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


                                   FORM 10-QSB


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

                  For the quarterly period ended March 31, 2000
                                                 --------------

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                            THE EXCHANGE ACT OF 1934

                For the transition period from          to
                                               --------    --------

                         Commission file number: 0-25854


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


Delaware
-------------------------------
(State or Other Jurisdiction of
Incorporation or Organization)                      04-2095007
                                                    ----------
                                                 (I.R.S. Employer
                                                 Identification No.)
221 West Aztec Avenue, Gallup, New Mexico
-----------------------------------------
(Address of Principal Executive Offices)
                                                      87301
                                                      -----
                                                    (Zip Code)

Issuer's Telephone Number, Including Area Code:    (505) 722-4361
                                                   --------------

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 April 27, 2000,  there were issued and  outstanding  940,963 shares of the
registrant's Common Stock.

<PAGE>
                               GFSB Bancorp, Inc.

                                      Index

                                                                        Page No.
                                                                        --------

                          PART I. FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements:

           Consolidated Statements of Financial Condition
               March 31, 2000 and June 30, 1999                              3

           Consolidated Statements of Earnings and Comprehensive Earnings
               Three months and nine months ended March 31, 2000 and 1999    4

           Consolidated Statements of Cash Flows
               Nine months ended March 31, 2000 and 1999                     6

           Notes to Consolidated Financial Statements                        8

Item 2.    Management's Discussion and Analysis or Plan of Operation        10

                           PART II. OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K                                 16

           Signatures                                                       17

                                        2
<PAGE>
                               GFSB Bancorp, Inc.

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>

                                                                                March 31,               June 30,
                                                                                  2000                    1999
                                                                            ------------------      -----------------
                                                                               (Unaudited)
                                     ASSETS
<S>                                                                       <C>                     <C>
Cash and due from banks                                                   $         3,319,541     $        2,839,479
Interest-bearing deposits with banks                                                1,248,595              2,307,736
Federal funds sold                                                                          0                      0
Available-for-sale investment securities                                           22,906,387             10,295,919
Available-for-sale mortgage-backed securities                                      25,713,893             31,711,838
Held-to-Maturity investment securities                                              1,680,250              1,677,144
Stock of Federal Home Loan Bank, at cost, restricted                                3,735,400              2,815,100
Loans receivable, net, substantially pledged                                      106,028,334             96,564,840
Accrued interest and dividends receivable                                           1,048,232                863,975
Premises and equipment                                                              1,312,952              1,404,616
Other real estate and repossessed property                                            188,459                150,459
Prepaid and other assets                                                              108,542                 54,365
Deferred tax asset                                                                     92,269                 68,377
                                                                            ------------------      -----------------

       TOTAL ASSETS                                                       $       167,382,855            150,753,849
                                                                            ==================      =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Transaction and NOW accounts                                              $        12,707,756     $       12,874,979
Savings and MMDA deposits                                                          15,705,127             16,962,513
Time deposits                                                                      54,245,196             51,391,829
Accrued interest payable                                                              335,159                276,328
Advances from borrowers for taxes and insurance                                       527,089                329,298
Accounts payable and accrued liabilities                                              443,135                426,634
Deferred income taxes                                                                  64,673                265,317
Dividends declared and payable                                                         90,350                 74,748
Advances from Federal Home Loan Bank                                               70,680,792             55,540,826
Securities sold under agreements to repurchase                                        271,139                      0
Income taxes payable                                                                  (57,975)               180,069
                                                                            ------------------      -----------------

       TOTAL LIABILITIES                                                          155,012,441            138,322,541


COMMITMENTS AND CONTINGENCIES                                                               -                      -


STOCKHOLDERS' EQUITY
Common stock, $.10 par value, 1,500,000
  shares authorized; 993,578 issued and outstanding at June 30, 1999 and 955,713
  shares issued and outstanding at March 31, 2000, adjusted for 40,035 shares at
  June 30, 1999 and 34,039 shares
  at March 31, 2000 for unallocated Management Stock Bonus Plan shares
  held by the Company's wholly owned subsidiary, respectively.                         92,167                 95,354
Preferred stock, $.10 par value, 500,000
  shares authorized;  no shares issued or
  outstanding                                                                               -                      -
Additional paid-in-capital                                                          3,007,774              3,432,687
Unearned ESOP stock                                                                  (335,710)              (371,183)
Retained earnings, substantially
  restricted                                                                        9,480,641              8,759,425
Accumulated other comprehensive
earnings                                                                              125,542                515,025
                                                                            ------------------      -----------------

       TOTAL STOCKHOLDERS' EQUITY                                                  12,370,414             12,431,308
                                                                            ------------------      -----------------

       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $       167,382,855     $      150,753,849
                                                                            ==================      =================
</TABLE>

See notes to consolidated financial statements.

                                        3
<PAGE>
                                     GFSB Bancorp, Inc.

                             CONSOLIDATED STATEMENTS OF EARNINGS
                                 AND COMPREHENSIVE EARNINGS
<TABLE>
<CAPTION>
                                                                     Three months ended                   Nine months ended
                                                                          March 31,                           March 31,
                                                                ------------------------------      -------------------------------
                                                                   2000              1999               2000              1999
                                                                ------------------------------      -------------------------------
                                                                (Unaudited)       (Unaudited)       (Unaudited)        (Unaudited)
<S>                                                          <C>               <C>               <C>                    <C>
Interest income
           Loans receivable
                          Mortgage loans                      $   1,965,405     $   1,684,895     $    5,688,913         4,807,011
                          Commercial loans                          134,946           126,488            354,540           363,185
                          Share and consumer loans                  121,765           102,616            350,339           298,412
           Investment and mortgage-backed securities                787,128           455,300          2,121,319         1,450,586
           Other interest-earning assets                             70,254            49,280            193,156           152,894
                                                                ------------      ------------      -------------      ------------

                          TOTAL INTEREST EARNINGS                 3,079,498         2,418,579          8,708,267         7,072,088

Interest expense
           Deposits                                                 808,376           787,428          2,385,421         2,438,034
           Advances from Federal Home Loan Bank                   1,034,046           593,183          2,736,404         1,745,165
           Other interest expense                                     2,189                 -              3,101                 -
                                                                ------------      ------------      -------------      ------------

                          TOTAL INTEREST EXPENSE                  1,844,611         1,380,612          5,124,926         4,183,199
                                                                ------------      ------------      -------------      ------------

                          NET INTEREST EARNINGS                   1,234,887         1,037,967          3,583,341         2,888,889

Provision for loan losses                                            70,000            25,000            130,000            65,000
                                                                ------------      ------------      -------------      ------------

                          NET INTEREST EARNINGS AFTER
                            PROVISION FOR LOAN LOSSES             1,164,887         1,012,967          3,453,341         2,823,889

Non-interest earnings
           Income from real estate operations                         2,500                 -              5,000                 -
           Miscellaneous income                                       5,026             2,805             13,311            14,095
           Net gains (losses)  from sales of loans and AFS Securitie(60,412)           31,828            (39,891)           41,053
           Service charge income                                     57,247            42,052            187,707           115,246
                                                                                                    -------------      ------------
                                                                ------------      ------------

                          TOTAL NON-INTEREST EARNINGS                 4,361            76,686            166,127           170,394

Non-interest expense
           Compensation and benefits                                431,280           365,635          1,230,279         1,062,061
           Insurance                                                 12,233            16,183             50,572            46,005
           Stock services                                             4,169             3,962             10,071            20,606
           Occupancy                                                 85,621            79,448            244,736           206,006
           Data processing                                           50,863            50,329            147,720           149,426
           Professional fees                                         20,303            10,170             67,579            37,862
           Advertising                                               13,811            20,224             48,722            55,626
           Stationary, printing and office supplies                  19,440            17,476             59,154            51,835
           ATM Expense                                               12,045            10,016             37,715            32,374
           Supervisosry Exam Fees                                    10,384             8,992             29,367            27,482
           Postage                                                    9,392            11,188             25,363            24,865
           Other                                                     57,829            53,812            156,718           163,916
                                                                ------------      ------------      -------------      ------------

                          TOTAL NON-INTEREST EXPENSE                727,369           647,435          2,107,997         1,878,063

</TABLE>

                                              4
<PAGE>

                                     GFSB Bancorp, Inc.

                             CONSOLIDATED STATEMENTS OF EARNINGS
                           AND COMPREHENSIVE EARNINGS - CONTINUED
<TABLE>
<CAPTION>
                                                                     Three months ended                   Nine months ended
                                                                          March 31,                           March 31,
                                                                ------------------------------      -------------------------------
                                                                   2000              1999               2000              1999
                                                                ------------------------------      -------------------------------
                                                                (Unaudited)       (Unaudited)       (Unaudited)        (Unaudited)

<S>                                                            <C>               <C>              <C>               <C>
                          EARNINGS BEFORE INCOME TAXES              441,879           442,218          1,511,471         1,116,220

Income tax expense
           Currently payable                                        148,912           166,159            534,430           418,448
           Deferred provision                                             -                 -                  -                 -
                                                                ------------      ------------      -------------      ------------

                                                                    148,912           166,159            534,430           418,448
                                                                ------------      ------------      -------------      ------------

                          NET EARNINGS                        $     292,967     $     276,058            977,041           697,772
                                                                ============      ============      =============      ============

Other Comprehensive Earnings
           Unrealized gain (loss), net of tax                       (16,594)         (206,486)          (389,483)           (5,701)

                                                                ------------      ------------      -------------      ------------
                          COMPREHENSIVE EARNINGS                    276,373            69,572            587,558           692,071
                                                                ============      ============      =============      ============
Earnings per common share
           Basic                                              $        0.32              0.28               1.06              0.67
                                                                ============      ============      =============      ============

Weighted average number of common shares outstanding
           Basic                                                    914,728           979,857            921,629         1,035,898
                                                                ============      ============      =============      ============

Earnings per common share
           Diluted                                                     0.31              0.27               1.04              0.66
                                                                ============      ============      =============      ============

Weighted average number of common shares outstanding
           Diluted                                                  933,052         1,006,191            939,953         1,064,377
                                                                ============      ============      =============      ============

Comprehensive earnings per common share
           Basic                                                       0.30              0.07               0.64              0.67
                                                                ============      ============      =============      ============

           Diluted                                                     0.30              0.07               0.63              0.65
                                                                ============      ============      =============      ============
</TABLE>


                                              5

<PAGE>
                                              GFSB Bancorp, Inc.

                                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                               Increase (decrease) in cash and cash equivalents
<TABLE>
<CAPTION>
                                                                                 Nine months ended
                                                                                     March 31,
                                                                      -----------------------------------------
                                                                           2000                   1999
                                                                      ---------------      --------------------
                                                                       (Unaudited)             (Unaudited)
<S>                                                               <C>                  <C>
Cash flows from operating activities
           Net earnings                                             $        977,041     $             697,772
           Adjustments to reconcile net earnings to
             net cash provided by operations
                     Deferred loan origination fees                         (231,360)                 (223,663)
                     Gain on sale of sold loans                              (26,122)                  (41,053)
                     Provision for loan losses                               130,000                    65,000
                     Depreciation of premises and equipment                  133,468                   113,570
                     Amortization of investment and mortgage-
                       backed securities premiums (discounts)                126,429                   294,702
                     Stock dividends on FHLB stock                          (144,400)                  (95,400)
                     Release of ESOP stock                                    72,124                    76,724
                     Stock compensation                                       48,664                    79,883
                     Provision (benefit) for deferred income taxes           (23,892)                        -

           Net changes in operating assets and liabilities
                     Accrued interest and dividends receivable              (184,257)                 (154,143)
                     Prepaid taxes                                                 -                         -
                     Prepaid and other assets                                (54,177)                  (26,355)
                     Accrued interest payable                                 58,831                    20,074
                     Accounts payable and accrued liabilities                (32,163)                  112,526
                     Income taxes payable                                   (238,044)                  (62,836)
                     Dividends declared and payable                           15,602                    (9,992)
                                                                      ---------------      --------------------

                               Net cash provided by
                               operating activities                          627,744                   846,809

Cash flows from investing activities
           Purchase of premises and equipment                                (41,804)                 (523,208)
           Loan originations and principal
             repayment on loans, net                                      (9,374,012)              (15,413,958)
           Principal payments on mortgage-backed
             securities                                                    4,341,753                 8,207,158
           Purchases of mortgage-backed securities                                 -                (2,928,670)
           Purchases of available-for-sale securities                    (15,929,426)               (6,002,335)
           Maturities and proceeds from sale of
             available-for-sale securities                                 4,178,588                 2,010,000
           Principal payments on available-for-sale securities                76,900                    70,000
           Purchases of held-to-maturity securities                                -                (1,530,000)
           Maturities and proceeds from sale of
            held-to-maturity securities                                            -                         -
           Purchase of FHLB stock                                           (775,900)                 (373,300)
                                                                      ---------------      --------------------

                               Net cash used by
                               investing activities                      (17,523,901)              (16,484,313)
</TABLE>

                                                      6
<PAGE>

                                              GFSB Bancorp, Inc.

                              CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                               Increase (decrease) in cash and cash equivalents
<TABLE>
<CAPTION>
                                                                                 Nine months ended
                                                                                     March 31,
                                                                      -----------------------------------------
                                                                           2000                   1999
                                                                      ---------------      --------------------
                                                                       (Unaudited)             (Unaudited)
<S>                                                                <C>                  <C>
Cash flows from financing activities
           Net increase in transaction accounts, passbook
             savings, money market accounts, and
             certificates of deposit                                $      1,428,758     $           8,131,524
           Net increase (decrease) in mortgage escrow funds                  197,791                   258,819
           Proceeds from FHLB advances                                   487,058,922               217,685,527
           Repayments on FHLB advances                                  (471,918,956)             (209,364,245)
           Net increase (decrease) in securities sold under
              agreements to repurchase                                       271,139                         -
           Purchase of GFSB Bancorp stock under the
             stock repurchase plan in cash                                  (539,640)               (2,058,528)
           Dividends paid or to be paid in cash                             (255,824)                 (222,984)
           Price paid for vested management bonus
           stock plan stock                                                   55,463                    50,065
           Proceeds from exercise of stock options                            19,425                         -
                                                                      ---------------      --------------------

                               Net cash provided by
                               financing activities                       16,317,078                14,480,178
                                                                      ---------------      --------------------

           Increase (decrease) in cash and cash equivalents                 (579,079)               (1,157,326)

           Cash and cash equivalents at beginning of period                5,147,215                 4,537,980
                                                                      ---------------      --------------------

           Cash and cash equivalents at end of period               $      4,568,136                 3,380,654
                                                                      ===============      ====================


Supplemental disclosures
           Cash paid during the period for
                     Interest on deposits and advances              $      5,062,994     $           4,163,126
                     Income taxes                                            772,475                   481,284

           Change in unrealized gain (loss), net of deferred
             taxes on available-for-sale securities                         (389,483)                   (5,701)

           Dividends declared not yet paid                                    90,350                    72,454

</TABLE>

                                                      7
<PAGE>

                               GFSB BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.  The  interim  financial  data  is  unaudited;  however,  in the  opinion  of
management, the interim data includes all adjustments, consisting only of normal
recurring  adjustments  necessary  for a fair  statement  of the results for the
interim periods.  The financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles   have  been  condensed  or  omitted   pursuant  to  such  rules  and
regulations,  although the Company believes that the disclosures included herein
are adequate to make the information presented not misleading.

The organization and business of the Company,  accounting  policies  followed by
the Company and other  information  is contained  in the notes to the  Company's
financial  statements filed as part of the Company's June 30, 1999, Form 10-KSB.
This quarterly report should be read in conjunction with such annual report.

2.       Dividends
         ---------

During the quarter ended  December 31, 1999,  the Board of Directors  declared a
cash  dividend of $0.10 per share on the  Company's  outstanding  common  stock,
payable to  stockholders  of record as of December 31, 1999.  The dividends were
paid in January 2000.

During the  quarter  ended March 31,  2000,  the Board of  Directors  declared a
quarterly cash dividend of $0.10 per share on the Company's  outstanding  common
stock,  payable to  stockholders  of record as of March 31, 2000.  The dividends
were paid in April 2000.

As required by SOP 93-6,  the  dividends  on  unallocated  ESOP shares have been
recorded as an additional  $5,200  compensation  cost rather than a reduction of
retained earnings.

3.       Employee Stock Ownership Plan
         -----------------------------

On December 31, 1999, the Company  released  7,021.01 shares of its common stock
owned by the  Company's  ESOP.  On March 31, 2000,  the Company was committed to
release 1,852.89 shares of this common stock. The commitment resulted in $25,000
of additional compensation cost for the three months ended March 31, 2000.

4.       Management Stock Bonus Plan
         ---------------------------

On January 5, 1996,  the  Company  made  awards  under the Plan in the amount of
30,573  shares.  The shares  were  awarded  at a price of $9.250  per share.  On
January 5, 1998,  the Company  made awards under the Plan in the amount of 2,250
shares.  On November  16,  1998,  the Company  made awards under the Plan in the
amount of 6,000 shares.  The retirement  during the quarter ended  September 30,
1997 of an officer, to whom an award had been made under the Plan, resulted in a
reduction of 3,000 shares in the total  number of shares  awarded.  Awards under
the Plan are earned at the rate of one-fifth of the award per year. From January
5, 1997 to January 5, 1999,  17,291  shares under the Plan were earned,  and the
corresponding  liability was paid. On November 16, 1999,  1,200 shares under the
Plan were earned, and the corresponding  liability was paid. On January 5, 2000,
5,816 shares under the Plan were earned,  and the  corresponding  liability  was
paid.

At March 31, 2000, 22,523 shares remain to be awarded under the Plan,  including
1,421  shares  earned  under the Plan but  withheld  from vesting to satisfy tax
obligations  of recipients.  As a result of vesting and the dividends  earned on
the vested shares, a liability and corresponding compensation cost in the amount
of $16,200 has been  recorded for the three  months ended March 31, 2000,  under
the provisions of the Plan.

                                       8
<PAGE>


5.       Earnings Per Share
         ------------------

The Company has potential  dilutive common stock (stock options to employees and
directors)  and  accordingly  presents  basic and  diluted  earnings  per share.
Diluted per share  amounts  assume the  conversion,  exercise or issuance of all
potential  common  stock  instruments  unless  the effect is to reduce a loss or
increase the income per common share

The weighted  average number of shares of common stock used to compute the basic
earnings  per share was  increased  by 18,324 for the three month  period  ended
March 31,  2000,  and by 26,334 for the three month period ended March 31, 1999,
in computing the diluted per share data.

The weighted  average number of shares of common stock used to compute the basic
earnings per share was increased by 18,324 for the nine month period ended March
31,  2000,  and by 28,479 for the nine month  period  ended March 31,  1999,  in
computing the diluted per share data.


6.       Comprehensive Earnings
         ----------------------

Comprehensive earnings, defined as the change in equity of a business enterprise
from transactions and other events and circumstances from non-owner sources. The
only item of other comprehensive earnings for the Company is the unrealized gain
(loss) on available-for-sale securities.

                                       9

<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

General

GFSB  Bancorp,  Inc.,  is the 100% owner of Gallup  Federal  Savings  Bank ("the
Bank"), and the Bank is currently the only entity with which the holding company
has an  ownership  interest.  The Bank is  primarily  engaged in the business of
accepting  deposit  accounts  from the  general  public  and using such funds to
originate mortgage loans for the purchase and refinancing of  one-to-four-family
homes located in its primary market area. The Bank also originates multi-family,
commercial real estate,  construction,  consumer,  and commercial business loans
and purchases  participations  in one-to-four  family and commercial real estate
loans. The Bank also purchases  mortgage-backed and investment  securities.  The
largest components of the Bank's net earnings are net interest income,  which is
the difference  between interest income and interest  expense,  and non-interest
income  derived  primarily  from fees.  Consequently,  the Bank's  earnings  are
dependent  on its  ability  to  originate  loans,  and the  relative  amounts of
interest-earning  assets  and  interest-bearing   liabilities.  The  Bank's  net
earnings  are also  affected  by its  provision  for loan  losses as well as the
amount of other expense, such as compensation and benefit expense, occupancy and
equipment expense and deposit  insurance premium expenses.  Earnings of the Bank
also are affected significantly by general economic and competitive  conditions,
particularly  changes in market interest rates,  government policies and actions
of regulatory authorities.

GFSB Bancorp,  Inc. (the  "Company")  may from time to time make written or oral
"forward-looking  statements",  including  statements contained in the Company's
filing with the Securities  and Exchange  Commission  (including  this quarterly
report on Form 10-QSB and the exhibits thereto),  in its reports to stockholders
and in other  communication by the Company,  which are made in good faith by the
Company  pursuant to the "safe  harbor"  provisions  of the  Private  Securities
Litigation Reform Act of 1995.

These  forward-looking  statements  involve  risks  and  uncertainties,  such as
statements  of the  Company's  plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in, trade, monetary and fiscal policies
and laws,  including  interest  rate  policies of the Board of  Governors of the
Federal  Reserve  System,   inflation,   interest  rate,   market  and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the Company and the perceived  overall  value of these  products and
services by users,  including  the  features,  pricing  and quality  compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Company's products and services;  the
success of the  Company in  gaining  regulatory  approval  of its  products  and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes;  acquisitions;  changes in consumer spending
and saving habits; and the success of the Company at managing these risks.

The Company cautions that this list of important  factors is not exclusive.  The
Company does not undertake to update forward-looking statements, whether written
or oral, that may be made from time to time by or on behalf of the Company.


Management Strategy

Management's  strategy  has been to monitor  interest  rate  risk,  by asset and
liability  management,  and maintain asset quality while enhancing  earnings and
profitability.   The  Bank's   strategy  has  been   primarily  to  make  loans,
secondarily,  to invest in mortgage-backed securities and investment securities,
and thirdly, to purchase  participations in adjustable rate,  one-to-four family
mortgage loans primarily secured by one-to-four  family  residences.  The Bank's
purchase of  mortgage-backed  securities and  investment  securities is designed
primarily for safety of principal and secondarily for rate of return. The Bank's
lending  strategy has  historically  focused on the  origination  of traditional
one-to-four-family   mortgage  loans  primarily  secured  by  one-to-four-

                                       10
<PAGE>

family residences in the Bank's primary market area.

These loans  typically have fixed rates.  The Bank also invests a portion of its
assets  in  construction,   consumer,  commercial  business,   multi-family  and
commercial real estate loans as a method of enhancing earnings and profitability
while also  reducing  interest  rate risk.  Since  1994,  the Bank has  actively
originated  commercial  business loans,  increased its origination of commercial
real  estate  loans,   construction  loans,  and  purchased   participations  in
commercial real estate loans.  These loans  typically have  adjustable  interest
rates and are for shorter terms than residential first mortgage loans. This type
of lending generally has more risk than residential lending. The Bank's purchase
of  participations  in adjustable  rate,  one-to-four  family  mortgage loans is
designed to increase  earnings and reduce  interest rate risk.  These loans have
more risk than loans  originated by the Bank,  therefore,  they have  adjustable
rates that are higher than standard.  The Bank also purchases  automobile  loans
from dealers.  These loans have risk and terms  comparable  to automobile  loans
originated in the Bank.  Investment securities in the Bank's portfolio typically
have shorter terms to maturity than residential first mortgage loans. As part of
its asset/liability  management strategy, the Bank sells its fixed rate mortgage
loans with terms over 15 years into the secondary market. The Bank has sought to
remain  competitive  in its market by offering a variety of products.  Automated
Teller Machine access and credit life insurance are additional  products offered
by the Bank.  The Bank attempts to manage the interest rates it pays on deposits
while  maintaining a stable deposit base and providing  quality  services to its
customers.

During the past few years the competing financial institutions located in Gallup
have all been acquired by statewide and regional  bank holding  companies.  As a
result,  as of 1995, the Bank is the only local  institution  headquartered  and
managed in Gallup, New Mexico.  The Bank believes that its "hometown"  advantage
provides an opportunity  to expand its operations as the only local  independent
financial  institution.  The Bank also believes that it has a unique  ability to
grow as a result of the  relatively  large number of local retail and  wholesale
businesses  specializing in Indian jewelry.  In addition,  the Bank is exploring
methods of  increasing  its business with the large Native  American  population
located in the nearby Navajo and Zuni Pueblo Indian reservations.

Asset and Liability Management

In an effort to reduce  interest  rate  risk and  protect  it from the  negative
effect  of  rapid  increases  and  decreases  in  interest  rates,  the Bank has
instituted  certain asset and liability  management  measures.  (See "Management
Strategy" discussed above).

The Bank, like many other thrift institutions,  is exposed to interest rate risk
as a result of the  difference in the maturity of  interest-bearing  liabilities
and  interest-earning  assets and the volatility of interest rates. Most deposit
accounts  react  more  quickly to market  interest  rate  movements  than do the
existing  mortgage  loans  because of their  shorter  terms to  maturity;  sharp
decreases  in  interest  rates  would  typically  positively  affect  the Bank's
earnings.  Conversely,  this same mismatch will generally  adversely  affect the
Bank's earnings during periods of increasing interest rates.

FINANCIAL CONDITION

The Bank's total assets  increased  $16.6 million or 11% from $150.8  million at
June 30, 1999 to $167.4  million at March 31, 2000.  This  increase is primarily
the result of a $9.5  million  increase in the Bank's net loan  portfolio  and a
$6.6 million increase in the Bank's  investment  portfolio.  The majority of the
increases  are  directly  attributable  to efforts  of  Management  to  increase
investment and lending activity. During the same period, deposits increased $1.4
million or 1.8% from $81.2  million at June 30,  1999 to $82.7  million at March
31, 2000.  This increase is primarily due to an increase in the Bank's volume of
time  deposits,  offset by a decrease  in the Bank's  volume of savings and MMDA
accounts.  Advances from the FHLB increased  $15.1 million from $55.5 million at
June 30, 1999 to $70.7 million at March 31, 2000.  These  additional  borrowings
funded purchases of loans,  securities,  and mortgage loan  participations.  The
Bank had $126,000 and $515,000 in  unrealized  gains (net of deferred  taxes) at
March 31, 2000 and June 30, 1999,  respectively  from market gains on the Bank's
equity  securities  offset by market  losses  on the  Bank's  available-for-sale
investment and mortgage-backed portfolios.

                                       11
<PAGE>

RESULTS OF OPERATIONS

COMPARISON  OF OPERATING  RESULTS FOR QUARTER  ENDED MARCH 31, 2000  COMPARED TO
QUARTER ENDED MARCH 31, 1999

General

Net earnings increased $17,000 or 6.1% for the quarter ended March 31, 2000 from
the quarter  ended March 31, 1999.  This  increase is primarily the result of an
increase  in net  interest  earnings  of  $197,000  and a decrease in income tax
expense of $17,000,  offset by an decrease in non-interest  earnings of $72,000,
an increase in non-interest  expense of $80,000 and an increase in provision for
loan losses of $45,000.

Interest Earnings

Total  interest  income  increased  $661,000 or 27.3% from $2.4  million for the
quarter  ended  March 31,  1999 to $3.1  million  for the  quarter  ended  March
31,2000.  This increase was primarily  due to  substantial  increases in the net
loan portfolio and securities portfolio of the bank.

Interest Expense

Total  interest  expense  increased  $464,000 or 33.6% from $1.4 million for the
quarter  ended  March 31, 1999 to $1.8  million for the quarter  ended March 31,
2000. This increase was primarily due to an increase in FHLB borrowings.

 Provision for Losses on Loans

The Bank 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  allowance for loan losses was $535,000 and $422,000 at
March 31, 2000 and 1999,  respectively.  The provision for loan loss was $70,000
and $25,000 for the quarters ended March 31, 2000 and 1999, respectively.  While
the Bank  maintains its allowance for losses at a level which 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.
Recent substantial  increases in the loan portfolio of the Bank may result in an
increase of  provision  for losses on loans.  The  establishment  of a loan loss
provision each period adversely impacts the Bank's net earnings.

Non-Interest Income

Total  non-interest  income  decrease  of $72,000 or 94.3% from  $77,000 for the
quarter  ended March 31, 1999 to $4,000 for the quarter ended March 31, 2000 was
primarily  due to net  losses  of  $66,000  from the sale of  available-for-sale
securities and a decrease in net gains from sales of loans of $25,000, offset by
increased service and NSF charges on NOW and checking accounts of $15,000 and an
increase in income from real estate operations of $5,000.  Funds received by the
Bank from the sale of available-for-sale securities were used to purchase higher
yielding available-for-sale securities to enhance future earnings.

Non-Interest Expense

Total  non-interest  expense  increased  $80,000 or 12.3% from  $647,000 for the
quarter  ended March 31, 1999 to $727,000 for the quarter  ended March 31, 2000.
This increase was primarily due to an increase in  compensation  and benefits of
$66,000 from general  salary  increases,  increases in accruals for  stock-based
compensation  programs,  increases in employee  health  insurance and retirement
benefits and a gross  receipts tax paid to the State of New Mexico for directors
fees. Other factors contributing to this increase were increases in professional
fees of $10,000 and occupancy costs of $6,000.

                                       12
<PAGE>
RESULTS OF OPERATIONS

COMPARISON  OF  OPERATING  RESULTS  FOR NINE MONTH  PERIOD  ENDED MARCH 31, 2000
COMPARED TO NINE MONTH PERIOD ENDED MARCH 31, 1999

General

Net earnings increased $279,000 or 40% for the nine-month period ended March 31,
2000 from the nine-month period ended March 31, 1999. This increase is primarily
the result of an increase in  net-interest  earnings  of  $694,000,  offset by a
decrease in non-interest earnings of $4,000, an increase in non-interest expense
of $230,000,  an increase in provision  for loan loss of $65,000 and an increase
in provision for income taxes of $116,000.

Interest Earnings

Total interest income  increased $1.6 million or 23.1% from $7.1 million for the
nine-month  period  ended March 31,  1999,  to $8.7  million for the  nine-month
period ended March 31, 2000.  This  increase was  primarily  due to  substantial
increases in the net loan portfolio and securities portfolio of the bank.

Interest Expense

Total  interest  expense  increased  $942,000 or 22.5% from $4.2 million for the
nine-month period ended March 31, 1999 to $5.1 million for the nine-month period
ended March 31, 2000.  This  increase was  primarily  due to an increase in FHLB
borrowings.

 Provision for Losses on Loans

The Bank 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  allowance for loan losses was $535,000 and $422,000 at
March 31, 2000 and 1999, respectively.  The provision for loan loss was $130,000
and  $65,000  for  the  nine-month   period  ended  March  31,  2000  and  1999,
respectively. While the Bank maintains its allowance for losses at a level which
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.  Recent  substantial  increases in the loan portfolio of the
Bank  may  result  in  an  increase  of  provision  for  losses  on  loans.  The
establishment of a loan loss provision each period adversely  impacts the Bank's
net earnings.

Non-Interest Income

Total  non-Interest  income  decreased  by $4,000 or 2.5% from  $170,000 for the
nine-month  period  ended March 31, 1999 to $166,000 for the  nine-month  period
ended March 31, 2000.  This  decrease was  primarily  due to net losses from the
sale of  available-  for-sale  securities of $66,000 and a decrease in net gains
from sales of loans of $16,000,  offset by increased  service and NSF charges on
NOW and checking  accounts of $72,000 and an increase in income from real estate
operations   of  $5,000.   Funds   received   by  the  Bank  from  the  sale  of
available-for-sale   securities   were   used  to   purchase   higher   yielding
available-for-sale securities to enhance future earnings.

Non-Interest Expense

Total  non-interest  expense increased $230,000 or 12.2% from $1,878,000 for the
nine-month  period ended March 31, 1999 to $2,108,000 for the nine-month  period
ended  March 31,  2000.  This  increase  was  primarily  due to an  increase  in
compensation  and benefits of $168,000  from the hiring of  additional  staff to
handle  growth,   salary  expense  for  a  full  time  data  processing  systems
administrator for Year 2000 administration,  general salary increases, increases
due to accruals for  stock-based  compensation  programs,  increases in

                                       13
<PAGE>

employee health insurance and retirement  benefits and a gross receipts tax paid
to the State of New Mexico for directors  fees.  Other factors were increases in
occupancy costs of $39,000,  professional fees of $30,000, stationary,  printing
and office  supplies  of $7,000,  Automated  Teller  Machine  expense of $5,000,
insurance expense of $5,000,  offset by a decrease in stock services of $11,000.
The increase in occupancy costs is primarily due leasehold  improvement  expense
and  janitorial  expense  for the  Loan  Center  and  furniture,  fixtures,  and
equipment expense. The decrease in stock services is primarily due to a fee paid
to the OTS for  filing a change of control  application  for the  quarter  ended
September 30, 1998.


Liquidity and Capital Resources

The Bank is required under applicable  federal  regulations to maintain "liquid"
investments  in qualifying  types of U.S.  Government,  federal agency and other
investments of not less than 4% of its average daily balance of net withdrawable
deposit  account and  borrowing  payable in one year or less. At March 31, 2000,
the Bank's liquidity,  as measured for regulatory purposes,  was 5.23%. The Bank
adjusts liquidity as appropriate to meet its asset/liability objectives.

The Bank's primary sources of funds are deposits, amortization and prepayment of
loans and mortgage-backed  securities,  maturities of investment securities, and
funds provided from operations. While scheduled loan repayments are a relatively
predictable source of funds, deposit flows and loan and mortgage-backed security
prepayments are  significantly  influenced by general  interest rates,  economic
conditions  and  competition.  In  addition,  the Bank  invests  excess funds in
overnight  deposits,  which provide  liquidity to meet lending  requirements and
deposit fluctuations.

The Bank's  most  liquid  assets are cash and cash  equivalents,  which  include
investments in highly liquid short-term  investments.  The level of these assets
are  dependent on the Bank's  operating,  financing,  and  investing  activities
during any given period.  At March 31, 2000, cash and cash  equivalents  totaled
$4.6 million.  The Bank has other sources of liquidity if a need for  additional
funds arises.  Additional  sources of funds include FHLB of Dallas  advances and
the ability to borrow against mortgage-backed and other securities. At March 31,
2000,  the Bank had $70.7  million in  outstanding  borrowings  from the FHLB of
Dallas.  Some of these outstanding  borrowings were used to purchase  additional
investment  securities and mortgage loan  participations as a means of enhancing
earnings.

The  primary  investment  activity  of the  Bank is the  origination  of  loans,
primarily  mortgage  loans.  During the quarter  ended  March 31 2000,  the Bank
originated $11 million in total loans (including loan participations purchased),
of which $5.7 million were mortgage loans.  Another  investment  activity of the
Bank  is  the  investment  of  funds  in  U.S.   Government  Agency  securities,
mortgage-backed securities,  collateralized mortgage obligations,  federal funds
and FHLB-Dallas overnight funds and readily marketable equity securities. During
periods  when the loan  demand  of the Bank is  limited,  the Bank may  purchase
short-term  investment  securities  to  obtain a  higher  yield  than  otherwise
available.

The Bank's cash flows are comprised of three primary classifications: cash flows
from operating activities,  investing activities and financing activities.  Cash
flows  from  operating  activities,  consisting  principally  of  net  earnings,
provision  for loan losses,  amortization  of  investment  and  mortgage  backed
securities  premiums and discounts,  stock based  compensation  costs and income
taxes less  disbursements  of interest and dividends,  and loan origination fees
were  $628,000  and  $847,000 for the nine month period ended March 31, 2000 and
1999 respectively. Net cash used for investing activities consisted primarily of
disbursement of loan  originations and investment and  mortgage-backed  security
purchases,  offset by principal  collections on loans and principal  collections
and proceeds from the maturities of investment  securities  and  mortgage-backed
securities, were $17.5 million and $16.5 million for the nine month period ended
March  31,  2000 and  1999,  respectively.  Net  cash  provided  from  financing
activities  consisting  primarily of net activity in deposit and escrow accounts
and new FHLB  borrowings,  offset by repayments on FHLB  borrowings,  were $16.3
million  and $14.5  million for the nine month  period  ended March 31, 2000 and
1999, respectively.

The Bank  anticipates  that it will have sufficient  funds available to meet its
current  commitments.  As of March 31, 2000,  the Bank had  commitments  to fund
loans of $10 million. Certificates of deposit scheduled to mature

                                       14
<PAGE>

in one year or less totaled $38.6 million.  Based on historical  withdrawals and
outflows,  on internal daily deposit  reports  monitored by management,  and the
fact that the Bank does not accept any brokered  deposits,  management  believes
that a majority of deposits will remain with the Bank.  As a result,  no adverse
liquidity effects are expected.

Pursuant  to  Financial  Accounting  Standards  Bulletin  No.  130,  the Bank is
required to record unrealized gains and losses in its investment  portfolio that
may result from movements in interest rates. The Bank showed unrealized  losses,
net of tax effect,  totaling $17,000,  due to increases in interest rates during
the three  months  ended March 31,  2000.  Management  does not  anticipate  the
realization  of this loss.  The unrealized  loss  negatively  impacts the Bank's
capital.  However,  the unrealized  losses combined with net operating income of
$293,000  yielded a net  increase  in the  Bank's  capital of  $276,000,  net of
applicable taxes,  during the three months ended March 31, 2000. During the nine
months ended March 31, 2000, the unrealized  losses in the investment  portfolio
totaled $389,000.

At March 31, 2000, the Bank exceeded each of the three OTS capital  requirements
on a fully-phased-in basis.


Subsequent Events

None


Stock Repurchase Program

On May 20, 1999 the Company  issued a press release  announcing its intention to
repurchase  up  to 5%  (49,965  shares)  of  the  Company's  common  stock.  The
repurchase was completed on March 24, 2000. On March 24, 2000 the Company issued
a press release  announcing its intention to repurchase up to 5% (47,785 shares)
of the  Company's  common stock.  As of April 24, 2000,  16,175 shares have been
repurchased and retired as authorized but unissued. The Company believes that it
has sufficient  capital to complete the repurchase and that the repurchase  will
not cause the Bank to fail to meet its regulatory capital requirements.

Impact of Inflation and Changing Prices

The  consolidated  financial  statements  of  the  Company  and  notes  thereto,
presented  elsewhere  herein,  have been prepared in accordance  with  Generally
Accepted  Accounting  Principles  ("GAAP"),  which  require the  measurement  of
financial  position  and  operating  results  primarily  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 Company's  operations.  Unlike most industrial  companies,
nearly all the assets and liabilities of the Company are financial. As a result,
interest  rates have a greater impact on the Company's  performance  than do the
effects of general levels of inflation.  Interest rates do not necessarily  move
in the same direction or to the same extent as the prices of goods and services.


Recapture of Post 1987 Bad Debt Reserves

The Small Business Job Protection Act of 1996, among other things, equalized the
taxation  of  thrifts  and  banks.  The bill no longer  allows  thrifts a choice
between the  percentage of taxable  income method and the  experience  method in
determining  additions  to their bad debt  reserves.  Smaller  thrifts with $500
million of assets or less are only allowed to use the experience  method,  which
is generally  available to small banks  currently.  Larger  thrifts must use the
specific  charge off method  regarding its bad debts.  Any reserve amounts added
after 1987 will be taxed over a six year period beginning in 1996; however,  bad
debt reserves set aside through 1987 will  generally not be taxed.  Institutions
can delay these taxes for two years if they meet a  residential  - lending test.
At June 30, 1999,  the Bank had $46,613 of post 1987 bad-debt  reserves of which
1/6th or $9,323 was  recaptured  into taxable income for the year ended June 30,
1999.  Future  recapture  of the Bank's  bad-debt  reserves  may have an adverse
effect on net earnings. Management does not believe such future recapture of the
Bank's bad debt  reserves  will have a material  impact on the Bank's  financial
condition.

                                       15
<PAGE>

Impact of Certain Accounting Standards

In October,  1995,  the FASB issued SFAS No. 123  "Statement of  Accounting  for
Stock-Based   Compensation"  which  defines  a  "fair  value  based  method"  of
accounting for an employee stock option whereby compensation cost is measured at
the  grant  date  based on the value of the  award  and is  recognized  over the
service  period.  The FASB encouraged all entities to adopt the fair value based
method,  however, it allows entities to continue the use of the "intrinsic value
based method" prescribed by Accounting  Principles Board ("APB") Opinion No. 25.
Under the intrinsic value based method,  compensation  cost is the excess of the
market price of the stock at the grant date over the amount an employee must pay
to acquire the stock.  However,  most stock option plans have no intrinsic value
at the grant date and, as such, no  compensation  cost is  recognized  under APB
Opinion No. 25. Entities electing to continue use of the accounting treatment of
APB Opinion No. 25 must make certain pro forma  disclosures as if the fair value
based method had been  applied.  The Bank has  continued  to use the  "intrinsic
value based method" as prescribed by APB Opinion No. 25.

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  About Segments of an
Enterprise and Related  Information." This Statement  establishes  standards for
the way that public entities  report  information  about  operating  segments in
annual  financial  statements  and  requires  that  selected  information  about
operating  segments be reported in interim  financial  reports as well.  It also
establishes  standards  for related  disclosures  about  products and  services,
geographic  areas and major  customers.  This  Statement is effective for fiscal
years beginning after December 31, 1997, except for interim financial statements
in the initial year of its application.

In February 1998,  the FASB issued SFAS No. 132,  Employer's  Disclosures  about
Pensions and Other Postretirement  Benefits. This statements revises disclosures
about pension and other  postretirement  benefit  plans.  It does not change the
measurement  or recognition of those plans.  This statement  eliminates  certain
disclosures  from SFAS No.'s 87, 88, and 106.  This  statement is effective  for
fiscal years  beginning after December 15, 1997. This statement is currently not
applicable to the Bank.

In  June  1998,  the  FASB  issued  SFAS  No.  133,  Accounting  for  Derivative
Instruments and Hedging Activities.  This statement  establishes  accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments   embedded  in  other   contracts   (collectively   referred  to  as
derivatives) and for hedging activities.  This statement is effective for fiscal
years  beginning after June 15, 1999.  Earlier  application of this statement is
encouraged. This statement is currently not applicable to the Bank.

In October 1998, the FASB issued SFAS No. 134,  Accounting  for  Mortgage-Backed
Securities  Retained After the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise. This statement amends SFAS No. 65 to require that
after the  securitization  of a  mortgage  loan an entity  engaged  in  mortgage
banking activities  classify the resulting mortgage backed security as a trading
or  held-for-sale  based on the  intent  to sell or hold the  investments.  This
statement is effective for the first fiscal quarter beginning after December 15,
1998. This statement is currently not applicable to the Bank.

PART II.  OTHER INFORMATION
--------  -----------------

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

10.3     Directors Deferred Compensation Agreements

10.4     Directors Stock Compensation Plan

                                       16
<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: May 8, 2000                /s/Jerry R. Spurlin
                                 -----------------------------------------------
                                 Jerry R. Spurlin
                                 Assistant Secretary and Chief Financial Officer
                                 (Duly Authorized Representative and
                                 Principal Financial Officer)