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


                                   FORM 10-QSB


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

                 For the quarterly period ended March 31, 2004
                                                --------------

                                       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 May 14, 2004,  there were issued and outstanding  1,146,270  shares of the
issuer'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
               March 31, 2004 and June 30, 2003                                                3

           Condensed Consolidated Statements of Earnings and Comprehensive Earnings
               Three months and nine months ended March 31, 2004 and March 31, 2003.           4

           Condensed Consolidated Statements of Cash Flows
               Nine months ended March 31, 2004 and March 31, 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                                                            15

                                          PART II. OTHER INFORMATION

Item 1.    Legal Proceedings                                                                  16

Item 2.    Changes in Securities and Small Business Issuer Purchases of                       16
               Equity Securities

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>
                                                                                 March 31,               June 30,
                                                                                   2004                    2003
                                                                             ------------------      -----------------

<S>                                                                        <C>                     <C>
                                                       ASSETS

Cash and due from banks                                                      $       7,329,919       $      6,785,410
Interest-bearing deposits with banks                                                   378,212                466,948
Available-for-sale investment securities                                            32,059,790             29,279,417
Available-for-sale mortgage-backed securities                                       34,848,544             38,517,103
Held-to-maturity investment securities                                                 398,998                675,997
Stock of Federal Home Loan Bank, at cost, restricted                                 4,392,800              4,332,800
Loans receivable, net, substantially pledged                                       155,460,388            146,264,291
Loans held-for-sale                                                                    158,105                132,000
Accrued interest and dividends receivable                                              963,432                844,722
Premises and equipment                                                               2,566,461              2,313,815
Other real estate and repossessed property                                              88,929                213,953
Prepaid and other assets                                                               266,224                128,197
                                                                             ------------------      -----------------

        TOTAL ASSETS                                                         $     238,911,802            229,954,653
                                                                             ==================      =================

                                        LIABILITIES AND STOCKHOLDERS' EQUITY

Transaction and NOW accounts                                                 $      27,968,784       $     24,937,782
Savings and MMDA deposits                                                           20,842,723             17,264,978
Time deposits                                                                       89,654,792             87,556,558
Advances from Federal Home Loan Bank                                                74,535,306             76,641,834
Other secured borrowings                                                             4,983,533              3,657,911
Repurchase agreements                                                                  638,427                584,902
Accrued interest payable                                                               479,972                515,872
Advances from borrowers for taxes and insurance                                        582,301                365,193
Notes payable                                                                          136,875                      -
Accounts payable and accrued liabilities                                               397,907                250,015
Deferred income taxes                                                                   13,275                312,796
Dividends declared and payable                                                         140,848                122,467
Income taxes payable                                                                         -                      -
                                                                             ------------------      -----------------

        TOTAL LIABILITIES                                                          220,374,743            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 March 31, 2004 and June 30, 2003                                                  114,627                114,627
Additional paid-in-capital                                                           3,010,219              2,853,446
Unearned ESOP stock                                                                    (85,981)              (139,882)
Retained earnings, substantially
  restricted                                                                        14,382,443             13,633,421
Accumulated other comprehensive
  earnings                                                                           1,115,751              1,282,733
                                                                             ------------------      -----------------

        TOTAL STOCKHOLDERS' EQUITY                                                  18,537,059             17,744,345
                                                                             ------------------      -----------------

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $     238,911,802       $    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                  Nine months ended
                                                                     March 31,                           March 31,
                                                           -------------------------------    --------------------------------
                                                               2004              2003             2004               2003
                                                           -------------------------------    --------------------------------
                                                            (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)
<S>                                                    <C>                <C>             <C>                <C>
Interest income
           Loans receivable
                           Mortgage loans                  $  2,008,343       $ 2,006,844     $  6,075,465       $  6,254,520
                           Commercial loans                     381,429           354,295        1,117,957          1,018,707
                           Share and consumer loans             104,884           100,988          320,214            320,619
           Investment and mortgage-backed securities            553,797           526,965        1,579,976          1,728,783
           Other interest-earning assets                         17,389            32,366           65,967            102,349
                                                           -------------      ------------    -------------      -------------

                           TOTAL INTEREST EARNINGS            3,065,842         3,021,458        9,159,579          9,424,978

Interest expense
           Deposits                                             666,258           710,295        2,166,025          2,262,892
           Advances from Federal Home Loan Bank                 659,373           790,859        2,036,789          2,375,061
           Repurchase agreements                                      6               160              146              3,710
                                                           -------------      ------------    -------------      -------------

                           TOTAL INTEREST EXPENSE             1,325,637         1,501,314        4,202,960          4,641,663
                                                           -------------      ------------    -------------      -------------

                           NET INTEREST EARNINGS              1,740,205         1,520,144        4,956,619          4,783,315

Provision for loan losses                                       339,016           140,015          469,030            215,015
                                                           -------------      ------------    -------------      -------------

                           NET INTEREST EARNINGS AFTER
                             PROVISION FOR LOAN LOSSES        1,401,189         1,380,129        4,487,589          4,568,300
                                                           -------------      ------------    -------------      -------------

Non-interest earnings
           Income from real estate operations                     1,350             1,350            4,900              5,100
           Miscellaneous income                                  12,184            15,663           78,060             39,544
           Net gain (loss) from sales of available
             for sale securities                                      -                 -           (1,417)                 -
           Net gains from sales of loans                          2,879            52,129           33,154            108,188
           Service charge income                                170,488           119,096          518,577            310,595
                                                           -------------      ------------    -------------      -------------

                           TOTAL NON-INTEREST EARNINGS          186,901           188,238          633,274            463,427
                                                           -------------      ------------    -------------      -------------

Non-interest expense
           Compensation and benefits                            561,408           595,937        1,782,997          1,710,413
           FDIC insurance                                         5,163             4,697           14,715             13,624
           Insurance                                             14,410            13,963           39,321             38,445
           Stock services                                         4,504             6,680           24,469             15,732
           Occupancy                                            142,071           136,430          415,158            402,050
           Data processing                                       95,339            92,276          279,199            251,211
           Professional fees                                     81,229            39,205          187,152            105,358
           Advertising                                           58,656            52,313          165,212            124,088
           Stationary, printing and office supplies              29,715            35,530           90,786            123,258
           ATM expense                                           21,773             9,312           55,812             40,257
           Supervisory exam fees                                 16,042            14,077           45,213             41,877
           Postage                                               18,136            18,458           56,977             43,997
           Other                                                119,285           101,778          316,692            275,178
                                                           -------------      ------------    -------------      -------------

                           TOTAL NON-INTEREST EXPENSE         1,167,731         1,120,656        3,473,703          3,185,488
                                                           -------------      ------------    -------------      -------------
</TABLE>

                                            4

<PAGE>

                               GFSB Bancorp, Inc.

                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                     AND COMPREHENSIVE EARNINGS - CONTINUED

<TABLE>
<CAPTION>
                                                                 Three months ended                  Nine months ended
                                                                     March 31,                           March 31,
                                                           -------------------------------    --------------------------------
                                                               2004              2003             2004               2003
                                                           -------------------------------    --------------------------------
                                                             (Unaudited)       (Unaudited)      (Unaudited)        (Unaudited)
<S>                                                       <C>               <C>            <C>                <C>
                           EARNINGS BEFORE INCOME TAXES         420,359           447,711        1,647,160          1,846,239

Income tax expense
           Currently payable                                    204,406           168,135          709,155            629,478
           Deferred (benefit)                                  (108,500)                -         (213,500)                 -
                                                           -------------      ------------    -------------      -------------

                           NET INCOME TAX EXPENSE                95,906           168,135          495,655            629,478
                                                           -------------      ------------    -------------      -------------

                           NET EARNINGS                    $    324,453       $   279,576     $  1,151,505       $  1,216,761
                                                           =============      ============    =============      =============

Other Comprehensive Earnings
           Unrealized (loss) gain, net of tax                   105,094           (85,190)        (166,981)           (29,084)

                                                           -------------      ------------    -------------      -------------
                           COMPREHENSIVE EARNINGS          $    429,547       $   194,386     $    984,524       $  1,187,677
                                                           =============      ============    =============      =============

Earnings per common share
           Basic                                           $       0.29       $      0.25     $       1.02       $       1.09
                                                           =============      ============    =============      =============

Weighted average number of common shares outstanding
           Basic                                              1,126,787         1,116,925        1,125,096          1,113,390
                                                           =============      ============    =============      =============

Earnings per common share
           Diluted                                         $       0.27       $      0.24     $       0.97       $       1.05
                                                           =============      ============    =============      =============

Weighted average number of common shares outstanding
           Diluted                                            1,183,235         1,164,785        1,181,231          1,158,911
                                                           =============      ============    =============      =============


Comprehensive earnings per common share
           Basic                                           $       0.38       $      0.17     $       0.88       $       1.07
                                                           =============      ============    =============      =============

           Diluted                                         $       0.36       $      0.17     $       0.83       $       1.02
                                                           =============      ============    =============      =============


Dividends per share                                        $      0.125       $      0.11     $       0.36       $       0.32
                                                           =============      ============    =============      =============
</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>
                                                                                        Nine Months Ended
                                                                                             March 31,
                                                                             -----------------------------------------
                                                                                   2004                    2003
                                                                             -----------------       -----------------
                                                                                  (Unaudited)             (Unaudited)
<S>                                                                        <C>                     <C>
Cash flows from operating activities
           Net earnings                                                      $      1,151,505        $      1,216,761
           Adjustments to reconcile net earnings to
             net cash provided by operations
                     Deferred loan origination fees                                  (413,928)               (220,607)
                     Gain on sale of loans and securities                             (31,737)               (108,188)
                     Provision for loan losses                                        469,030                 215,015
                     Depreciation of premises and equipment                           218,274                 218,734
                     Amortization of investment and mortgage-
                       backed securities premiums                                     308,306                 116,885
                     Stock dividend on FHLB stock                                     (60,000)                (87,500)
                     Release of ESOP stock                                            203,052                 148,525
                     Stock compensation under management stock bonus plan              29,117                  23,060
                     Stock compensation resulting from stock purchased by
                       the Company within six months of exercise of
                       related options                                                      -                  16,920
                     (Benefit) for deferred income taxes                             (213,500)                      -

           Net changes in operating assets and liabilities
                     Accrued interest and dividends receivable                       (118,709)                101,087
                     Prepaid and other assets                                         (39,882)                (28,990)
                     Accrued interest payable                                         (35,900)                 58,988
                     Accounts payable and accrued liabilities                         118,775                 133,531
                     Income taxes (receivable) payable                                (98,146)                (15,341)
                     Dividends declared and payable                                    18,381                  11,961
                                                                             -----------------       -----------------
                               Net cash provided by
                               operating activities                                 1,504,638               1,800,841
                                                                             -----------------       -----------------
Cash flows from investing activities
           Purchase of premises and equipment                                        (470,920)                (95,114)
           Loan originations and principal
             repayment on loans, net                                              (11,256,682)             (2,211,905)
           Change in other secured borrowings                                       1,325,621                       -
           Proceeds from the sale of loans                                          2,137,557                       -
           Principal payments on mortgage-backed
             securities                                                            10,943,433               7,905,784
           Principal payments on available-for-sale securities                      1,663,455               4,719,479
           Principal payments on held-to-maturity securities                            7,000                   4,000
           Purchases of mortgage-backed securities                                 (7,649,914)            (14,408,091)
           Purchases of available-for-sale securities                              (5,331,514)             (7,088,496)
           Purchases of held-to-maturity securities                                         -                (270,000)
           Maturities and proceeds from sale of
             available-for-sale securities                                            700,000               1,668,000
           Maturities and proceeds from sale of held-to-maturity securites            270,000                       -
                                                                             -----------------       -----------------
                               Net cash used by
                               investing activities                                (7,661,964)             (9,776,343)
                                                                             -----------------       -----------------
</TABLE>

                                        6

<PAGE>
                               GFSB Bancorp, Inc.

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                Increase (decrease) in cash and cash equivalents

<TABLE>
<CAPTION>
                                                                                        Nine Months Ended
                                                                                            March 31,
                                                                             -----------------------------------------
                                                                                   2004                    2003
                                                                             -----------------       -----------------
                                                                                   (Unaudited)            (Unaudited)
<S>                                                                        <C>                     <C>
Cash flows from financing activities
           Net increase in transaction accounts, passbook
             savings, money market accounts, and
             certificates of deposit                                         $      8,706,979        $     10,110,496
           Net increase (decrease) in Repurchase agreements                            53,525                (462,464)
           Net increase (decrease) in mortgage escrow funds                           217,108                 198,950
           Proceeds from FHLB advances                                          1,144,089,296             726,298,387
           Repayments on FHLB advances                                         (1,146,195,823)           (727,616,577)
           Purchase of GFSB Bancorp stock under the
             stock repurchase plan in cash                                                  -                (112,624)
           Net increase (decrease) in note payable                                    136,875                       -
           Dividends paid or to be paid in cash                                      (402,483)               (354,530)
           Proceeds from exercise of stock options                                          -                  31,125
           Price paid for vested management bonus
              stock plan stock                                                          7,622                  11,100
                                                                             -----------------       -----------------
                               Net cash provided by
                               financing activities                                 6,613,099               8,103,863
                                                                             -----------------       -----------------

           Increase in cash and cash equivalents                                      455,773                 128,361

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

           Cash and cash equivalents at end of period                        $      7,708,131        $      5,779,852
                                                                             =================       =================

Supplemental disclosures of cash flow information
           Cash paid during the period for
                     Interest on deposits and advances                       $      4,238,715        $      4,582,675
                     Income taxes                                                     593,800                 644,100

           Change in market value, net of deferred taxes on
             available-for-sale securities (other comprehensive earnings)            (166,981)                (29,084)

           Dividends declared not yet paid                                            140,848                 122,467

</TABLE>

See notes to condensed consolidated financial statements.

                                        7


<PAGE>

                               GFSB BANCORP, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

         1.  The  accompanying   unaudited  condensed   consolidated   financial
statements  were prepared in accordance  with  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.

                                       9

<PAGE>

RESULTS OF OPERATIONS

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

General

Net earnings for the quarter ended March 31, 2004 increased  $44,000 to $324,000
($0.27 per  diluted  share)  from  $280,000  ($0.24 per  diluted  share) for the
quarter  ended  March 31,  2003.  The  increase  in net  earnings  is  primarily
attributable  to a $220,000  increase  in net  interest  earnings  and a $72,000
decrease in income tax expense,  partially offset by a $199,000  increase in the
provision for loan losses, an increase in non-interest  expense of $47,000 and a
$1,000 decrease in non-interest  earnings. The increase in net interest earnings
is primarily due to improvement in the Company's net interest margin,  which was
driven by a higher volume of earning assets.  The decrease in income tax expense
is primarily due to the recognition of certain permanent tax differences. Please
refer to "Average Balance Sheets" for an analysis of the changes in net interest
earnings  for the quarter  ended  March 31, 2004  compared to the same period in
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 March 31, 2004                 Quarter ended March 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)               $156,489        $2,494           6.37%      $142,246          $2,462           6.92%
Investment securities and
 mortgage-backed securities          67,459           554           3.28%        55,686             527           3.78%
Other interest-earning
  assets (2)                          4,013            17           1.69%         5,110              32           2.50%
                                   --------        ------           ----       --------          ------           ----

Total interest-earning assets       227,961         3,065           5.38%       203,042           3,021           5.95%
Non-interest-earning assets          11,492                                       9,158
                                   --------                                    --------

Total assets                       $239,453                                    $212,200
                                   ========                                    ========

Interest-bearing liabilities:
  Transaction accounts              $11,020        $    6            .22%       $ 8,673          $   16            .74%
  Passbook savings                    7,702            16            .83%         4,721              15           1.27%
  Money market accounts              12,305            24            .78%        10,309              27           1.05%
  Certificates of deposit            91,899           620           2.70%        76,666             652           3.40%
  Other liabilities (3)              80,750           659           3.26%        80,417             791           3.93%
                                   --------        ------                       -------          ------

Total interest-bearing
   liabilities                      203,676         1,325           3.07%       180,786           1,501           3.32%
Non-interest bearing
   liabilities                       17,342                                      14,096
                                   --------                                     -------

Total liabilities                   221,018                                     194,882

Stockholders' equity                 18,435                                      17,318
                                   --------                                     --------

Total liabilities and
  stockholders' equity             $239,453                                    $212,200
                                   ========                                    ========

                                       10
<PAGE>

Net interest earnings                              $1,740                                       $1,520
                                                   ======                                       ======
Interest rate spread (4)                                           2.31%                                         2.63%
                                                                   ====                                          ====

Net yield on interest-
  earning assets (5)                                               3.05%                                         2.99%
                                                                   ====                                          ====
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.
(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 earnings 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;  and
(ii) changes in rates. 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 March 31, 2004 vs. 2003
                                                 Increase (Decrease)
                                                       Due to
                                       -----------------------------------------
                                         Volume          Rate            Net
                                         ------          ----            ---
                                               (Dollars in Thousands)
Interest income:
  Loans receivable                        $ 237         $(205)         $   32
  Mortgage-backed securities and
    investment securities                   104           (77)             27
  Other interest-earning assets              (6)           (9)            (15)
                                          -----         -----            ----
    Total interest-earning assets           335          (291)             44

Interest expense:

  Transaction accounts                        3           (13)            (10)
  Savings accounts                            7            (6)              1
  Money markets                               5            (8)             (3)
  Certificates of deposit                   115          (147)            (32)
  Other liabilities                           3          (135)           (132)
                                          -----         -----          ------
    Total interest-bearing liabilities    $ 133         $(309)         $ (176)
                                          -----         -----          -----
Net change in interest income             $ 202         $  18          $  220
                                          =====         =====          ======


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 $339,000 and $140,000 for
the quarters ended March 31, 2004 and March 31, 2003, respectively. The increase
in the  provision  for  loan  losses  for the  current  three-month  period  was
primarily the result of a $1,799,000  increase in substandard and doubtful loans
to  $6,478,000  for the quarter  ended March 31,  2004 from  $4,679,000  for the
quarter ended March 31, 2003 and loan growth in commercial and  commercial  real
estate  loans,  which tend to have  greater  credit risk than  residential  real
estate loans. The increase in classified loans is primarily  attributable to two
loans,  each with unique credit quality  concerns.   While the Company maintains
its allowance for losses at a level which it considers to be

                                       11
<PAGE>

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  decreased  by $1,000 or 0.5% to $187,000  for the
quarter ended March 31, 2004 from $188,000 for the quarter ended March 31, 2003.
This  increase was  primarily due to a decrease in net gains from sales of loans
of $49,000 and a decrease in miscellaneous income of $3,000, partially offset by
an increase in service charge income of $51,000.  The increase in service charge
income is primarily due to increased insufficient funds charges collected on NOW
and checking accounts because of increased volume of insufficient funds checks.

Non-Interest Expense

Total  non-interest  expense  increased  $47,000 or 4.2% to  $1,168,000  for the
quarter  ended March 31, 2004 from  $1,121,000  for the quarter  ended March 31,
2003.  The  increase in  non-interest  expense  was  primarily  attributable  to
increases in  professional  fees,  ATM  expense,  advertising,  occupancy,  data
processing,  and other  operating  expenses,  partially  offset by  decreases in
compensation  and benefits and  stationary,  printing and office  supplies.  The
$42,000  increase in professional  fees is primarily  attributable to $32,000 in
fees paid to consultants for strategic  planning services and a $10,000 increase
in legal fees,  audit expense and  accounting  fees largely due to the Company's
efforts to comply  with  requirements  of the  Sarbanes-Oxley  Act.  ATM expense
increased  $12,000,  primarily  due to the  installation  and  operation  of one
additional ATM and transaction volume increases.  Advertising  expense increased
$6,000, primarily due to efforts to achieve growth in the Gallup and Farmington,
New Mexico markets.  Occupancy  expense  increased  $6,000,  primarily due to an
increase  in  lease  expense  on the  Bank's  loan  center  and an  increase  in
depreciation  of furniture,  fixtures and  equipment.  Data  processing  expense
increased  $3,000,   primarily  due  to  transaction  volume  increases.   Other
non-interest  expenses  increased  $18,000,  primarily  due to losses on sale or
repossessed assets and increases in charitable contributions, correspondent bank
expense and franchise  taxes.  The $35,000 decrease in compensation and benefits
is primarily attributable to a reduction in accruals for performance bonuses due
to operating  results below  expectations  for the Company during the six months
ended  December 31, 2004.  Stationary,  printing and office  supplies  decreased
$6,000,  since a  substantial  portion of such  expenses the previous  year were
attributable  to the  start-up  costs  during the first year of operation of the
Farmington branch.

                                       12
<PAGE>

RESULTS OF OPERATIONS

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

General

Net  earnings  for the nine months  ended March 31,  2004  decreased  $65,000 to
$1,152,000  ($0.97 per diluted  share)  compared to net  earnings of  $1,217,000
($1.05 per diluted  share) for the  comparable  nine-month  period in 2003.  The
decrease in net  earnings  was  primarily  the result of a $288,000  increase in
non-interest  expense and a $254,000  increase in the provision for loan losses,
partially  offset by an  increase  in net  interest  earnings  of  $173,000,  an
increase in non-interest  earnings of $170,000 and a $134,000 decrease in income
tax  expense.  The  Company  attributes  the  increase in  non-interest  expense
primarily to bank growth. The increase in net interest earnings is primarily due
to  improvement  in the  Company's  net interest  margin,  which was driven by a
higher volume of earning assets. The decrease in income tax expense is primarily
due to the  recognition of certain  permanent tax  differences.  Please refer to
"Average Balance Sheets" for an analysis of the change in net interest  earnings
for the nine months ended March 31, 2004 compared to the same period in 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>
                                        Nine-month period ended                        Nine-month period ended
                                             March 31, 2004                                 March 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)               $155,794        $7,514           6.43%      $141,191        $7,594            7.17%
Investment securities and
 Mortgage-backed securities          67,055         1,580           3.14%        53,547         1,729            4.31%
Other interest-earning
  assets (2)                          3,899            66           2.26%         5,192           102            2.62%
                                   --------        ------                      --------        ------

Total interest-earning assets       226,748         9,160           5.39%       199,930         9,425            6.28%
Non-interest-earning assets          11,783                                       8,997
                                   --------                                    --------

Total assets                       $238,531                                    $208,927
                                   ========                                    ========

Interest-bearing liabilities:
  Transaction accounts              $10,586          $ 24           .30%        $ 8,678          $ 52             .80%
  Passbook savings                    7,064            50           .94%          5,781            48            1.11%
  Money market accounts              12,604            82           .87%         11,648           105            1.20%
  Certificates of deposit            90,948         2,010          2.95%         74,838         2,058            3.67%
  Other liabilities (3)              81,924         2,037          3.32%         76,216         2,379            4.16%
                                   --------        ------                       -------        ------

Total interest-bearing
   liabilities                      203,126         4,203          2.76%        177,161         4,642            3.49%
Non-interest bearing
   liabilities                       17,415                                      14,746
                                   --------                                    --------

Total liabilities                   220,541                                     191,907

Stockholders' equity                 17,990                                      17,020
                                   --------                                    --------

Total liabilities and
  Stockholders' equity             $238,531                                    $208,927
                                   ========                                    ========

                                       13
<PAGE>

Net interest earnings                              $4,957                                      $4,783
                                                   ======                                      ======
Interest rate spread (4)                                           2.63%                                         2.79%
                                                                   ====                                          ====
Net yield on interest-
  earning assets (5)                                               2.91%                                         3.19%
                                                                   ====                                          ====
Ratio of average interest-
  earning assets to average
  interest-bearing liabilities                                     1.12X                                         1.13X
                                                                   ====                                          ====
</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 earnings 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;  and
(ii) changes in rates. 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.

                                                 Nine-month period ended
                                                 March 31, 2004 vs. 2003
                                                   Increase (Decrease)
                                                         Due to
                                       -----------------------------------------
                                        Volume           Rate           Net
                                        ------           ----           ---
                                               (Dollars in Thousands)
Interest income:
  Loans receivable                         $  745        $  (825)        $  80
  Mortgage-backed securities and
    investment securities                     379           (528)         (149)
  Other interest-earning assets               (24)           (12)          (36)
                                           ------        -------         -----
    Total interest-earning assets           1,100         (1,365)         (265)
                                           ======        =======         =====

Interest expense:

  Transaction accounts                          8            (36)          (28)
  Savings accounts                             10             (8)            2
  Money markets                                 8            (31)          (23)
  Certificates of deposit                     400           (448)          (48)
  Other liabilities                           158           (500)         (342)
                                           ------        -------         -----
    Total interest-bearing liabilities     $  584        $(1,023)        $(439)
                                           ------        -------         -----

Net change in interest income              $  516        $  (342)        $(174)
                                           ======        =======         =====

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 $469,000 and $215,000 for
the nine  months  ended  March 31, 2004 and March 31,  2003,  respectively.  See
"Comparison  of Operating  Results for the quarter ended March 31, 2004 compared
to quarter ended March 31, 2003 - Provision for Losses on Loans."

                                       14
<PAGE>

Non-Interest Earnings

Total  non-interest  earnings increased by $170,000 or 36.7% to $633,000 for the
nine months  ended March 31, 2004 from  $463,000 for the nine months ended March
31, 2003.  This  increase  was  primarily  due to an increase in service  charge
income of $208,000 and an increase in miscellaneous income of $39,000, partially
offset by a decrease in net gains from sales of loans of $75,000.  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
because of increased volume of insufficient funds checks.

Non-Interest Expense

Total non-interest expense increased $288,000 or 9.0% to $3,474,000 for the nine
months ended March 31, 2004 from  $3,186,000 for the nine months ended March 31,
2003.  The  increase in  non-interest  expense  was  primarily  attributable  to
increases in professional  fees,  compensation and benefits,  advertising,  data
processing,  ATM expense,  occupancy expense,  postage, stock services and other
operating expenses,  partially offset by a decrease in stationary,  printing and
office  supplies.  The  $82,000  increase  in  professional  fees  is  primarily
attributable  to  $52,000 in fees paid to  consultants  for  strategic  planning
services and a $30,000 increase in legal fees, audit expense and accounting fees
largely  due to  the  Company's  efforts  to  comply  with  requirements  of the
Sarbanes-Oxley  Act.  The  $73,000  increase  in  compensation  and  benefits is
primarily  attributable to a $57,000  increase in general  salaries and benefits
due to the hiring of two additional  employees,  general salary increases and an
increase  in  retirement  benefits  expenses,  a  $44,000  increase  in  expense
associated with employee stock compensation plans, and an increase of $16,000 in
director's fees,  partially offset by a $44,000  reduction in performance  bonus
accruals due to operating results below  expectations for the Company during the
six months ended  December  31, 2004.  Advertising  expense  increased  $41,000,
primarily  due to efforts to achieve  growth in the Gallup and  Farmington,  New
Mexico market.  Data  processing  expense  increased  $28,000,  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. ATM expense increased $16,000,  primarily due to the installation and
operation of one  additional ATM and  transaction  volume  increases.  Occupancy
expense increased $13,000,  primarily due to an increase in lease expense on the
Bank's loan center and an increase in  depreciation  of furniture,  fixtures and
equipment. Postage Expense increased $13,000 due to the mailing costs associated
with the growth in the  volume of deposit  accounts  and  statement  processing.
Stock services  increased $9,000,  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 $42,000, primarily due
to  losses  on  sale  or   repossessed   assets  and   increases  in  charitable
contributions,  correspondent bank expense, organization dues and subscriptions,
franchise taxes, meals and armored transportation, partially offset by decreases
in loan expense,  OREO expense and telephone expense.  Stationary,  printing and
office supplies decreased $32,000,  since a substantial portion of such expenses
the previous year were  attributable to the start-up costs during the first year
of operation 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.

                                       15

<PAGE>

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

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

                  Not applicable.

Item 2. Changes in  Securities  and Small  Business  Issuer  Purchases of Equity
        ------------------------------------------------------------------------
        Securities
        ----------

                  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 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      Certifications 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 Exhibit 4.1 to  the  Registration
                  Statement on Form S-8 (File No. 333-51478) filed with the SEC
                  on December 8, 2000.

(b)  On February  18, 2004 the  Company  filed a report on Form 8-K  pursuant to
     items 7 and 12 to report earnings for the quarter ended December 31, 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:        May 14, 2004        /s/Jerry R. Spurlin
                                 -----------------------------------------------
                                 Jerry R. Spurlin
                                 Assistant Secretary and Chief Financial Officer
                                 (Duly Authorized Representative and
                                 Principal Financial Officer)

                                       17