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


                                   FORM 10-QSB


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

                For the quarterly period ended December 31, 2004
                                               -----------------
                                       OR

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

               For the transition period from ________ to ________


                         Commission file number: 0-25854


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


Delaware                                                          85-0430841
---------------------------------------------                  ----------------
(State or Other Jurisdiction of Incorporation                 (I.R.S. Employer
 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 January 31, 2005,  there were issued and outstanding  1,146,645  shares of
the registrant's Common Stock.

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


<PAGE>

                               GFSB Bancorp, Inc.


                                      Index

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

                                        PART I. FINANCIAL INFORMATION
<S>                                                                                               <C>
Item 1.    Condensed Consolidated Financial Statements:

           Condensed Consolidated Statements of Financial Condition
               December 31, 2004 and June 30, 2004                                                      3

           Condensed Consolidated Statements of Earnings and Comprehensive Earnings
               Three and six months ended December 31, 2004 and December 31, 2003                       4

           Condensed Consolidated Statements of Cash Flows
               Three and six months ended December 31, 2004 and December 30, 2003                       6

           Notes to Condensed Consolidated Financial Statements                                         8

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

Item 3.    Controls and Procedures                                                                     17

                                          PART II. OTHER INFORMATION

Item 1.    Legal Proceedings                                                                           18

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                                 18

Item 3.    Defaults Upon Senior Securities                                                             18

Item 4.    Submission of Matters to a Vote of Security Holders                                         18

Item 5.    Other Information                                                                           18

Item 6.    Exhibits                                                                                    18

           Signatures                                                                                  20

</TABLE>
                                        2

<PAGE>

                               GFSB Bancorp, Inc.

            CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                                December 31,       June 30,
                                                                                    2004             2004
                                                                               -------------    -------------
                                                                                (Unaudited)

<S>                                                                          <C>              <C>
                                                       ASSETS

Cash and due from banks                                                        $   6,277,306    $   7,840,712
Interest-bearing deposits with banks                                                 362,790          866,281
Available-for-sale investment securities                                          27,909,821       30,518,828
Available-for-sale mortgage-backed securities                                     26,453,935       30,680,195
Held-to-maturity investment securities                                               389,999          398,999
Stock of Federal Home Loan Bank, at cost, restricted                               3,625,900        4,409,200
Loans receivable, net, substantially pledged                                     148,419,879      152,430,322
Loans held-for-sale                                                                        -          411,400
Accrued interest and dividends receivable                                            807,214          859,298
Premises and equipment                                                             2,410,835        2,513,992
Other real estate and repossessed property                                           283,405          437,211
Prepaid and other assets                                                             184,230          445,847
Deferred tax asset                                                                   131,886          275,125
                                                                               -------------    -------------

        TOTAL ASSETS                                                           $ 217,257,200    $ 232,087,410
                                                                               =============    =============

                                        LIABILITIES AND STOCKHOLDERS' EQUITY

Transaction and NOW accounts                                                   $  28,571,724    $  28,987,811
Savings and MMDA deposits                                                         21,128,121       21,501,954
Time deposits                                                                     81,889,595       83,369,991
Advances from Federal Home Loan Bank                                              60,467,614       73,652,218
Other secured borrowings                                                           4,539,209        4,814,763
Repurchase agreements                                                                269,699          157,119
Accrued interest payable                                                             455,225          460,520
Advances from borrowers for taxes and insurance                                      370,784          499,998
Accounts payable and accrued liabilities                                             310,734          369,595
Dividends declared and payable                                                       138,459          140,895
                                                                               -------------    -------------

        TOTAL LIABILITIES                                                        198,141,164      213,954,864
                                                                               -------------    -------------

COMMITMENTS AND CONTINGENCIES                                                              -                -

STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value, 500,000
  shares authorized;  no shares issued or
  outstanding                                                                              -                -
Common stock, $.10 par value, 1,500,000
  shares authorized;  1,146,645 issued and outstanding
  at December 31, 2004 and June 30, 2004                                             114,665          114,665
Additional paid-in-capital                                                         3,237,565        3,095,718
Unearned ESOP stock                                                                  (23,729)         (68,048)
Retained earnings, substantially restricted                                       14,959,391       14,440,118
Accumulated other comprehensive earnings                                             828,144          550,093
                                                                               -------------    -------------

        TOTAL STOCKHOLDERS' EQUITY                                                19,116,036       18,132,546
                                                                               -------------    -------------

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 217,257,200    $ 232,087,410
                                                                               =============    =============
</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,
                                                           --------------------------    -------------------------
                                                                2004          2003           2004          2003
                                                           --------------------------    -------------------------
                                                            (Unaudited)   (Unaudited)    (Unaudited)   (Unaudited)
<S>                                                       <C>           <C>            <C>           <C>
Interest income
     Loans receivable
            Mortgage loans                                  $ 1,972,742   $ 2,022,098    $ 3,961,861   $ 4,067,122
            Commercial loans                                    411,366       407,690        801,667       736,528
            Share and consumer loans                             99,522       106,761        203,975       215,330
     Investment and mortgage-backed securities                  462,274       526,977        933,614     1,026,179
     Other interest-earning assets                               23,009        23,106         44,063        48,578
                                                            -----------   -----------    -----------   -----------

            TOTAL INTEREST EARNINGS                           2,968,913     3,086,632      5,945,180     6,093,737

Interest expense
     Deposits                                                   598,099       746,607      1,206,365     1,499,767
     Advances from Federal Home Loan Bank                       591,493       671,778      1,208,878     1,377,416
     Repurchase agreements                                        1,019            37          1,258           141
                                                            -----------   -----------    -----------   -----------

            TOTAL INTEREST EXPENSE                            1,190,611     1,418,422      2,416,501     2,877,324
                                                            -----------   -----------    -----------   -----------

            NET INTEREST EARNINGS                             1,778,302     1,668,210      3,528,679     3,216,413

Provision for loan losses                                        60,000        70,014         60,000       130,014
                                                            -----------   -----------    -----------   -----------

            NET INTEREST EARNINGS AFTER
              PROVISION FOR LOAN LOSSES                       1,718,302     1,598,196      3,468,679     3,086,399
                                                            -----------   -----------    -----------   -----------
Non-interest earnings
     Income from real estate operations                           5,050         1,350          8,499         3,550
     Miscellaneous income                                        16,304        52,195         36,670        65,876
     Net loss from sales of available for sale securities             -        (1,417)          --          (1,417)
     Net gains from sales of loans                               15,262        19,490         30,337        30,274
     Service charge income                                      219,512       177,542        435,281       348,090
                                                            -----------   -----------    -----------   -----------

            TOTAL NON-INTEREST EARNINGS                         256,128       249,160        510,787       446,373
                                                            -----------   -----------    -----------   -----------

Non-interest expense
     Compensation and benefits                                  683,502       635,466      1,269,394     1,221,589
     FDIC insurance                                              14,535         4,822         29,718         9,552
     Insurance                                                   15,107        11,703         32,336        24,911
     Stock services                                               5,379        13,380          9,716        19,965
     Occupancy                                                  126,413       138,260        245,796       273,087
     Data processing                                             90,841        94,376        191,673       183,860
     Professional fees                                          127,386        60,353        337,716       105,924
     Advertising                                                 41,643        49,506         91,526       106,556
     Stationary, printing and office supplies                    25,625        30,166         50,546        61,071
     ATM expense                                                 23,618        19,462         49,060        34,040
     Supervisory exam fees                                       23,916        14,585         47,832        29,170
     Postage                                                     11,328        19,555         24,831        38,841
     Other                                                      154,795        96,932        257,731       197,405
                                                            -----------   -----------    -----------   -----------

            TOTAL NON-INTEREST EXPENSE                        1,344,088     1,188,566      2,637,875     2,305,971
                                                            -----------   -----------    -----------   -----------
</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,
                                                       -------------------------    -------------------------
                                                            2004          2003           2004          2003
                                                       -------------------------    -------------------------
                                                        (Unaudited)   (Unaudited)    (Unaudited)   (Unaudited)
<S>                                                  <C>               <C>            <C>                <C>
            EARNINGS BEFORE INCOME TAXES               $   630,342   $   658,790    $ 1,341,591   $ 1,226,801

Income tax expense
     Currently payable                                     303,446       263,582        540,527       504,749
     Deferred provision                                          -      (105,000)             -      (105,000)
                                                       -----------   -----------    -----------   -----------

                                                           303,446       158,582        540,527       399,749
                                                       -----------   -----------    -----------   -----------

            NET EARNINGS                               $   326,896   $   500,208    $   801,064   $   827,052
                                                       ===========   ===========    ===========   ===========

Other Comprehensive Earnings
     Unrealized (loss) gain, net of tax                    (56,038)      (75,211)       278,051      (272,075)
                                                       -----------   -----------    -----------   -----------
            COMPREHENSIVE EARNINGS                     $   270,858   $   424,997    $ 1,079,115   $   554,977
                                                       ===========   ===========    ===========   ===========

Earnings per common share
     Basic                                             $      0.29   $      0.44    $      0.70   $      0.74
                                                       ===========   ===========    ===========   ===========

Weighted average number of common shares outstanding
     Basic                                               1,136,166     1,125,105      1,138,046     1,123,414
                                                       ===========   ===========    ===========   ===========
Earnings per common share
     Diluted                                           $      0.27   $      0.42    $      0.67   $      0.70
                                                       ===========   ===========    ===========   ===========

Weighted average number of common shares outstanding
     Diluted                                             1,196,326     1,179,896      1,200,122     1,177,867
                                                       ===========   ===========    ===========   ===========

Comprehensive earnings per common share
     Basic                                             $      0.24   $      0.38    $      0.95   $      0.49
                                                       ===========   ===========    ===========   ===========

     Diluted                                           $      0.23   $      0.36    $      0.90   $      0.47
                                                       ===========   ===========    ===========   ===========

Dividends per share                                    $     0.125   $     0.125    $     0.250   $     0.235
                                                       ===========   ===========    ===========   ===========
</TABLE>

See notes to condensed consolidated financial statements.

                                        4

<PAGE>

                               GFSB Bancorp, Inc.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                Increase (decrease) in cash and cash equivalents

<TABLE>
<CAPTION>
                                                                            Six Months Ended
                                                                               December 31,
                                                                       ----------------------------
                                                                            2004            2003
                                                                       ------------    ------------
                                                                        (Unaudited)     (Unaudited)
<S>                                                                  <C>             <C>
Cash flows from operating activities
     Net earnings                                                      $    801,064    $    827,052
     Adjustments to reconcile net earnings to
       net cash provided by operations
         Deferred loan origination fees                                    (284,187)       (281,515)
         Gain on sale of loans and securities                               (30,337)        (28,857)
         Provision for loan losses                                           60,000         130,014
         Depreciation of premises and equipment                             119,076         148,019
         Amortization of investment and mortgage-
           backed securities premiums                                       156,002         238,377
         Stock dividend on FHLB stock                                       (42,500)        (43,700)
         Release of ESOP stock                                              186,167         125,088
         Stock compensation under management stock bonus plan               122,539          19,411
         (Benefit) for deferred income taxes                                      -        (105,000)

     Net changes in operating assets and liabilities
         Accrued interest and dividends receivable                           52,086         (35,791)
         Prepaid and other assets                                           334,688          (6,978)
         Accrued interest payable                                            (5,295)         (7,085)
         Accounts payable and accrued liabilities                          (181,400)        124,890
         Income taxes (receivable) payable                                  (73,072)        (38,120)
         Dividends declared and payable                                      (2,436)         16,700
                                                                       ------------    ------------
                           Net cash provided by
                           operating activities                           1,212,395       1,082,505
                                                                       ------------    ------------
Cash flows from investing activities
     Purchase of premises and equipment                                     (15,919)       (456,714)
     Loan originations and principal
       repayment on loans, net                                            4,086,674     (13,044,462)
     Change in other secured borrowings                                    (412,428)      2,896,808
     Proceeds from the sale of loans                                        743,500       1,980,073
     Principal payments on mortgage-backed
       securities                                                         4,158,022       9,006,531
     Principal payments on available-for-sale securities                  1,938,446         943,672
     Principal payments on held-to-maturity securities                        9,000           7,000
     Purchases of mortgage-backed securities                                      -      (3,420,353)
     Purchases of available-for-sale securities                          (2,995,915)     (5,277,976)
     Maturities and proceeds from sale of
       available-for-sale securities                                      4,000,000         700,000
     Maturities and proceeds from sale of held-to-maturity securites              -         270,000
     Redemption (purchase) of FHLB stock                                    825,800               -
                                                                       ------------    ------------

                           Net cash provided (used) by
                           investing activities                          12,337,180      (6,395,421)
                                                                       ------------    ------------
</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,
                                                                       -----------------------------
                                                                           2004             2003
                                                                      -------------    -------------
                                                                       (Unaudited)       (Unaudited)
<S>                                                                 <C>              <C>
Cash flows from financing activities
     Net increase (decrease) in transaction accounts, passbook
       savings, money market accounts, and
       certificates of deposit                                        $  (2,270,317)   $   9,943,018
     Net increase in Repurchase agreements                                  112,580          345,107
     Net increase in mortgage escrow funds                                    7,661           16,050
     Proceeds from FHLB advances                                        397,275,000      773,689,296
     Repayments on FHLB advances                                       (410,459,604)    (777,932,171)
     Net increase (decrease) in note payable                                      -          273,750
     Dividends paid or to be paid in cash                                  (281,792)        (261,634)
     Price paid for vested management bonus
        stock plan stock                                                          -            7,622
                                                                      -------------    -------------

                           Net cash (used) provided by
                           financing activities                         (15,616,472)       6,081,038
                                                                      -------------    -------------

     Increase (decrease) in cash and cash equivalents                    (2,066,897)         768,122

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

     Cash and cash equivalents at end of period                       $   6,640,096        8,020,480
                                                                      =============    =============

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest on deposits and advances                            $   2,420,537    $   2,884,268
         Income taxes                                                       281,100          437,869

     Change in market value, net of deferred taxes on
       available-for-sale securities (other comprehensive earnings)         278,051         (272,075)

     Dividends declared not yet paid                                        138,459          139,167
</TABLE>

See notes to condensed consolidated financial statements.

                                       7

<PAGE>

                               GFSB BANCORP, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

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

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

                                       8

<PAGE>

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

General

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

Overview

GFSB  Bancorp,  Inc.  is a 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.

Proposed Merger

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

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

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

Comparison of Financial Condition at December 31, 2004 and June 30, 2004

Total assets decreased by $14.8 million,  or 6.4%, to $217.3 million at December
31, 2004 from $232.1  million at June 30, 2004  primarily  due to  decreases  in
available-for-sale   investment  and  mortgage-backed   securities,   net  loans
receivable,  cash and cash  equivalents,  stock of the  Federal  Home  Loan Bank
("FHLB"),  and loans held for sale.  The $6.8  million,  or 11.2%,  decrease  in
available-for-sale investment and mortgage-backed securities to $54.4 million at
December 31, 2004 from $61.2 million at June 30, 2004,  was the result of normal
monthly  principal   payments  received  on  the  securities  owned.  Net  loans
receivable  decreased $4.0 million,  or 2.6%, to $148.4 million, at December 31,
2004,  from $152.4  million at June 30, 2004,  primarily  due to normal  monthly
principal  payments  received on the loans.  Cash and cash  equivalents  of $6.6
million  held at December  31, 2004 was $2.1 million or 23.7% less than the June
30, 2004 balance of $8.7 million, primarily due to normal daily fluctuations and
a  decision  by  management  to  reduce  the  level of cash for the  purpose  of
increasing  profitability  through an increase in the level of interest  earning
assets and also for the purpose of reducing cash exposure risk. This decrease in
total  cash  and  cash   equivalents   included  a  $0.5  million   decrease  in
interest-bearing  deposits with banks, which primarily consists of the Company's
FHLB demand account. The stock of FHLB decreased $0.8 million, or 18.0%, to $3.6
million at December 31, 2004 from $4.4 million at June 30, 2004,  primarily  due
to quarterly stock

                                       9

<PAGE>

redemptions by the FHLB. There were no loans held for sale at December 31, 2004,
while there were $0.4 million in loans held for sale at June 30, 2004, resulting
in a decrease of $0.4 million,  or 100.0%. This change was primarily a matter of
timing,  as  there  has  been no  change  in the  Company's  plan  to sell  some
longer-term,  fixed-rate one- to four-family loans in the secondary market.  The
remaining  $0.7 million  decrease in assets  during the  six-month  period ended
December  31,  2004 was the result of small  changes in various  asset  accounts
including  accrued  interest and dividends  receivable,  premises and equipment,
other real estate and repossessed property,  deferred tax asset, and prepaid and
other assets.

Total liabilities  decreased $15.8 million,  or 7.4% mostly due to a decrease in
FHLB  advances of $13.2  million or 17.9% to $60.5 million at December 31, 2004,
from $73.7 million at June 30, 2004.  Time deposits  decreased $2.3 million,  or
1.7% to $131.6  million at December  31,  2004 from  $133.9  million at June 30,
2004.  There were small decreases in transaction  and NOW accounts,  savings and
MMDA  deposits,  and time  deposits.  The  remaining  $0.3  million  decrease in
liabilities was the result of changes in various  liability  accounts  including
other secured  borrowings,  repurchase  agreements,  accrued  interest  payable,
advances from borrowers for taxes and insurance, dividends payable, and accounts
payable and accrued liabilities.

Stockholders'  equity  increased  $1.0  million,  or 5.4% to  $19.1  million  at
December 31, 2004 from $18.1  million at June 30, 2004,  primarily due to income
of $801,000 for the six-month  period ended  December 31, 2004 and to unrealized
gains, net of taxes, in investment and mortgage-backed  securities.  The Company
paid a cash  dividend of $0.125 per share,  or  $141,000,  in the quarter  ended
September 30, 2004, and a cash dividend of $0.125 per share, or $141,000, in the
quarter ended December 31, 2004.

                                       10

<PAGE>

RESULTS OF OPERATIONS

COMPARISON OF OPERATING  RESULTS FOR QUARTER ENDED DECEMBER 31, 2004 COMPARED TO
QUARTER ENDED DECEMBER 31, 2003.

General

Net  earnings for the quarter  ended  December  31, 2004  decreased  $173,000 to
$327,000  ($0.27 per diluted share) from $500,000  ($0.42 per diluted share) for
the quarter ended  December 31, 2003.  The decrease in net earnings is primarily
attributable  to a $156,000  increase  in  non-interest  expense  and a $145,000
increase in income tax expense  partially  offset by a $110,000  increase in net
interest  earnings,  a $7,000 increase in non-interest  earnings,  and a $10,000
decrease in 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, 2004 compared to the quarter ended December 31, 2003.

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, 2004              Quarter ended December 31, 2003
                                       -------------------------------              -------------------------------
                                    Average                        Average       Average                         Average
                                    Balance      Interest        Yield/Cost      Balance       Interest        Yield/Cost
                                   (Dollars in Thousands)                        (Dollars in Thousands)
<S>                              <C>             <C>              <C>         <C>              <C>              <C>
Interest-earning assets:
Loans receivable (1)               $151,344        $2,484           6.57%       $158,656         $2,537           6.39%
Investment securities and
 mortgage-backed securities          57,035           462           3.24%         65,866            527           3.20%
Other interest-earning
  assets (2)                          4,069            23           2.26%          5,772             23           1.59%
                                   --------        ------                       --------        ------

Total interest-earning assets       212,448         2,969           5.59%        230,294          3,087           5.36%
Non-interest-earning assets          11,500        ------                         10,307        -------
                                   --------                                     --------

Total assets                       $223,948                                     $240,601
                                   ========                                     ========

Interest-bearing liabilities:
  Transaction accounts             $ 13,144        $   12            .37%       $ 10,858        $    8             .29%
  Passbook savings                    9,353            18            .77%          7,094            18            1.01%
  Money market accounts              12,695            30            .95%         13,863            32             .92%
  Certificates of deposit            82,679           539           2.61%         92,571           689            2.98%
  Other liabilities (3)              68,600           592           3.45%         80,884           672            3.32%
                                   --------        ------                       --------        ------
Total interest-bearing
   liabilities                      186,471         1,191           2.55%        205,270         1,419            2.77%
Non-interest bearing                               ------                                       ------
   liabilities                       18,387                                       17,392
                                   --------                                     --------

Total liabilities                   204,858                                      222,662

Stockholders' equity                 19,090                                       17,939
                                   --------                                     --------

Total liabilities and
  stockholders' equity             $223,948                                     $240,601
                                   ========                                     ========


                                       11
<PAGE>

Net interest earnings                              $1,778                                       $1,668
                                                   ======                                       ======
Interest rate spread (4)                                            3.04%                                         2.59%
                                                                    ====                                          ====
Net yield on interest-
  earning  assets (5)                                               3.35%                                         2.90%
                                                                    ====                                          ====
Ratio of average interest-
Earning assets to average
interest-bearing  liabilities                                       1.14X                                         1.12X
                                                                    ====                                          ====
</TABLE>

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

Rate/Volume Analysis

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

                                     Quarter ended December 31, 2004 vs. 2003
                                               Increase (Decrease)
                                                     Due to
                                        ----------------------------------
                                                          Rate/
                                        Volume    Rate    Volume     Net
                                        ------    ----    ------     ---
                                              (Dollars in Thousands)
Interest income:
  Loans receivable                      $(117)   $  71    $  (7)   $ (53)
  Mortgage-backed securities and
     investment securities                (71)       7       (1)     (65)
  Other interest-earning  assets           (7)      10       (3)       -
                                        ------   -----    ------   -----
    Total interest-earning assets        (195)      88      (11)    (118)

Interest expense:

  Transaction accounts                      2        2        -        4
  Savings accounts                          6       (4)      (2)       -
  Money markets                            (3)       1        -       (2)
                                                                       3)
  Certificates of deposit                 (73)     (86)       9     (150)
  Other liabilities                      (102)      26       (4)      80)
                                        ------   -----    ------   -----
   Total interest-bearing liabilities    (170)     (61)       3     (228)
                                        ------   -----    ------   -----

Net change in interest income           $  (25)  $ 149    $  (14)  $ 110
                                        ======   =====    ======   =====

Provision for Losses on Loans

The Company  maintains  an  allowance  for loan losses  based upon  management's
periodic evaluation of known and inherent risks in the loan portfolio, past loss
experience,  adverse  situations that may affect the borrower's ability to repay
loans,  estimated  value of the  underlying  collateral and current and expected
market  conditions.  The provision for loan loss was $60,000 and $70,000 for the
quarter  ended  December  31, 2004 and 2003,  respectively.  The decrease in the
provision for loan losses for the current quarter compared to the same quarter a
year earlier is primarily due to  improvement  in loan quality and the fact that
the Company's  loan  portfolio  decreased  during the period.  While the Company
maintains  its allowance for losses at a level that it considers to be adequate,
there can be no assurance  that further  additions  will not be made to the loss
allowances and that such losses will not exceed the estimated amounts.

                                       12

<PAGE>

Non-Interest Earnings

Total  non-interest  earnings  increased  by $7,000 or 2.8% to $256,000  for the
quarter ended December 31, 2004 from $249,000 for the quarter ended December 31,
2003.  This increase was primarily due to a $42,000  increase in service  charge
income and a $4,000  increase in income from real  estate  operations  partially
offset by a $36,000  decrease in  miscellaneous  income and a $3,000 decrease in
net gains from sales of loans and securities.

Non-Interest Expense

Total  non-interest  expense  increased  $156,000 or 13.1% to $1,344,000 for the
quarter ended  December 31, 2004 from  $1,188,000 for the quarter ended December
31, 2003. The increase in  non-interest  expense was primarily  attributable  to
increases in professional fees, other expense,  compensation and benefits,  FDIC
insurance  expense,  supervisory exam fees, ATM expense,  and insurance expense,
partially  offset  by  decreases  in  occupancy,  stock  services,  advertising,
postage,  stationery,  printing and office supplies,  and data  processing.  The
$67,000 increase in professional fees for the quarter ended December 31, 2004 is
primarily  attributable  to a  $47,000  increase  in legal  fees  and a  $20,000
increase in other  professional  services in  connection  with the Agreement and
Plan of Merger between the Company and First Federal Banc of the Southwest, Inc.
announced on August 25, 2004. The $58,000 increase in other expense is primarily
attributable to a $29,000 increase in loan expense and a $20,000 loss on sale of
other real estate owned. Compensation and benefits increased $48,000,  primarily
attributable  to early vesting of restricted  stock as a result of the filing of
the Agreement  and Plan of Merger  between the Company and First Federal Banc of
the Southwest,  Inc.  announced on August 25, 2004. The $10,000 increase in FDIC
insurance was primarily  due to an increase in the FDIC  assessment.  The $9,000
increase in supervisory exam fees was primarily due to an increase in the Office
of Thrift Supervision  supervisory exam fees assessment.  The $4,000 increase in
ATM  expense  is  primarily  attributable  to an  increase  in the volume of ATM
transactions.  Insurance  expense  increased $3,000 due to a general increase in
premium rates for property and casualty  insurance.  Occupancy expense decreased
$12,000  primarily  due to a decrease in  depreciation  expense  for  furniture,
fixtures and equipment.

Borrowings

The Company may obtain advances from the FHLB of Dallas to supplement its supply
of  funds  available  for  loans  and  investments.  Advances  from the FHLB are
typically  secured by a pledge of the Company's  stock in the FHLB, a portion of
the Company's  first mortgage  loans and certain other assets.  Each FHLB credit
program has its own interest rate, which may be fixed or variable,  and range of
maturities. The Company, if the need arises, may also access the Federal Reserve
Bank discount  window to supplement its supply of funds  available for loans and
investments and to meet deposit withdrawal requirements.  For the quarters ended
December  31, 2004 and  December 31,  2003,  borrowings  with the FHLB  averaged
$61,510,895 and $72,307,668, respectively. The approximate weighted average rate
paid on borrowings  was 3.45% and 3.32% for the quarter ended  December 31, 2004
and December 31, 2003, respectively.

                                       13

<PAGE>

RESULTS OF OPERATIONS

COMPARISON OF OPERATING RESULTS FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2004
COMPARED TO THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2003.

General

Net earnings for the six-month period ended December 31, 2004 decreased  $26,000
to $801,000  compared to net earnings of $827,000 for the six-month period ended
December 31, 2003.  The decrease in net earnings was  primarily  the result of a
$332,000 increase in non-interest  expense and a $141,000 increase in income tax
expense  partially offset by increases in net interest  earnings of $312,000 and
non-interest  earnings of $64,000 and a $70,000  decrease in provision  for loan
losses.  Please refer to "Average  Balance Sheets" for an analysis of the change
in net  interest  earnings  for the  six-month  period  ended  December 31, 2004
compared to the six-month period ended December 31, 2003.

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, 2004                             December 31, 2003
                                            -----------------                             -----------------
                                    Average                       Average        Average                        Average
                                    Balance      Interest        Yield/Cost      Balance       Interest        Yield/Cost
                                 (Dollars in Thousands)                       (Dollars in Thousands)
<S>                              <C>            <C>              <C>         <C>              <C>              <C>
Interest-earning assets:
Loans receivable (1)               $151,770       $4,966            6.54%       $155,676         $5,019           6.45%
Investment securities and
 Mortgage-backed securities          58,602          934            3.19%         66,611          1,026           3.08%
Other interest-earning
  assets (2)                          4,496           44            1.96%          5,275             49           1.86%
                                   --------       ------                        --------         ------

Total interest-earning assets       214,868        5,944            5.53%        227,562          6,094           5.36%
Non-interest-earning assets          11,649       ------                          10,577         ------
                                   --------                                     --------

Total assets                       $226,517                                     $238,139
                                   ========                                     ========

Interest-bearing liabilities:
  Transaction accounts              $12,966       $   23             .35%        $10,370         $   18            .35%
  Passbook savings                    9,140           35             .77%          6,768             34           1.00%
  Money market accounts              12,906           61             .95%         12,767             58            .91%
  Certificates of deposit            67,318        1,087            3.23%         90,844          1,389           3.06%
  Other liabilities (3)              70,879        1,210            3.41%         82,303          1,378           3.35%
                                   --------       ------                        --------         ------

Total interest-bearing
   liabilities                      173,209        2,416            2.79%        203,052          2,877           2.83%
Non-interest bearing                              ------                                         ------
   liabilities                       34,463                                       17,326
                                   --------                                     --------

Total liabilities                   207,672                                      220,378

Stockholders' equity                 18,845                                       17,761
                                   --------                                     --------

Total liabilities and
  Stockholders' equity             $226,517                                     $238,139
                                   ========                                     ========

                                       14
<PAGE>

Net interest income                               $3,528                                         $3,217
                                                  ======                                         ======
Interest rate spread (4)                                            2.74%                                         2.53%
                                                                    ====                                          ====
Net yield on interest-
  earning assets (5)                                                3.28%                                         2.83%
                                                                    ====                                          ====
Ratio of average interest-
  earning assets to average
interest-bearing liabilities                                        1.24X                                         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.

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.

                                              Six-month period ended
                                            December 31, 2004 vs. 2003
                                               Increase (Decrease)
                                                     Due to
                                        -----------------------------------
                                                           Rate/
                                        Volume    Rate    Volume      Net
                                        ------    ----    ------      ---
                                                 (Dollars in Thousands)
Interest income:

  Loans receivable                      $(126)   $  70    $   3    $ (53)
  Mortgage-backed securities and
     investment securities               (123)      37       (6)     (92)
  Other interest-earning assets            (7)       3       (1)      (5)
                                        -----    -----    -----    -----
    Total interest-earning assets        (256)     110       (4)    (150)
                                        -----    -----    -----    -----

Interest expense:

  Transaction accounts                      4        -        1        5
  Savings accounts                         12       (8)      (3)       1
  Money markets                             1        3       (1)       3
  Certificates of deposit                (360)      77      (19)    (302)
  Other liabilities                      (191)      25       (2)    (168)
                                        -----    -----    -----    -----
   Total interest-bearing liabilities    (534)      97      (24)    (461)
                                        -----    -----    -----    -----

Net change in interest income           $ 278    $  13    $  20    $ 311
                                        =====    =====    =====    =====


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.

                                       15

<PAGE>

The provision for loan losses was $60,000 and $130,000 for the six-month  period
ended  December 31, 2004 and 2003,  respectively.  See  "Comparison of Operating
Results for the  quarter  ended  December  31,  2004  compared to quarter  ended
December 31, 2003 - Provision for Losses on Loans."

Non-Interest Earnings

Total  non-interest  earnings  increased by $64,000 or 14.4% to $511,000 for the
six-month  period ended December 31, 2004 from $446,000 for the six-month period
ended  December 31, 2003.  This  increase  was  primarily  due to an increase in
service  charge  income of $87,000 and an increase of $5,000 in income from real
estate  operations  partially  offset by a decrease in  miscellaneous  income of
$29,000.  The decrease in miscellaneous  income is primarily due to gains on the
sale of other real estate owned in the six-month period ended December 31, 2003.
The  increase in service  charge  income is primarily  due to increased  account
analysis service charges and increased  insufficient  funds charges collected on
NOW and checking accounts.

Non-Interest Expense

Total non-interest  expense increased $332,000,  or 14.4%, to $2,638,000 for the
six-month  period ended  December  31, 2004 from  $2,306,000  for the  six-month
period  ended  December  31,  2003.  The  increase in  non-interest  expense was
primarily  attributable  to  increases in  professional  fees,  other  expenses,
compensation and benefits,  FDIC insurance,  supervisory exam fees, ATM expense,
data  processing  and  insurance,  partially  offset by decreases in  occupancy,
advertising,  postage,  stationery,  printing  and  office  supplies,  and stock
services.  The $232,000  increase in professional  fees for the six-month period
ended  December 31, 2004 is  primarily  attributable  to a $156,000  increase in
legal fees and a $71,000 increase in other  professional  services in connection
with the Agreement and Plan of Merger between the Company and First Federal Banc
of the  Southwest,  Inc.  announced  on August 25, 2004 The $60,000  increase in
other expense is primarily  attributable  to a $45,000  increase in loan expense
and $22,000 in losses on sale of other real estate  owned,  partially  offset by
small  decreases  in several  other  expense  items.  Compensation  and benefits
increased $48,000,  primarily  attributable to early vesting of restricted stock
as a result  of the  filing of the  Agreement  and Plan of  Merger  between  the
Company and First Federal Banc of the  Southwest,  Inc.  announced on August 25,
2004. The $20,000 increase in FDIC insurance was primarily due to an increase in
the FDIC assessment. The $19,000 increase in supervisory exam fees was primarily
due to an increase  in the Office of Thrift  Supervision  supervisory  exam fees
assessment.  The $15,000 increase in ATM expense is primarily attributable to an
increase in the volume of ATM  transactions.  Data processing costs increased by
$8,000,  primarily  due  to  growth  in  the  number  of  deposit  accounts  and
transaction  volume  increases.  Insurance  expense  increased  $7,000  due to a
general increase in premium rates for property and casualty insurance. Occupancy
expense decreased  $27,000  primarily due to a decrease in depreciation  expense
for furniture, fixtures and equipment.

Borrowings

The Company may obtain advances from the FHLB of Dallas to supplement its supply
of  funds  available  for  loans  and  investments.  Advances  from the FHLB are
typically  secured by a pledge of the Company's  stock in the FHLB, a portion of
the Company's  first mortgage  loans and certain other assets.  Each FHLB credit
program has its own interest rate, which may be fixed or variable,  and range of
maturities. The Company, if the need arises, may also access the Federal Reserve
Bank discount  window to supplement its supply of funds  available for loans and
investments  and to meet  deposit  withdrawal  requirements.  For the  six-month
period ended December 31, 2004 and December 31, 2003,  borrowings  with the FHLB
averaged  $63,900,571 and $72,573,899,  respectively.  The approximate  weighted
average rate paid on  borrowings  was 3.41% and 3.35% for the  six-month  period
ended December 31, 2004 and December 31, 2003, respectively.

                                       16

<PAGE>

Item 3.  CONTROLS AND PROCEDURES

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

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

                                       17

<PAGE>

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


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

                  Not applicable.

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

                  Not applicable.

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

                  Not applicable.

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

                  Not applicable.

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

                  Not applicable.

Item 6.  Exhibits
         --------
<TABLE>
<CAPTION>

         (a)  List of Exhibits

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

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

                                       18

<PAGE>

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

                                       19

<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 14,  2005        /s/Jerry R. Spurlin
                                 -----------------------------------------------
                                 Jerry R. Spurlin
                                 Assistant Secretary and Chief Financial Officer
                                 (Duly Authorized Representative and
                                 Principal Financial Officer)


                                       20