UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 25049

                                    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, 1998
                                             -----------------------------------

                                      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 3  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 7, 1998 there  were  issued and  outstanding  4,298,125  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,
               1997 and March 31, 1998 (unaudited)                      1-2

             Statements of income for the three months ended
               March 31, 1997 (unaudited) and
               March 31, 1998 (unaudited)                                 3

             Statements of income for the six months ended
               March 31, 1997 (unaudited) and
               March 31, 1998 (unaudited)                                 4

             Statements of cash flows for the six months ended
               March 31, 1997 (unaudited) and
               March 31, 1998 (unaudited)                               5-6

             Notes to condensed consolidated financial statements       7-8

    Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations                     9-11

    Item 3.  Quantitative and Qualitative Disclosures About Market
                Risk                                                     12

PART II - OTHER INFORMATION

    Item 1.  Legal Proceedings                                        13-14

    Item 2.  Changes in Securities                                    13-14

    Item 3.  Defaults upon Senior Securities                          13-14

    Item 4.  Submission of Matters to a Vote of Security Holders      13-14

    Item 5.  Other Information                                        13-14

    Item 6.  Exhibits and Reports on Form 8-K                         13-14

    Signatures                                                           15



<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
March 31, 1998 and September 30, 1997
                                                March 31,    September 30,
ASSETS                                             1998          1997
--------------------------------------------------------------------------------
                                                     (Unaudited)
Cash and short-term cash investments:
  Interest-earning                            $ 31,153,936   $ 29,414,597
  Noninterest-earning                              361,562        555,043
  Federal funds sold                             1,733,000      3,118,000
Investment securities:
  Held to maturity, at amortized cost           10,500,000     13,500,000
  Nonmarketable equity securities                1,189,189      1,170,889
Loans receivable, net                          131,791,523    128,945,951
Accrued interest receivable, investments           126,646        222,716
Real estate acquired in settlement of loans         51,749              -
Property and equipment, net                        305,762        306,794
Prepaid expenses and other assets                  687,419        727,688
                                              ---------------------------







         Total Assets                         $177,900,786   $177,961,678
                                              ===========================


See Notes to Condensed Consolidated Financial Statements.



<PAGE>

<TABLE>
<CAPTION>

                                                                               March 31,       September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                                              1998              1997
-------------------------------------------------------------------------------------------------------------
                                                                                       (Unaudited)
Liabilities:
<S>                                                                        <C>              <C>             
   Deposits                                                                $    112,110,602 $    112,641,893
   Advance payments by borrowers for taxes and insurance                            839,414          250,662
   Income taxes payable                                                              34,400          243,000
   Accrued expenses and other liabilities                                           397,130          375,080
   Dividends payable                                                                472,794        1,117,513
   Deferred compensation                                                            381,436          387,847
                                                                           ----------------------------------
              Total liabilities                                                 114,235,776      115,015,995
                                                                           ----------------------------------
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  4,298,125 shares                                                            -                -
   Additional paid-in capital                                                    41,923,229       41,816,239
   Note receivable, ESOP                                                         (2,080,000)      (2,210,000)
   Retained earnings, substantially restricted                                   23,821,781       23,339,444
                                                                           ----------------------------------
              Total  stockholders' equity                                        63,665,010       62,945,683
                                                                           ----------------------------------
              Total liabilities and stockholders' equity                   $    177,900,786 $    177,961,678
                                                                           ==================================
</TABLE>

                                       2

<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                                            
                                                                                    1998            1997
------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>              <C>             
Interest and dividend income:
   Loans                                                                  $      2,604,349 $      2,519,575
   Investments                                                                     689,760          685,401
                                                                          ----------------------------------
              Total interest income                                              3,294,109        3,204,976
Interest expense                                                                 1,393,714        1,311,896
                                                                          ----------------------------------
              Net interest income                                                1,900,395        1,893,080
Provision for loan losses                                                                -                -
                                                                          ----------------------------------
              Net interest income after provision for loan losses                1,900,395        1,893,080
                                                                          ----------------------------------

Noninterest income                                                                  52,658           32,845
                                                                          ----------------------------------
Noninterest expense:
   Compensation and employee benefits                                              579,952          569,373
   Other                                                                           258,392          257,565
                                                                          ----------------------------------
                                                                                   838,344          826,938
                                                                          ----------------------------------
               Income before income taxes                                        1,114,709        1,098,987

Income taxes                                                                       422,300          413,100
                                                                          ----------------------------------
              Net income                                                  $        692,409 $        685,887
                                                                          ----------------------------------


Basic earnings per share                                                  $           0.17 $           0.17
                                                                          ==================================
Diluted earnings per share                                                $           0.17 $           0.17
                                                                          ==================================
Dividends paid per share                                                  $           0.11 $           0.10
                                                                          ==================================
</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, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                   1998             1997
------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>             <C>            
Interest and dividend income:
   Loans                                                                    $     5,227,983 $     5,048,291
   Investments                                                                    1,407,668       1,412,363
                                                                            --------------------------------
              Total interest income                                               6,635,651       6,460,654
Interest expense                                                                  2,853,591       2,680,669
                                                                            --------------------------------
              Net interest income                                                 3,782,060       3,779,985
Provision for loan losses                                                                 -               -
                                                                            --------------------------------
              Net interest income after provision for loan losses                 3,782,060       3,779,985
                                                                            --------------------------------

Noninterest income                                                                   73,437          60,001
                                                                            --------------------------------
Noninterest expense:
   Compensation and employee benefits                                             1,169,530       1,142,118
   Other                                                                            475,767         555,025
                                                                            --------------------------------
                                                                                  1,645,297       1,697,143
                                                                            --------------------------------
              Income before income taxes                                          2,210,200       2,142,843

Income taxes                                                                        828,750         816,965
                                                                            --------------------------------
              Net income                                                    $     1,381,450 $     1,325,878
                                                                            --------------------------------


Basic earnings per share                                                    $          0.34 $          0.33
                                                                            ================================
Diluted earnings per share                                                  $          0.33 $          0.32
                                                                            ================================
Dividends paid per share                                                    $          0.22 $          0.20
                                                                            ================================
</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, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                     1998         1997
-----------------------------------------------------------------------------------------------------------
<S>                                                                         <C>             <C>           
Cash Flows From Operating Activities
   Net income                                                               $     1,381,450 $    1,325,878
   Adjustments to reconcile net income to net
      cash provided by operating activities:
      Depreciation and amortization                                                  18,000         20,179
      Net gain on disposal of real estate acquired                                       
         in settlement of loans                                                           -        (12,354)
      Increase in deferred income taxes                                               9,000        329,000
      Decrease in deferred compensation                                              (6,411)        (8,197)
      ESOP compensation charged to paid-in capital                                  106,990         80,730
      Changes in assets and liabilities:
        (Increase) decrease in:
           Prepaid expenses and other assets                                         40,269        (82,189)
           Accrued interest receivable                                               96,070         85,740
        Increase (decrease) in:
           Accrued expenses and other liabilities                                    13,050        280,860
           Accrued SAIF assessment                                                        -       (792,868)
           Income taxes payable                                                    (208,600)        34,600
                                                                            -------------------------------
              Net cash provided by operating activities                           1,449,818      1,261,379
                                                                            -------------------------------
Cash Flows From Investing Activities
   Net increase in loans receivable                                              (2,897,321)    (1,141,633)
   Proceeds from sale of real estate acquired in settlement of loans                     -          46,779
   Proceeds from maturities of held to maturity investment securities            18,000,000     12,000,000
    Purchase of held to maturity investment securities                          (15,000,000)    (9,000,000)
   Purchase of nonmarketable equity securities                                      (18,300)             -
   Purchase of property and equipment                                               (16,968)        (8,984)
                                                                            -------------------------------
              Net cash provided by investing activities                     $        67,411 $    1,896,162
                                                                            -------------------------------

</TABLE>

                                       5


<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                   1998            1997
------------------------------------------------------------------------------------------------------------

<S>                                                                         <C>             <C>            
Cash Flows From Financing Activities
   Net decrease in deposits                                                 $      (531,291)$    (2,262,439)
   Principal payment for ESOP debt                                                  130,000         130,000
   Cash dividends paid                                                           (1,543,832)     (1,418,544)
   Increase in advance payments by borrowers
       for taxes and insurance                                                      588,752         609,591
                                                                            --------------------------------
              Net cash used in financing activities                              (1,356,371)     (2,941,392)
                                                                            --------------------------------
              Net increase in cash and cash equivalents                             160,858         216,149
Cash and cash equivalents:
   Beginning                                                                     33,087,640      35,481,906
                                                                            --------------------------------
   Ending                                                                   $    33,248,498 $    35,698,055
                                                                            ================================
   Cash and cash equivalents:
       Cash and short-term investments:
       Interest-bearing                                                     $    31,153,936 $    33,998,331
       Noninterest-bearing                                                          361,562         311,138
       Federal funds sold                                                         1,733,000       1,388,586
                                                                            --------------------------------
                                                                            $    33,248,498 $    35,698,055
                                                                            ================================
Supplemental Disclosures of Cash Flow Information
   Cash payments for:
      Interest                                                              $     2,851,596 $     2,675,434
                                                                            ================================
      Income taxes                                                          $     1,050,350 $       428,543
                                                                            ================================
Supplemental Disclosure of Noncash Investing and Financing
   Activities:
     Dividends declared and accrued                                         $       472,794 $       406,412
                                                                            ================================
      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.

            Basis  of  Presentation  The  accompanying   unaudited  consolidated
            financial   statements   (except  for  the  statement  of  financial
            condition  at  September  30,  1997,  which is  audited)  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
            three and six month periods ended March 31, 1998 are not necessarily
            indicative of the results of operations that may be expected for the
            year ended September 30, 1998 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 1997 annual report
            of the Corporation.

                                       7
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY


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

            Note 3.   Dividends Declared

            Dividends  Declared On March 25, 1998, the Board of Directors of the
            Corporation declared a dividend of $ .11 a share for stockholders of
            record as of April 13,  1998 and  payable  on April  23,  1998.  The
            dividends declared were accrued and reported as other liabilities in
            the March 31, 1998 consolidated statement of financial condition.

            Note 4.   Earnings Per Share

            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.  No adjustments
            were  made to net  income  (numerator)  for all  periods  presented.
            Accordingly,  this  presentation  has been  adopted  for all periods
            presented. The basic and diluted weighted average shares outstanding
            for the three and six month periods are as follows:
<TABLE>
<CAPTION>
            Three-months ended:
                                                                                                 1998             1997  
                                                                                          --------------------------------
<S>                                                                                            <C>              <C>      
            Weighted average shares outstanding                                                4,298,125        4,298,125
            Less unallocated ESOP shares                                                         211,250          237,250
                                                                                          --------------------------------
                Weighted average outstanding shares used for basic EPS                         4,086,875        4,060,875
            Plus incremental shares from assumed issuance
               of stock options                                                                   71,735           53,475
                                                                                          --------------------------------
                Weighted average outstanding shares used for diluted EPS                       4,158,610        4,114,350
                                                                                          ================================
</TABLE>
            
<TABLE>
<CAPTION>
            
            Six-months ended:
            
<S>                                                                                            <C>              <C>      
            Weighted average shares outstanding                                                4,298,125        4,298,125
            Less unallocated ESOP shares                                                         214,500          240,500
                                                                                          --------------------------------
                Weighted average outstanding shares used for basic EPS                         4,083,625        4,057,625
            Plus incremental shares from assumed issuance
               of stock options                                                                   71,735           53,475
                                                                                          --------------------------------
                Weighted average outstanding shares used for diluted EPS                       4,155,360        4,111,100
                                                                                          ================================
</TABLE>

                                       8


<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, 1998 and September 30, 1997:

Total assets  remained  stable at $177.9  million at March 31, 1998  compared to
$178.0  million  at  September  30,  1997.  The only  significant  change in the
component of the Corporation's assets during the period was $3.0 million in held
to maturity investment  securities,  which were called and used to fund mortgage
loans at March 31,  1998.  Investments  and other  short-term  interest  earning
assets  amounted  to $44.6  million  at March 31,  1998.  Net  loans  receivable
increased  by $2.8 million  during the period and amounted to $131.8  million at
March 31, 1998.  Approximately  99% of the  Corporation's  assets were  interest
earning at March 31, 1998, and approximately 75% of such interest earning assets
were held in the form of loans receivable.

Savings  deposits  decreased  by $.5 million  during the period and  amounted to
$112.1 million at March 31, 1998. The Association had no borrowings  outstanding
during or at the end of the six month  period  ended  March  31,  1998,  but has
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 $2.1  million  at March  31,  1998 net of a  $130,000
principal   repayment  during  the  period,   is  reported  as  a  reduction  of
stockholders'  equity.  Retained  earnings  increased  by $.5  million  to $23.8
million  at  March  31,  1998,  which  is  attributable  to  the   Corporation's
consolidated earnings during the six months ended March 31, 1998, less dividends
accrued for the period.

At March 31, 1998,  the  Corporation's  stockholders'  equity  amounted to $63.7
million,  which as a  percentage  of total  assets  was  35.8%.  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
(OTS). The Association's  stand-alone equity was $45.0 million at March 31, 1998
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 .13% at March
31, 1998 and  September  30,  1997,  respectively.  The  Association's  level of
nonperforming  loans was .19% at March 31, 1997.  During the quarter ended March
31, 1998, 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, 1998,  no additional  provision for loan losses was made
during the quarter.

                                       9

<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 Six Months  Ended March 31, 1998 and
1997:

General.  Net income for the three  month and six month  period  ended March 31,
1998 was $692,000, and $1,381,000, respectively, or $6,000 and $55,000 more than
the $686,000 and $1,326,000 earned during the same periods in 1997. The increase
in net income was primarily  attributable  to an increase in noninterest  income
for the three month period and to a decrease in noninterest  expense for the six
month period ended March 31, 1998 as compared to the same periods in 1997.

Interest income.  Interest income increased by $89,000 from $3.2 million for the
three  months  ended March 31, 1997 to $3.3  million for the three  months ended
March 31, 1998.  Interest income increased by $175,000 from $6.5 million for the
six months  ended March 31, 1997 to $6.6  million for the six months ended March
31, 1998. These increases were principally  attributable to the overall increase
in net loans receivable.

Interest  expense.  Interest expense  increased by $82,000 from $1.3 million for
the three months ended March 31, 1997 to $1.4 million for the three months ended
March 31, 1998. Interest expense increased by $173,000 from $2.7 million for the
six months  ended March 31, 1997 to $2.9  million for the six months ended March
31,  1998.  Even though the  Association's  savings  deposits  decreased  by $.5
million  during  the six month  period,  the cost of funds  for the same  period
increased from  approximately  4.85% to approximately  5.05%. The  Association's
cost of funds  which  approximated  4.75% for the  quarter  ended March 31, 1997
increased to approximately 4.95% for the quarter ended March 31, 1998.

Net interest  income.  Net interest  income  remained stable at $1.9 million and
$3.8  million  for the  three and six  months  ended  March  31,  1997 and 1998,
respectively.

Provision for loan losses. Based on management's analysis of the adequacy of its
allowances at March 31, 1998 and 1997,  no provisions  for loan losses were made
during  the  three  and six  months  periods  ended  March  31,  1998 and  1997.
Provisions,  which  are  charged  to  operations,  and the  resulting  loan loss
allowances are amounts the Association's management believes will be adequate to
absorb potential losses on existing loans that may become  uncollectible.  Loans
are  charged  off  against  the   allowance   when   management   believes  that
collectibility is unlikely. The evaluation to increase or decrease the provision
and resulting  allowances is based both on prior loan loss  experience and other
factors, such as changes in the nature and volume of the loan portfolio, overall
portfolio quality, and current economic  conditions.  The Association's level of
nonperforming  loans has  remained  consistently  low in relation to total loans
outstanding,  and the Association has not charged off any loans during either of
the three or six month periods ended March 31, 1998 and 1997. At March 31, 1998,
the Association's level of general valuation allowances for loan losses amounted
to $255,000, which management believes is adequate to absorb potential losses in
its loan portfolio.

Noninterest  income.  Noninterest  income has  historically  been  immaterial in
relation to the Association's overall operations. Noninterest income amounted to
$53,000  and  $73,000 for the three and six months  ended  March 31,  1998,  and
$33,000  and  $60,000  for the  three  and six  months  ended  March  31,  1997,
respectively.

                                       10
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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

Noninterest  expense.  Noninterest  expense increased by $11,000 to $838,000 for
the three month  period ended March 31, 1998 from  $827,000  for the  comparable
quarter in 1997.  For the six month  period  ended March 31,  1998,  noninterest
expense  amounted to $1.6  million,  a decrease of $52,000 from the $1.7 million
reported for the six months ended March 31,  1997.  The increase in  noninterest
expense for the three month period is principally due to an increase in employee
benefits,  whereas the decrease in noninterest  expense for the six month period
is principally due to a decrease in deposit insurance premiums.

Capital  Resources and Liquidity.  The term  "liquidity"  generally refers to an
organization's  ability to generate  adequate amounts of funds to meet its needs
for cash. More specifically for financial  institutions,  liquidity insures that
adequate funds are available to meet deposit withdrawals,  fund loan and capital
expenditure commitments,  maintain reserve requirements, pay operating expenses,
and  provide  funds  for debt  service,  dividends  to  stockholders,  and other
institutional  commitments.  Funds  are  primarily  provided  through  financial
resources from operating activities,  expansion of the deposit base, borrowings,
through  the sale or  maturity  of  investments,  the  ability  to raise  equity
capital, or maintenance of shorter term interest-earning deposits.

During the six month period ended March 31, 1998, cash and cash  equivalents,  a
significant  source  of  liquidity,  remained  fairly  constant,  increasing  by
approximately $161,000.

As a federally chartered savings association, Home Federal must maintain a daily
average balance of liquid assets equal to at least 4% of  withdrawable  deposits
and short-term borrowings.  The Association's liquidity ratio at March 31, 1998,
as  computed  under  OTS  regulations,   was  considerably  in  excess  of  such
requirements.  Given its excess  liquidity  and its  ability to borrow  from the
Federal Home Loan Bank, the  Association  believes that it will have  sufficient
funds  available to meet the  anticipated  future loan  commitments,  unexpected
deposit withdrawals, and other cash requirements.

Year 2000 Issue.  The Year 2000 Issue relates to whether  computer  systems will
properly  recognize and process date sensitive  information on and after January
1, 2000.  Systems that do not properly recognize such information could generate
erroneous data or fail. The Association is heavily dependent on computer systems
in the conduct of substantially all of its business activities.  The Association
has conducted a comprehensive review of its computer systems, including its core
processing  systems maintained by an independent data processing service center,
to  identify  the  systems  that  could  be  affected  by the Year  2000  Issue.
Management  has identified  the  corrective  action  required to ensure that the
Association's internal and vendor-maintained systems that are date sensitive are
Year 2000 compliant.

Because  the  Association  has  not  completed  discussions  with  its  vendors,
management  is unable to estimate  the cost of making all its systems  Year 2000
compliant.

                                       11

<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, 1998 from
the  information  presented in the annual  report on Form 10K for the year ended
September 30, 1997.





















                                       12

<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 28, 1998,  the annual meeting of  stockholders  was
                  held to consider and vote upon the election of three directors
                  of the  Company,  to ratify the  appointment  of  McGladrey  &
                  Pullen,  LLP as  independent  auditors for the Company for the
                  fiscal year ending September 30, 1998, to ratify the amendment
                  to Green Street  Financial  Corp's 1996 Stock Option Plan, and
                  to ratify  the  amendment  to Home  Federal  Savings  and Loan
                  Association's  Restricted Stock Plan and Trust Agreement.  All
                  items were approved by the stockholders as shown below:

                  Vote concerning the election of directors of the Company:
<TABLE>
<CAPTION>
                                            For             Against          Abstain            Total
                                      ----------------------------------------------------------------------
                    <S>                    <C>                  <C>                   <C>       <C>      
                    Hutaff, Sr.            3,935,504            95,757                0         4,031,261
                    McCoy, Jr.             3,942,422            88,839                0         4,031,261
                    Pate                   3,942,072            89,189                0         4,031,261
</TABLE>


                    Vote concerning  ratification of McGladrey & Pullen,  LLP as
                    independent auditors for the year ended September 30, 1998:

<TABLE>
<CAPTION>
                                            For             Against          Abstain            Total
                                      ----------------------------------------------------------------------
<S>                                          <C>                  <C>              <C>            <C>      
                                             3,981,486            23,770           26,002         4,031,258
</TABLE>




                                       13

<PAGE>
                    Vote  concerning  ratification  of the  amendment  to  Green
                    Street Financial Corp's 1996 Stock Option Plan:
<TABLE>
<CAPTION>

                                            For             Against          Abstain            Total
                                      ----------------------------------------------------------------------
<S>                                          <C>                 <C>               <C>            <C>      
                                             3,378,281           290,523           68,362         3,737,166
</TABLE>


                    Vote  concerning  ratification  of  the  amendment  to  Home
                    Federal Savings and Loan Association's Restricted Stock Plan
                    and Trust Agreement:

<TABLE>
<CAPTION>
                                            For             Against          Abstain            Total
                                      ----------------------------------------------------------------------
<S>                                          <C>                 <C>               <C>            <C>      
                                             3,659,754           309,189           62,314         4,031,257
</TABLE>

        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.












                                       14
<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 7, 1998            By:  s/s H. D. Reaves, Jr.
                  ---------------------            -----------------------------
                                                   H. D. Reaves, Jr.
                                                   President and CEO

         Dated         May 7, 1998            By:  s/s John C. Pate
                  ---------------------            -----------------------------
                                                   John C. Pate
                                                   Senior Vice President and CFO










                                       15