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       December 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 Identification No.)
          incorporation or organization)

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

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

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

Indicate by check X whether the registrant (1) has filed all reports required to
be filed by  Section  13 or 15(d) of the  Securities  and  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes  X   No
                                       ---     --- 

As of February 5, 1999 there were issued and outstanding 4,083,219 shares of the
Registrant's common stock, no par value.
<PAGE>

                   Green Street Financial Corp andSubsidiary

                                    CONTENTS


PART I - FINANCIAL INFORMATION                                             Pages
                                                                           -----
      Item 1.  Condensed Consolidated Financial Statements

Statements of financial condition at September 30, 1998
     and December 31, 1998 (unaudited)                                      1-2

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

Statements of cash flows for the three months ended
     December 31, 1997 (unaudited) and
     December 31, 1998 (unaudited)                                          4-5

Notes to condensed consolidated financial statements                        6-7

      Item 2.  Management's Discussion and Analysis of Financial Condition
                        and Results of Operations                           8-11

      Item 3.  Quantitative and Qualitative Disclosures About Market Risk     12

PART II - OTHER INFORMATION

      Item 1.  Legal Proceedings                                              13
      Item 2.  Changes in Securities and Use of Proceeds                      13
      Item 3.  Defaults upon Senior Securities                                13
      Item 4.  Submission of Matters to a Vote of Security Holders            13
      Item 5.  Other Information                                              13
      Item 6.  Exhibits and Reports on Form 8-K                               13

      Signatures                                                              14



<PAGE>


Green Street Financial Corp and Subsidiary


CONDENSED Consolidated Statements of Financial Condition
December 31, 1998 and September 30, 1998

                                            December 31,   September 30,
ASSETS                                            1998           1997
-----------------------------------------------------------------------
                                               (Unaudited)
Cash and short-term cash investments:
   Interest-earning                          $ 32,168,240  $ 27,817,856
   Noninterest-earning                            668,276       171,500
   Federal funds sold                           3,930,000     1,473,000
Investment securities:
   Held to maturity, at amortized cost          3,000,000     9,000,000
   Nonmarketable equity securities              1,144,700     1,144,700
Loans receivable, net                         129,613,357   131,697,916
Accrued interest receivable, investments               -        180,301
Real estate acquired in settlement of loans        34,521        34,521
Property and equipment, net                       340,190       349,190
Prepaid expenses and other assets                 821,979       835,561
                                             --------------------------







             Total Assets                    $171,721,263 $ 172,704,545
                                             ==========================

See Notes to Condensed Consolidated Financial Statements.




                                       1

<PAGE>


<TABLE>
<CAPTION>

                                                                  December 31,   September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                                    1998         1998
-----------------------------------------------------------------------------------------------
                                                                    (Unaudited)
<S>                                                             <C>           <C>          
Liabilities:
   Deposits                                                      $ 109,133,084 $ 110,459,780
   Advance payments by borrowers for taxes and insurance               503,776       208,998
   Income taxes payable                                                335,082            -
   Accrued expenses and other liabilities                              288,394       222,918
   Dividends payable                                                   489,986     1,102,469
   Deferred compensation                                               375,988       377,804
                                                                 ----------------------------
              Total liabilities                                    111,126,310   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 4,083,219 shares                               -             -
   Additional paid-in capital                                       38,572,882    38,550,912
   Unearned ESOP shares                                             (1,885,000)   (1,950,000)
   Retained earnings, substantially restricted                      23,907,071    23,731,664
                                                                 ----------------------------
              Total  stockholders' equity                           60,594,953    60,332,576
                                                                 ----------------------------

              Total  liabilities and stockholders' equity        $ 171,721,263 $ 172,704,545
                                                                 ============================

</TABLE>



                                       2
<PAGE>


Green Street Financial Corp and Subsidiary


Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended December 31, 1998 and 1997

<TABLE>
<CAPTION>
                                                                              1998              1997
------------------------------------------------------------------------------------------------------
<S>                                                                      <C>              <C>        
Interest and dividend income:                                                              
   Loans                                                                  $ 2,574,242      $ 2,623,634
    Investment Securities                                                     524,190          717,908
                                                                          -----------------------------
              Total interest income                                         3,098,432        3,341,542
Interest expense                                                            1,346,709        1,459,877
                                                                          -----------------------------
              Net interest income                                           1,751,723        1,881,665
Provision for loan losses                                                          -                -
                                                                          -----------------------------
              Net interest income after provision for loan losses           1,751,723        1,881,665
                                                                          -----------------------------
                                                                                           
Noninterest income                                                             35,773           20,779
                                                                          -----------------------------
Noninterest expense:                                                                       
   Compensation and employee benefits                                         540,472          589,578
   Other                                                                      228,640          217,375
                                                                          -----------------------------
                                                                              769,112          806,953
                                                                          -----------------------------
               Income before income taxes                                   1,018,384        1,095,491
                                                                                           
Income taxes                                                                  375,611          406,450
                                                                          -----------------------------
              Net income                                                  $   642,773      $   689,041
                                                                          =============================
                                                                                           
                                                                                           
Basic earnings per share                                                  $      0.17      $      0.17
                                                                          =============================
Diluted earnings per share                                                $      0.17      $      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 Cash Flows (unaudited)
Three Months Ended December 31, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                  1998            1997
--------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>           
Cash Flows From Operating Activities                                                     
   Net income                                                               $   642,773  $      689,041
   Adjustments to reconcile net income to net                                            
      cash provided by operating activities:                                             
      Depreciation and amortization                                               9,000           9,000
      Increase in deferred income taxes                                           4,000           3,000
      Decrease in deferred compensation                                          (1,816)         (4,595)
      ESOP compensation charged to paid-in capital                               21,970          55,445
      Changes in assets and liabilities:                                                 
        (Increase) decrease in:                                                          
           Prepaid expenses and other assets                                     13,582          17,378
           Accrued interest receivable                                          180,301         (31,819)
        Increase (decrease) in:                                                          
           Accrued expenses and other liabilities                                61,476        (126,976)
           Income taxes payable                                                 335,082         165,700
                                                                            ----------------------------
              Net cash provided by operating activities                       1,266,368         776,174
                                                                            ----------------------------
Cash Flows From Investing Activities                                                     
   Net increase in loans receivable                                           2,084,559      (1,287,293)
   Proceeds from held to maturity investment securities                       6,000,000       3,000,000
   Purchase of held to maturity investment securities                                -       (9,000,000)
   Purchase of property and equipment                                                -          (11,191)
                                                                            ----------------------------
              Net cash provided by (used in) investing activities             8,084,559      (7,298,484)
                                                                            ----------------------------
                                                                                         
</TABLE>
                                                                    
                                       4
                                                                  
<PAGE>                                                               
                                                                      

Green Street Financial Corp and Subsidiary


Condensed Consolidated Statements of Cash Flows (unaudited)
Three Months Ended December 31, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                      1998               1997
---------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                <C>            
                                                                                              
Cash Flows From Financing Activities                                                           
   Net decrease in deposits                                                 $    (1,326,696)   $     1,705,763
   Principal payment for ESOP debt                                                   65,000             65,000
   Cash dividends paid                                                           (1,079,849)        (1,093,918)
   Increase in advance payments by borrowers                                                   
       for taxes and insurance                                                      294,778            279,604
                                                                            -----------------------------------
              Net cash provided by (used in) financing activities                (2,046,767)           956,449
                                                                            -----------------------------------
              Net increase (decrease) in cash and cash equivalents                7,304,160         (5,565,861)
Cash and cash equivalents:                                                                     
   Beginning                                                                     29,462,356         33,087,640
                                                                            -----------------------------------
   Ending                                                                   $    36,766,516    $    27,521,779
                                                                            ===================================
   Cash and cash equivalents:                                                                  
       Cash and short-term investments:                                                        
       Interest-bearing                                                     $    32,168,240    $    24,138,855
       Noninterest-bearing                                                          668,276            242,924
       Federal funds sold                                                         3,930,000          3,140,000
                                                                            -----------------------------------
                                                                            $    36,766,516    $    27,521,779
                                                                            ===================================
Supplemental Disclosures of Cash Flow Information                                              
   Cash payments for:                                                                          
      Interest                                                              $     1,347,929    $     1,462,315
                                                                            ===================================
      Income taxes                                                          $        40,529    $       240,750
                                                                            ===================================
Supplemental Disclosure of Noncash Investing and Financing                                     
   Activities:                                                                                 
     Dividends declared and accrued                                         $       489,986    $       472,794
                                                                            ===================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                       5

<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 (except for the
statement of financial  condition at September 30, 1998,  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 month
period ended December 31, 1998 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.

                                       6
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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


Note 2.  Basis of Presentation (Continued)

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


Note 3.  Dividends Declared
On December 30,  1998,  the Board of  Directors  of the  Corporation  declared a
dividend of $ .12 a share for  stockholders of record as of January 12, 1999 and
payable on January 22, 1999. The dividends declared were accrued and reported as
other liabilities in the December 31, 1998  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:
<TABLE>
<CAPTION>

                                                                                     1998             1997   
                                                                            ----------------------------------
<S>                                                                         <C>              <C>             
Weighted average shares outstanding                                                4,083,219        4,298,125
Less unallocated ESOP shares                                                         191,750          217,750
                                                                            ----------------------------------
    Weighted average outstanding shares used for basic EPS                         3,891,469        4,080,375
Plus incremental shares from assumed issuance
   of stock options                                                                       -            83,330
                                                                            ----------------------------------
    Weighted average outstanding shares used for diluted EPS                       3,891,469        4,163,705
                                                                            ==================================

Net income                                                                  $        642,773 $        689,041
                                                                            ==================================

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


                                       7
<PAGE>


GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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

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

Total  assets  decreased  by $1.0  million  during  the first  quarter to $171.7
million at December 31, 1998.  The only  significant  change in the component of
the Corporation's  assets during the quarter was that $6.0 million in investment
securities  were  called  and placed in short term  interest  earning  assets at
December 31, 1998.  Investments  and other short term  interest  earning  assets
amounted to $40.2  million at December  31, 1998,  compared to $39.4  million at
September 30, 1998.  Net loans  receivable  decreased by $2.1 million during the
quarter  and  amounted  to $129.6  million at  December  31,  1998,  due to loan
repayments  exceeding loan originations.  Approximately 99% of the Corporation's
assets were interest earning at December 31, 1998, and approximately 76% of such
interest earning assets were held in the form of loans receivable.

The Association had no borrowings  outstanding during or at the end of the three
month period ended  December 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
$1.9 million at December 31, 1998 net of a $65,000  principal  repayment  during
the  quarter,  is reported  as a reduction  of  stockholders'  equity.  Retained
earnings  increased by $.2 million to $23.9 million at December 31, 1998,  which
is  attributable  to the  Corporation's  consolidated  earnings during the three
months ended December 31, 1998, less dividends accrued for the quarter.

At December 31, 1998, the Corporation's  stockholders'  equity amounted to $60.6
million,  which as a  percentage  of total  assets  was  35.3%.  As a  Federally
chartered  savings and loan  association,  the  Association  is required to meet
three  separate   capital   standards   established  by  the  Office  of  Thrift
Supervision.  The Association's stand-alone equity was $45.2 million at December
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  .10% and .15% at
December 31, 1998 and September 30, 1998, respectively.  The Association's level
of nonperforming  loans was .10% at December 31, 1997.  During the quarter ended
December 31, 1998,  the  Association's  level of  nonperforming  loans  remained
consistently low in relation to prior periods and total loans  outstanding,  and
the Association did not incur any loan losses. Based on management's analysis of
the adequacy of it allowance at December 31, 1998, no  additional  provision for
loan losses was made during the quarter.

                                       8
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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


Comparison of Operating Results for the Three Months Ended December 31, 1998 and
1997:

General.  Net income for the three  month  period  ended  December  31, 1998 was
$643,000,  a 6.7%  decrease  over the $689,000  earned during the same period in
1997. The decrease in net income was primarily attributable to a decrease in net
interest income for the 1998 quarter.

Interest  income.  Interest income decreased by $243,000 to $3.1 million for the
three months ended  December 31, 1998,  from $3.3 million for the same period in
1997.  The  decrease was  attributable  to a reduced  level of  interest-earning
assets  outstanding  during the first  quarter of this year in comparison to the
same quarter a year earlier and to a lower yield on those assets. In the quarter
ended June 30, 1998, the Company  repurchased  approximately $3.5 million of its
common stock using interest-earning assets to complete the transaction.

Interest expense. Interest expense decreased by $113,000 to $1.4 million for the
three months ended  December 31, 1998,  from $1.5 million for the same period in
1997.  The primary cause for this decrease was the decrease in savings  deposits
from $114.3 million at December 31, 1997 to $109.1 million at December 31, 1998.
In addition,  the Association's  average cost of funds, which approximated 5.12%
for the quarter ended December 31, 1997, was approximately 22 basis points lower
in the quarter ended December 31, 1998.

Noninterest  income.  Noninterest  income has  historically  been  immaterial in
relation to the Association's overall operations. Noninterest income amounted to
$21,000  and  $36,000  for the  quarters  ended  December  31,  1997  and  1998,
respectively.

Noninterest  expense.  Noninterest  expense decreased by $38,000 to $769,000 for
the three month period ended  December 31, 1998 from $807,000 for the comparable
quarter in 1997.  The decrease in noninterest  expense is  principally  due to a
decrease  in  compensation  expense.  Compensation  expense  includes  the  cash
contribution  necessary to fund the Employee Stock Ownership Plan (ESOP),  which
represents the difference between the fair market value of the shares which have
been released or committed to be released to participants, and the cost of these
shares. The fair market value declined for the three month period ended December
31, 1998 in comparison to the same period for 1997.

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,   and  credit  bureau
information) are likely to be affected. Furthermore, if computer systems are not


                                       9
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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

Year  2000 Issue (Continued)

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 is in
          process with a scheduled completion date of February 1999.

     (4)  Validation. Test and verify system changes and coordinate with outside
          parties.  This phase is in process with a scheduled completion date of
          April 1999.

     (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.

                                       10
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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

Year 2000 Issue (Continued)

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.

                                       11
<PAGE>

GREEN STREET FINANCIAL CORP AND SUBSIDIARY

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


There were no  significant  changes for the three months ended December 31, 1998
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.








                                       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

                  None

        Item 5.   Other Information

                  None

        Item 6.   Exhibits and Reports on Form 8-K

                  (a) 27. Financial Data Schedule

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




                                       13
<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 February 10, 1999          By:      s/s H. D. Reaves, Jr.    
                                             -----------------------------------
                                                   H. D. Reaves, Jr.
                                                   President and CEO

         Dated February 10, 1999          By:      s/s John C. Pate     
                                                   -----------------------------
                                                   John C. Pate
                                                   Senior Vice President and CFO




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