UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB


               [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended September 30, 2004

                                       OR

               [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                                THE EXCHANGE ACT

                   For the transition period from ________ to ________


                         Commission file number: 0-25854


                               GFSB BANCORP, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its Charter)


Delaware                                                         04-2095007
-------------------------------                              -------------------
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)


221 West Aztec Avenue, Gallup, New Mexico                               87301
-----------------------------------------                             ----------
(Address of Principal Executive Offices)                              (Zip Code)


Issuer's Telephone Number, Including Area Code:           (505) 726-6500
                                                        ------------------

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

As of October 31, 2004, there were issued and outstanding 1,146,635 shares of
the registrant's Common Stock.

Transitional Small Business Disclosure format:
                      Yes                        No       X
                           -------------             ------------
<PAGE>
                               GFSB Bancorp, Inc.


                                      Index

<TABLE>
<CAPTION>
                                                                                                    Page No.
                                                                                                    --------

                                        PART I. FINANCIAL INFORMATION

<S>      <C>                                                                                          <C>
Item 1.    Condensed Consolidated Financial Statements:

           Condensed Consolidated Statements of Financial Condition
               September 30, 2004 and June 30, 2004                                                     3

           Condensed Consolidated Statements of Earnings and Comprehensive Earnings
               Three months ended September 30, 2004 and September 30, 2003                             4

           Condensed Consolidated Statements of Cash Flows
               Three months ended September 30, 2004 and September 30, 2003                             6

           Notes to Condensed Consolidated Financial Statements                                         8

Item 2.    Management's Discussion and Analysis or Plan of Operation                                    9

Item 3.    Controls and Procedures                                                                     13

                                          PART II. OTHER INFORMATION

Item 1.    Legal Proceedings                                                                           14

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                                 14

Item 3.    Defaults Upon Senior Securities                                                             14

Item 4.    Submission of Matters to a Vote of Security Holders                                         14

Item 5.    Other Information                                                                           14

Item 6.    Exhibits                                                                                    14

           Signatures                                                                                  16
</TABLE>










                                        2

<PAGE>
                               GFSB Bancorp, Inc.

            CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                               September 30,       June 30,
                                                                   2004             2004
                                                               -------------    -------------
                                                                (Unaudited)
                                     ASSETS

<S>                                                          <C>              <C>
Cash and due from banks                                        $   8,476,582    $   7,840,712
Interest-bearing deposits with banks                                 257,272          866,281
Available-for-sale investment securities                          29,779,522       30,518,828
Available-for-sale mortgage-backed securities                     28,707,069       30,680,195
Held-to-maturity investment securities                               398,999          398,999
Stock of Federal Home Loan Bank, at cost, restricted               3,944,900        4,409,200
Loans receivable, net, substantially pledged                     152,387,986      152,430,322
Loans held-for-sale                                                       --          411,400
Accrued interest and dividends receivable                            922,849          859,298
Premises and equipment                                             2,455,856        2,513,992
Other real estate and repossessed property                           280,082          437,211
Prepaid and other assets                                             214,239          445,847
Deferred tax asset                                                   103,018          275,125
                                                               -------------    -------------

        TOTAL ASSETS                                           $ 227,928,374    $ 232,087,410
                                                               =============    =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Transaction and NOW accounts                                   $  30,155,975    $  28,987,811
Savings and MMDA deposits                                         22,519,176       21,501,954
Time deposits                                                     83,725,941       83,369,991
Advances from Federal Home Loan Bank                              65,896,776       73,652,218
Other secured borrowings                                           4,771,582        4,814,763
Repurchase agreements                                                400,519          157,119
Accrued interest payable                                             483,867          460,520
Advances from borrowers for taxes and insurance                      580,148          499,998
Accounts payable and accrued liabilities                             352,845          369,595
Dividends declared and payable                                       140,895          140,895
                                                               -------------    -------------

        TOTAL LIABILITIES                                        209,027,724      213,954,864
                                                               -------------    -------------


COMMITMENTS AND CONTINGENCIES                                             --               --


STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value, 500,000
  shares authorized;  no shares issued or
  outstanding                                                             --               --
Common stock, $.10 par value, 1,500,000
  shares authorized;  1,146,645 issued and outstanding
  at September 30, 2004 and June 30, 2004                            114,665          114,665
Additional paid-in-capital                                         3,172,154        3,095,718
Unearned ESOP stock                                                  (43,743)         (68,048)
Retained earnings, substantially
  restricted                                                      14,773,392       14,440,118
Accumulated other comprehensive
earnings                                                             884,182          550,093
                                                               -------------    -------------

        TOTAL STOCKHOLDERS' EQUITY                                18,900,650       18,132,546
                                                               -------------    -------------

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 227,928,374    $ 232,087,410
                                                               =============    =============
</TABLE>

See notes to condensed consolidated financial statements.





                                        3

<PAGE>
                               GFSB Bancorp, Inc.

                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                           AND COMPREHENSIVE EARNINGS

                                                         Three months ended
                                                            September 30,
                                                    ---------------------------
                                                       2004            2003
                                                    ---------------------------
                                                    (Unaudited)     (Unaudited)
Interest income
   Loans receivable
      Mortgage loans                                $1,989,119       $2,045,024
      Commercial loans                                 390,301          328,838
      Share and consumer loans                         104,454          108,569
   Investment and mortgage-backed securities           471,339          499,202
   Other interest-earning assets                        21,054           25,473
                                                    ----------       ----------

                      TOTAL INTEREST EARNINGS        2,976,267        3,007,106

Interest expense
   Deposits                                            608,266          753,160
   Advances from Federal Home Loan Bank                617,385          705,638
   Repurchase agreements                                   239              104
                                                    ----------       ----------

                      TOTAL INTEREST EXPENSE         1,225,890        1,458,902
                                                    ----------       ----------

                      NET INTEREST EARNINGS          1,750,377        1,548,204

Provision for loan losses                                   --           60,000

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

                      NET INTEREST EARNINGS AFTER
                        PROVISION FOR LOAN LOSSES    1,750,377        1,488,204
                                                    ----------       ----------

Non-interest earnings
   Income from real estate operations                    3,450            2,200
   Miscellaneous income                                 20,366           13,681
   Net gains from sales of loans                        15,076           10,784
   Service charge income                               215,768          170,548

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

                      TOTAL NON-INTEREST EARNINGS      254,660          197,213
                                                    ----------       ----------

Non-interest expense
   Compensation and benefits                           585,892          586,123
   FDIC insurance                                       15,184            4,730
   Insurance                                            17,229           13,208
   Stock services                                        4,337            6,584
   Occupancy                                           119,383          134,827
   Data processing                                     100,832           89,484
   Professional fees                                   210,329           45,570
   Advertising                                          49,884           57,050
   Stationary, printing and office supplies             24,921           30,905
   ATM expense                                          25,442           14,578
   Supervisory exam fees                                23,916           14,585
   Postage                                              13,502           19,286
   Other                                               102,936          100,475
                                                    ----------       ----------

                      TOTAL NON-INTEREST EXPENSE     1,293,787        1,117,405
                                                    ----------       ----------



                                        4

<PAGE>

                               GFSB Bancorp, Inc.

                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                     AND COMPREHENSIVE EARNINGS - CONTINUED

<TABLE>
<CAPTION>
                                                                   Three months ended
                                                                      September 30,
                                                               --------------------------
                                                                    2004         2003
                                                               --------------------------
                                                                (Unaudited)   (Unaudited)

<S>                                                          <C>            <C>
                      EARNINGS BEFORE INCOME TAXES                  711,250       568,012

Income tax expense
      Currently payable                                             237,081       241,167
      Deferred provision                                                 --            --
                                                               ------------   -----------

                                                                    237,081       241,167
                                                               ------------   -----------

                      NET EARNINGS                             $    474,169   $   326,845
                                                               ============   ===========


Other Comprehensive Earnings
      Unrealized (loss) gain, net of tax                       $    334,090   $  (196,863)

                                                               ------------   -----------
                      COMPREHENSIVE EARNINGS                   $    808,259   $   129,982
                                                               ============   ===========


Earnings per common share
      Basic                                                    $       0.42   $      0.29
                                                               ============   ===========

Weighted average number of common shares outstanding
      Basic                                                       1,136,166     1,121,733
                                                               ============   ===========

Earnings per common share
      Diluted                                                  $       0.40   $      0.28
                                                               ============   ===========

Weighted average number of common shares outstanding
      Diluted                                                     1,196,326     1,169,955
                                                               ============   ===========

Comprehensive earnings per common share
      Basic                                                    $       0.71   $      0.12
                                                               ============   ===========

      Diluted                                                  $       0.68   $      0.11
                                                               ============   ===========

Dividends per share                                            $       0.13   $      0.11
                                                               ============   ===========
</TABLE>




See notes to condensed consolidated financial statements.








                                        5

<PAGE>


                               GFSB Bancorp, Inc.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                Increase (decrease) in cash and cash equivalents

<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                                 September 30,
                                                                       -------------------------------
                                                                            2004             2003
                                                                       -------------     -------------
                                                                        (Unaudited)       (Unaudited)
<S>                                                                  <C>               <C>
Cash flows from operating activities
     Net earnings                                                      $    474,169      $    326,845
     Adjustments to reconcile net earnings to
       net cash provided by operations
         Deferred loan origination fees                                    (136,387)         (158,702)
         Gain on sale of loans and securities                               (15,075)          (10,784)
         Provision for loan losses                                               --            60,000
         Depreciation of premises and equipment                              58,136            72,619
         Amortization of investment and mortgage-
           backed securities premiums                                        84,638           147,273
         Stock dividend on FHLB stock                                       (19,700)          (21,800)
         Release of ESOP stock                                              100,740            57,356
         Stock compensation under management stock bonus plan                 4,912             9,706

     Net changes in operating assets and liabilities
         Accrued interest and dividends receivable                          (63,551)         (105,894)
         Prepaid and other assets                                           327,025           (52,349)
         Accrued interest payable                                            23,348             6,810
         Accounts payable and accrued liabilities                           (21,661)           28,760
         Income taxes (receivable) payable                                  (95,418)          216,298
                                                                       ------------      ------------

                           Net cash provided by
                           operating activities                             721,176           576,138
                                                                       ------------      ------------

Cash flows from investing activities
     Purchase of premises and equipment                                          --          (179,118)
     Loan originations and principal
       repayment on loans, net                                               18,828       (11,803,750)
     Change in other secured borrowings                                    (180,056)        2,437,665
     Proceeds from the sale of loans                                        743,500           852,982
     Principal payments on mortgage-backed
       securities                                                         2,183,298         5,396,403
     Principal payments on available-for-sale securities                  1,040,825           439,976
     Purchases of mortgage-backed securities                                     --          (979,375)
     Purchases of available-for-sale securities                          (1,090,133)       (5,225,184)
     Maturities and proceeds from sale of
       available-for-sale securities                                      1,000,000                --
     Maturities and proceeds from sale of held-to-maturity securites             --           500,000
     Purchase of FHLB stock                                                 484,000                --
                                                                       ------------      ------------

                           Net cash provided (used) by
                           investing activities                           4,200,262        (8,560,401)
                                                                       ------------      ------------

</TABLE>









                                        6
<PAGE>

                               GFSB Bancorp, Inc.

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                Increase (decrease) in cash and cash equivalents

<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                                September 30,
                                                                      -------------------------------
                                                                           2004             2003
                                                                      -------------    --------------
                                                                       (Unaudited)       (Unaudited)
<S>                                                                 <C>              <C>
Cash flows from financing activities
     Net increase in transaction accounts, passbook
       savings, money market accounts, and
       certificates of deposit                                        $   2,541,335    $   7,356,907
     Net increase in Repurchase agreements                                  243,399          226,326
     Net increase in mortgage escrow funds                                  217,025          202,199
     Proceeds from FHLB advances                                        207,775,000      523,764,296
     Repayments on FHLB advances                                       (215,530,441)    (522,432,721)
     Dividends paid or to be paid in cash                                  (140,895)        (122,467)
     Price paid for vested management bonus
        stock plan stock                                                         --            7,622
                                                                      -------------    -------------

                           Net cash (used) provided by
                           financing activities                          (4,894,577)       9,002,162
                                                                      -------------    -------------

     Decrease in cash and cash equivalents                                   26,861        1,017,899

     Cash and cash equivalents at beginning of period                     8,706,993        7,252,358
                                                                      -------------    -------------

     Cash and cash equivalents at end of period                       $   8,733,854    $   8,270,257
                                                                      =============    =============


Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest on deposits and advances                            $   1,202,303    $   1,452,092
         Income taxes                                                            --           24,869

     Change in market value, net of deferred taxes on
       available-for-sale securities (other comprehensive earnings)         334,090         (196,863)

     Dividends declared not yet paid                                        140,895          122,467
</TABLE>


See notes to condensed consolidated financial statements.



















                                        7


<PAGE>


                               GFSB BANCORP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

     1. The accompanying  unaudited condensed  consolidated financial statements
were prepared in accordance with the  instructions for Form 10-QSB and therefore
do not include  all  disclosure  necessary  for a complete  presentation  of the
consolidated  financial  statements in  conformity  with  accounting  principles
generally  accepted in the United States of America.  However,  all adjustments,
which are, in the opinion of management,  necessary for the fair presentation of
the interim financial statements have been included. All such adjustments are of
a normal recurring nature. The condensed consolidated statements of earnings and
comprehensive  earnings are not necessarily  indicative of results, which may be
expected for the entire year, or for any other interim period.

Certain information and footnote  disclosures normally included in the financial
statements prepared in accordance with accounting  principles generally accepted
in the United States of America have been  condensed or omitted  pursuant to the
rules and regulations of the Securities and Exchange Commission. It is suggested
that these condensed unaudited financial  statements be read in conjunction with
the Form 10-KSB for the year ended June 30, 2004.


























                                       8


<PAGE>

Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

General

The  Private  Securities  Litigation  Reform Act of 1995  contains  safe  harbor
provisions regarding forward-looking  statements.  When used in this discussion,
the words  "believes",  "anticipates",  "contemplates",  "expects",  and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and  uncertainties  that could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest  rates,  risks  associated with the ability to control costs
and  expenses,  general  economic  conditions.  We  undertake no  obligation  to
publicly  release  the  results  of  any  revisions  to  those   forward-looking
statements  that may be made to reflect events or  circumstances  after the date
hereof or to reflect the occurrence of unanticipated events.

Overview

GFSB  Bancorp,  Inc. is a bank  holding  company  headquartered  in Gallup,  New
Mexico,  which provides a full range of deposits and  traditional  mortgage loan
products  through its wholly owned banking  subsidiary,  Gallup Federal  Savings
Bank. All references refer  collectively to the Company and the Bank, unless the
context indicates otherwise.

Proposed Merger

On August 25, 2004, the Company announced that it had signed a definitive merger
agreement with First Federal Banc of the Southwest,  Inc. ("FFBSW"), the holding
company for First  Federal  Bank,  Roswell,  New  Mexico,  pursuant to which the
Company will merge with and into FFBSW.

Under the terms of the agreement, upon consummation of the merger of the Company
into  FFBSW,  each  outstanding  share of the  Company's  common  stock  will be
converted into the right to receive either $20.00 in cash or FFBSW common stock,
at the election of the holder, subject to an overall requirement that 51% of the
Company's total outstanding common stock be exchanged for stock. The transaction
is subject to various  conditions,  including  stockholder  approval of both the
Company and FFBSW, and approval by the applicable banking regulatory agencies.

Pursuant  to the terms of the merger  agreement,  FFBSW has  agreed to  register
FFBSW's common stock under the Securities  Exchange Act of 1934 and it will file
reports with the  Securities  and  Exchange  Commission.  In addition,  upon the
completion of the merger, its shares are expected to be listed on the NASDAQ.

Comparison of Financial Condition at September 30, 2004 and June 30, 2004

Total assets decreased by $4.2 million,  or 1.8%, to $227.9 million at September
30, 2004 from $232.1  million at June 30, 2004  primarily  due to  decreases  in
available-for-sale  investment  and  mortgage-backed  securities,  stock  of the
Federal Home Loan Bank  ("FHLB"),  loans held for sale and other real estate and
repossessed   property   owned.   The  $2.7  million,   or  4.4%,   decrease  in
available-for-sale investment and mortgage-backed securities to $58.5 million at
September 30, 2004 from $61.2 million at June 30, 2004, was the result of normal
monthly  principal  payments received on the securities owned. The stock of FHLB
decreased  $0.5  million,  or 10.5%,  to $3.9 million at September 30, 2004 from
$4.4 million at June 30, 2004,  primarily to a quarterly stock redemption by the
FHLB.  There were no loans held for sale at September 30, 2004, while there were
$0.4 million in loans held for sale at June 30, 2004, resulting in a decrease of
$0.4 million,  or 100.0%. This change was primarily a matter of timing, as there
has been no change in the Company's  plan to sell some  longer-term,  fixed-rate
one- to four-family loans in the secondary market.  The $0.1 million,  or 35.9%,
decrease in other real estate and repossessed  property owned to $0.3 million at
September 30, 2004 from $0.4 million at June 30, 2004 was the result of sales of
properties.  Total cash and cash  equivalents  of $8.8 million at September  30,
2004 was virtually  unchanged  from the $8.7 million at June 30, 2004,  although
there were some changes in the various  components of cash and cash equivalents,
primarily a $0.6  million  increase in cash and due from banks


                                       9


<PAGE>

offset by a $0.6 million decrease in  interest-bearing  deposits with banks. The
interest-bearing  deposits with banks  consists  primarily of the Company's FHLB
demand account.  The $152.4 million in loans receivable,  net was unchanged from
June 30, 2004 to September  30, 2004.  The  remaining  $0.5 million  decrease in
assets  during the  quarter  ended  September  30,  2004 was the result of small
changes in various  asset  accounts  including  accrued  interest and  dividends
receivable, deferred tax asset and prepaid and other assets.

Total  liabilities  decreased $4.9 million,  or 2.3% mostly due to a decrease in
FHLB advances to $65.9 million at September 30, 2004, from $73.7 million at June
30, 2004, a $7.8 million, or 10.5% decrease. Deposits increased $2.5 million, or
1.9% to $136.4  million at  September  30, 2004 from $133.9  million at June 30,
2004.  There were  increases in transaction  and NOW accounts,  savings and MMDA
deposits and time deposits.

Stockholders'  equity  increased  $0.8  million,  or 4.2% to  $18.9  million  at
September 30, 2004 from $18.1 million at June 30, 2004,  primarily due to income
of $474,000  for the three  months ended  September  30, 2004 and to  unrealized
gains, net of taxes, in investment and mortgage-backed  securities.  The Company
paid a cash  dividend of $0.125 per share,  or $141,000,  in the quarter  ending
September 30, 2004.























                                       10

<PAGE>


RESULTS OF OPERATIONS

COMPARISON OF OPERATING RESULTS FOR QUARTER ENDED SEPTEMBER 30, 2004 COMPARED TO
QUARTER ENDED SEPTEMBER 30, 2003.

General

Net earnings for the three months ended September 30, 2004 increased $147,000 to
$474,000  ($0.40 per diluted share) from $327,000  ($0.28 per diluted share) for
the three  months  ended  September  30,  2003.  The increase in net earnings is
primarily  attributable  to a $202,000  increase  in net  interest  earnings,  a
$57,000 increase in non-interest  earnings,  a $60,000 decrease in the provision
for loan losses and a $4,000 decrease in income tax expense  partially offset by
a $176,000  increase in non-interest  expense.  Please refer to "Average Balance
Sheets" for an analysis of the changes in net  interest  earnings  for the three
months ended September 30, 2004 compared to the same 2003 period.

Average Balance Sheets

The  following  table sets forth certain  information  relating to the Company's
average  balance sheet and reflects the average yield on assets and average cost
of  liabilities  for the periods  indicated and the average annual yields earned
and rates paid. Average balances are derived from month-end balances. Management
does not believe that the use of  month-end  balances  instead of daily  average
balances has caused any material differences in the information presented.

<TABLE>
<CAPTION>
                                    Quarter ended September 30, 2004           Quarter ended September 30, 2003
                                 ---------------------------------------    -----------------------------------------
                                  Average                      Average        Average                       Average
                                  Balance       Interest      Yield/Cost      Balance       Interest       Yield/Cost
                                 (Dollars in Thousands)                       (Dollars in Thousands)

<S>                            <C>           <C>              <C>         <C>            <C>               <C>
Interest-earning assets:
Loans receivable (1)             $  152,351    $    2,484       6.52%       $   153,141    $    2,482        6.48%
Investment securities and
 mortgage-backed securities          60,240           471       3.13%            67,677           499        2.95%
Other interest-earning
  assets (2)                          4,851            21       1.74%             4,716            25        2.16%
                                 ----------    ----------                   -----------    ----------

Total interest-earning assets       217,442         2,976       5.48%           225,534         3,006        5.33%
                                               ----------                                  ---------
Non-interest-earning assets          11,830                                      11,044
                                 ----------                                 -----------

Total assets                     $  229,272                                 $   236,578
                                 ==========                                 ===========

Interest-bearing liabilities:
  Transaction accounts           $   12,922    $       11        .35%       $     9,838    $       10         .42%
  Passbook savings                    9,029            17        .76%             6,422            16        1.00%
  Money market accounts              13,133            31        .95%            11,844            25         .87%
  Certificates of deposit            83,785           549       2.62%            88,718           701        3.16%
  Other liabilities (3)              73,172           618       3.38%            84,367           706        3.35%
                                 ----------    ----------                   -----------    ----------

Total interest-bearing
   liabilities                      192,041         1,226       2.55%           201,189         1,458        2.90%
                                               ----------                                  ----------
Non-interest bearing
   liabilities                       18,616                                      17,792
                                 ----------                                 -----------

Total liabilities                   210,657                                     218,981

Stockholders' equity                 18,615                                      17,597
                                 ----------                                 -----------

Total liabilities and
  stockholders' equity           $  229,272                                 $   236,578
                                 ==========                                 ===========
</TABLE>
                                       11
<PAGE>
<TABLE>
<S>                            <C>           <C>              <C>         <C>            <C>               <C>
Net interest earnings                          $    1,750                                  $   1,548
                                               ==========                                  ==========
Interest rate spread (4)                                        2.93%                                        2.43%
                                                               ======                                        =====

Net yield on interest-                                          3.22%                                        2.75%
  earning  assets (5)
                                                               ======                                        =====
Ratio of average interest-
Earning assets to average
interest-bearing  liabilities                                   1.13X                                        1.12X
                                                               ======                                        =====
</TABLE>

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

Borrowings

The Company may obtain advances from the FHLB of Dallas to supplement its supply
of  funds  available  for  loans  and  investments.  Advances  from the FHLB are
typically  secured by a pledge of the Company's  stock in the FHLB, a portion of
the Company's  first mortgage  loans and certain other assets.  Each FHLB credit
program has its own interest rate, which may be fixed or variable,  and range of
maturities. The Company, if the need arises, may also access the Federal Reserve
Bank discount  window to supplement  its supply of funds for available for loans
and investments and to meet deposit  withdrawal  requirements.  At June 30, 2004
and  September  30,  2004,  borrowings  with the FHLB  totaled  $73,652,218  and
$65,896,776,  respectively.  The  approximate  weighted  average  rate  paid  on
borrowings  was  3.58%  and  3.76% at June  30,  2004 and  September  30,  2004,
respectively.

Rate/Volume Analysis

The table below sets forth  certain  information  regarding  changes in interest
income and interest expense of the Company for the periods  indicated.  For each
category   of   interest-earning   assets  and   interest-bearing   liabilities,
information is provided on changes  attributable to (i) changes in volume;  (ii)
changes in rates; (iii) changes in rate-volume.  The changes attributable to the
combined  impact of volume and rate have been allocated  proportionately  to the
changes due to volume and the changes due to rate.

                                       Quarter ended September 30, 2004 vs. 2003
                                                  Increase (Decrease)
                                                         Due to
                                        ----------------------------------------
                                                             Rate/
                                        Volume     Rate      Volume      Net
                                        ------    ------    --------   ------
                                                (Dollars in Thousands)
Interest income:
  Loans receivable                      $ (13)    $  15     $  --      $   2
  Mortgage-backed securities and
     investment securities                (55)       30        (3)       (28)
  Other interest-earning  assets            1        (5)       --         (4)
                                        -----     -----     -----      -----
    Total interest-earning assets         (67)       40        (3)       (30)

Interest expense:

  Transaction accounts                      3        (2)       --          1
  Savings accounts                          7        (4)       (2)         1
  Money markets                             3         3        --          6
  Certificates of deposit                 (39)     (120)        7       (152)
  Other liabilities                       (94)        5         1        (88)
                                        -----     -----     -----      -----
   Total interest-bearing liabilities    (120)     (118)        6       (232)
                                        -----     -----     -----      -----

Net change in interest income           $  53     $ 158     $ ( 9)     $ 202
                                        =====     =====     =====      =====

                                       12

<PAGE>


Provision for Losses on Loans

The Company  maintains  an  allowance  for loan losses  based upon  management's
periodic evaluation of known and inherent risks in the loan portfolio, past loss
experience,  adverse  situations that may affect the borrower's ability to repay
loans,  estimated  value of the  underlying  collateral and current and expected
market  conditions.  The  provision  for loan  loss was $0 and  $60,000  for the
periods ended September 30, 2004 and 2003, respectively.  There was no provision
for loan losses for the current  three-month period primarily due to improvement
in loan quality and the fact that the Company's  loan portfolio did not increase
during the period.  While the Company  maintains  its  allowance for losses at a
level that it considers to be adequate,  there can be no assurance  that further
additions will not be made to the loss  allowances and that such losses will not
exceed the estimated amounts.

Non-Interest Earnings

Total  non-interest  earnings  increased by $57,000 or 53.7% to $254,000 for the
quarter ended  September 30, 2004 from $197,000 for the quarter ended  September
30, 2003.  This  increase  was  primarily  due to a $45,000  increase in service
charge income and  increases in  miscellaneous  income,  net gains from sales of
loans and income from real estate operations.

Non-Interest Expense

Total  non-interest  expense  increased  $176,000 or 15.7% to $1,294,000 for the
quarter ended September 30, 2004 from $1,118,000 for the quarter ended September
30, 2003. The increase in  non-interest  expense was primarily  attributable  to
increases in professional fees, data processing, ATM expense, FDIC insurance and
supervisory exam fees, partially offset by a decrease in occupancy,  advertising
and  stationary,   printing  and  office  supplies.  The  $165,000  increase  in
professional  fees  for  the  period  ended  September  30,  2004  is  primarily
attributable  to  $106,000  in legal  fees  and  $61,000  in other  professional
services in connection with the Agreement and Plan of Merger between the Company
and First Federal Banc of the Southwest, Inc. announced on August 25, 2004. Data
processing  increased  $11,000  primarily due to growth in the number of deposit
accounts and transaction volume increases. ATM expenses increased $11,000 due to
the addition of an additional ATM and an increase in the volume of transactions.
The  $10,000  increase  in FDIC  insurance  was  primarily  due to the growth in
deposits.  Occupancy  expense  decreased  $15,000 primarily due to a decrease in
depreciation expense for furniture, fixtures and equipment.

Item 3.  CONTROLS AND PROCEDURES

     (a)  Evaluation  of  disclosure  controls  and  procedures.  The  Company's
          management  evaluated,  with the  participation of the Company's Chief
          Executive  Officer and Chief Financial  Officer,  the effectiveness of
          the Company's  disclosure controls and procedures as of the end of the
          period covered by this report. Based on such evaluation, the Company's
          principal  executive officer and the principal  financial officer have
          concluded that such  disclosure  controls and procedures are effective
          to ensure that information  required to be disclosed by the Company in
          reports  that it files or submits  under the Exchange Act is recorded,
          processed,  summarized and reported within the time periods  specified
          in Securities and Exchange Commission rules and forms.

     (b)  Changes in  internal  control  over  financial  reporting.  During the
          quarter  under report,  there was no change in the Company's  internal
          control over financial reporting that has materially  affected,  or is
          reasonably likely to materially affect, the Company's internal control
          over financial reporting.





                                       13
<PAGE>

PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings
         -----------------

               Not applicable.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
         -----------------------------------------------------------

               Not applicable.

Item 3.  Defaults Upon Senior Securities
         ------------------------------

               Not applicable.

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

               Not applicable.

Item 5.  Other Information
         -----------------

               Not applicable.

Item 6.  Exhibits
         --------

         (a)   List of Exhibits

                    2.1    Agreement and Plan of  Merger, dated as of August 25,
                           2004, between GFSB Bancorp, Inc. and First Federal
                           Banc of the Southwest, Inc.*
                    3.1    Certificate of Incorporation of GFSB Bancorp, Inc.**
                    3.2    Bylaws of GFSB Bancorp, Inc.**
                    10.1+  1995 Stock Option Plan***
                    10.2+  Management Stock Bonus Plan***
                    10.3+  Form of Directors  Deferred  Compensation  Agreement
                           between the Bank and Directors****
                    10.4+  Form of Directors Stock Compensation Plan between the
                           Company and Directors of the Company****
                    10.5+  2000 Stock Option Plan*****
                    10.6+  Change-in-Control Severance Agreement with Richard P.
                           Gallegos******
                    10.7+  Change-in-Control  Severance  Agreement with Jerry R.
                           Spurlin******
                    10.8+  Change-in-Control Severance Agreement with William W.
                           Head, Jr.******
                    10.9+  Change-in-Control Severance Agreement with Leonard C.
                           Scalzi******
                    31.1   Rule 13a-14(a)/15d-14(a) Certification
                    31.2   Rule 13a-14(a)/15d-14(a) Certification
                    32     Section 1350 Certification

         --------------
         +        Management contract or compensatory plan or arrangement.
         *        Incorporated herein by reference to the identically numbered
                  exhibit to the current report on Form 8-K filed with the SEC
                  on August 26, 2004.
         **       Incorporated herein by reference to the Registration Statement
                  on Form S-1 of the Company (File No. 33-90400) initially filed
                  with the Commission on March 17, 1995.
         ***      Incorporated by reference to the identically numbered exhibits
                  of the Annual Report on Form 10-KSB for the fiscal year ended
                  June 30, 1997 (File No. 0-25854) filed with the SEC.


                                       14
<PAGE>


         ****     Incorporated by reference to the identically numbered exhibits
                  of the Quarterly Report on Form 10-QSB for the quarter ended
                  March 31, 2001 filed with the SEC.
         *****    Incorporated by reference to Exhibit 4.1 to the Registration
                  Statement on Form S-8 (File No. 333-51498) filed with the SEC
                  on December 8, 2000.
         ******   Incorporated by reference to Annual Report on Form 10-KSB for
                  the fiscal year ended June 30, 2004 as filed September 27,
                  2004.





























                                       15
<PAGE>

SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  registrant
     caused this report to be signed on its behalf by the undersigned, thereunto
     duly authorized.

                                 GFSB BANCORP, INC.


Date:  November 12,  2004        /s/ Jerry R. Spurlin
       -------------------       -----------------------------------------------
                                 Jerry R. Spurlin
                                 Assistant Secretary and Chief Financial Officer
                                 (Duly Authorized Representative and
                                 Principal Financial Officer)












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