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

                                   FORM 10-QSB

(Mark One)
  (X)  Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
       Exchange Act of 1934

       For the quarterly period ended December 31, 1999

  ( )  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: 0-23323

               THE BRYAN COLLEGE STATION FINANCIAL HOLDING COMPANY
               ---------------------------------------------------
             (Exact name of registrant as specified in its charter)

                                    DELAWARE
                                    --------
         (State or other jurisdiction of incorporation of organization)

                                   36-4153491
                                   ----------
                      (I.R.S. employer identification no.)

                     2900 TEXAS AVENUE, BRYAN, TEXAS 77802
                     -------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (409) 779-2900
                                 --------------
               (Registrants telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934 during the proceeding 12 months (or for such shorter period that the issuer
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                   No                               Yes   X
                      -----                             -----

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.


                             Shares Outstanding
              Class       as of January 24, 2000
              -----       ----------------------
          Common Stock            428,409



<PAGE>


              THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY
                                 BRYAN, TEXAS

                                  FORM 10-QSB

                     THREE MONTHS ENDED DECEMBER 31, 1999

                        PART I - FINANCIAL INFORMATION


ITEM 1 - FINANCIAL STATEMENTS
                                                                            Page

      Consolidated Statements of Financial Condition.........................3

      Consolidated Statements of Income......................................4

      Consolidated Statements of Changes in Stockholders' Equity.............5

      Consolidated Statements of Cash Flows..................................6

      Notes to Consolidated Financial Statements.............................7


ITEM  2  -  MANAGEMENT'S   DISCUSSION  AND  ANALYSIS  OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........................9


                        PART II - OTHER INFORMATION

Other Information...........................................................17

Signatures..................................................................18



                                       2

<PAGE>

<TABLE>
<CAPTION>
       THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                    December 31, 1999 and September 30, 1999
                                   (Unaudited)
                       In thousands, except per share data

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

                                                               December 31,   September 30,
                                                                   1999           1999
                                                                   ----           ----
<S>                                                              <C>            <C>
ASSETS
Cash and due from banks                                          $ 4,743        $ 3,086
Interest-bearing deposits in other financial institutions          1,539          1,619
                                                                 -------        -------
   Total cash and cash equivalents                                 6,282          4,705

Securities available for sale                                          5              5
Mortgage-backed securities held-to-maturity (fair value:
  December 1999 - $636; September 1999 - $667)                       659            692
Loans held for sale                                                3,379          2,464
Loans receivable, net                                             69,025         67,974
Federal Home Loan Bank stock                                         410            404
Servicing rights                                                     479            545
Repossessed assets                                                   590            937
Real estate owned and in judgment                                    530            548
Premises and equipment                                             2,294          2,099
Accrued interest receivable                                          641            613
Other assets                                                       1,523            883
                                                                 -------        -------

                                                                 $85,817        $81,869
                                                                 =======        =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Deposits                                                      $73,614        $73,240
   Advance payments by borrowers for insurance and taxes             244            818
   Advance from Federal Home Loan Bank                             4,000             --
   Debentures                                                      3,629          3,629
   Accrued interest payable and other liabilities                  1,509          1,194
                                                                 -------        -------
                                                                  82,996         78,881

Minority Interest                                                    873            873

Stockholders' equity
   Common stock - par value $.01 per share;
     authorized 1,500,000 shares, issued 428,409
     at December 31, 1999 and September 30, 1999                       4              4
   Additional paid-in capital                                      1,849          2,060
   Retained earnings, substantially restricted                        95             51
                                                                 -------        -------
                                                                   1,948          2,115

                                                                 $85,817        $81,869
                                                                 =======        =======
</TABLE>

                                       3
<PAGE>


       THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                       In thousands, except per share data

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

                                                              Three months ended
                                                                  December 31,
                                                              ------------------
                                                               1999        1998
                                                               ----        ----
Interest income
   Loans                                                     $ 1,785     $ 1,878
   Mortgage-backed securities                                      9          13
   Other                                                          32          66
                                                             -------     -------
     Total interest income                                     1,826       1,957

Interest expense
   Deposits                                                      766         861
   Other borrowings                                              121         109
                                                             -------     -------
     Total interest expense                                      887         970
                                                             -------     -------


NET INTEREST INCOME                                              939         987

Provision for loan losses                                         30          20
                                                             -------     -------

NET INTEREST INCOME AFTER PROVISION FOR LOAN                     909         967

Noninterest income
   Service charges                                               173         198
   Net gain on sale of loans and mortgage servicing rights        51         139
   Servicing fee income net of amortization                       60          --
   Other                                                           7          63
                                                             -------     -------
     Total noninterest income                                    291         400

Noninterest expenses
   Compensation and benefits                                     666         548
   Occupancy and equipment expense                               124         133
   Federal insurance premiums                                     16          15
   Net loss on real estate owned                                   3          --
   Professional fees                                              41          55
   Data processing                                                67          62
   Other                                                         373         333
                                                             -------     -------
     Total noninterest expenses                                1,290       1,146
                                                             -------     -------


INCOME (LOSS) BEFORE INCOME TAX (BENEFIT) EXPENSE AND
   CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE         (90)        221

Income tax (benefit) expense                                     (23)         86
                                                             -------     -------

INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A CHANGE IN
   ACCOUNTING PRINCIPLE                                          (67)        135

Cumulative effect of a change in accounting principle           (100)         --
                                                             -------     -------

NET INCOME (LOSS)                                            $  (167)    $   135
                                                             =======     =======


EARNINGS (LOSS) PER SHARE:
   BASIC AND DILUTED                                         $  (.39)    $   .32
                                                             =======     =======


                                       4
<PAGE>


       THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                           December 31, 1999 and 1998
                                   (Unaudited)
                       In thousands, except per share data

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

                                                            Three months ended
                                                               December 31,
                                                            -------------------
                                                             1999     1998
                                                             ----     ----

Balance at beginning of period                              $2,115   $1,870

Net income (loss)                                             (167)     135
                                                            ------   ------

Balance at December 31,                                     $1,948   $2,005
                                                            ======   ======


















                                       5
<PAGE>


       THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                  In thousands

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

                                                            Three months ended
                                                               December 31,
                                                            ------------------
                                                              1999        1998
                                                              ----        ----
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                        $  (167)    $   135
   Adjustments to reconcile net income to net
     cash from operating activities
     Depreciation                                                70          61
     Amortization of premiums and discounts on
       mortgage-backed securities, net                            1           1
     Net change in loans held for sale                         (884)        165
     Amortization of loan servicing rights                       66          --
     Amortization of deferred loan origination fees             186          12
     Net gains on sales of
       Mortgage loans                                           (31)       (110)
       Mortgage servicing rights                                (20)        (29)
     Provision for losses on loans and real estate owned         30          20
     Loss on sale of REO                                          3          --
     Federal Home Loan Bank stock dividend                       (6)         (6)
     Change in
       Accrued interest receivable                              (28)        (54)
       Other assets                                             140        (329)
       Accrued interest payable and other liabilities          (118)         51
                                                            -------     -------
         Net cash from operating activities                    (758)        (83)

CASH FLOWS FROM INVESTING ACTIVITIES
   Net increase in loans receivable                          (1,245)       (583)
   Principal payments on mortgage-backed securities
     and collateralized mortgage obligations                     32          52
   Proceeds from maturity of securities                          --           5
   Proceeds from sale of mortgage servicing rights               20          29
   Investment in office properties and equipment, net          (265)        (47)
   Investment in real estate owned                               (9)         (4)
   Proceeds from sale of real estate owned                        2          --
                                                            -------     -------
     Net cash from investing activities                      (1,465)       (548)

Cash flows from financing activities
   Net increase in deposits                                     374       1,563
   Net decrease in advance payments by
     borrowers for insurance and taxes                         (574)       (625)
   Net change in advances from Federal
     Home Loan Bank                                           4,000         200
   Dividends paid                                                --          --
                                                            -------     -------
     Net cash from financing activities                       3,800       1,138
                                                            -------     -------

Net change in cash and cash equivalents                       1,577         507

Cash and cash equivalents at beginning of period              4,705       5,327
                                                            -------     -------
Cash and cash equivalents at end of period                  $ 6,282     $ 5,834
                                                            =======     =======

                                       6

<PAGE>



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information and with the  instructions  to Form 10-QSB.  Accordingly,
they do not include all the  information  and  footnotes  required by  generally
accepted accounting principles for complete financial statements.

In the opinion of management,  the unaudited  consolidated  financial statements
contain  all  adjustments  (consisting  only of  normal  recurring  adjustments)
necessary to present fairly the financial condition of The Bryan-College Station
Financial Holding Company (the "Company") and its wholly-owned  subsidiary First
Federal  Savings Bank (the  "Bank"),  as of December 31, 1999 and  September 30,
1999,  and the  results of its  operations  and cash  flows for the  three-month
periods ended December 31, 1999 and 1998.


NOTE 2 - ALLOWANCE FOR LOAN LOSSES

The summary of changes in the allowance for loan losses is as follows:

                                                        Three months ended
                                                           December 31,
                                                        ------------------
                                                          (In thousands)
                                                           1999     1998
                                                           ----     ----

      Balances, beginning of period                      $  326   $  307
      Provision charged to operations                        30       20
      Charge-offs                                           (50)     (10)
      Recoveries                                              2        1
                                                         ------   ------

         Balances, end of period                         $  308   $  318
                                                         ======   ======


NOTE 3 - CAPITAL REQUIREMENTS

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies.  Failure to meet minimum capital  requirements can
initiate certain  mandatory and possibly  additional  discretionary,  actions by
regulators  that,  if  undertaken,  could have a direct  material  effect on the
Bank's  financial   statements.   Under  capital  adequacy  guidelines  and  the
regulatory  framework for prompt corrective  action, the Bank must meet specific
capital  guidelines  that involve  quantitative  measures of the Bank's  assets,
liabilities,  and certain off-balance-sheet items as calculated under regulatory
accounting  practices.  The Bank's capital amounts and  classification  are also
subject to  qualitative  judgments  by the  regulators  about  components,  risk
weightings, and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  the Bank to  maintain  minimum  amounts  and ratios of total and Tier I
capital as defined in the regulations to risk-weighted  assets as defined and of
Tier I capital to average  assets as defined.  As of December 31, 1999, the most
recent  notification from the Office of Thrift Supervision  categorized the Bank
as adequately under the regulatory framework for prompt corrective action. To be
categorized  as  well   capitalized,   the  Bank  must  maintain  minimum  total
risk-based, Tier I risk-based, and Tier I leverage ratios. At December 31, 1999,
the Bank  did not meet the  minimum  requirement  to be well  capitalized  under
prompt corrective action regulations.

                                      7
<PAGE>

The following is a reconciliation  of the Bank's capital
under generally accepted  accounting  principles (GAAP) to regulatory capital at
December 31, 1999.


                                                 Core       Risk based
                                                Capital       Capital
                                                -------       -------
      (In thousands)

     GAAP capital                               $5,663      $  5,663

     General valuation allowances                    -           308
                                                ------      --------

     Regulatory capital                          5,663         5,971

     Minimum capital requirement                 3,405         5,424
                                                ------      --------

     Excess regulatory capital over
       minimum requirement                      $2,258      $    547
                                                ======      ========



NOTE 4 - EARNINGS PER COMMON SHARE

Amounts  reported  as  Earnings  Per  Common  Share for the two  quarters  ended
December 31, 1998 and 1998 reflect the earnings available to common stockholders
for  the  year  divided  by  the  weighted   average  number  of  common  shares
outstanding.  Diluted earnings per share shows the dilutive effect of additional
common shares issuable under stock options.  Earnings per share for both periods
has been  restated to reflect a 10% common  stock  dividend  declared in January
1999. The weighted  average shares  outstanding  used to calculate  earnings per
share  were  428,409  for  the  quarters  ended  December  31,  1999  and  1998,
respectively.


















                                       8

<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

GENERAL

      The  Bryan-College  Station  Financial  Holding  Company  (the  "  Holding
Company", and with its subsidiary,  the "Company"), a Delaware corporation,  was
formed as of April 1, 1998 to act as a unitary thrift holding  company for First
Federal Savings Bank, Bryan,  Texas ("First Federal" or the "Bank") by acquiring
100% of the stock of First Federal through the exchange of approximately  32% of
First Federal common stock for Holding  Company common stock and the purchase of
approximately  68% of First Federal  common stock for cash (the  "Acquisition").
The Holding Company received approval from the Office of Thrift Supervision (the
"OTS")  to  acquire  all of  the  common  stock  of the  Bank  outstanding  upon
completion of the Acquisition.

      First Federal is a federally  chartered,  independent thrift  institution,
headquartered in Bryan-College  Station,  Texas, which began operations in 1965.
First Federal is  predominantly a residential  mortgage and consumer  automobile
lender, originating loans primarily in Bryan-College Station and the surrounding
immediate  trade area, and now expanding into the general trade area bordered by
the   growing   "Texas   Triangle"   of   Houston,   Austin-San   Antonio,   and
Dallas-Ft.Worth. First Federal originates a significant amount of consumer loans
primarily  secured  by  automobiles  through  selected  automobile  dealers.  In
addition, to a lesser extent, First Federal originates residential  construction
loans  in its  immediate  trade  area,  Small  Business  Administration  ("SBA")
partially guaranteed loans throughout the "Texas Triangle", and small commercial
real  estate  and small to  medium  commercial  business  loans.  First  Federal
converted from the mutual to stock form of  organization  and  recapitalized  in
1993.  First Federal began its  transition to  full-service  banking in 1994 and
1995,  and  incurred  the  expenses  associated  therewith  (such  as  new  data
processing,  tellers and drive-in  facilities).  As a result of First  Federal's
transition to full-service  banking, net income was $193,000 in fiscal year 1994
and  $211,000  in fiscal  year 1995.  In fiscal  year 1996,  net income  rose to
$454,000  before a one-time  charge of  $220,000  to  recapitalize  the  Savings
Association Insurance Fund. In fiscal year 1997, net income rose to $605,000 and
to  $628,000 in fiscal  year 1998.  Net income for First  Federal for the fiscal
year ended September 30, 1999 was $815,000.

      Implementing new strategy,  in 1994 and 1995,  senior  management of First
Federal began expanding its core  residential  mortgage lending and by investing
in innovative, niche business with higher risk-adjusted returns than residential
loans such as its Second  Chance  Auto Loan  Program,  in order to compete  more
effectively in its "niche" market,  increase the overall  profitability of First
Federal and enhance stockholder value. The Second Chance Auto Loan Program is an
innovative loan program targeting non-prime vehicle loan borrowers. The Company.
These loans are insured for credit  default,  generally up to $6,000 per loan in
the event there is a deficiency  between the unpaid  balance of the loan and the
resale price of the  repossessed  vehicle.  In addition to its core  residential
mortgage and Second Chance Auto Loan Program lending business, since fiscal 1994
First Federal has increased its focus on the following products:

      O   SBA loans  (partially  government  guaranteed)  throughout  the "Texas
          Triangle" by utilizing  First Federal's new designation as a certified
          SBA  lender,  and  managed  by an  experienced  &  seasoned  SBA  loan
          originator hired in 1999.
      O   Direct consumer lending.
      O   Commercial  lending to small and medium-sized  businesses,  secured by
          "hard collateral" such as real estate and automobiles.
      O   Commercial  real estate lending,  primarily to small and  medium-sized
          businesses
      O   Home improvement loans.

      First  Federal funds these lending  products  using a retail  deposit base
gathered  in  its  home  market  of  Bryan-College  Station  as  well  as in the
surrounding  counties  of  Burleson,   Grimes,  Leon,  Madison,   Robertson  and
Washington,  which  comprise  its  immediate  trade area.  Because of the unique
charter granted to the Company which permits it to enter into any type of lawful
business  (subject to regulatory  oversight),  whether or not related to banking
(as long as such business is safe and  profitable),  its strategic plan over the
next three years is to safely and profitably  diversify into different  types of
businesses,  products and services and carefully expand further into this "Texas
Triangle", including expanding the business of its primary operating subsidiary,
First  Federal (as its  capital  will  permit)  through  strategically  located,

                                       9
<PAGE>



low-cost  and  profitable  loan  production  offices and  low-cost  full-service
mini-branches  -- in order to enhance  stockholder  value now and in the future.
First  Federal  currently  operates  three  full-service  offices and a mortgage
lending  office,  two of which are  located in Bryan  (including  its  principal
executive offices which are situated in the middle of the Bryan-College  Station
community), a new facility located at a key highway intersection in North Bryan,
and one full-service  branch in adjacent  College Station,  which is the home of
the third largest university in the nation, Texas A&M University, and the George
Bush Presidential  Library,  and a centrally located mortgage lending offices in
College Station.

     First  Federal  has   concentrated  on  the  middle-class  and  blue-collar
population as its targeted  market in providing  banking  products and services,
which had  successfully led to its  loan-to-deposit  ratio of 97.9% at September
30, 1999 consisting  primarily of performing  short-term  balloon and adjustable
rate residential  mortgage loans and consumer loans which are secured  primarily
by  automobiles.  Although its favorable loan demand enables the Bank to utilize
all of its deposits to fund loan products,  First Federal  maintains  additional
liquidity through $28.5 million borrowing authority at the FHLB of Dallas ("FHLB
of Dallas").  First Federal has a positive  spread between the interest it earns
on its loans and the interest it pays for deposits of 6.12% at December 31, 1999
as compared to 5.94% at September 30, 1999.

FINANCIAL CONDITION

      The Company's  total assets  increased by $3.9 million to $85.8 million at
December  31, 1999 from $81.9  million at September  30, 1999,  due to a planned
growth in liquid  assets to cover any  extraordinary  Y2K cash needs and prudent
growth of the Company's loan portfolio.  This increase consisted primarily of an
increase in cash, loans held for sale, loans receivable and other assets.

      Net  loans  receivable  (excluding  loans  held for sale)  increased  $1.0
million to $69.0  million at December  31,  1999,  compared to $68.0  million at
September 30, 1999. During the three months ended December 31, 1999, the Company
originated  $8.2 million of mortgage  loans,  including $7.6 million  secured by
one- to four-family  residential loans. In addition, the Company originated $5.3
million in consumer  loans,  of which $2.8 million were Second  Chance Auto Loan
Program loans and $1.4 million in commercial business loans.

      Deposits  increased  $374,000  to $73.6  million  at  December  31,  1999,
compared to $73.2 million at September  30, 1999.  Other  liabilities  increased
$3.8 million to $9.4  million at December 31, 1999,  compared to $5.6 million at
September  30, 1999,  primarily as a result of an increase in advances  from the
FHLB of Dallas,  offset by a  decrease  in  escrowed  funds for  property  taxes
related to real estate loans held by the Bank.

      Stockholders'  equity in the Company decreased $167,000 to $1.9 million at
December 31, 1999 from $2.1 million at September 30, 1999 due to the net loss in
the first quarter of the fiscal year.

ASSET/LIABILITY MANAGEMENT

      The Holding  Company's  subsidiary,  First Federal  Savings Bank, like all
financial institutions,  is subject to interest rate risk to the degree that its
interest-bearing  liabilities (deposits) mature or reprice more rapidly, or on a
different basis, than its interest-earning  assets (loans), some of which may be
longer  term or fixed  interest  rate.  As a  continuing  part of its  financial
strategy,  First  Federal  continually  considers  methods of managing  any such
asset/liability  mismatch,  consistent with maintaining acceptable levels of net
interest income and interest rate risk.

     In order to monitor and manage interest rate  sensitivity and interest rate
spread, First Federal created an Asset/Liability Committee ("ALCO"), composed of
its President/Chief Executive Officer, Executive Vice President/CFO, Senior Vice
President/Financial and four outside Directors. The responsibilities of the ALCO
are to assess First Federal's  asset/liability mix and recommend strategies that
will enhance income while managing First Federal's  vulnerability  to changes in
interest rates.


                                       10
<PAGE>

      First Federal's asset/liability  management strategy has two goals. First,
the Bank seeks to build its net interest  income and noninterest  income,  while
adhering to its underwriting  and lending  guidelines.  Second,  and to a lesser
extent,  First Federal seeks to increase the interest  rate  sensitivity  of its
assets and decrease the interest rate  sensitivity  of its  liabilities so as to
reduce First Federal's overall  sensitivity to changes in interest rates.  There
can be no assurance that this strategy will achieve the desired results and will
not result in  substantial  losses in the event of an increase in interest  rate
risk.

      As part of this  strategy,  management  continues to  emphasize  growth in
noninterest-bearing deposits such as checking accounts or lower interest-bearing
savings  deposits  by  offering  full  service  retail  banking to its  targeted
customer  base. In order to minimize the possible  adverse impact that a rise in
interest  rates may have on net interest  income,  First  Federal has  developed
several strategies to manage its interest rate risk. Primarily, First Federal is
currently selling all newly originated one-to four-family  residential  mortgage
loans which are saleable in the  secondary  market--most  of which are long-term
fixed-rate  loans. In addition,  First Federal currently offers three-year fixed
rate balloon  loans and other  adjustable  rate loans,  and has  implemented  an
active, diversified short-term consumer lending program, giving First Federal an
opportunity to reprice its loans on a more frequent basis.

NET PORTFOLIO VALUE

      The OTS, First Federal's  primary regulator has issued a proposed rule for
the  calculation  of an interest  rate risk  component for  institutions  with a
greater  than  "normal"  (i.e.,  greater  than 2%) level of  interest  rate risk
exposure  ("NPV").  The OTS has not yet  implemented  the capital  deduction for
interest  rate  risk.  NPV is  the  difference  between  incoming  and  outgoing
discounted cash flows from assets,  liabilities and off-balance sheet contracts.
This approach  calculates the  difference  between the present value of expected
cash  flows  from  assets  and the  present  value of  expected  cash flows from
liabilities,  as well as cash flows from off-balance sheet contracts.  Under OTS
regulations,  an institution's "normal" level of interest rate risk in the event
of an assumed change in interest rates is a decrease in the institution's NPV in
an amount not  exceeding  2% of the present  value of its assets.  The amount of
that  deduction  is one-half  of the  difference  between (a) the  institution's
actual  calculated  exposure  to a 200 basis  point  interest  rate  increase or
decrease  (whichever  results in the greater pro forma  decrease in NPV) and (b)
its "normal" level of exposure which is 2% of the present value of its assets.

      It has been, and continues to be, an objective of First Federal's Board of
Directors  and  management  to  manage  interest  rate  risk.   First  Federal's
asset/liability  policy,  established  by  the  Board  of  Directors,   dictates
acceptable  limits on the  amount of change  in NPV  given  certain  changes  in
interest rates.

      Presented  below,  as of  September  30,  1999,  the latest date for which
information is available,  is an analysis of First Federal's  interest rate risk
as measured by changes in NPV for instantaneous and sustained parallel shifts in
the yield curve, in 100 basis point increments,  up and down 300 basis points in
accordance with OTS  regulations.  As illustrated in the table, the NPV of First
Federal is very rate insensitive. This occurs principally because, First Federal
has a small  portfolio  of  long-term  fixed rate loans and as rates  rise,  the
market value of  fixed-rate  loans  declines  due to both the rate  increase and
slowing  prepayments.  When rates  decline,  First Federal does not experience a
significant  rise in market value for these loans  because  borrowers  prepay at
relatively  high rates.  OTS  assumptions are used in calculating the amounts in
this table. Even though the information  presented  reflects the Bank's interest
rate risk position at the close of the prior quarter,  management  believes that
this  information is helpful in assessing First Federal's  current interest rate
risk position.

                                       11
<PAGE>



                                                   Acceptable
    Change in                                        Limits
  Interest Rate     Estimated   At September 30,   Established
                                      1999         by Board of
                                                    Directors
  (Basis Points)       NPV     $ Change % Change    % Change

                    (Dollars in Thousands)
       +300           8,322      -152      -2%         -10
       +200           8,474         0      +0%          -8
       +100           8,539       +65      +1%          -6
        0             8,474         0       0%           0
       -100           8,319      -155      -2%          -6
       -200           8,289     - 186      -2%          -8
       -300           8,516       +42      +0%         -10


      Management  reviews the OTS measurements on a quarterly basis. In addition
to monitoring  selected measures on NPV, management also monitors effects on net
interest income resulting from increases or decreases in rates.  This measure is
used in conjunction with NPV measures to identify  excessive interest rate risk.
In the event of a 200 basis point change in interest rates,  First Federal would
experience  no change in NPV in a rising rate  environment.  As of September 30,
1999, a decrease in interest  rates of 200 basis points would have resulted in a
2% decrease in the net portfolio value of First Federal.

      In evaluating  First  Federal's  exposure to interest  rate risk,  certain
shortcomings  inherent  in the method of  analysis  presented  in the  foregoing
tables must be considered.  For example, although certain assets and liabilities
may have similar maturities or periods to repricing, they may react in different
degrees to changes in market interest rates. Also, the interest rates on certain
types of assets and  liabilities  may  fluctuate in advance of changes in market
interest  rates,  while  interest rates on other types may lag behind changes in
market rates.  Further,  in the event of a change in interest rates,  prepayment
and early  withdrawal  levels  would  likely  deviate  significantly  from those
assumed in calculating the table. For example,  projected passbook, money market
and checking  account  maturities may also  materially  change if interest rates
change.  Finally,  the  ability  of many  borrowers  to  service  their debt may
decrease in the event of an interest rate increase.  First Federal considers all
of these factors in monitoring its exposure to interest rate risk.

NON-PERFORMING ASSETS AND LOAN LOSS PROVISION

      The provision for loan losses is based on management's  periodic review of
the Company's loan portfolio which considers,  among other factors,  past actual
loan loss experience, the general prevailing economic conditions, changes in the
size,  composition  and  risks  inherent  in  the  loan  portfolio,  independent
third-party  loan  reviews  and  specific  borrower  considerations  such as the
ability to repay the loan and the estimated value of the underlying  collateral.
In  addition,  various  regulatory  agencies,  as  an  integral  part  of  their
examination  process,  periodically review the Company's allowance for estimated
loan losses.  Such agencies may require the Company to provide  additions to the
allowance based upon judgments that differ from those of management.

     The Company  recorded a provision  for loan losses in the amount of $30,000
for the  three  months  ending  December  31,  1999,  as  compared  to a $20,000
provision for the same period in 1998.  Management  decided to increase the loan
loss provision to reflect the growth in the loan portfolio. Total non-performing
assets decreased  during the three-month  period ended December 31, 1999 to $2.0
million or 2.37% of total  assets as compared to $2.7  million or 3.31% of total
assets at September 30, 1999. Much of the decrease in non-performing  assets was
attributable to aggressive efforts to sell repossessed vehicles originated under
the  Second  Chance  Auto  Loan  Program.   Included  in  the  $2.7  million  of
non-performing   assets  were  $221,000  and  $500,000  representing  loans  and
repossessed  vehicles,  respectively,  from our Second Chance Auto Loan Program.
The Company may recover all or a portion of any losses incurred upon the sale of
any of these vehicles from its insurer.

                                       12
<PAGE>


RESULTS OF OPERATIONS

      The  Company's  results of operations  are primarily  dependent on its net
interest   income,   which  is  the  difference   between   interest  income  on
interest-earning  assets and interest expense on  interest-bearing  liabilities.
Interest income is a function of the average balances of interest-earning assets
outstanding  during the period and the  average  yields  earned on such  assets.
Interest  expense  is a  function  of the  average  amount  of  interest-bearing
liabilities  outstanding  during the period and the  average  rates paid on such
liabilities.  The Company also generates noninterest income, such as income from
service charges and fees on checking accounts, loan servicing and other fees and
charges and gains on sales of loans and  servicing  rights.  The  Company's  net
income  is also  affected  by the  level of its  noninterest  expenses,  such as
employee salaries and benefits,  occupancy and equipment  expenses,  and federal
deposit  insurance  premiums.  The Company intends to expand its  credit-default
insured  Second  Chance Auto Loan  Program  with  additional  select  automobile
dealers  throughout  the State of Texas,  retaining a portion of these loans for
its own  portfolio  while also  selling loan  participations  in order to record
gains on the sale of these loan  participations,  to maintain capital compliance
and provide additional liquidity.  As a part of expanding the Second Chance Auto
Loan Program,  the Company has experienced  increased  noninterest  expense as a
result of adding  staff and other  resources.  The Company  does not expect this
trend to continue  past the second  quarter of the  Company's  fiscal year.  The
Company also  anticipates  increased loan sale activity  beginning in the second
quarter of the Company's fiscal year.

COMPARISON OF THREE MONTHS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998

     The  Company  reported a net loss after taxes of  $(167,000)  for the three
months ended December 31, 1999, a decrease of $302,000 as compared to net income
of $135,000  reported for the three months ended December 31, 1998. The decrease
in earnings,  as  discussed  in more detail  below,  resulted  primarily  from a
$131,000  decrease in the  Company's  interest  income,  a $109,000  decrease in
noninterest income and an increase of $144,000 in noninterest expense, partially
offset by a decrease of $83,000 in interest expense.

     Net  interest  income  decreased  $48,000 to $939,000  for the three months
ended December 31, 1999 from $987,000 for the same period in 1998. This decrease
was attributable primarily to a decrease in interest earned on loans receivable,
primarily  as a result of the sale of $2.6  million  in loan  participations  in
Second  Chance Auto Loan Program  loans  partially  offset by a decline in rates
paid on the Bank's deposit liabilities.  The spread between the average yield on
interest  earning  assets and the average  cost of funds  increased  to 6.12% at
December 31, 1999 from 5.94% at September 30, 1999.

      Noninterest  income  decreased  $109,000 to $291,000  for the three months
ended  December 31, 1999 from  $400,000 for the three months ended  December 31,
1998.  This  decrease can be  attributed to a decline in gains on sale of loans.
The Company  recorded an $88,000  gain on sale of loans  originated  through its
Second Chance Auto Loan Program in the three months ended  December 31, 1998. In
addition,  during the three months ended December 31, 1998 the Company  recorded
$56,000 in other  noninterest  income  resulting  from a decrease  in the credit
default  insurance  reserve it was required to maintain  with its  insurer.  The
Company  recorded net servicing  income of $60,000  related to servicing  Second
Chance Auto Loan Program loan participations.

      Noninterest  expense  increased  $144,000  to $1.3  million  for the three
months  ended  December  31, 1999 from $1.1  million for the three  months ended
December 31, 1998.  Compensation and benefits  increased $118,000 as a result of
an increase in the number of employees  due  primarily  to the  expansion of the
Second  Chance  Auto  Loan  Program  and  mortgage  lending  departments.  Other
noninterest  expenses  increased  $40,000,  which  consisted  of various  items,
including  $15,000 of advertising and marketing  expenses,  an uninsured $12,000
fraud  loss  and  miscellaneous  expenses  related  to  the  termination  of the
Company's  defined benefit pension plan and the  administration of the Company's
new 401(k) pension plan. The Company expensed all costs associated with the year
2000 or Y2K  issue as those  costs  were  incurred.  The  total  cost of the Y2K
project  since  commencement  in October 1997 for the Company was  approximately
$250,000.  No disruptions  in systems,  service to customers or operation of the
Company were  experienced as a result of reaching the year 2000. While unlikely,
problems  associated with Y2K may still occur as a result of noncompliant  third
parties.  Management  will  continue to monitor all  business  systems and third
party  relationships  to ensure  that all  systems  and  processes  continue  to
function properly.

                                       13
<PAGE>



     Income tax expense  decreased $ 109,000 to a benefit of  $(23,000)  for the
three  months  ended  December  31, 1999 from $86,000 for the three months ended
December 31, 1998 due to the loss  recorded  before the provision for income tax
and the  cumulative  effect  of a change in  accounting  principle.  The  period
reflected  tax rates of 25.5% and 38.9% for  December  31, 1999 and December 31,
1998, respectively.

     The Company  recognized  the  cumulative  effect of a change in  accounting
principle relating to the treatment of organization costs as a long-lived asset.
Due to this change in generally accepted  accounting  principles,  the remaining
carrying  value of this asset,  of $100,000,  was fully  amortized on October 1,
1999.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's  primary sources of funds are deposits,  checking  accounts,
principal  and  interest  payments  on loans and  mortgage  related  securities,
proceeds  from sales of long term,  fixed-rate  residential  mortgage  loans and
other funds provided from operations.  Additionally, the Company in the past has
borrowed funds from the FHLB of Dallas or utilized  particular  sources of funds
based on need, comparative costs and availability at the time.

      While scheduled loan and mortgage-backed securities repayments, short-term
investments,  and FHLB of Dallas  borrowings  are  relatively  stable sources of
funds,  deposit flows are  unpredictable  and are a function of external factors
including  competition,  the general level of interest rates,  general  economic
conditions  and  most  recently,  the  restructuring  occurring  in the  banking
industry.

      The Company  maintains  investments in liquid assets based on management's
assessment of cash needs, expected deposit flows,  availability of advances from
the FHLB of  Dallas,  available  yield on liquid  assets  (both  short-term  and
long-term) and the objectives of its asset/liability management program. Several
options  are   available  to  increase   liquidity,   including   reducing  loan
originations, increasing deposit marketing activities, and increasing borrowings
from the FHLB of Dallas.

      At December  31, 1999,  the Company had  commitments  to originate  loans,
including loans in process, totaling $4.0 million. The Company also had $353,000
of  outstanding  unused lines of credit and  $452,000 of letters of credit.  The
Company considers its liquidity and capital resources to be adequate to meet its
foreseeable short and long-term needs. The Company expects to be able to fund or
refinance,   on  a  timely  basis,   its  material   commitments  and  long-term
liabilities.  The Company also has the ability, if needed, to borrow up to $28.5
million from the FHLB of Dallas for  liquidity  purposes.  At December 31, 1999,
the Company had $4.0 million in advances outstanding from the FHLB of Dallas.

      Federal  regulations  require  insured  institutions  to maintain  minimum
levels of liquid  assets.  As of  December  31,  1999,  the  minimum  regulatory
liquidity requirement was 4% of the sum of First Federal's average daily balance
of net withdrawable deposit accounts and borrowings payable in one year or less.
At December 31, 1999,  First  Federal's  regulatory  liquidity  ratio was 7.55%.
First  Federal  uses its  capital  resources  principally  to meet  its  ongoing
commitments to fund maturing  certificates of deposits and deposit  withdrawals,
repay borrowings,  fund existing and continuing loan  commitments,  maintain its
liquidity and meet operating expenses.

      At December 31, 1999, the Bank had Core Capital of $5.7 million,  or 6.65%
of total assets, which was $2.3 million above the minimum capital requirement of
$3.4 million or 4% of total assets.

     At December 31, 1999, the Bank had total Risk-based Capital of $6.0 million
and risk-weighted  assets of $67.8 million or total Risk-based  Capital of 8.81%
of risk-weighted  assets.  This amount was $547,000 above the minimum regulatory
requirement  to  be  adequately   capitalized  of  $5.4  million,   or  8.0%  of
risk-weighted assets.

      In March 1999, the federal banking agencies issued an interagency guidance
on subprime  lending,  which is defined in the guidance as  extending  credit to
borrowers who have a significantly  higher risk of default than traditional bank
lending customers.  The guidance provides that institutions should recognize the
additional  risks inherent in subprime  lending and determine if these risks are
acceptable and controllable given the institution's staff,  financial condition,
size and level of capital support.  Institutions that engage in subprime lending

                                       14
<PAGE>



in any significant way should have  board-approved  policies and procedures,  as
well as internal  controls  that  identify,  measure,  monitor and control these
additional  risks.  The agencies  believe that the following items are essential
components of a well-structured risk management program for subprime lenders:

      o   adequate planning and strategy;
      o   sufficient staff expertise;
      o   appropriate lending policy;
      o   thorough purchase evaluation;
      o   strong loan administration procedures;
      o   ongoing loan review and monitoring;
      o   special care to comply with consumer protection laws and regulations;
      o   adequate planning with respect to securitization  and sale of subprime
          loans; and
      o   periodic evaluation of the institution's subprime lending program.

      If the risks  associated  with this activity are not properly  controlled,
the banking  agencies  consider  subprime  lending a high-risk  activity that is
unsafe and unsound.  In light of the higher risks  associated  with this type of
lending,  the  agencies  may  impose  higher  minimum  capital  requirements  on
institutions  engaging  in  subprime  lending.  We  believe  that  the  Bank  is
conducting its subprime  lending  operations in accordance with the guidance and
that the guidance will have no material effect on the Bank's operations.

NEW ACCOUNTING PRONOUNCEMENTS

      Statement of  Financial  Accounting  Standards  No. 133,  "Accounting  for
Derivative  Instruments and Hedging  Activities" (SFAS No. 133"), issued in June
1998,  must be  adopted  as of  January  1,  2000.  This  Statement  establishes
accounting and reporting standards for derivative financial  instruments and for
hedging  activities.  Upon adoption of the Statement,  all  derivatives  must be
recognized  at fair value as either  assets or  liabilities  in the statement of
financial  position.  Changes in the fair value of derivatives not designated as
hedging instruments are to be recognized currently in earnings.  Gains or losses
on  derivatives  designated as hedging  instruments  are either to be recognized
currently  in  earnings  or  are  to  be  recognized  as a  component  of  other
comprehensive  income,  depending on the intended use of the derivatives and the
resulting designations. Upon adoption, retroactive application of this Statement
to  financial   statements  of  prior  periods  is  not  permitted.   Management
anticipates  the adoption of SFAS No. 133 will not have a material impact on the
financial condition or operations of the Bank.

SAFE HARBOR STATEMENT

      This  report  contains  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.   The  Company  intends  such
forward-looking  statements  to be  covered  by the safe  harbor  provision  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for  purposes  of these  safe  harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and describe  future plans,  strategies  and  expectations  of the Company,  are
generally identifiable by use of the words believe, expect, intend,  anticipate,
estimate,  project  or similar  expressions.  The  Company's  ability to predict
results  or the  actual  effect  of future  plans or  strategies  is  inherently
uncertain.  Factors which could have a material adverse affect on the operations
and future  prospects of the Company and the subsidiaries  include,  but are not
limited  to,  changes  in:  interest   rates,   general   economic   conditions,
legislative/regulatory  changes,  monetary  and  fiscal  policies  of  the  U.S.
Government,  including  policies of the U.S.  Treasury  and the Federal  Reserve
Board, the quality or composition of the loan or investment  portfolios,  demand
for loan products, deposit flows, competition,  demand for financial services in
the Company's  market area and accounting  principles,  policies and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and could affect the Company's  financial  performance  and cause the
Company's  actual  results for future  periods to differ  materially  from those
anticipated  or projected.  The Company  wishes to caution  readers not to place
undue reliance on any such  forward-looking  statements,  which speak only as of
the date made.

      The Company does not undertake, and specifically disclaims any obligation,
to  revise  any   forward-looking   statements  to  reflect  the  occurrence  of
anticipated  or  unanticipated  events or  circumstances  after the date of such


                                       15
<PAGE>



statements.  Further  information  concerning  the  Company  and  its  business,
including   additional  factors  that  could  materially  affect  the  Company's
financial results,  is included in the Company's filings with the Securities and
Exchange Commission.




















                                       16
<PAGE>


                           PART II- OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

      None.

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

      None.



                                       17
<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.

                                    THE BRYAN COLLEGE STATION FINANCIAL
                                    HOLDING COMPANY


Date: February 14, 2000             /s/ J. Stanley Stephen
      -----------------             --------------------------------------------
                                    J. Stanley Stephen
                                    President and Chief Executive Officer






Date: February 14, 2000             /s/ William Wantuck
      -----------------             --------------------------------------------
                                    William Wantuck
                                    Chief Financial Officer









                                       18