPANY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                          CONDENSED PARENT COMPANY ONLY
                             STATEMENTS OF CONDITION
                                                                              December 31,
                                                                           1998         1997
                                                                      -----------  -----------
<S>                                                                   <C>          <C>       
Assets
     Cash                                                               $ 157,539    $ 250,308
     Investment in subsidiary                                           8,591,255   12,229,216
     Securities available for sale                                        530,780      533,990
     Other assets, net                                                     32,770       40,952
                                                                           ------       ------
                                                      Total Assets     $9,312,344  $13,054,466
                                                                       ==========  ===========
Liabilities and stockholders' equity
     Other liabilities                                                   $  1,879     $  1,965
     Stockholders' equity                                               9,310,465   13,052,501
                                                                        ---------   ----------
                        Total Liabilities and Stockholders' Equity     $9,312,344  $13,054,466
                                                                       ==========  ===========

                            STATEMENTS OF OPERATIONS
                                                                       Year ended December 31,
                                                                           1998         1997
                                                                      -----------  ----------- 
Revenue                                                                 
     Equity in earnings of subsidiary                                    $917,644     $911,272
     Other income                                                          57,285       82,734
Expense
     Operating expenses                                                   (52,416)    (118,002)
     Income tax benefit                                                    15,550       25,000
                                                                           ------       ------
                                                        Net Income       $938,063     $901,004
                                                                         ========     ========

                            STATEMENTS OF CASH FLOWS
                                                                       Year ended December 31,
                                                                           1998         1997
                                                                      -----------  -----------              
Operating activities                                    
     Net income                                                         $ 938,063     $901,004
     Adjustments to reconcile net income to net
        Earnings of subsidiary                                           (917,644)    (911,272)
        Amortization of organization expense                                  801        1,068
        Loss on sale of securities                                              -        1,751
        (Increase)decrease in other assets and accrued liabilities          8,386      (28,106)
                                                                            -----      ------- 
                 Net Cash Provided (Used)  by Operating Activities         29,606      (35,555)
                                                                           ------      ------- 
Ivesting activities
     Sale of securities available for sale                                      -      600,000
     Dividends received                                                 4,650,000            -
                                                                        ---------     --------        
                         Net Cash Provided by Investing Activities      4,650,000      600,000
                                                                        =========      =======
Financing activities
     Dividends paid                                                      (470,268)    (386,937)
     Stock options exercised                                              127,126            -
     ESOP payments received                                                59,800       59,800
     Treasury stock purchased                                          (4,489,033)    (600,000)
                                                                       ----------     --------
                             Net Cash Used by Financing Activities     (4,772,375)    (927,137)
                                                                       ----------     -------- 
                                              Net Decrease in Cash        (92,769)    (362,692)
Cash and cash equivalents - beginning of period                           250,308      613,000
                                                                          -------      -------
Cash and cash equivalents - end of period                               $ 157,539     $250,308
                                                                        =========     ========
</TABLE>
                                       32

                                     <PAGE>
                                    DIRECTORS
                           LARRY C. GODDARD, Chairman
              ROBERT L. SAVAGE, President & Chief Executive Officer
                             CARL F. RUPP, Secretary
                                 LANCE H. GRIGGS
                                 DAVID C. KELLAM
                                 WILLIAM J. RUEB


                                    AUDITORS
                           DALBY, WENDLAND & CO., P.C.
                          464 Main Street, P.O. Box 430
                         Grand Junction, Colorado 81502


LEGAL COUNSEL                      SPECIAL COUNSEL
JOHN MAIER                         MALIZIA, SPIDI, SLOANE & FISCH P.C.
110 West 22nd Avenue               1301 K Street, N.W., Suite 700 E
Torrington, Wyoming  82240         Washington, D.C.  20005

REGISTRAR  AND  STOCK  TRANSFER  AGENT
Inquiries regarding stock transfer,  registration,  lost certificates or changes
in name  and/or  address  should be  directed  to the stock  transfer  agent and
registrar in writing.

ATTN:  Investor Relations
AMERICAN SECURITIES TRANSFER, INCORPORATED 
938 Quail Street, Suite 101 
Lakewood, Colorado 80215-5513


MARKET MAKERS
As of December 31, 1998, the following firms were market makers in the Company's
shares:

Friedman, Billings, Ramsey & Co., Inc. - Washington D.C.
Keefe, Bruyette & Woods, Inc. - New York, New York


FORM 10-KSB
A copy of Form 10-KSB for the year ended December 31, 1998,  excluding exhibits,
as filed with the Securities and Exchange Commission,  will be furnished without
charge to stockholders upon request to the Secretary,  Tri-County Bancorp, Inc.,
P.O. Box 1057, Torrington, Wyoming 82240.

ANNUAL MEETING
The annual meeting of stockholders of Tri-County  Bancorp,  Inc. will be held at
3:00 p.m. on April 28, 1999 at Tri-County  Federal  Savings  Bank's main office,
2201 Main Street, Torrington, Wyoming.

                                       33

<PAGE>
MAIN OFFICE                             BRANCH OFFICE
2201 Main Street, P.O. Box 1057         957 Maple, P.O. Box 337
Torrington,  Wyoming 82240              Wheatland, Wyoming 82201
Telephone - (307) 532-2111              Telephone - (307) 322-9215
Fax - (307) 532-7631                    Fax - (307) 322-4080
Email - email@tricobank.com


                               EXECUTIVE OFFICERS

                                Robert L. Savage
                       President & Chief Executive Officer

                               Earl F. Warren, Jr.
                              Senior Vice President

                                Tommy A. Gardner
                    Vice President & Chief Financial Officer



                                      STAFF

              Roseanne L. Burnett, Vice President & Branch Manager
                       Jane E. Faber, Assistant Secretary
                        Richard R. Yates, Vice President
                                 Pam J. Heilbrun
                              Colleen M. Holtzclaw
                                 Nancy A. Martin
                                Brita F. Mehling
                                Michele L. Nation
                                Terri J. Pindell
                                Becky J. Shaffer
                                 Linda L. Smith
                                Darlene L. Sorge
                                Debra K. Stoeger
                               Lynette K. Strecker
                                 Diana R. Toner
                                 Scott L. Vasko
                                Mona Kay Williams

                                       34