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

                                    FORM 10-Q

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

          For the quarterly period ended        June 30, 1999
                                         ---------------------------------------

                                       OR

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

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

                         Commission File Number 0-27620
                                                -------

                           Green Street Financial Corp
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          North Carolina                              56-1951478
--------------------------------------------------------------------------------
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

                                241 Green Street
                     Fayetteville, North Carolina 28301-5051
                     ---------------------------------------
               (Address of principal executive office) (Zip code)

                                 (910)-483-3681
                                 --------------
                         (Registrant's telephone number)

                                       N/A
                                       ---
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check X whether the registrant (1) has filed all reports required to
be filed by  Section  13 or 15(d) of the  Securities  and  Exchange  Act of 1934
during the preceding 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 August 10, 1999 there were issued and outstanding  3,879,269 shares of the
Registrant's common stock, no par value.


<PAGE>


                   Green Street Financial Corp and Subsidiary

                                    CONTENTS


PART I - FINANCIAL INFORMATION                                            Pages
                                                                          -----
   Item 1.  Condensed Consolidated Financial Statements
     Statements of financial condition at September 30, 1998
       and June 30, 1999 (unaudited)                                         1-2
     Statements of income for the three months ended
       June 30, 1998 (unaudited) and
       June 30, 1999 (unaudited)                                               3
     Statements of income for the nine months ended
       June 30, 1998 (unaudited) and
       June 30, 1999 (unaudited)                                               4
     Statements of cash flows for the nine months ended
       June 30, 1998 (unaudited) and
       June 30, 1999 (unaudited)                                             5-6
     Notes to condensed consolidated financial statements                    7-9

   Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                    10-14

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk        15

PART II - OTHER INFORMATION

   Item 1.  Legal Proceedings                                                 16
   Item 2.  Changes in Securities and Use of Proceeds                         16
   Item 3.  Defaults upon Senior Securities                                   16
   Item 4.  Submission of Matters to a Vote of Security Holders               16
   Item 5.  Other Information                                                 16
   Item 6.  Exhibits and Reports on Form 8-K                                  16

   Signatures                                                                 17



<PAGE>


Green Street Financial Corp and subsidiary


CONDENSED Consolidated Statements of Financial Condition
June 30, 1999 and September 30, 1998

                                                   June 30,        September 30,
Assets                                               1999              1998
--------------------------------------------------------------------------------
                                                  (Unaudited)
Cash and short-term cash investments:
   Interest-earning                           $     31,947,835 $     27,817,856

   Noninterest-earning                                 259,173          171,500
    Federal funds sold                               4,508,000        1,473,000
Investment securities:
   Held to maturity, at amortized cost                      --        9,000,000
   Nonmarketable equity securities                   1,147,500        1,144,700
Loans receivable, net                              126,569,597      131,697,916
Accrued interest receivable, investments                35,700          180,301
Real estate acquired in settlement of loans             34,521           34,521
Property and equipment, net                            452,308          349,190
Prepaid expenses and other assets                      741,190          835,561
                                              ----------------------------------




             Total Assets                     $    165,695,824 $    172,704,545
                                              ==================================

See Notes to Condensed Consolidated Financial Statements.


                                       1


<PAGE>

<TABLE>
<CAPTION>




                                                                      June 30,         September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                                   1999              1998
----------------------------------------------------------------------------------------------------
                                                                     (Unaudited)
<S>                                                              <C>              <C>
Liabilities:
   Deposits                                                       $    104,832,199 $    110,459,780
   Advance payments by borrowers for taxes and insurance                 1,009,713          208,998
   Income taxes payable                                                      4,000               --
   Accrued expenses and other liabilities                                  488,862          222,918
   Dividends payable                                                       504,305        1,102,469
   Deferred compensation                                                   370,833          377,804
                                                                  ---------------------------------
              Total liabilities                                        107,209,912      112,371,969
                                                                  ---------------------------------
Stockholders' equity:
   Preferred stock, no par value, authorized 1,000,000 shares;
      none issued                                                               --               --
   Common stock, no par value, authorized 10,000,000 shares;
      issued and outstanding 3,879,269 shares                                   --               --
   Additional paid-in capital                                           35,927,729       38,550,912
   Unearned ESOP shares                                                 (1,755,000)      (1,950,000)
   Retained earnings, substantially restricted                          24,313,183       23,731,664
                                                                  ---------------------------------
              Total  stockholders' equity                               58,485,912       60,332,576
                                                                  ---------------------------------
              Total liabilities and stockholders' equity          $    165,695,824 $    172,704,545
                                                                  =================================


</TABLE>


                                       2
<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>


                                                                                 1999                1998
-----------------------------------------------------------------------------------------------------------
<S>                                                                      <C>              <C>
Interest and dividend income:
   Loans                                                                  $      2,414,308 $      2,631,266
   Investment Securities                                                           456,929          641,498
                                                                          ---------------------------------
              Total interest income                                              2,871,237        3,272,764
Interest expense                                                                 1,178,019        1,367,282
                                                                          ---------------------------------
              Net interest income                                                1,693,218        1,905,482
Provision for loan losses                                                               --               --
                                                                          ---------------------------------
              Net interest income after provision for loan losses                1,693,218        1,905,482
                                                                          ---------------------------------

Noninterest income                                                                  19,060           25,117
                                                                          ---------------------------------
Noninterest expense:
   Compensation and employee benefits                                              441,277          576,510
   Other                                                                           216,864          227,314
                                                                          ---------------------------------
                                                                                   658,141          803,824
                                                                          ---------------------------------
               Income before income taxes                                        1,054,137        1,126,775

Income taxes                                                                       393,500          425,900
                                                                          ---------------------------------
              Net income                                                  $        660,637 $        700,875
                                                                          =================================


Basic earnings per share                                                  $           0.18 $           0.17
                                                                          =================================
Diluted earnings per share                                                $           0.18 $           0.17
                                                                          =================================
Dividends paid per share                                                  $           0.13 $           0.12
                                                                          =================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Nine Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>



                                                                          1999                1998
----------------------------------------------------------------------------------------------------
<S>                                                                 <C>             <C>
Interest and dividend income:
   Loans                                                             $     7,469,476 $     7,859,248
   Investment Securities                                                   1,457,137       2,049,167
                                                                     -------------------------------
              Total interest income                                        8,926,613       9,908,415
Interest expense                                                           3,750,305       4,220,873
                                                                     -------------------------------
              Net interest income                                          5,176,308       5,687,542
Provision for loan losses
                                                                     -------------------------------
              Net interest income after provision for loan losses          5,176,308       5,687,542
                                                                     -------------------------------

Noninterest income                                                            94,339          98,554
                                                                     -------------------------------
Noninterest expense:
   Compensation and employee benefits                                      1,430,650       1,746,040
   Other                                                                     694,438         703,081
                                                                     -------------------------------
                                                                           2,125,088       2,449,121
                                                                     -------------------------------
              Income before income taxes                                   3,145,559       3,336,975

Income taxes                                                               1,171,511       1,254,650
                                                                     -------------------------------
              Net income                                             $     1,974,048 $     2,082,325
                                                                     ===============================

Basic earnings per share                                             $          0.52 $          0.51
                                                                     ===============================
Diluted earnings per share                                           $          0.52 $          0.50
                                                                     ===============================
Dividends paid per share                                             $          0.37 $          0.34
                                                                     ===============================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>


                                                                                  1999            1998
-----------------------------------------------------------------------------------------------------------
<S>                                                                        <C>             <C>
Cash Flows From Operating Activities
   Net income                                                               $     1,974,048 $    2,082,325
   Adjustments to reconcile net income to net
      cash provided by operating activities:
      Depreciation and amortization                                                  27,000         27,000
        Net loss (gain) on disposal of real estate acquired
             in settlement of loans                                                      --          2,308
      Increase in deferred income taxes                                                  --         17,000
      Decrease in deferred compensation                                              (6,971)        (8,227)
      ESOP compensation credited to paid-in capital                                  50,635        151,060
      Changes in assets and liabilities:
        (Increase) decrease in:
           Prepaid expenses and other assets                                         94,371        115,394
           Accrued interest receivable                                              144,601        (22,683)
        Increase (decrease) in:
           Accrued expenses and other liabilities                                   265,944        202,405
           Income taxes payable                                                       4,000       (196,400)
                                                                            ------------------------------
              Net cash provided by operating activities                           2,553,628      2,370,182
                                                                            ------------------------------
Cash Flows From Investing Activities
   Net decrease (increase) in loans receivable                                    5,128,319     (2,174,396)
   Proceeds from sale of real estate acquired in settlement of loans                     --         14,920
   Proceeds from maturities of held to maturity investment securities             9,000,000     18,000,000
   Purchase of held to maturity investment securities                                    --    (21,000,000)
   Purchase of nonmarketable equity securities                                       (2,800)       (18,300)
   Purchase of property and equipment                                              (130,118)       (67,902)
                                                                            ------------------------------
              Net cash provided by (used in) investing activities                13,995,401     (5,245,678)
                                                                            ------------------------------

</TABLE>

                                       5

<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>


                                                                                   1999           1998
------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>             <C>
Cash Flows From Financing Activities
   Net decrease in deposits                                                 $    (5,627,581)$    (2,440,751)
   Principal payment for ESOP debt                                                  195,000         195,000
   Cash dividends paid                                                           (1,990,693)     (1,992,446)
   Redemption of common stock                                                    (2,673,818)     (3,545,957)
   Increase in advance payments by borrowers
       for taxes and insurance                                                      800,715         839,094
                                                                            -------------------------------
              Net cash used in financing activities                              (9,296,377)     (6,945,060)
                                                                            -------------------------------
              Net increase in cash and cash equivalents                           7,252,652      (9,820,556)
Cash and cash equivalents:
   Beginning                                                                     29,462,356      33,087,640
                                                                            -------------------------------
   Ending                                                                   $    36,715,008 $    23,267,084
                                                                            ===============================
   Cash and cash equivalents:
       Cash and short-term investments:
       Interest-bearing                                                     $    31,947,835 $    19,405,018
       Noninterest-bearing                                                          259,173         605,066
       Federal funds sold                                                         4,508,000       3,257,000
                                                                            -------------------------------
                                                                            $    36,715,008 $    23,267,084
                                                                            ===============================
Supplemental Disclosures of Cash Flow Information
   Cash payments for:
      Interest                                                              $     3,753,694 $     4,220,993
                                                                            ===============================
      Income taxes                                                          $     1,167,511 $     1,451,050
                                                                            ===============================
Supplemental Disclosure of Noncash Investing and Financing
   Activities:
     Dividends declared and accrued                                         $       504,305 $       489,986
                                                                            ===============================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                       6

<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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


Note 1.  Nature of Business

In December  1995,  pursuant to a Plan of Conversion,  Home Federal  Savings and
Loan Association (the  "Association" or "Home Federal") amended and restated its
charter to effect its conversion from a federally  chartered  mutual savings and
loan  association to a federally  chartered stock savings and loan  association,
and  became a  wholly-owned  subsidiary  of Green  Street  Financial  Corp  (the
"Corporation")  a holding company formed in connection with the Conversion.  The
Corporation's  principal business  activities consist solely of the ownership of
Home Federal,  a loan to the Employee Stock  Ownership Plan (the "ESOP") for its
purchase of common stock and the  investment  of its portion of the net proceeds
received in the Conversion.

The  Association  accepts  deposits  and other  sources of funds to enable it to
originate  one-to-four  family residential loans within its primary lending area
of Cumberland and Robeson counties in North Carolina. These loans are secured by
the underlying properties.

Note 2. Basis of Presentation

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the opinion of  management,  all  adjustments  (none of which were other than
normal recurring  accruals)  necessary for a fair  presentation of the financial
position and results of operations for the periods presented have been included.
The results of operations  for the nine month period ended June 30, 1999 are not
necessarily indicative of the results of operations that may be expected for the
year ended September 30, 1999 or any other interim period.

The  accounting  policies  followed  are as set  forth in Note 1 of the Notes to
Consolidated Financial Statements in the 1998 annual report of the Corporation.


Note 3.  Dividends  Declared

On June 28, 1999, the Board of Directors of the Corporation  declared a dividend
of $ .13 a share for  stockholders  of record as of July 12, 1999 and payable on
July 23,  1999.  The  dividends  declared  were  accrued  and  reported as other
liabilities in the June 30, 1999 consolidated statement of financial condition.

Note 4. Earnings Per Share

As required, the Corporation adopted statement of Financial Accounting Standards
No. 128 during the quarter ended December 31, 1997. This statement requires dual
presentation of basic and diluted earnings per share (EPS) with a reconciliation
of the  numerator  and  denominator  of the EPS  computations.  Basic  per share
amounts are based on the weighted  average  shares of common stock  outstanding.
Diluted  earnings per share assume the  conversion,  exercise or issuance of all
potential


                                        7

<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

Note 4.     Earnings Per Share (Continued)

common stock instruments such as options,  warrants and convertible  securities,
unless  the  effect  is to  reduce  a  loss  or  increase  earnings  per  share.
Accordingly,  this presentation has been adopted for all periods presented.  The
basic and diluted weighted average shares outstanding are as follows:

<TABLE>
<CAPTION>

Three months ended June 30, :
                                                                        1999             1998
                                                                ---------------------------------
<S>                                                           <C>              <C>
Weighted average shares outstanding                                    3,879,269        4,276,654
Less unallocated ESOP shares                                             178,750          204,750
                                                                ---------------------------------
    Weighted average outstanding shares used for basic EPS             3,700,519        4,071,904
Plus incremental shares from assumed issuance
   of stock options                                                           --           47,195
                                                                ---------------------------------
    Weighted average outstanding shares used for diluted EPS           3,700,519        4,119,099
                                                                =================================

Net income                                                      $        660,637 $        700,875
                                                                =================================

Basic earnings per share                                        $           0.18 $           0.17
                                                                =================================
Diluted earnings per share                                      $           0.18 $           0.17
                                                                =================================
</TABLE>




                                       8



<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------


Note 4.  Earnings Per Share (Continued)
Nine months ended June 30, :
<TABLE>
<CAPTION>
                                                                      1999             1998
                                                                ---------------------------------
<S>                                                            <C>              <C>
Weighted average shares outstanding                                    3,986,633        4,290,968
Less unallocated ESOP shares                                             185,250          211,250
                                                                ---------------------------------
    Weighted average outstanding shares used for basic EPS             3,801,383        4,079,718

Plus incremental shares from assumed issuance
   of stock options                                                           --           68,104
                                                                ---------------------------------
    Weighted average outstanding shares used for diluted EPS           3,801,383        4,147,822
                                                                =================================

Net income                                                      $      1,974,048 $      2,082,325
                                                                =================================

Basic earnings per share                                        $           0.52 $           0.51
                                                                =================================
Diluted earnings per share                                      $           0.52 $           0.50
                                                                =================================

</TABLE>

Note 5. Restricted Stock Plan

Under the  Restricted  Stock Plan ("RSP"),  171,925  shares of common stock were
authorized  for grant to directors  and key  employees  and vested over a 5 year
period,  which began vesting in October,  1997.  Effective  March 31, 1999,  all
awards  previously  granted to directors under the RSP that have not as of March
17, 1999, become 100% earned and nonforfeitable,  shall thereafter become earned
and  nonforfeitable  at the rate of  one-sixth  of the March 17,  1999  unearned
awards until  October 17,  2004.  This will result in a reduction of the cost of
the plan from  approximately  $512,000  to $286,000  for the years 1999  through
2001,  and to  approximately  $226,000 for the years 2002 through  2004.  In the
event of a change  of  control  of the  Company,  all  shares  allocated  to the
participants in the RSP will become fully vested (see Note 6).

Note 6.  Subsequent Event

On August 9, 1999, the Company entered into a definitive  merger  agreement with
NewSouth  Bancorp,  Inc.  and its banking  subsidiary,  NewSouth  Bank,  a North
Carolina chartered commercial bank, headquartered in Washington,  North Carolina
(collectively,  the "Acquiror").  Under the terms of the Agreement, the Acquiror
will  purchase  each  outstanding  common  share  of  the  Company  for  $15.25.
Consummation of the merger is subject to approval by bank regulatory authorities
and the  shareholders of the Company.  The merger is expected to be completed in
the fourth calendar quarter of 1999.


                                       9
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

Overview

On August 9, 1999, the Company entered into a definitive  merger  agreement with
NewSouth  Bancorp,  Inc.  and its banking  subsidiary,  NewSouth  Bank,  a North
Carolina chartered commercial bank, headquartered in Washington,  North Carolina
(collectively,  the "Acquiror").  Under the terms of the Agreement, the Acquiror
will  purchase  each  outstanding  common  share  of  the  Company  for  $15.25.
Consummation of the merger is subject to approval by bank regulatory authorities
and the  shareholders of the Company.  The merger is expected to be completed in
the fourth calendar quarter of 1999.

Comparison of Financial Condition at June 30, 1999 and September 30, 1998:

Total assets  decreased by $7.0 million,  or 4.0% to $165.7  million at June 30,
1999 from $172.7 million at September 30, 1998. Net loans  receivable  decreased
by $5.1 million  during the nine month period and amounted to $126.6  million at
June 30, 1999. The Company  received $9.0 million in proceeds from maturities of
investment  securities  held to  maturity,  the  majority of the  proceeds  were
invested in interest-earning cash and federal funds sold.

At June 30,  1999,  the  Corporation's  stockholders'  equity  amounted to $58.5
million,  which as a  percentage  of total  assets  was  35.3%.  As a  Federally
chartered  savings and loan  association,  the  Association  is required to meet
three  separate   capital   standards   established  by  the  Office  of  Thrift
Supervision.  The Association's stand-alone equity was $45.4 million at June 30,
1999 and was substantially in excess of all such capital requirements.

The  Association's  level of nonperforming  loans,  defined as loans past due 90
days or more,  as a percentage of loans  outstanding,  was .21% and .15% at June
30, 1999 and September 30, 1998, respectively. During the quarter ended June 30,
1999, the Association's level of nonperforming  loans remained  consistently low
in relation to total loans  outstanding,  and the  Association did not incur any
loan losses. Based on management's analysis of the adequacy of its allowances at
June 30,  1999,  no  additional  provision  for loan  losses was made during the
quarter.

                                       10
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

Comparison  of  Operating  Results for the Three and Nine Months  Ended June 30,
1999 and 1998:

General. Net income for the three and nine months period ended June 30, 1999 was
$661,000 and  $1,974,000,  respectively,  or $40,000 and $108,000  less than the
$701,000 and $2,082,000  earned during the same periods in 1998. The decrease in
net income was primarily  attributable  to a decrease in net interest income for
the three  months  period and the nine  months  period  ended  June 30,  1999 as
compared to the same periods in 1998.

Interest Income. Interest income decreased by $402,000 from $3.3 million for the
three months ended June 30, 1998 to $2.9 million for the three months ended June
30, 1999.  Interest  income  decreased by $1.0 million from $9.9 million for the
nine months  ended June 30, 1998 to $8.9  million for the nine months ended June
30, 1999. These decreases were attributable to the overall decrease in net loans
receivable and cash and investments.

Interest  Expense.  Interest expense decreased by $189,000 from $1.4 million for
the three  months ended June 30, 1998 to $1.2 million for the three months ended
June 30, 1999.  Interest expense decreased by $471,000 from $4.2 million for the
nine months  ended June 30, 1998 to $3.8  million for the nine months ended June
30, 1999. The  Association's  savings deposits  decreased by $5.6 million during
the nine month period and the cost of funds for the same period  decreased  from
approximately  5.05% to  approximately  4.65%. The  Association's  cost of funds
which  approximated  4.92% for the  quarter  ended June 30,  1998  decreased  to
approximately 4.70% for the quarter ended June 30, 1999.

Noninterest  Income.  Noninterest  income has  historically  been  immaterial in
relation to the Association's overall operations. Noninterest income amounted to
$19,000  and  $94,000 for the three and nine  months  ended June 30,  1999,  and
$25,000  and  $99,000  for the  three  and nine  months  ended  June  30,  1998,
respectively.

Noninterest  Expense.  Noninterest expense decreased by $146,000 to $658,000 for
the three  months  period ended June 30, 1999 from  $804,000 for the  comparable
quarter in 1998.  For the nine months  period ended June 30,  1999,  noninterest
expense  amounted to $2.1 million,  a decrease of $324,000 from the $2.4 million
reported for the nine months ended June 30,  1998.  The decrease in  noninterest
expense  for each  period is  principally  due to a  decrease  in  employee  and
director benefits.

Year 2000 Issue.  The "Year 2000  Problem"  centers on the inability of computer
systems to recognize the Year 2000. Many existing  computer programs and systems
were originally programmed with six digit dates that provided only two digits to
identify the calendar year in the date field,  without  considering the upcoming
change  in the  century.  With the  impending  millennium,  these  programs  and
computers will  recognize "00" as the year 1900 rather than the year 2000.  Like
most financial  service  providers,  the  Association  and its operations may be
affected by the Year 2000  Problem due to the nature of  financial  information.
Software,  hardware,  and  equipment  both within and outside the  Association's
direct control and with whom the  Association  electronically  or  operationally
interfaces  (e.g.  third party vendors  providing data  processing,  information
system management, maintenance of computer systems,

                                       11
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

Year  2000 Issue (Continued)

and credit  bureau  information)  are  likely to be  affected.  Furthermore,  if
computer  systems are not  adequately  changed to identify  the Year 2000,  many
computer  applications could fail or create erroneous results. As a result, many
calculations which rely on the date field information, such as interest, payment
or due dates and other operating functions, will generate results which could be
significantly  misstated,  and the  Association  could  experience  a  temporary
inability to process  transactions,  send  invoices or engage in similar  normal
business activities.

In  addition,   non-information  technology  systems,  such  as  equipment  like
telephones and copiers may also contain  embedded  technology which controls its
operation and which may be affected by the Year 2000 Problem. When the Year 2000
arrives,  systems,  including  some of those with embedded  chips,  may not work
properly because of the way they store date information. They may not be able to
deal with the date 01/01/00.  Thus, even non-information  technology systems may
affect the normal  operations  of the  Association  upon the arrival of the Year
2000.

Under certain circumstances, failure to adequately address the Year 2000 Problem
could  adversely  affect  the  viability  of  the  Association's  suppliers  and
creditors and the  creditworthiness  of its  borrowers.  Thus, if not adequately
addressed, the Year 2000 Problem could result in a significant adverse impact on
the Association's products, services and competitive condition.

In order to address the Year 2000 Issue and to minimize  its  potential  adverse
impact,  management  has begun a process to identify areas that will be affected
by the Year 2000 Problem,  assess its potential  impact on the operations of the
Association,  monitor the progress of third party software vendors in addressing
the matter,  test changes  provided by these  vendors,  and develop  contingency
plans  for any  critical  systems  which  are not  effectively  reprogrammed.  A
committee of senior  officers of the Association has been formed to evaluate the
effects that the upcoming Year 2000 could have on computer  programs utilized by
the Association. The Association's plan is divided into the five phases:

     (1)  Awareness.  Define the problem,  obtain  executive  level  support and
          develop an overall strategy. This phase was completed in April 1998.

     (2)  Assessment.  Identify all systems and the  criticality of the systems.
          This phase was completed June 1998.

     (3)  Renovation.  Program  enhancements,  hardware and  software  upgrades,
          system  replacements,  and  vendor  certifications.   This  phase  was
          completed in February 1999.

     (4)  Validation. Test and verify system changes and coordinate with outside
          parties. This phase was completed in April 1999.


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<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------


Year 2000 Issue (Continued)

     (5)  Implementation.  Components certified as Year 2000 compliant and moved
          to production. This phase was completed in July 1999.

Third party vendors  provide the majority of software  used by the  Association.
All of the Association's vendors are aware of the Year 2000 situation,  and each
has assured the Association that it is currently has software that is compliant,
and testing for the critical  applications began in April 1998. This will enable
the  Association  to devote  substantial  time to the  testing  to the  upgraded
systems prior to the arrival of the  millennium.  The  Association  utilizes the
service of a third party vendor to provide the software which is used to process
and maintain most mortgage and deposit  customer-related  accounts.  This vendor
has provided the Company with a software  version which has been certified to be
Year 2000  compliant.  Testing by the  Association  has been completed to verify
compliance for its application and usage.  The  Association  presently  believes
that with  modifications  to existing  software and  conversions to new software
that it is  currently  undertaking,  the Year  2000  Problem  will be  mitigated
without causing an adverse impact on the operations of the Association. However,
a contingency plan has been developed and approved by the Board of Directors. As
part of that plan, the  Association  has contracted with its third party vendor,
so that if their usual operational center is not functioning, an individual from
the Association will be able to post  transactions in the Orlando center. In the
event this center is also not  operational,  the  Association  has  obtained the
necessary equipment and supplies to operate by posting transactions manually.

In  addition,  monitoring  and  managing  the Year 2000  project  will result in
additional  direct and indirect costs to the  Association.  Direct costs include
potential  charges by third party  software  vendors  for product  enhancements,
costs involved in testing software  products for Year 2000  compliance,  and any
resulting costs for developing and implementing  contingency  plans for critical
software  products  which are not  enhances.  Indirect  costs  will  principally
consist of the time devoted by existing employees in monitoring  software vendor
progress,  testing  enhanced  software  products and  implementing any necessary
contingency plans. The Association has spent approximately  $25,000 on Year 2000
related costs to date and estimates that it will spend an additional  $2,500 for
Year 2000 compliance. Both direct and indirect costs of addressing the Year 2000
Problem  will be charged to  earnings  as  incurred.  The  Association  does not
believe  that such costs will have a material  effect on results of  operations.
However,  there can be no guarantee that the systems of other companies on which
the Association's  systems rely will be timely  converted,  or that a failure to
convert  by  another  company  or a  conversion  that is  incompatible  with the
Association's   systems,   would  not  have  material   adverse  effect  on  the
Association.

The costs of the project and the date on which the Association plans to complete
the Year 2000 modifications are based on management's best estimates, which were
derived utilizing numerous  assumptions of future events including the continued
availability  of certain  resources,  third party  modification  plans and other
factors.  However,  there  can be no  guarantee  that  these  estimates  will be
achieved and actual results could differ from those plans. Specific factors that
might cause such


                                       13

<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

Year 2000 Issue (Continued)

differences  include,  but are not  limited  to,  the  availability  and cost of
personnel  trained in this area,  the ability to locate and correct all relevant
computer codes, and similar uncertainties.


                Special Note Regarding Forward-Looking Statements

Statements  herein  regarding  estimated future expense levels and other matters
may constitute  forward-looking  statements  under the federal  securities laws.
Such statements are subject to certain risks and  uncertainties.  Undue reliance
should  not be  placed on this  information.  These  estimates  are based on the
current  expectations  of  management,  which may  change in the future due to a
large number of potential events, including unanticipated developments.


                                       14
<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------


There were no  significant  changes for the nine months ended June 30, 1999 from
the  information  presented in the annual report on Form 10-K for the year ended
September 30, 1998,  concerning  quantitative and qualitative  disclosures about
market risk.


                                       15
<PAGE>




Part II.  OTHER INFORMATION

        Item 1.   Legal Proceedings

                  The  Company is not  engaged in any legal  proceedings  at the
                  present time. From time to time, the Association is a party to
                  legal proceedings within the normal course of business wherein
                  it  enforces  its  security  interest in loans made by it, and
                  other matters of a similar nature.

        Item 2.   Changes in Securities

                  None

        Item 3.   Defaults Upon Senior Securities

                  None

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

                  None

        Item 5.   Other Information

                  None

        Item 6.   Exhibits and Reports on Form 8-K

                  (a)  27. Financial Data Schedule

                  (b)  No reports on 8-K were filed for the period covered by
                       this report.


                                       16
<PAGE>




SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
        Registrant has duly caused this report to be signed on its behalf by the
        undersigned thereunto duly authorized.

                                           Green Street Financial Corp

         Dated August 13, 1999             By: s/s H. D. Reaves, Jr.
                                               ---------------------------------
                                               H. D. Reaves, Jr.
                                               President and CEO

         Dated August 13, 1999             By: s/s John C. Pate
                                               ---------------------------------
                                               John C. Pate
                                               Senior Vice President and CFO




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