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 December 31, 2003
                                               -----------------

                                       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                                                        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 February 3, 2004,  there were issued and outstanding  1,146,270  shares of
the registrant's Common Stock.

Transitional Small Business Disclosure format:
                      Yes                 No    x
                            -----             -----

<PAGE>
                               GFSB Bancorp, Inc.


                                      Index
<TABLE>
<CAPTION>

                                                                                          Page No.
                                                                                          --------

<S>                                                                                       <C>

                          PART I. FINANCIAL INFORMATION

Item 1.    Condensed Consolidated Financial Statements:

           Condensed Consolidated Statements of Financial Condition
               December 31, 2003 and June 30, 2003                                            3

           Condensed Consolidated Statements of Earnings and Comprehensive Earnings
               Three months and six months ended December 31, 2003 and December 31, 2002.     4

           Condensed Consolidated Statements of Cash Flows
               Six months ended December 31, 2003 and December 31, 2002.                      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                                                           15

                           PART II. OTHER INFORMATION

Item 1.    Legal Proceedings                                                                 16

Item 2.    Changes in Securities                                                             16

Item 3.    Defaults Upon Senior Securities                                                   16

Item 4.    Submission of Matters to a Vote of Security Holders                               16

Item 5.    Other Information                                                                 16

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

           Signatures                                                                        18

</TABLE>

                                        2

<PAGE>
                               GFSB Bancorp, Inc.

            CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                                December 31,       June 30,
                                                                                    2003             2003
                                                                               -------------    -------------
<S>                                                                          <C>              <C>
                                                       ASSETS

Cash and due from banks                                                        $   6,925,370    $   6,785,410
Interest-bearing deposits with banks                                               1,095,110          466,948
Available-for-sale investment securities                                          32,732,974       29,279,417
Available-for-sale mortgage-backed securities                                     32,459,642       38,517,103
Held-to-maturity investment securities                                               398,998          675,997
Stock of Federal Home Loan Bank, at cost, restricted                               4,376,500        4,332,800
Loans receivable, net, substantially pledged                                     157,508,993      146,264,291
Loans held-for-sale                                                                  236,105          132,000
Accrued interest and dividends receivable                                            880,513          844,722
Premises and equipment                                                             2,622,510        2,313,815
Other real estate and repossessed property                                           111,310          213,953
Prepaid and other assets                                                             173,295          128,197
                                                                               -------------    -------------

        TOTAL ASSETS                                                           $ 239,521,320      229,954,653
                                                                               =============    =============

                                        LIABILITIES AND STOCKHOLDERS' EQUITY

Transaction and NOW accounts                                                   $  25,592,733    $  24,937,782
Savings and MMDA deposits                                                         20,089,690       17,264,978
Time deposits                                                                     94,019,915       87,556,558
Advances from Federal Home Loan Bank                                              72,398,958       76,641,834
Other secured borrowings                                                           6,554,720        3,657,911
Repurchase agreements                                                                930,009          584,902
Accrued interest payable                                                             508,787          515,872
Advances from borrowers for taxes and insurance                                      381,243          365,193
Notes payable                                                                        273,750             --
Accounts payable and accrued liabilities                                             394,315          250,015
Deferred income taxes                                                                 67,636          312,796
Dividends declared and payable                                                       139,167          122,467
Income taxes payable                                                                       -                -
                                                                               -------------    -------------

        TOTAL LIABILITIES                                                        221,350,923      212,210,308
                                                                               -------------    -------------

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;  1,146,270 issued and outstanding
  at December 31, 2003 and June 30, 2003                                             114,627          114,627
Additional paid-in-capital                                                         2,950,187        2,853,446
Unearned ESOP stock                                                                 (103,914)        (139,882)
Retained earnings, substantially
  restricted                                                                      14,198,839       13,633,421
Accumulated other comprehensive
  earnings                                                                         1,010,658        1,282,733
                                                                               -------------    -------------

        TOTAL STOCKHOLDERS' EQUITY                                                18,170,397       17,744,345
                                                                               -------------    -------------

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 239,521,320    $ 229,954,653
                                                                               =============    =============
</TABLE>

See notes to condensed consolidated financial statements.

                                       3

<PAGE>

                               GFSB Bancorp, Inc.

                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                           AND COMPREHENSIVE EARNINGS

<TABLE>
<CAPTION>
                                                                      Three months ended           Six months ended
                                                                         December 31,                 December 31,
                                                                  --------------------------   --------------------------
                                                                      2003           2002          2003           2002
                                                                  -----------    -----------   -----------    -----------
                                                                  (Unaudited)    (Unaudited)   (Unaudited)    (Unaudited)
<S>                                                             <C>            <C>             <C>          <C>
Interest income
           Loans receivable
                           Mortgage loans                         $ 2,022,098    $ 2,111,982     4,067,122    $ 4,247,677
                           Commercial loans                           407,690        332,932       736,528        664,412
                           Share and consumer loans                   106,761        110,668       215,330        219,630
           Investment and mortgage-backed securities                  526,977        563,759     1,026,179      1,201,818
           Other interest-earning assets                               23,106         37,178        48,578         69,984
                                                                  -----------    -----------   -----------    -----------

                           TOTAL INTEREST EARNINGS                  3,086,632      3,156,519     6,093,737      6,403,521

Interest expense
           Deposits                                                   746,607        758,252     1,499,767      1,552,597
           Advances from Federal Home Loan Bank                       671,778        779,208     1,377,416      1,584,203
           Repurchase agreements                                           37          1,408           141          3,550
                                                                  -----------    -----------   -----------    -----------

                           TOTAL INTEREST EXPENSE                   1,418,422      1,538,868     2,877,324      3,140,350
                                                                  -----------    -----------   -----------    -----------

                           NET INTEREST EARNINGS                    1,668,210      1,617,651     3,216,413      3,263,171

Provision for loan losses                                              70,014         50,000       130,014         75,000
                                                                  -----------    -----------   -----------    -----------

                           NET INTEREST EARNINGS AFTER
                             PROVISION FOR LOAN LOSSES              1,598,196      1,567,651     3,086,399      3,188,171
                                                                  -----------    -----------   -----------    -----------

Non-interest earnings
           Income from real estate operations                           1,350          1,550         3,550          3,750
           Miscellaneous income                                        52,195         11,717        65,876         23,882
           Net loss from sales of available for sale securities        (1,417)          --          (1,417)          --
           Net gains from sales of loans                               19,490         40,852        30,274         56,058
           Service charge income                                      177,542         92,720       348,090        191,499
                                                                  -----------    -----------   -----------    -----------

                           TOTAL NON-INTEREST EARNINGS                249,160        146,839       446,373        275,189
                                                                  -----------    -----------   -----------    -----------

Non-interest expense
           Compensation and benefits                                  635,466        576,170     1,221,589      1,114,476
           FDIC insurance                                               4,822          4,598         9,552          8,927
           Insurance                                                   11,703         12,193        24,911         24,482
           Stock services                                              13,380          5,109        19,965          9,053
           Occupancy                                                  138,260        129,580       273,087        265,620
           Data processing                                             94,376         90,864       183,860        158,935
           Professional fees                                           60,353         32,506       105,924         66,153
           Advertising                                                 49,506         36,062       106,556         71,775
           Stationary, printing and office supplies                    30,166         42,900        61,071         87,729
           ATM expense                                                 19,462         15,588        34,040         30,945
           Supervisory exam fees                                       14,585         13,900        29,170         27,800
           Postage                                                     19,555         13,220        38,841         25,539
           Other                                                       96,932         96,343       197,405        173,399
                                                                  -----------    -----------   -----------    -----------

                           TOTAL NON-INTEREST EXPENSE               1,188,566      1,069,033     2,305,971      2,064,833
                                                                  -----------    -----------   -----------    -----------
</TABLE>

                                        4

<PAGE>

                               GFSB Bancorp, Inc.

                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                     AND COMPREHENSIVE EARNINGS - CONTINUED

<TABLE>
<CAPTION>
                                                               Three months ended          Six months ended
                                                                  December 31,               December 31,
                                                           -------------------------    -----------------------
                                                               2003           2002         2003          2002
                                                          -----------    -----------    ---------   -----------
                                                          (Unaudited)    (Unaudited)  (Unaudited)   (Unaudited)
<S>                                                      <C>            <C>        <C>           <C>
                           EARNINGS BEFORE INCOME TAXES       658,790        645,457    1,226,801     1,398,527

Income tax expense
           Currently payable                                  263,582        219,876      504,749       461,343
           Deferred (benefit)                                (105,000)            --     (105,000)           --
                                                          -----------    -----------    ---------   -----------

                                                              158,582        219,876      399,749       461,343
                                                          -----------    -----------    ---------   -----------

                           NET EARNINGS                   $   500,208    $   425,581      827,052   $   937,184
                                                          ===========    ===========    =========   ===========

Other Comprehensive Earnings
           Unrealized (loss) gain, net of tax                 (75,211)        37,435     (272,075)       56,106

                                                          -----------    -----------    ---------   -----------
                           COMPREHENSIVE EARNINGS             424,997        463,016      554,977       993,290
                                                          ===========    ===========    =========   ===========
Earnings per common share
           Basic                                          $      0.44           0.38         0.74          0.84
                                                          ===========    ===========    =========   ===========
Weighted average number of common shares outstanding
           Basic                                            1,125,105      1,115,665    1,123,414     1,113,645
                                                          ===========    ===========    =========   ===========
Earnings per common share
           Diluted                                               0.42           0.37         0.70          0.81
                                                          ===========    ===========    =========   ===========

Weighted average number of common shares outstanding
           Diluted                                          1,179,896      1,162,238    1,177,867     1,159,720
                                                          ===========    ===========    =========   ===========
Comprehensive earnings per common share
           Basic                                                 0.38           0.42         0.49          0.89
                                                          ===========    ===========    =========   ===========

           Diluted                                               0.36           0.40         0.47          0.86
                                                          ===========    ===========    =========   ===========

Dividends per share                                             0.125           0.11        0.235          0.21
                                                          ===========    ===========    =========   ===========
</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>
                                                                                  Six Months Ended
                                                                                     December 31,
                                                                             -----------------------------------------
                                                                                  2003            2002
                                                                             ------------    ------------
                                                                              (Unaudited)     (Unaudited)
<S>                                                                        <C>             <C>
Cash flows from operating activities
           Net earnings                                                      $    827,052    $    937,184
           Adjustments to reconcile net earnings to
             net cash provided by operations
                     Deferred loan origination fees                              (281,515)       (139,099)
                     Gain on sale of loans and securities                         (28,857)        (56,058)
                     Provision for loan losses                                    130,014          75,000
                     Depreciation of premises and equipment                       148,019         143,331
                     Amortization of investment and mortgage-
                       backed securities premiums                                 238,377          39,757
                     Stock dividend on FHLB stock                                 (43,700)        (61,200)
                     Release of ESOP stock                                        125,088          92,282
                     Stock compensation under management stock bonus plan          19,411          15,374
                     (Benefit) for deferred income taxes                         (105,000)              -

           Net changes in operating assets and liabilities
                     Accrued interest and dividends receivable                    (35,791)         59,518
                     Prepaid and other assets                                      (6,978)       (118,323)
                     Accrued interest payable                                      (7,085)          8,164
                     Accounts payable and accrued liabilities                     124,890          85,818
                     Income taxes (receivable) payable                            (38,120)         17,324
                     Dividends declared and payable                                16,700          11,051
                                                                             ------------    ------------
                               Net cash provided by
                               operating activities                             1,082,505       1,110,123
                                                                             ------------    ------------
Cash flows from investing activities
           Purchase of premises and equipment                                    (456,714)        (48,181)
           Loan originations and principal
             repayment on loans, net                                          (13,044,462)     (5,067,089)
           Change in other secured borrowings                                   2,896,808      (1,003,273)
           Proceeds from the sale of loans                                      1,980,073       3,453,649
           Principal payments on mortgage-backed
             securities                                                         9,006,531       4,954,873
           Principal payments on available-for-sale securities                    943,672       3,292,388
           Principal payments on held-to-maturity securities                        7,000          31,000
           Purchases of mortgage-backed securities                             (3,420,353)     (8,272,674)
           Purchases of available-for-sale securities                          (5,277,976)     (2,068,053)
           Purchases of held-to-maturity securities                                     -        (270,000)
           Maturities and proceeds from sale of
             available-for-sale securities                                        700,000         785,000
           Maturities and proceeds from sale of held-to-maturity securites        270,000               -
                                                                             ------------    ------------

                               Net cash used by
                               investing activities                            (6,395,421)     (4,212,360)
                                                                             ------------    ------------
</TABLE>
                                        6

<PAGE>

                               GFSB Bancorp, Inc.

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                Increase (decrease) in cash and cash equivalents

<TABLE>
<CAPTION>
                                                                                  Six Months Ended
                                                                                    December 31,
                                                                            ------------------------------
                                                                                  2003             2002
                                                                            -------------    -------------
                                                                              (Unaudited)      (Unaudited)
<S>                                                                       <C>              <C>
Cash flows from financing activities
           Net increase in transaction accounts, passbook
             savings, money market accounts, and
             certificates of deposit                                        $   9,943,018    $   1,301,040
           Net increase (decrease) in Repurchase agreements                       345,107         (104,895)
           Net increase (decrease) in mortgage escrow funds                        16,050           (3,648)
           Proceeds from FHLB advances                                        773,689,296      200,425,000
           Repayments on FHLB advances                                       (777,932,171)    (197,558,727)
           Net increase in note payable                                           273,750                -
           Dividends paid or to be paid in cash                                  (261,634)        (232,062)
           Price paid for vested management bonus
              stock plan stock                                                      7,622                -
                                                                            -------------    -------------
                               Net cash provided by
                               financing activities                             6,081,038        3,826,708
                                                                            -------------    -------------

           Increase in cash and cash equivalents                                  768,122          724,471

           Cash and cash equivalents at beginning of period                     7,252,358        5,651,491
                                                                            -------------    -------------

           Cash and cash equivalents at end of period                       $   8,020,480        6,375,962
                                                                            =============    =============

Supplemental disclosures of cash flow information
           Cash paid during the period for
                     Interest on deposits and advances                      $   2,884,268    $   3,132,186
                     Income taxes                                                 437,869          444,020

           Change in market value, net of deferred taxes on
             available-for-sale securities (other comprehensive earnings)        (272,075)          56,106

           Dividends declared not yet paid                                        139,167          121,557
</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  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  consolidated  financial  statements be read in
conjunction with the Form 10-KSB for the year ended June 30, 2003.

                                       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, which 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 and general  economic  conditions.  We undertake no  obligation  to
publicly  release  the  results  of  any  revisions  to  those   forward-looking
statements,  which 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 savings and loan  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.


RESULTS OF OPERATIONS

COMPARISON OF OPERATING  RESULTS FOR QUARTER ENDED DECEMBER 31, 2003 COMPARED TO
QUARTER ENDED DECEMBER 31, 2002.

General

Net  earnings  for the quarter  ended  December  31, 2003  increased  $74,000 to
$500,000 from $426,000 for the quarter ended  December 31, 2002. The increase in
net earnings is primarily  attributable  to a $102,000  increase in non-interest
earnings,  a $51,000 increase in net interest earnings and a $61,000 decrease in
income tax expense,  partially offset by an increase in non-interest  expense of
$120,000 and a $20,000  increase in the provision for loan losses.  Please refer
to "Average  Balance  Sheets"  for an  analysis  of the changes in net  interest
earnings for the quarter  ended  December  31, 2003  compared to the same period
in 2002.

                                        9
<PAGE>
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 December 31, 2003              Quarter ended December 31, 2002
                                   ---------------------------------------     ------------------------------------------
                                    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)               $158,656        $2,537           6.39%       $140,447         $2,556           7.28%
Investment securities and
 mortgage-backed securities          65,866           527           3.20%         51,160            564           4.41%
Other interest-earning
  assets (2)                          5,772            23           1.59%          5,392             37           2.74%
                                   --------        ------                       --------         ------

Total interest-earning assets       230,294         3,087           5.36%        196,999          3,157           6.41%
                                                   ------                                        ------
Non-interest-earning assets          10,307                                       11,522
                                   --------                                    --------

Total assets                       $240,601                                     $208,521
                                   ========                                     ========

Interest-bearing liabilities:
  Transaction accounts              $10,858           $ 8           .29%        $ 8,626          $ 17             .79%
  Passbook savings                    7,094            18          1.01%          5,553            16            1.15%
  Money market accounts              13,863            32           .92%         12,500            40            1.28%
  Certificates of deposit            92,571           689          2.98%         73,749           685            3.72%
  Other liabilities (3)              80,884           672          3.32%         79,676           781            3.92%
                                   --------        ------                       --------         ------
Total interest-bearing
   liabilities                      205,270         1,419          2.96%        180,104         1,539            3.42%
                                                   ------                                        ------
Non-interest bearing
   liabilities                       17,392                                      11,343
                                   --------                                    --------

Total liabilities                   222,662                                     191,447

Stockholders' equity                 17,939                                      17,074
                                   --------                                    --------
Total liabilities and
  stockholders' equity             $240,601                                    $208,521
                                   ========                                    ========
Net interest income                                $1,668                                      $1,618
                                                   ======                                      ======
Interest rate spread (4)                                           2.40%                                         2.99%
                                                                   ====                                          ====
Net yield on interest-
  earning assets (5)                                               2.90%                                         3.29%
                                                                   ====                                          ====
Ratio of average interest-
Earning assets to average
interest-bearing liabilities                                       1.12X                                         1.09X
                                                                   ====                                          ====
</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.

                                        10
<PAGE>

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; and (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 December 31, 2003 vs. 2002
                                                  Increase (Decrease)
                                                         Due to
                                        --------------------------------
                                                           Rate/
                                        Volume    Rate    Volume     Net
                                        ------    ----    ------     ---
                                                 (Dollars in Thousands)
Interest income:
  Loans receivable                      $ 331    $(312)   $ (38)   $ (19)
  Mortgage-backed securities and
     investment securities                162     (155)     (44)     (37)
  Other interest-earning assets             3      (16)      (1)     (14)
                                        -----    -----    -----    -----
    Total interest-earning assets         496     (483)     (83)     (70)

Interest expense:

  Transaction accounts                      4      (11)      (2)      (9)
  Savings accounts                          4       (2)       0        2
  Money markets                             4      (11)      (1)      (8)
  Certificates of deposit                 175     (136)     (35)       4
  Other liabilities                        12     (120)      (1)    (109)
                                        -----    -----    -----    -----
   Total interest-bearing liabilities     199     (280)     (39)    (120)
                                        -----    -----    -----    -----

Net change in interest income           $ 297    $(203)   $ (44)   $  50
                                        =====    =====    =====    =====

                                       11
<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 losses was $70,000 and $50,000 for the
quarters  ended  December 31, 2003 and  December  31, 2002.  The increase in the
provision for loan losses for the current  three-month  period was primarily the
result of loan growth in commercial and commercial real estate loans, which tend
to have  greater  credit  risk than  residential  real estate  loans.  While the
Company 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.


Non-Interest Earnings

Total  non-interest  earnings increased by $102,000 or 69.7% to $249,000 for the
quarter ended December 31, 2003 from $147,000 for the quarter ended December 31,
2002. This increase was primarily due to an increase in service charge income of
$85,000 and an increase in miscellaneous  income of $40,000 due to a gain on the
sale of other real  estate  owned,  partially  offset by a decrease in net gains
from  sales of loans of  $21,000.  The  increase  in  service  charge  income is
primarily  due to  increased  insufficient  funds  charges  collected on NOW and
checking accounts.

Non-Interest Expense

Total  non-interest  expense  increased  $120,000 or 11.2% to $1,189,000 for the
quarter ended  December 31, 2003 from  $1,069,000 for the quarter ended December
31, 2002. The increase in  non-interest  expense was primarily  attributable  to
increases  in  compensation  and  benefits,   professional  fees,   advertising,
occupancy,  postage  and  stock  services,  partially  offset by a  decrease  in
stationary,  printing and office supplies.  The $59,000 increase in compensation
and benefits is primarily attributable to a $34,000 increase in general salaries
and benefits due to the hiring of two additional employees last quarter, general
salary  increases,  and increases in the cost of employee  health  insurance and
retirement  benefits  and  $23,000 in expense  associated  with  employee  stock
compensation plans. Professional fees increased $28,000, primarily due to higher
legal fees, audit expense,  and accounting fees.  Advertising  expense increased
$13,000,  primarily  due  to  efforts  to  achieve  growth  in  the  Gallup  and
Farmington,  New Mexico markets.  Occupancy expense increased $9,000,  primarily
due to an increase in lease expense on the Bank's loan center and an increase in
depreciation  of furniture,  fixtures and equipment.  Stock  services  increased
$8,000,  primarily due to increases in annual fees for NASDAQ stock services and
an  increase  in  printing  costs  associated  with the Bank's  annual  reports.
Stationary,  printing and office supplies decreased $13,000, since a substantial
portion of such expenses the previous year were  attributable  to the March 2002
opening of the Farmington branch.


RESULTS OF OPERATIONS

COMPARISON OF OPERATING RESULTS FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2003
COMPARED TO THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2002.

General

Net earnings for the six months ended  December 31, 2003  decreased  $110,000 to
$827,000  compared  to net  earnings of $937,000  for the  comparable  six-month
period in 2002.  The  decrease in net  earnings  was  primarily  the result of a
$55,000  increase  in the  provision  for loan  losses,  a $241,000  increase in
non-interest  expense  and a  decrease  in net  interest  earnings  of  $47,000,
partially  offset by an increase  in  non-interest  earnings  of $171,000  and a
$62,000 decrease in income tax expense. The decrease in net interest earnings is
primarily due to the recent leveling of interest  rates,  which has put pressure
on the  Company's  net interest  margin and reduced  refinancing  activity.  The
Company  attributes  the increase in provision for loan losses and  non-interest
expense to bank growth and growth in the loan  portfolio in  particular.  Please
refer to "Average  Balance Sheets" for an analysis of the change in net interest
earnings for the six months ended  December 31, 2003 compared to the same period
in 2002.

                                       11
<PAGE>

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 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>
                                         Six-month period ended                        Six-month period ended
                                         ----------------------                        ----------------------
                                            December 31, 2003                             December 31, 2002
                                            -----------------                             -----------------
                                   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)               $155,676        $5,019           6.45%       $139,545         $5,132           7.36%
Investment securities and
 Mortgage-backed securities          66,611         1,026           3.08%         52,017          1,202           4.62%
Other interest-earning
  assets (2)                          5,275            49           1.86%          5,198             70           2.69%
                                   --------        ------                       --------         ------

Total interest-earning assets       227,562         6,094           5.36%        196,760          6,404           6.51%
                                                   ------                                        ------

Non-interest-earning assets          10,577                                       10,639
                                   --------                                    --------

Total assets                       $238,139                                     $207,399
                                   ========                                     ========
Interest-bearing liabilities:
  Transaction accounts              $10,370          $ 18           .35%        $ 8,709          $ 35             .80%
  Passbook savings                    6,768            34          1.00%          5,508            33            1.20%
  Money market accounts              12,767            58           .91%         12,235            78            1.28%
  Certificates of deposit            90,844         1,389          3.06%         73,705         1,407            3.82%
  Other liabilities (3)              82,303         1,378          3.35%         76,061         1,587            4.18%
                                   --------        ------                       --------         ------
Total interest-bearing
   liabilities                      203,052         2,877          2.83%        176,218         3,140            3.56%
                                                   ------                                        ------
Non-interest bearing
   liabilities                       17,326                                      14,300
                                   --------                                    --------
Total liabilities                   220,378                                     190,518

Stockholders' equity                 17,761                                      16,881
                                   --------                                    --------
Total liabilities and
  Stockholders' equity             $238,139                                    $207,399
                                   ========                                    ========

Net interest income                                $3,217                                      $3,264
                                                   ======                                      ======
Interest rate spread (4)                                           2.53%                                         2.95%
                                                                   ====                                          ====
Net yield on interest-
  earning assets (5)                                               2.83%                                         3.32%
                                                                   ====                                          ====
Ratio of average interest-
  earning assets to average
interest-bearing liabilities                                       1.12X                                         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.  The  FHLB  borrowings  are  adversely  affecting  the
     Company's net interest  earnings  because some of them bear fixed  interest
     rates that are above current market rates.  These  borrowings will continue
     to  adversely  affect net  interest  earnings  unless paid off early,  at a
     significant penalty, or unless market rates increase.
(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.

                                       12
<PAGE>

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; and (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.

                                                 Six-month period ended
                                               December 31, 2003 vs. 2002
                                                  Increase (Decrease)
                                                         Due to
                                        ----------------------------------------
                                                              Rate/
                                         Volume     Rate      Volume       Net
                                         ------     ----      ------       ---
                                                 (Dollars in Thousands)
Interest income:

  Loans receivable                      $   593   $  (635)   $   (71)   $  (113)
  Mortgage-backed securities and
     investment securities                  337      (401)      (112)      (176)
  Other interest-earning assets               1       (22)         0        (21)
                                        -------   -------    -------    -------
    Total interest-earning assets           931    (1,058)      (183)      (310)
                                        -------   -------    -------    -------

Interest expense:

  Transaction accounts                        7       (20)        (4)       (17)
  Savings accounts                            8        (6)        (1)         1
  Money markets                               1       (23)         2        (20)
  Certificates of deposit                   327      (280)       (65)       (18)
  Other liabilities                         130      (316)       (23)      (209)
                                        -------   -------    -------    -------
   Total interest-bearing liabilities       473      (645)       (91)      (263)
                                        -------   -------    -------    -------
Net change in interest income           $   458   $  (413)   $   (92)   $   (47)
                                        =======   =======    =======    =======

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 losses was $130,000 and $75,000 for
the  six-month  period  ended  December  31,  2003 and 2002,  respectively.  See
"Comparison  of  Operating  Results  for the  quarter  ended  December  31, 2003
compared to quarter ended December 31, 2002 - Provision for Losses on Loans."

Non-Interest Earnings

Total  non-interest  earnings increased by $171,000 or 62.2% to $446,000 for the
six months  ended  December  31,  2003 from  $275,000  for the six months  ended
December 31, 2002.  This  increase was  primarily  due to an increase in service
charge  income of $157,000 and an increase in  miscellaneous  income of $42,000,
partially offset by a decrease in net gains from sales of loans of $26,000.  The
increase in miscellaneous income is primarily due to a gain on the sale of other
real estate  owned.  The increase in service  charge  income is primarily due to
increased insufficient funds charges collected on NOW and checking accounts.

                                       13
<PAGE>

Non-Interest Expense

Total non-interest expense increased $241,000 or 11.7% to $2,306,000 for the six
months ended December 31, 2003 from $2,065,000 for the six months ended December
31, 2002. The increase in  non-interest  expense was primarily  attributable  to
increases in compensation  and benefits,  data  processing,  professional  fees,
advertising,  postage,  stock services and other operating  expenses,  partially
offset by a decrease in stationary,  printing and office supplies.  The $107,000
increase in  compensation  and benefits is primarily  attributable  to a $65,000
increase in general  salaries and  benefits due to the hiring of two  additional
employees,  general  salary  increases,  and  increases  in the cost of employee
health insurance and retirement  benefits and $37,000 in expense associated with
employee stock compensation plans. Data processing increased $25,000,  primarily
due to increases in expenses  resulting from the processing cost associated with
the growth in the volume of deposit accounts,  statement  processing,  servicing
for the online home banking system and an increase in the number of transactions
processed.  Professional fees increased  $40,000,  primarily due to higher legal
fees, audit expense and accounting fees.  Advertising expense increased $35,000,
primarily  due to efforts to achieve  growth in the Gallup and  Farmington,  New
Mexico market.  Stock services increased $11,000,  primarily due to increases in
annual  fees for  NASDAQ  stock  services  and an  increase  in  printing  costs
associated with the Bank's annual reports.  Other operating  expenses  increased
$24,000,  primarily due to increases in charitable contributions,  correspondent
bank expense and organization dues and subscriptions.  Stationary,  printing and
office supplies decreased $27,000,  since a substantial portion of such expenses
the previous year were  attributable to the March 2002 opening of the Farmington
branch.


Item 3.  CONTROLS AND PROCEDURES

(a)           Evaluation of disclosure  controls and procedures.  Based on their
              evaluation of the Company's disclosure controls and procedures (as
              defined in Rules  13a-15(e)  under the Securities  Exchange Act of
              1934 (the  "Exchange  Act")),  the Company's  principal  executive
              officer and the principal financial officer have concluded that as
              of the end of the period covered by this Quarterly  Report on Form
              10-QSB 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.

                                       14

<PAGE>

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


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

                  Not applicable.

Item 2.  Changes in 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
         ---------------------------------------------------

The annual  meeting of the  stockholders  of the Company was held on October 27,
2003.  At the meeting three  directors  were elected for terms to expire in 2006
and  the  appointment  of  Neff  +  Ricci,  LLP  as  the  Company's  independent
accountants was ratified.

The results of voting are shown for each matter considered.

Director election:

Nominees                Votes for         Votes withheld
--------                ---------         --------------

George S. Perce         988,829                 0
Charles L. Parker, Jr.  988,829                 0
Michael P. Mataya       983,179             5,650


Independent accountant ratification:

                        Votes for        Votes against       Abstentions
                        ---------        -------------       -----------
                          988,717               0                112

                                       15
<PAGE>

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

                  Not applicable.

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

                  (a)         List of Exhibits
<TABLE>
<CAPTION>
                <S>         <C>
                       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****
                      31      Certification Pursuant to Section 302 of the Sarbanes
                              Oxley Act of 2002
                      32      Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>

         ______________
         *        Incorporated herein by reference to exhibits  3(i)(Certificate
                  of  Incorporation)   and  3(ii)(Bylaws)  to  the  Registration
                  Statement on Form S-1 of the  Registrant  (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.

         ***      Incorporated by reference to the identically numbered exhibits
                  of the  Quarterly  Report on Form 10-QSB for the quarter ended
                  March 31, 2000 filed with the SEC.

         ****     Incorporated  by  reference  to the  Proxy  Statement  for the
                  Annual Meeting of  Stockholders  on October 27, 2000 and filed
                  with the SEC on September 25, 2000.

(b)  The  Company  filed a report on Form 8-K on  November  7, 2003  pursuant to
     items 7 and 12 to report earnings for the quarter ended September 30, 2003.

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


                                       17