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 March 31, 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 
     incorporation or organization)                   Identification No.)

                                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 May 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 March 31, 1999 (unaudited)                                          1-2

     Statements of income for the three months ended
     March 31, 1998 (unaudited) and
     March 31, 1999 (unaudited)                                                3

     Statements of income for the six months ended
     March 31, 1998 (unaudited) and
     March 31, 1999 (unaudited)                                                4

     Statements of cash flows for the six months ended
     March 31, 1998 (unaudited) and
     March 31, 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
March 31, 1999 and September 30, 1998

                                                       March 31,   September 30,
Assets                                                   1999          1998  
--------------------------------------------------------------------------------
                                                     (Unaudited)

Cash and short-term cash investments:
   Interest-earning                                 $ 29,111,210    $ 27,817,856
Noninterest-earning                                      894,755         171,500
    Federal funds sold                                 2,831,000       1,473,000
Investment securities:
   Held to maturity, at amortized cost                 3,000,000       9,000,000
   Nonmarketable equity securities                     1,147,500       1,144,700
Loans receivable, net                                128,037,592     131,697,916
Accrued interest receivable, investments                  59,470         180,301
Real estate acquired in settlement of loans               34,521          34,521
Property and equipment, net                              461,308         349,190
Prepaid expenses and other assets                        855,498         835,561
                                                    ----------------------------


             Total Assets                           $166,432,854    $172,704,545
                                                    ============================


See Notes to Condensed Consolidated Financial Statements.

                                       1
<PAGE>

<TABLE>
<CAPTION>

                                                                         March 31,     September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                                       1999            1998
-----------------------------------------------------------------------------------------------------
                                                                        (Unaudited)
<S>                                                                  <C>             <C>          
Liabilities:
   Deposits                                                            $ 106,191,009   $ 110,459,780
   Advance payments by borrowers for taxes and insurance                     771,452         208,998
   Income taxes payable                                                       22,000            -
   Accrued expenses and other liabilities                                    378,366         222,918
   Dividends payable                                                         465,512       1,102,469
   Deferred compensation                                                     373,410         377,804
                                                                       -----------------------------
              Total liabilities                                          108,201,749     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                                             35,917,069      38,550,912
   Unearned ESOP shares                                                   (1,820,000)     (1,950,000)
   Retained earnings, substantially restricted                            24,134,036      23,731,664
                                                                       -----------------------------
              Total  stockholders' equity                                 58,231,105      60,332,576
                                                                       -----------------------------
              Total liabilities and stockholders' equity               $ 166,432,854   $ 172,704,545
                                                                       =============================

</TABLE>

                                       2

<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                               1999            1998
--------------------------------------------------------------------------------------------------------
<S>                                                                     <C>              <C>         
Interest and dividend income:
   Loans                                                                  $  2,480,926     $  2,604,349
   Investment Securities                                                       476,019          689,760
                                                                          -----------------------------
              Total interest income                                          2,956,945        3,294,109
Interest expense                                                             1,225,577        1,393,714
                                                                          -----------------------------
              Net interest income                                            1,731,368        1,900,395
Provision for loan losses                                                         -                -
                                                                          -----------------------------
              Net interest income after provision for loan losses            1,731,368        1,900,395
                                                                          -----------------------------

Noninterest income                                                              39,506           52,658
                                                                          -----------------------------
Noninterest expense:
   Compensation and employee benefits                                          448,901          579,952
   Other                                                                       248,935          258,392
                                                                          -----------------------------
                                                                               697,836          838,344
                                                                          -----------------------------
               Income before income taxes                                    1,073,038        1,114,709
                                                                            
Income taxes                                                                   402,400          422,300
                                                                          -----------------------------
              Net income                                                  $    670,638     $    692,409
                                                                          =============================
                                                                            
Basic earnings per share                                                  $       0.18     $       0.17
                                                                          =============================
Diluted earnings per share                                                $       0.18     $       0.17
                                                                          =============================
Dividends paid per share                                                  $       0.12     $       0.11
                                                                          =============================
</TABLE>
                                                                           
See Notes to Condensed Consolidated Financial Statements.

                                       3

<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Six Months Ended March 31, 1999 and 1998

<TABLE>
<CAPTION>

                                                                                1999            1998
--------------------------------------------------------------------------------------------------------
<S>                                                                        <C>             <C>      
Interest and dividend income:
   Loans                                                                    $ 5,055,168     $ 5,227,983
   Investment Securities                                                      1,000,208       1,407,668
                                                                            ----------------------------
              Total interest income                                           6,055,376       6,635,651
Interest expense                                                              2,572,285       2,853,591
                                                                            ----------------------------
              Net interest income                                             3,483,091       3,782,060
Provision for loan losses
                                                                            ----------------------------
              Net interest income after provision for loan losses             3,483,091       3,782,060
                                                                            ----------------------------

Noninterest income                                                               75,279          73,437
                                                                            ----------------------------
Noninterest expense:
   Compensation and employee benefits                                           989,373       1,169,530
   Other                                                                        477,575         475,767
                                                                            ----------------------------
                                                                              1,466,948       1,645,297
                                                                            ----------------------------
              Income before income taxes                                      2,091,422       2,210,200

Income taxes                                                                    778,011         828,750
                                                                            ----------------------------
              Net income                                                    $ 1,313,411     $ 1,381,450
                                                                            ============================

Basic earnings per share                                                    $      0.34     $      0.34
                                                                            ============================
Diluted earnings per share                                                  $      0.34     $      0.33
                                                                            ============================
Dividends paid per share                                                    $      0.24     $      0.22
                                                                            ============================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                        4
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended March 31, 1999 and 1998

<TABLE>
<CAPTION>

                                                                                1999           1998
------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>            <C>        
Cash Flows From Operating Activities
   Net income                                                               $ 1,313,411    $ 1,381,450
   Adjustments to reconcile net income to net
      cash provided by operating activities:
      Depreciation and amortization                                              18,000         18,000
      Increase in deferred income taxes                                            -             9,000
      Decrease in deferred compensation                                          (4,394)        (6,411)
      ESOP compensation credited to paid-in capital                              39,975        106,990
      Changes in assets and liabilities:
        (Increase) decrease in:
           Prepaid expenses and other assets                                    (19,937)        40,269
           Accrued interest receivable                                          120,831         96,070
        Increase (decrease) in:
           Accrued expenses and other liabilities                               155,448         13,050
           Income taxes payable                                                  22,000       (208,600)
                                                                            ---------------------------
              Net cash provided by operating activities                       1,645,334      1,449,818
                                                                            ---------------------------
Cash Flows From Investing Activities
   Net decrease (increase) in loans receivable                                3,660,324     (2,897,321)
   Proceeds from maturities of held to maturity investment securities         6,000,000     18,000,000
    Purchase of held to maturity investment securities                                     (15,000,000)
   Purchase of nonmarketable equity securities                                   (2,800)       (18,300)
   Purchase of property and equipment                                          (130,118)       (16,968)
                                                                            ---------------------------
              Net cash provided by investing activities                       9,527,406         67,411
                                                                            ---------------------------

</TABLE>

                                       5
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended March 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                          
                                                                                   1999             1998
--------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>              <C>          
Cash Flows From Financing Activities
   Net decrease in deposits                                                    $  (4,268,771)   $   (531,291)
   Principal payment for ESOP debt                                                   130,000         130,000
   Cash dividends paid                                                            (1,547,996)     (1,543,832)
   Redemption of common stock                                                     (2,673,818)           - 
   Increase in advance payments by borrowers
       for taxes and insurance                                                       562,454         588,752
                                                                                -----------------------------
              Net cash used in financing activities                               (7,798,131)     (1,356,371)
                                                                                -----------------------------
              Net increase in cash and cash equivalents                            3,374,609         160,858
Cash and cash equivalents:
   Beginning                                                                      29,462,356      33,087,640
                                                                                -----------------------------
   Ending                                                                      $  32,836,965    $ 33,248,498
                                                                                =============================
   Cash and cash equivalents:
       Cash and short-term investments:
       Interest-bearing                                                        $  29,111,210    $ 31,153,936
       Noninterest-bearing                                                           894,755         361,562
       Federal funds sold                                                          2,831,000       1,733,000
                                                                                -----------------------------                    
                                                                               $  32,836,965    $ 33,248,498
                                                                                =============================
Supplemental Disclosures of Cash Flow Information
   Cash payments for:
      Interest                                                                 $   2,573,475    $  2,851,596
                                                                                =============================
      Income taxes                                                             $     756,011    $  1,050,350
                                                                                =============================
Supplemental Disclosure of Noncash Investing and Financing
   Activities:
     Dividends declared and accrued                                            $     465,512    $    472,794
                                                                                =============================
      Transfer from loans to real estate acquired
        in settlement of loans                                                 $           -    $     51,749
                                                                                =============================
</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

Green Street Financial Corp (the  "Corporation") was incorporated under the laws
of the State of North  Carolina for the purpose of becoming the savings and loan
holding company of Home Federal Savings and Loan Association (the  "Association"
or "Home  Federal")  in  connection  with the  Association's  conversion  from a
federally chartered mutual savings and loan association to a federally chartered
stock  savings and loan  association,  pursuant to its Plan of  Conversion.  The
Corporation was organized in December 1995 to acquire all of the common stock of
Home Federal upon its conversion to stock form. A  subscription  offering of the
Corporation's  shares  closed on April 3, 1996,  at which  time the  Corporation
acquired all of the shares of the  Association  and  commenced  operations.  The
financial  statements of the Corporation  are presented on a consolidated  basis
with those of Home Federal.
            
The Corporation has no operations and conducts no business of its own other than
owning Home Federal,  investing its portion of the net proceeds  received in the
Conversion,  and lending funds to the Employee Stock Ownership Plan (the "ESOP")
which was formed in connection  with the Conversion.  The principal  business of
the  Association  is accepting  deposits from the general public and using those
deposits  and other  sources of funds to make loans  secured by real  estate and
other forms of collateral  located in the  Association's  primary market area of
Cumberland and Robeson counties in North Carolina.

Home  Federal's  results of  operations  depend  primarily  on its net  interest
income,  which is the difference  between interest income from  interest-earning
assets and interest expense on interest-bearing  liabilities.  The Association's
operations are also affected by noninterest income, such as miscellaneous income
from loans,  customer  deposit  account  service  charges,  and other sources of
revenue.  The Association's  principal operating  expenses,  aside from interest
expense,  consist of  compensation  and  associated  benefits,  federal  deposit
insurance  premiums,   occupancy  costs,  advertising,  and  other  general  and
administrative expenses.

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 six month period ended March 31, 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.

                                       7
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

--------------------------------------------------------------------------------
Note 3.   Dividends Declared

On March 31, 1999, the Board of Directors of the Corporation declared a dividend
of $ .12 a share for  stockholders of record as of April 12, 1999 and payable on
April 23,  1999.  The  dividends  declared  were  accrued and  reported as other
liabilities in the March 31, 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  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:

Three months ended:
<TABLE>
<CAPTION>

                                                                                 1999             1998       
                                                                            -----------------------------
<S>                                                                       <C>              <C>      
Weighted average shares outstanding                                           3,996,458        4,298,125
Less unallocated ESOP shares                                                    185,250          211,250
                                                                            -----------------------------
    Weighted average outstanding shares used for basic EPS                    3,811,208        4,086,875
Plus incremental shares from assumed issuance
   of stock options                                                                               71,735
                                                                            -----------------------------
    Weighted average outstanding shares used for diluted EPS                  3,811,208        4,158,610
                                                                            =============================

Net income                                                                  $   670,638      $   692,409
                                                                            =============================

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)

Six months ended:

<TABLE>
<CAPTION>
                                                                      1999               1998     
                                                                 --------------------------------
<S>                                                            <C>                 <C>        
Weighted average shares outstanding                                4,040,315           4,298,125
Less unallocated ESOP shares                                         188,500             214,500
                                                                 --------------------------------
    Weighted average outstanding shares used for basic EPS         3,851,815           4,083,625
Plus incremental shares from assumed issuance                                       
   of stock options                                                                       71,735
                                                                 --------------------------------
    Weighted average outstanding shares used for diluted EPS       3,851,815           4,155,360
                                                                 ================================
                                                                                    
Net income                                                       $ 1,313,411         $ 1,381,450
                                                                 ================================
                                                                                    
Basic earnings per share                                         $      0.34         $      0.34
                                                                 ================================
Diluted earnings per share                                       $      0.34         $      0.33
                                                                 ================================
</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.

                                       9
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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

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

Comparison of Financial Condition at March 31, 1999 and September 30, 1998:

Total assets  decreased to $166.4  million at March 31, 1999  compared to $172.7
million at September 30, 1998. The decrease was mainly  attributed to a decrease
in cash and  investments  of $2.6 million and loans  receivable of $3.7 million.
The decrease in cash is principally  attributable to a 5% stock  repurchase plan
of $2.7 million, which began in February, 1999 and was completed in March, 1999.
As a result of this plan, 203,950 shares were repurchased. Investments and other
short term interest  earning assets amounted to $36.1 million at March 31, 1999.
Net loans receivable amounted to $128.0 million at March 31, 1999. Approximately
99% of the  Corporation's  assets were interest  earning at March 31, 1999,  and
approximately 78% of such interest earning assets were held in the form of loans
receivable.

Savings  deposits  decreased by $4.3  million  during the period and amounted to
$106.2 million at March 31, 1999. The Association had no borrowings  outstanding
during or at the end of the six month  period  ended  March  31,  1999,  but had
guaranteed the repayment of the ESOP's note payable to the Corporation which was
originated on April 3, 1996 in order for the ESOP to purchase  260,000 shares of
common stock in the  Corporation.  The  Corporation's  note  receivable from the
ESOP,  which  amounted  to $1.8  million  at March  31,  1999 net of a  $130,000
principal   repayment  during  the  period,   is  reported  as  a  reduction  of
stockholders'  equity.  Retained  earnings  increased  by $.4  million  to $24.1
million  at  March  31,  1999,  which  is  attributable  to  the   Corporation's
consolidated earnings during the six months ended March 31, 1999, less dividends
accrued for the period.

At March 31, 1999,  the  Corporation's  stockholders'  equity  amounted to $58.2
million,  which as a  percentage  of total  assets  was  35.0%.  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 $45.3 million at March 31,
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 .19% and .15% at March
31, 1999 and  September  30,  1998,  respectively.  The  Association's  level of
nonperforming  loans was .21% at March 31, 1998.  During the quarter ended March
31, 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 march 31, 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 Six Months  Ended March 31,
1999 and 1998:

General. Net income for the three and six months period ended March 31, 1999 was
$671,000  and  $1,313,000,  respectively,  or $21,000 and $68,000  less than the
$692,000 and $1,381,000  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 six months  period  ended  March 31,  1999 as
compared to the same periods in 1998.

Interest Income. Interest income decreased by $337,000 from $3.3 million for the
three  months  ended March 31, 1998 to $3.0  million for the three  months ended
March 31, 1999.  Interest income decreased by $580,000 from $6.6 million for the
six months  ended March 31, 1998 to $6.1  million for the six months ended March
31, 1999. These decreases were attributable to the overall decrease in net loans
receivable and cash and investments.

Interest  Expense.  Interest expense decreased by $168,000 from $1.4 million for
the three months ended March 31, 1998 to $1.2 million for the three months ended
March 31, 1999. Interest expense decreased by $281,000 from $2.9 million for the
six months  ended March 31, 1998 to $2.6  million for the six months ended March
31, 1999. The  Association's  savings deposits  decreased by $4.3 million during
the six month  period and the cost of funds for the same period  decreased  from
approximately  5.05% to  approximately  4.75%. The  Association's  cost of funds
which  approximated  4.95% for the quarter  ended March 31,  1998  decreased  to
approximately 4.55% for the quarter ended March 31, 1999.

Noninterest  Income.  Noninterest  income has  historically  been  immaterial in
relation to the Association's overall operations. Noninterest income amounted to
$40,000  and  $75,000 for the three and six months  ended  March 31,  1999,  and
$53,000  and  $73,000  for the  three  and six  months  ended  March  31,  1998,
respectively.

Noninterest  Expense.  Noninterest expense decreased by $140,000 to $698,000 for
the three months  period ended March 31, 1999 from  $838,000 for the  comparable
quarter in 1998.  For the six months  period ended March 31,  1999,  noninterest
expense  amounted to $1.5 million,  a decrease of $178,000 from the $1.6 million
reported for the six months ended March 31,  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.
          
                                       12

<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 is in process with a scheduled  completion
          date of 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  working to have its software
compliant by July 1999, 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 is underway
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.

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 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.

                                       13

<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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

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

                     Impact of Inflation and Changing Prices

The  consolidated  financial  statements  and  accompanying  footnotes have been
prepared in accordance with generally accepted accounting  principles  ("GAAP"),
which require the  measurement  of financial  position and operating  results in
terms of historical  dollars without  consideration  for changes in the relative
purchasing power of money over time due to inflation. The assets and liabilities
of the  Corporation  are  primarily  monetary  in nature and changes in interest
rates have a greater impact on the Corporation's performance than do the effects
of inflation.

                                       14

<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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

There were no  significant  changes for the six months ended March 31, 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
                  On January 27, 1999,  the annual meeting of  stockholders  was
                  held to consider and vote upon the election of three directors
                  of the Company and to ratify the  appointment  of  McGladrey &
                  Pullen,  LLP as  independent  auditors for the Company for the
                  fiscal year ending September 30, 1999. All items were approved
                  by the stockholders as shown below:

                  Vote concerning the election of directors of the Company:

                                      For        Against    Abstain     Total
                                  ----------------------------------------------
                    Grantham        3,596,122    155,311       0      3,751,433
                    Ray             3,595,504    155,929       0      3,751,433
                    Reaves, Jr.     3,596,578    154,855       0      3,751,433


                  Vote  concerning  ratification of McGladrey & Pullen,  LLP  as
                  independent auditors for the year ended September 30, 1999:

                                      For        Against    Abstain     Total
                                  ----------------------------------------------
                                    3,697,564     29,489    24,380    3,751,433


        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  May 12, 1999                  By: /s/ H. D. Reaves, Jr.  
                                                  ------------------------------
                                                  H. D. Reaves, Jr.
                                                  President and CEO


         Dated  May 12, 1999                  By: /s/ John C. Pate
                                                  ------------------------------
                                                  John C. Pate
                                                  Senior Vice President and CFO